Woodside Posts 98% Surge in Full-Year Profit

Oil Refining’s Fortunes Rise
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Woodside Petroleum, Australia's biggest oil and gas company, beat analyst expectations with a record full-year net profit on Wednesday after its Pluto liquefied natural gas (LNG) plant boosted production.

Woodside maintained its production target for 2013 of 88 to 94 million barrels of oil equivalent, but lifted its investment expenditure forecast to $2.6 billion due to anticipated costs relating to opportunities in Israel and Myanmar.

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Production increased 31 percent to 4.9 million barrels of oil equivalent in 2012, while sales revenue lifted 30 percent, bolstered by stronger than expected output from its A$15 billion ($15.5 billion) Pluto LNG plant which came online in May.

Profit after tax rose to $2.983 million in 2012 from $1.51 billion in the previous year, compared with an analyst consensus forecast of $2.037 billion.

The LNG market has tightened sharply following the Fukushima nuclear disaster which has stoked Japan's demand for gas, with global LNG demand growth expected to average around 4 percent a year to 2025.

But several projects, including Woodside's Pluto and Browse plants and Santos' Gladstone, suffered setbacks and cost blowouts, raising concerns they may struggle to find gas that has already been pre-sold to Asian customers.

Woodside said on Wednesday the outcomes for recent price negotiations in the Asia Pacific for existing supplies was robust, with the long-term oil-linked price relatively stable with average pricing indexed to 85-90 percent of oil price movements.

The company had said in August it would shelve plans to expand the project, but on Wednesday said it was continuing to pursue expansion opportunities.

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Woodside's shares rose 1.6 percent to A$38.68 ($40.03), the highest since August 2011, in early trade on Wednesday.

Offshore Opportunities

Woodside has been trying to build its global presence to offset the jump in Australian project costs.

The company said it was hoping to finalise agreements to progress exploration for its 30 percent stake in the huge Leviathan natural gas field in Israel, and in Myanmar where it has agreed to explore for oil and gas with South Korea's Daewoo International.

It added that it would hold further talks with the East Timor government this year over how to develop substantial offshore gas reserves to Australia's north. Woodside's Sunrise venture wants to employ a floating LNG plant, while East Timor wants the plant built onshore to create more jobs.

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Woodside also said it was "actively engaged" with a broad base of customers to secure foundation sales for its Browse LNG plant at James Price Point in northwestern Australia and expected to be in a position to consider a final investment decision by mid-2013.

Woodside said its revised forecast expenditure for this year did not include potential costs resulting from a decision on Browse, which has drawn opposition from some Aboriginal and environmental groups.