Unlike 2006 and its surprises, 2007 seems to be a much smoother year for the country's second ranking oil and gas group, Woodside Petroleum.
Even though earnings last year were solid, they could have been better with production problems on the Northwest Shelf and in West Africa cutting output of oil and gas and forcing more money to be spent on remedial development work.
This year, no sign of a reworking of production estimates for the year and the company is seemingly on-track to meet this year's forecast output of 72 to 78 million barrels of oil equivalent (mmboe).
Woodside said first half production rose 19 per cent to almost 35 million barrels of oil equivalent (mmboe). That and higher revenues, seems to be behind the reception the market gave the quarterly report yesterday.
WPL shares rose 77c to $46.48 after rising almost $1 to $46.70.
The market was also encouraged by the news that Woodside is a couple of months away from making a final investment decision on the huge $10 billion Pluto Liquefied Natural Gas (LNG) project off the northwest coast of Western Australia.
The company said in yesterday's report that it will make a final decision on Pluto in the next two months. Two weeks ago, Woodside said the project remained on time and budget.
Woodside also said that the start-up of its Otway gas project in Bass Strait will contribute to production in the second half of 2007. Otway has been behind schedule. As well, there was the "potential for production from Neptune and Stybarrow in late Q4". These are fields in the Gulf of Mexico (Neptune) and off the Northern WA Coast (Stybarrow).
First sales revenue rose 19 per cent to $1.869 billion, compared to the $1.567 billion of the first half of 2006.
"Revenue increases occurred mainly in response to higher sales and production volumes," Woodside said.
The big difference was the production from the Enfield oil field off the WA coast. It contributed around $396 million in extra revenues this half against nothing in the previous half.
Oil prices were a touch higher to lower at times in the June half, when compared to a year earlier, so the extra revenues from Enfield have offset a slight fall in revenues elsewhere. The Chinguetti field was the culprit there off West Africa.
With Woodside's the North West Shelf Venture's liquefied natural gas (LNG) expansion project, phase five, procurement activities have been completed and all prefabricated modules have been received in Karratha where construction activities are continuing. "The project remains on schedule for first LNG shipment by Q4 2008," Woodside said in the statement to the ASX.
Second-quarter sales rose 14 per cent thanks to Enfield. They hit $969.7 million in the three months to June 30, compared to the $848 million in the June quarter of 2006.
That was on a 9 per cent rise in production to 17 million barrels of oil equivalent.
"Revenue increases occurred mainly in response to higher sales and production volumes,'' Woodside said in the statement." LNG sales volumes were also good with the North West Shelf venture delivering 53 cargoes in Q2 2007, compared to 49 in Q1.''
Looking at the exploration and development costs, there was a fair amount of capitalised spending in the June half, compared to a year ago. Around $402 million of spending on exploration and development was capitalised, compared to around $309 million in the same period of 2006.
This will produce a surplus of around $968 million, compared to $860 million in the first six months of last year. (That's on the basis of total revenue minus expensed development and exploration costs, and excluding the capitalised amounts.)