Woodside Petroleum, Australia's second-largest oil and gas producer, posted a 27 percent fall in second-half profit, but its shares rose more than 3 percent on a reserves upgrade and
expectations it would lift its production target.
Woodside, which produced 70.6 billion barrels of oil equivalent (boe) last year, reiterated its 2008 production forecast of 80-86 million boe, but said it would review that target after it completes the acquisition of Shell's oil assets in the North West Shelf.
"The results are pretty much in line with our expectations. There were no major surprises in terms of costs and the reserve upgrade was positive," said Johan Hedstrom, resource analyst at Bell Potter Securities. "The market is also expecting Woodside to raise its production forecast for 2008."
Woodside, 34 percent-owned by Royal Dutch Shell, posted 2007 net profit before one-offs of A$1.18 billion (US$1.08 billion), a touch below expectations of A$1.19 billion in a poll of 11 analysts by Reuters Estimates.
Higher exploration expenses and a strong Australian dollar outweighed the benefits of higher production and oil prices, Woodside said in a statement.
Based on Reuters calculations, net profit before one-offs for the second half was A$634.6 million, down from A$870.7 million a year ago.
Reported net profit fell 28 percent to A$1.03 billion, from A$1.43 billion a year earlier, due to a loss on the sale of some assets.
Woodside said it added over 108 million boe to its proved and probable (2P) reserves last year due to new bookings from its Pluto liquefied natural gas (LNG) project as well as its acquisition of some Shell oil assets.
Earlier this month, Woodside agreed to buy Shell's oil assets in the North West Shelf project off Western Australia for A$398.5 million.
Woodside said its 2007 sales revenue rose 4 percent to A$4 billion, but exploration expenses rose 24 percent to A$524.1 million.
The company said increased production for 2008 was expected to come from a full year of output at the 80,000 barrel per day (bpd) Stybarrow field off Western Australia and the ramp-up of the Otway gas field off Victoria state.
The start-up of a suite of other projects, including the Neptune field in the Gulf of Mexico, Angel gas field and the fifth-train expansion of North West Shelf's LNG project would also boost output this year.
The 50,000 bpd BHP Billiton-operated Neptune oil project is expected to start production late this quarter. Woodside, which has two other proposed offshore LNG projects in the works, has said it expects little growth in 2009 and 2010 before a jump in output as Pluto comes onstream.