Woodside Sees 74 Percent Fall in Annual Profit

Woodside Energy Group Ltd. reported Tuesday $1.7 billion in net profit for 2023, down 74 percent compared to 2022 as weaker oil and gas prices and higher costs offset increased sales and production.

The Australian integrated energy company focused on liquefied natural gas (LNG) produced a company record of 187.2 million barrels of oil equivalent (MMboe) last year. Sales volumes totaled 201.5 MMboe, 104.5 MMboe of which were LNG. Woodside sold 50.2 MMboe of crude oil and condensate.

“While oil and gas prices eased from 2022’s record highs, robust product demand continued”, board chair Richard Goyder said in a statement.

Goyder expressed confidence demand for gas will be sustained, saying conflicts have complicated the transition to clean energy.

“Reflecting on 2023, conflicts in the Middle East and Europe contributed to another volatile year on global energy markets”, Goyder said. “Coupled with a strong focus on energy security, this further indicates the transition will not be smooth or linear and our strategy needs to be responsive.

“We are confident gas will continue to play a crucial role in the global energy mix, including as backup support for electricity grids powered by renewables.

“We are also working to diversify our portfolio into new energy products and lower carbon services”.

Woodside said it has spent over $335 million toward its $5 billion investment target in “new energy products and lower carbon services” by 2030. While Woodside categorizes this investment as part of emission reduction efforts, the Australian Conservation Foundation (ACF) earlier said the investment still involves fossil fuels.

In an analysis published February 12 the ACF said Woodside’s investment in oil and gas expansion as well as its emissions accounting practice do not align with the company’s commitment to the Paris Agreement. The ACF particularly called on Woodside to add Scope 3 emission targets to its Scope 1 and Scope 2 pathway.

Reporting 2023 results, Woodside said it has now set a conditional target for Scope 3, or emissions from the use of its products, for the $5 billion planned investment. “Woodside has set a complementary Scope 3 emissions abatement target, to indicate the potential abatement impact of these products and services upon customer Scope 1 or 2 emissions”, it said. “This target is to take final investment decisions on new energy products and lower carbon services by 2030, with total abatement capacity of 5 Mtpa CO2e [million tons per annum of carbon dioxide equivalent]”.

In oil and gas Woodside has progressed three major projects that have combined investments of around $20 billion.

Woodside’s Sangomar oil field off Senegal is on track for production mid-2024, it said. The first phase is expected to produce 100,000 barrels per day with total recoverable volumes of 230 million barrels, according to Woodside, which operates the project with an 82 percent stake.

In Australia the Scarborough gas project reached 55 percent completion as of yearend 2023, Woodside said. On February 23 Woodside announced it has entered a definite agreement to sell 15.1 percent of its ownership in the project to Japan’s JERA Co. Inc. for $1.4 billion. Expected to be completed in the second half of 2024, the transaction results in Woodside having a 74.9 percent interest, maintaining operatorship.

Last year it also took a final investment decision on what it calls Mexico’s first deepwater oil development. Woodside holds a 60 percent stake as the operator of the Trion field.

For 2023 Woodside logged $1.7 billion in net income after tax. “In 2023, Woodside paid a record A$5 billion [$3.3 billion] to the Australian Government in tax and royalty payments”, it said.

Woodside recorded 87.5 in basic earnings per share, compared to 140 cents in dividends per share, or 80 percent of underlying net earnings after tax. It has declared 60 cents in final 2023 dividend per ordinary share.

It generated $6 billion in net cash from operating activities last year, while operating free cash flow landed at $560 million. Operating revenue stood at $14 billion. Woodside spent $5.7 billion in capital.

Woodside exited 2023 with $5.1 billion in current assets includingn $1.7 billion in cash and cash equivalents. Current liabilities stood at $5 billion.

For 2024 Woodside expects to produce 185–195 MMboe. It put capital guidance at $5–5.5 billion.

To contact the author, email jov.onsat@rigzone.com