Woodside Eyes 2020 Production Lift After Solid Q4

By Glenn Dyer | More Articles by Glenn Dyer

Woodside Petroleum reckons it is looking to boost 2020 production of oil and gas by 10% or more after reporting a near 7% rise in the fourth-quarter production ending December 31 last.

The company told the ASX that it expects production between 97 million barrels of oil equivalent (mmboe) and 103 mmboe in 2020, above the 89.6 mmboe it produced in 2019. It had forecast output of about 100 mmboe for 2020.

LNG output is forecast to rise to the range of 74 to 77 mmboe in 2020 from 67.7 mmboe last year; production of liquids will rise from 15.3 mmboe to a range of 18 to 20 mmboe; Australian domestic gas is forecast to ease to a range of 4 to 5 mmboe from 5.6 mmboe in 2010. Output of lps and other domestic gas will remain steady at 1 mmboe.

“We are targeting increased production in 2020 following the successful execution of our near-term growth projects,” Chief Executive Officer Peter Coleman said.

Despite the improvement in Q4 output, revenue eased from a year earlier.

In fact quarterly sales revenue fell about 8% to $US1.30 billion, the company said, as LNG prices plunged 44% in 2019 due to oversupply and a slowing in the strong pace of demand seen from China in late 2018.

That saw total group revenues for 2019 fall 6% to $US4.954 billion from $US5.240 billion in 2018. Sales revenues fell 8% to $US4.427 billion from $US4.827 billion.

That can be explained by a sharp fall in the average product price for Woodside in the final quarter of 2019 – $US48 a barrel of oil equivalent (boe) in the quarter from $US59 per boe in the final quarter of 2018.

Woodside revealed last November that it has an ambitious expansion plan and expects projects worth over $36 billion in Australia, Senegal and Myanmar to boost its oil and gas reserve base and expand production by 6% each year over the next decade.

The company had recently received the greenlight for its Sangomar oil project in Senegal and has reached a tolling agreement to process gas from the $US11 billion Scarborough project with partner BHP Group.

The larger $US20.5 billion Browse project, however, has been bogged down by lengthy negotiations between partners on the terms for processing gas.

Woodside said in Thursday’s release that depending on project timing and decisions, total investment spending in 2020 could jump to as much as $US4.4 billion from $US1.192 billion in 2019 (and $US1.8 billion in 2018).

That sharp rise will raise eyebrows among investors used to the lower levels of spending and solid dividend income from Woodside.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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