Pluto helps Woodside double profits
In 2012, Woodside's net profit rose 98 per cent to $2.98 billion as revenue rose 29.6 per cent to $US6.2 billion.
Delays in finalising the $US14.9 billion Pluto project weighed on the performance but its completion will underpin a further lift in production volumes this year.
Earnings per share rose to $US3.66 from $US1.90, with the final dividend raised by US10¢ to a fully-franked US65¢, giving an annual payout of $US1.30, up from $US1.10.
Earnings were flattered by the $US974 million gain on the partial sale of equity in Browse Basin for a gross amount of $US2 billion, which helped reduce debt.
It comes as the group is faced with a rise in spending in 2013, both on development projects and exploration.
Capital spending for 2013 is budgeted at $US2.58 billion, up from $US1.8 billion in 2012, boosted by spending on the Leviathan development and on a project in Burma. This excludes any outlays on Browse, with an update due by mid-year, Woodside said.
Exploration spending in 2013 is to rise to $US478 million, well up on $US260 million in 2012, with eight offshore wells planned in Australia alone.
During 2012, the average realised LNG price for exports from the North-West Shelf project was $US77.85 per barrel of oil equivalent, up by more than $US10.
Woodside said long-term prices continue to be indexed to 85-90 per cent of oil price movements, despite pressure to break the link between the oil price and export liquefied gas prices. By the end of 2014 about 85 per cent of Woodside's long-term contracted LNG portfolio will have been subject to price reviews in the preceding three years, it said.
The gas market remained tight, it said, with the prospect of delays in completing some of the planned projects to buoy prices and, with uncommitted gas available from 2014, Woodside was well positioned.
Despite speculation of the adverse impact of US liquefied natural gas exports on the gas trade, Woodside said the US was likely to account for about 10 per cent of global trade, compared to 25 per cent by Australia and 20 per cent by Qatar.
Frequently Asked Questions about this Article…
Woodside's 2012 profit jump was mainly driven by a strong initial contribution from the Pluto development and the partial sell-down of its equity in the Browse Basin. These factors helped lift net profit by 98% to US$2.98 billion while revenue rose about 29.6% to US$6.2 billion.
The Pluto project provided a strong initial contribution to earnings, but delays in finalising the US$14.9 billion Pluto development weighed on short‑term performance. Woodside said Pluto’s completion will underpin a further lift in production volumes during the year.
Woodside booked a US$974 million gain on the partial sale of Browse equity, from a gross sale amount of about US$2 billion. That gain helped reduce the group’s debt and materially boosted reported earnings.
Earnings per share rose to US$3.66 from US$1.90. The final dividend was increased by US$0.10 to a fully‑franked US$0.65, giving an annual payout of US$1.30, up from US$1.10 the prior year.
Capital spending for 2013 was budgeted at US$2.58 billion (up from US$1.8 billion in 2012), boosted by spending on the Leviathan development and a project in Burma. Exploration spending was set to rise to US$478 million (from US$260 million in 2012), with eight offshore wells planned in Australia. This excludes any Browse outlays, with an update due mid‑year.
The average realised LNG price for North‑West Shelf exports in 2012 was US$77.85 per barrel of oil equivalent, more than US$10 higher than previously. Woodside said long‑term LNG prices continue to be indexed to around 85–90% of oil price movements, and by the end of 2014 about 85% of its long‑term contracted LNG portfolio will have had price reviews in the prior three years.
Woodside described the gas market as tight, noting that delays to planned projects could support higher prices. The company expected uncommitted gas to become available from 2014 and said it was well positioned. It also noted US LNG exports were likely to account for about 10% of global trade, compared with roughly 25% for Australia and 20% for Qatar.
Key investor considerations include project delays (notably Pluto), reliance on gains such as the Browse sell‑down to boost earnings, higher capital and exploration spending in 2013, and exposure to LNG pricing indexed to oil. A decision on the controversial Browse Basin development was not due until the June quarter, which adds near‑term uncertainty.
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