Woodside 1H Profit Drops

Woodside has achieved a half-year reported net profit after tax (NPAT) of US$679 million, underpinned by production of 42.0 MMboe and operating revenue of US$2.556 billion for the period.

Financial headlines for 1H 2015

 Half-year reported net profit after tax (NPAT) of US$679 million, down 39% on 1H 2014. The reported NPAT is consistent with market consensus. NPAT was predominantly impacted by lower operating revenue.
 Half-year operating revenue of US$2.556 billion, down 28% on 1H 2014, mainly due to lower commodity prices and to a lesser extent reduced sales volumes, predominantly arising from the planned turnaround work at Pluto.
 Earnings per share (EPS) on a reported basis of 83 cps, down 39% on 1H 2014 (134 cps).
 Declared an interim dividend of US66 cents per share, representing an 80% dividend payout ratio.
 Operating cash flow of US$1.08 billion.
 US$0.2 billion in cash and US$3.0 billion in undrawn facilities available to fund growth.
 2.6% pre-tax portfolio cost of debt, reduced from 3.4% in 1H 2014.
 Raised US$3.75 billion in debt at competitive rates.

Woodside CEO Peter Coleman said the financial results reflected the impact of the fall in commodity prices over the past year.

“Our half-year profit is down 39 percent on the same period last year as a direct result of the fall in oil price over the period,” Mr Coleman said. “However, we have achieved some significant milestones this year which are part of our strategy to transform the business. With the purchase of interests in Wheatstone, Balnaves and Kitimat we have substantially increased our reserves and production capacity while de-risking our future growth. The recent decision to move to FEED on Browse is a significant step towards developing this world class resource.”

Mr Coleman said the company had continued its focus on cost reduction opportunities and process efficiencies throughout the period. “Projects such as Greater Enfield have taken advantage of lower costs resulting from the low oil price environment, while we constantly look to improve processes, as demonstrated at our recent Pluto turnaround which was completed ten days ahead of the original schedule,” Mr Coleman said.
Key Business Activities

 Total Recordable Injury Rate per million hours worked was 1.84 in 1H 2015, slightly better than the 2014 full year result of 1.90.
 2015 production target range remains unchanged at 86 to 94 MMboe.
 The Browse Joint Venture participants agreed to enter the front-end engineering and design (FEED) phase for the proposed floating LNG development, a key milestone in preparing for a final investment decision, targeted for 2H 2016.
 The transaction to acquire interests in Wheatstone LNG, Kitimat LNG and Balnaves oil projects successfully completed in April 2015, increasing the reserves and resources stated in the 2014

Annual Report as follows:
 Proved (1P) Developed and Undeveloped reserves increased by 191.8 MMboe (18.3%),
 Proved plus Probable (2P) Developed and Undeveloped reserves by 260.9 MMboe (19.5%) and
 Contingent resources (2C) by 2,632.0 MMboe (151%).
 Production of 42.0 MMboe, down 9.7% on 1H 2014 (46.5 MMboe). The reduction was primarily due
to the first major planned turnaround at Pluto which was completed within 25 days, ten days ahead
of the original schedule. Pluto requires turnarounds of this magnitude approximately every three years. Based on the condition of key rotating equipment we are assessing if the next period can be extended to four years.
 We made significant gains in our productivity program during the half, targeting $800 million in enduring benefits by the end of 2016.
 Exploration drilling completed three wells with the Pyxis-1 well in the Carnarvon basin resulting in a gas discovery of an additional 2C Contingent resource of 68 MMboe (net) for future tie-back potential to existing Pluto LNG infrastructure.
 Two 3D marine seismic surveys in New Zealand, one 2D in Peru and one 2D in Tanzania were completed in the half. Woodside has subsequently decided to exit the Lake Tanganyika South production sharing contract in Tanzania.
 Vincent phase IV in-fill drilling was completed and oil production commenced in early June.
 Xena Phase 1 installation activities were completed ahead of schedule and production commenced in June.
 Providing increased supply diversity in support of a portfolio-seller approach, Woodside secured approximately 0.85 million tonnes of LNG per annum commencing from 2019, as a result of the conditions precedent to the LNG sales and purchase agreement with Corpus Christi Liquefaction
LLC being satisfied. Corpus Christi Liquefaction LLC, a subsidiary of Cheniere Energy Inc., made a final investment decision on the construction of Trains 1 and 2 of the Corpus Christi Liquefaction Project on 13 May 2015.
 Woodside’s affiliate, Woodside Energy (USA) Inc. (WUSA), entered into a non-binding Memorandum of Understanding (MOU) with Sempra LNG, an affiliate of Sempra Energy (SRE). Under the non-binding MOU, WUSA and Sempra LNG will commence preliminary discussions and assessments pertaining to the potential development of a natural gas liquefaction facility at Port Arthur, Texas.

Any decision by WUSA to proceed with a binding arrangement, including the establishment of a joint venture or partnership with Sempra LNG in relation to the project, remains subject to further due diligence and a variety of internal and external approvals