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Woodside profit rebounds

Written by  Tuesday, 21 February 2017 22:14
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Despite a challenging market, Woodside chief executive Peter Coleman says the company has performed exceptionally well in 2016 by exceeding production targets, sanctioning Greater Enfield and acquiring two growth assets.

Australia’s independent oil and gas producer recorded a full year net profit after tax of US$868 million, up sharply from $26 million in 2015, and achieved 3% higher annual production of 94.9 MMboe.

“We achieved our second highest annual production, record liquefied natural gas (LNG) production and reduced gas unit production costs to $0.61/MMbtu,” Coleman said.

During the year, Woodside delivered annual LNG production of 63.7 MMboe, as well as signed an agreement for the long-term supply of LNG to Indonesia’s Pertamina. Commencing in 2019, the deal runs for a period of 15-20 years.

Coleman confirmed that first LNG cargo from the Chevron-led Wheatstone project will commence in mid-2017, followed by the start-up of Train 2, six to eight months later. Wheatstone LNG is expected to provide more than 13 MMboe of annual production to Woodside, once fully operational.

In November 2015, Woodside completed the acquisition of half of BHP Billiton’s Scarborough area assets in the Carnarvon basin, offshore Western Australia. The acquisition was concluded for $250 million and a contingent payment of $150 million payable during the development of the Scarborough field.

Under the terms, Woodside will acquire 25% interest in WA-1-R and 50% interest in WA-61-R, WA-62-R, and WA-63-R. Woodside will operate WA-61-R, WA-62-R, and WA-63-R, while ExxonMobil is the operator of WA-1-R. The Scarborough area assets include the Scarborough, Thebe and Jupiter gas fields, which are estimated to contain gross 8.7 Tcf of dry gas resources.

This acquisition comes just months after Woodside closed on a deal in July to buy ConocoPhillips’ offshore exploration interests in Senegal for $350 million. It includes a 35% working interest in three offshore exploration blocks, which contain the SNE and FAN deepwater oil discoveries in Senegal.

“At the SNE oil field, we have commenced a two well appraisal campaign to improve our understanding of the reservoir and inform development planning. The addition of the Scarborough area assets offshore Western Australia increases our resource base close to existing Woodside-operated infrastructure,” Coleman said.

“In Myanmar, where we announced back-to-back gas discoveries in 2016, we are preparing to commence a significant drilling program that includes a minimum of two appraisal and two exploration wells, with scope for an additional three wells,” he added.

“We are evaluating opportunities to maximize our investment in Pluto LNG by undertaking further capacity enhancements and mid-scale or large-scale expansion. In addition, we are planning for the construction of infrastructure that will enable us to supply LNG from Pluto to fuel the local mining and marine sectors. This is part of our broader objective of growing the LNG market.”

Woodside has also approved the Greater Enfield project’s development of oil reserves of 41 MMbbl as a tie-back to the Ngujima-Yin floating production, storage, and offloading unit, targeting first oil in mid-2019.

It is forecasting production from 2017-20 to grow by approximately 15% through existing operations and sanctioned projects, and sell 88% of LNG production in 2017 under mid-term or long-term oil-linked contracts. 

Image: Peter Coleman / Woodside

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