Woodside Cashes in, Production Rises 15% in 2008
Woodside Petroleum has issued its fourth quarter report for the period ended December 31, 2008.
Production records for the quarter, second half and full year:
- Quarterly production was boosted by higher condensate, LNG and oil (largely due to start-up of Angel, the ramp-up of LNG Train 5 and the first full-quarter of Vincent and Neptune production)
Sales revenue records for the second half and full year:
- Increased production and higher commodity prices led to record revenues over the last 6 and 12 month periods. The second-half revenues also had some assistance from a weakening A$-US$ exchange rate, compared to the first half 2008
- Despite the Q4 production being higher than the previous quarter and a favourable movement in the A$-US$ exchange rate, the significant drop in commodity prices during the last quarter of 2008 reduced the Q4 2008 revenue compared to the previous quarter 2008 Profit:
Preliminary analysis indicates FY 2008 Reported NPAT could be in the range of $1.75 billion to $1.80 billion, approximately 70% to 75% higher than that of 2007 (subject to finalisation by company and external auditors)
- In January 2009 Woodside reached agreements to enter into new debt facilities for US$800 million
- Vincent -- first full quarter of production after start-up 28 August
- Train 5 -- first full quarter of production after start-up 31 August
- Angel -- first gas achieved 2 October
- North West Shelf oil -- redevelopment project approved
- North Rankin Redevelopment -- on schedule with North Rankin B sub-structure fabrication in Indonesia
- 2009 production target is 81 to 86 Mmboe
North West Shelf
- LNG Phase V Expansion Project: During 2008, construction of a fifth processing train was completed, adding 4.4 million tonnes of annual LNG processing capacity and bringing total capacity at the Karratha gas plant to 16.3 million tonnes per year. Train 5 had an exceptional startup, ramping up to approximately 75% capacity in 19 days. Currently the train is running smoothly at 80-90% of capacity. To achieve optimal production, some inefficiencies with two cryogenic heat exchangers will be addressed and they will be reconfigured during a planned maintenance shutdown in 2009.
- Angel Project: Development of the Angel field commenced in December 2005 and first gas was produced on October 2, 2008, with costs just under the budgeted $1.6 billion.
- North Rankin Redevelopment Project: North Rankin B substructure fabrication has continued on schedule at the PT McDermott site in Indonesia. Steel continues to be delivered to Hyundai Heavy Industries in Korea, ready for the start of topside steel cutting in Q2 2009.
- Perseus 1C: The Persephone development well was suspended due to instability of the Muderong Shale in the well. The first well in the P1C project was successfully drilled and completed into the Perseus field (PEN-09) and is producing.
Pluto LNG Project
As at the end of Q4 2008, the Pluto LNG Project was 42% complete. The Q4 2008 milestones were all realized.
The milestones included:
- arrival of the first 14 modules and supporting structures for the LNG train from Thailand
- deck stacking for the offshore processing unit commenced in Malaysia
- award of the primary offshore hook-up contract
- successful raising of the roof for the second LNG tank ahead of schedule in October
- completion of the first phase of the Gap Ridge Accommodation Village with more than 1500 beds now available for occupation by construction workers.
The drilling campaign for the five production wells has progressed as planned during the quarter and is expected to be completed during Q3 2009. Project milestones planned for Q1 2009 include the commencement of pipe lay operations and the load-out for shipment of the LNG plant’s main cryogenic heat exchangers.
Pluto Train 2
The Martell exploration well is expected to be drilled in Q1 2009 as part of a wider exploration campaign for Pluto Train 2. Woodside has progressed site preparations for Train 2 with the initial earthworks for the Train 2 pad completed.
Appraisal drilling and technical, environmental and social impact studies on development options are ongoing. With respect to the Kimberley option, the Western Australian Government announced James Price Point on the Dampier Peninsula as the preferred location for an LNG precinct. Woodside, the Western Australian and Commonwealth Governments are seeking a negotiated outcome for land tenure and Indigenous benefits with the Kimberley Land Council and Traditional Owners in the first quarter of 2009.
The Browse Joint Venture aims to select a preferred LNG facility location once these are completed. Development locations in the Kimberley and Pilbara (Karratha) are currently under consideration.
Sub-surface studies continue including analysing information obtained from the Sunrise-3 appraisal well and reprocessed seismic data. Work is progressing on the floating and Darwin LNG development concepts with concept selection anticipated in 2H 2009.
In January 2009, Woodside announced that, in view of current market conditions, it was suspending work and withdrawing applications associated with its proposed natural gas import project for the Los Angeles region.
PERMITS AND LICENSES:
Key changes to permit and license holdings during the quarter are noted below (some transactions may be subject to government and regulatory approval).
Woodside has relinquished its 25.17% interest in WA-297-P (Beagle Basin). Woodside was awarded a 100% interest in exploration permits: WA-415-P, WA-416-P and WA-417-P (offshore Canning Basin).
Gulf of Mexico
Woodside exited the following lease blocks as part of ongoing portfolio management: G 24765 / WC, S 546; G 25550 / HI 51; G 25538 / GA 318; G 25543 / GA 395; G 25577 / HI, E 120; G 25578 / HI, E 128; G 25510 / MI 688; G 25511/ MI 689; G 25512 / BA 366; G 25523 / GA 191; G 25560 / HI 164; G25513 / BA 399; G 27465 / MU 803; G 20795 / GB 563; S/L 16019 / WC 49; S/L 16017 / WC 49; S/L 16186 / SA 3
The following deep-water lease block interests were acquired: G 31535 / MC 978 (33.33%); G 28081 / GC 496 (41.67%); G 28082 / GC 497 (41.67%)
In view of substantially increased market volatility in Q4 2008, Woodside believes it is appropriate to provide an early indication of the 2008 financial results. Woodside currently anticipates a record full-year 2008 Reported Net Profit After Tax when final results are released on 18 February, 2009. This profit is expected to be in the range of $1,750 million to $1,800 million, approximately 70% to 75% higher than that reported for 2007.
The financial results were impacted by weakening commodity price and exchange rate movements in the last six months of 2008. Consequently the underlying result for the second-half of 2008 will be impacted by the net effect of foreign exchange losses, primarily associated with the revaluation of net US dollar liabilities after taking into account the Hedge of Net Investment. The underlying result will also be affected by an impairment charge on US assets. These two impacts are likely to reduce the underlying 2H 2008 after-tax profit by about $260 million.
In addition, the FY 2008 reported profit is expected to be reduced by the net effect of various significant items which could amount to around $50 million (post-tax). This amount includes a charge for the write down of the OceanWay development.
The guidance contained in this Q4 2008 report is preliminary in nature, subject to finalisation within Woodside as well as to review by the company’s external auditors. As such, the actual results for the 12 months to December 31, 2008 may differ from the guidance given in this update.
Operates 3 Offshore Rigs
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