Woodside Warns of $4.3B Post Tax Hit
Woodside Petroleum Ltd. has warned that it expects to take a post-tax hit of $4.37 billion in its financial results for the first half of the year.
The company outlined that a non-cash, post tax impairment loss of $3.92 billion and a non-cash, post tax onerous contract provision for the Corpus Christi LNG sale and purchase agreement of $447 million are anticipated in its 1H results. The $3.92 billion impairment is comprised of a $2.76 billion hit for oil and gas properties and a $1.16 billion loss for exploration and evaluation assets, Woodside outlined.
Around 80 percent of the oil and gas properties impairment losses are due to the “significant and immediate” reduction in oil and natural gas prices assumed up to 2025, according to Woodside. Additional contributors were said to be increased longer term demand uncertainty impacted by the Covid-19 pandemic and macroeconomic dynamics, and increased risk of higher carbon pricing.
Woodside stated that despite the challenges of the current environment, the fundamentals of its business remain strong. The business also highlighted that its balance sheet strength and liquidity are not materially impacted by the post-tax loss.
“We’ve taken some tough decisions over recent months in response to the Covid-19 pandemic and oversupply in our key markets, but Woodside’s focus remains on cash preservation, capital discipline and maintaining the strength of our balance sheet,” Woodside CEO Peter Coleman said in a company statement.
“This will ensure we can deliver appropriate returns to shareholders and maintain our investment grade credit rating over the long term,” he added.
“Although these are difficult and uncertain times, the medium-term outlook for Woodside’s growth prospects and for our core product, natural gas, is positive,” Coleman continued.
Woodside is the pioneer of the LNG industry in Australia and the largest Australian natural gas producer, according to its website.
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