Resources Production forecasts downgraded by more than 5%
Problems at its Pluto and Vincent assets prompted the oil and gas giant to downgrade its production forecasts by more than 5 per cent.
The revised figures mean that no more than 89 million barrels of oil equivalent will be produced in 2013, down from the previous forecasts that tipped production could rise as high as 94 million barrels of oil equivalent.
The biggest factor in the downgrade was an unplanned shutdown at the company's flagship $15 billion Pluto LNG plant in Western Australia, which was still out of action at the time of going to print.
That issue was compounded by delays in refurbishment works on the Vincent production vessel, located in waters about 50 kilometres from the WA town of Exmouth. That asset could be out of action until October.
When combined, those two problems are expected to deny Woodside about 3 million barrels of oil equivalent, suggesting the company has shaved a little extra off its forecasts for good measure.
Analysts at Goldman Sachs said such events were not uncommon in the oil and gas industry and there was no need for investors to panic at this stage. "While disappointing for 2013 earnings, these represent a deferral of production and are unlikely to have a major valuation impact," the analysts wrote.
Woodside shares had been steady at about $35.30 for most of the day, but release of the news resulted in the stock plummeting as low as $34.05 within minutes. It finished the day 3.4 per cent lower at $34.62.
The downgrade came as oil and gas multinationals enjoyed a win over market regulators in the US, where a court ruling deemed that new transparency rules had been wrongly interpreted.
A federal judge found that the US Securities and Exchange Commission was wrong to interpret the 2010 Dodd-Frank Act as requiring big resources companies to declare every payment to governments around the world.
The rule was to improve transparency in the industry, which often ventures into developing nations with serious corruption.
Frequently Asked Questions about this Article…
Woodside downgraded its 2013 production forecasts after problems at its Pluto and Vincent assets — an unplanned shutdown at the flagship A$15 billion Pluto LNG plant in WA and delays to refurbishment work on the Vincent production vessel.
The company cut its 2013 estimates by more than 5%, revising expected production to no more than 89 million barrels of oil equivalent, down from previous forecasts that had suggested production could reach as high as 94 million barrels.
Combined, the Pluto shutdown and Vincent refurbishment delays are expected to deny Woodside about 3 million barrels of oil equivalent in 2013.
An unplanned shutdown at the Pluto LNG plant — Woodside’s A$15 billion flagship facility in Western Australia — was the biggest factor behind the downgrade and was still out of action at the time the report was published.
News of the downgrade wiped close to A$1 billion off Woodside’s value. Shares fell intraday from about $35.30 to as low as $34.05 and finished the day 3.4% lower at $34.62.
Goldman Sachs analysts said such outages are not uncommon in the oil and gas industry and described the hit as a deferral of production that is unlikely to have a major valuation impact, advising investors there was no need to panic at this stage.
Yes — refurbishment delays on the Vincent production vessel, located about 50 kilometres from Exmouth in WA waters, meant the asset could be out of action until October, according to the article.
Yes — a US federal judge ruled that the SEC had wrongly interpreted the Dodd‑Frank Act as requiring big resources companies to declare every payment to governments worldwide. The decision was framed as a win for oil and gas multinationals and concerned rules intended to improve industry transparency.
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