Not Such Good Oil from Woodside, Santos

By Glenn Dyer | More Articles by Glenn Dyer

A not unexpected large splash of red ink on the Woodside Petroleum and Santos profit and loss accounts in 2020 thanks to the COVID-driven impact on prices and demand for all but the first month and a bit of the year.

The two companies took impairments of more than $US5 billion for the year between them.

Despite the ravages of Covid on oil supply and especially demand in 2020 and the crazy fall and rise of prices, both companies are paying dividends for the roughest year both have had for a while.

Woodside reported a net loss after tax of $US4.028 billion was impacted by the non-cash impairments and onerous contract provision announced in July 2020.

Underlying net profit after tax (NPAT) of $US447 million on a 26% slide in revenue to $US3.6 billion.

The directors have declared a final dividend of 12 cents US a share, bringing the full-year dividend to US 38 US cents a share, down from 91 cents a share in 2019

Woodside CEO Peter Coleman said production topped 100 million barrels of oil equivalent for the first time in Woodside’s history.

“Strong production outcomes were delivered even though we weathered a direct hit from Tropical Cyclone Damien in February, followed by operational challenges posed by the pandemic.

“The outstanding performance of our base business in 2020 was reflected in our low unit production cost of $US4.80 per barrel of oil equivalent and the high reliability of our operated LNG facilities.

“The decisions to defer the targeted final investment decision (FID) on our Scarborough and Pluto Train 2 developments and the review of the value of our assets were appropriate responses to extraordinary market uncertainty caused by the pandemic and lower oil and gas prices.

“Our disciplined balance sheet management has safeguarded Woodside’s financial resilience and positioned us to take advantage of emerging growth opportunities as markets recover. The potential strength of that recovery is already being signalled by the recent increase in oil price and record spot LNG prices achieved in Asia over the northern hemisphere winter.

Production this year will be lower than in 2020 because of maintenance on several production platforms and facilities.

This year will see the retirement of CEO Peter Coleman after 10 years in the job. The company is looking for a successor.


Santos reported a net loss after tax of $US357 million for the 2020 financial year thanks to write downs totalling $US895 million due to lower oil price assumptions and impairments on its GLNG venture in Queensland.

Underlying earnings dropped 60% to $US287 million which reflect the tough reality of the 2020 global energy markets and was in line with market forecasts.

The company maintained its final dividend at 5 cents a share for a full year payout of 7.1 cents a share for 2020 after an 11 cents a share in 2019.

Santos CEO Kevin Gallagher said Santos managed to deliver record annual production and sales volumes in 2020, and strong free cash flow of US$740 million despite significantly lower commodity prices.

“These results again demonstrate the resilience of our cash-generative base business in a lower oil price environment and strong operational performance across our diversified asset portfolio,” he said in Thursday’s statement.

“The improvements in our base business in recent years were perfectly illustrated in 2020 with an average realised oil price of US$47 per barrel generating more than three times the free cash flow as generated in 2016 at a similar average oil price.“

Santos reported a 16% drop in sales revenue to $US3.387 billion for the year ending December 31.

The company said it received $4 million in JobKeeper payments from the Australian government up to September 2020. This was paid back in December after it had become clear that the impact of COVID-19 on Santos would be less than expected.

“As prices and demand recover, our projects are much better placed than those of our competitor countries,” said Mr Gallagher.

“Living by our disciplined approach to cost and capital allocation, and remaining cash flow positive through 2020 means we are well positioned for further efficiency gains and growth initiatives in 2021.”


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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