Australia: Woodside 1H Profit at AUD 812 Mln

Woodside today reported a half-year profit after tax of $812 million, underpinned by a 17.8% increase in operating revenue and a 7.2% increase in production. Key to these increases was the successful start-up of Pluto LNG, stronger commodity prices and higher contributions from Vincent and North West Shelf (NWS) oil.

Woodside CEO Peter Coleman noted the performance of the underlying business and the successful ramp-up of the Pluto LNG project was clear demonstration of Woodside’s commitment to consistent, world-class delivery.“It is particularly pleasing to see Pluto achieve utilisation rates of 80% in the first two months of operation; well in excess of the 36% we had targeted. The ongoing reliability of the underlying business and the successful addition of Pluto production provides positive momentum for our production and revenue,” Mr Coleman said.

Woodside has increased its 2012 production target to a range of 77 to 83 million of barrels oil equivalent (MMboe), up from the previous target of 73 to 81 MMboe.

Woodside also advises that all conditions precedent required for the sale of an estimated 14.7% unitised interest in the Browse Development to Japan Australia LNG (MIMI Browse) Pty Ltd have been satisfied, and will finalise the sale during Q3 2012.

Pluto LNG

Woodside 90% (operator): During the first half of 2012, LNG and condensate production commenced. Pluto LNG performed at better than expected rates due to high reliability in the ramp-up phase. First gas entered the processing train on the 22 March 2012 and production began at the end of April 2012. Woodside delivered eight cargoes of LNG in the first half of the year. From start-up to the end of June 2012, Pluto LNG produced 599,564 tonnes of LNG and 513,038 barrels of condensate (100% project).

Over the first two months actual capacity utilisation of 80% was achieved against a forecast of 36%. The forecast was based on actual start-up performance of NWS LNG trains 4 and 5. The increased utilisation resulted in excess production beyond contracted volumes. Consequently, of the eight cargoes delivered during Q2 2012, three cargoes were sold to the spot market at prices higher than the normal contracted pricing formula.

With initial Pluto operational performance at levels higher than anticipated, Woodside now expects this asset to contribute around 20 to 23 MMboe to Woodside’s 2012 production target.

North West Shelf

Woodside 12.5%-50% (operator): The NWS delivered 111 cargoes of LNG on behalf of the NWS joint venture participants, compared to 132 in 1H 2011 (100% project). The reduced number of cargoes is due to the ongoing refurbishment and maintenance program with planned shutdowns being completed in Q2 2012 on the Trunkline Onshore Terminal 1 and LNG Train 4. In addition, production was impacted by North Rankin Redevelopment Project activities and cyclone activity in Q1 2012.

The NWS Oil Redevelopment Project achieved first oil in September 2011. With a full period of production, commissioning of compression systems and the start up of the Okha floating production storage and offloading (FPSO) vessel’s gas system; oil production of 1.4 MMbbls in 1H 2012 was significantly higher than the previous corresponding period (1H 2011: 0.4 MMbbls).

Vincent

Woodside 60% (operator): Several cyclones caused unplanned outages earlier in the year with extended reconnection delays providing opportunity for remediation activities. Nonetheless Vincent production rose to 2.8 MMbbls (1H 2011: 1.5 MMbbls), largely due to the successful start-up of the VNB-H7 infill well in May 2012, coupled with production from two infill wells previously brought online in September 2011. With the start-up of the VNB-H7 infill well, a monthly production record was achieved at Vincent during May.

Following the purchase of the Ngujima-Yin FPSO (December 2011) and the expected completion of handover in September 2012, ongoing integrity and reliability improvements are planned. The acquisition has facilitated plans to extend the field life at Vincent and to further progress the reliability and availability of the vessel. To implement these improvements it is anticipated that the FPSO will be taken offline for up to five months in 1H 2013.

“The sale to MIMI signals a very positive step in the development of Browse, and underscores the value of this world-class resource,” Mr Coleman said.

“Woodside remains focused on the efficient and timely development of our growth projects. We operate in a global industry and we must ensure our cost base remains competitive to maintain the strength of our company. We will continue to exercise this same discipline in pursuing complementary global opportunities.

“With regard to Pluto expansion, the current phase of exploration drilling to support additional trains has concluded without discovering the volume of commercial gas that is required to endorse a final investment decision at this point in time. Therefore a break in the drill program is required to allow a thorough evaluation of the well results and to rebuild the exploration portfolio. Nonetheless, discussions with other resource owners regarding potential Pluto expansion are active and are expected to continue through 2013,” Mr Coleman said.

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LNG World News Staff, August 22, 2012