Woodside Petroleum Plans Up to $1.2 Billion Write-Down
January 21 2016 - 3:30AM
Dow Jones News
SYDNEY—Woodside Petroleum Ltd. said it would write down the
value of its assets by between US$1 billion and US$1.2 billion, as
the global rout in crude-oil prices worsens.
Still, the Perth-based company said it could produce more oil
and natural gas this year than in 2015 as it didn't plan to carry
out major maintenance on its Pluto gas-export project in northern
Australia and it seeks to implement new measures to make the
flagship facility more productive.
Woodside—Australia's second-largest oil and gas producer by
volume, after BHP Billiton Ltd.—forecast output of between 86
million and 93 million barrels of oil equivalent in the year
through December. That compares to the 92.2 million barrels of oil
equivalent pumped in 2015, which was broadly at the midpoint of
guidance issued last month.
"We continue to relentlessly focus on delivering the
fundamentals of our business and are now seeing the benefits of our
productivity programs flow through to our results," Chief Executive
Peter Coleman said. "The recent significant fall in oil and gas
prices has highlighted the quality of our low cost production and
approach to balance sheet risk management."
Woodside said it would look to reduce spending on existing
projects and exploration to around US$1.96 billion this year, from
US$2.35 billion in 2015. On Wednesday, U.S. crude futures tumbled
below US$27 a barrel, underscoring the intensifying fears about the
pace of global growth and fueling a deepening rout of the financial
markets in the new year.
Woodside has been among the most aggressive globally in seeking
opportunities to expand, despite its share price tumbling to its
lowest level since mid-2005 on concerns that a global glut of crude
oil will take years to clear.
In September, Woodside made an all-stock takeover offer for Oil
Search Ltd. that valued the Papua New Guinea-based company at 11.64
billion Australian dollars (US$8 billion). It later walked away
from a deal after Oil Search's directors rejected the offer as too
low.
For Woodside, a combination with Oil Search would have increased
its bet on natural gas and the continuing growth in Asia's appetite
for cleaner-burning fuels at a time of low prices.
The proposed deal was also viewed by some analysts as an answer
to Woodside's struggle to grow its reserves and production levels
after repeated delays to an investment decision on the massive
Browse LNG project off Australia's coast. Two years ago, the
company also abandoned a planned US$2.5 billion investment in the
Leviathan natural-gas discovery off Israel's coast.
Write to David Winning at david.winning@wsj.com
(END) Dow Jones Newswires
January 21, 2016 03:15 ET (08:15 GMT)
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