Woodside Petroleum Ltd (WPL), Australia’s second-largest oil and gas producer, will write down the value of some assets by as much as $400 million and review its spending plans after the plunge in crude prices.
Output this year should decline to between 84 million barrels of oil equivalent and 91 million barrels, from 95.1 million barrels in 2014, due to a planned shutdown at its Pluto gas project, aging fields and Gulf of Mexico asset sales, the Perth-based company said today in a statement.
Energy companies including Woodside have been hit by the biggest drop in oil since 2008 as the Organization of Petroleum Exporting Countries resisted calls to cut output even as the US pumped at the fastest rate in more than 30 years.
The writedown of between $250 million and $400 million will apply to 2014, Woodside said.
Woodside is weathering oil’s slide better than competitors, its shares falling about 7% in Sydney trading in the past 12 months compared with a 47% decline for Santos Ltd. Adelaide-based Santos last month slashed its spending plans and said it would look at selling assets.
Woodside fell 1.4% to close at A$35.06, while Australia’s benchmark index declined 0.4%.
Woodside and Japan Australia LNG Pty, a venture between Mitsubishi Corp. and Mitsui & Co., terminated an agreement to jointly sell LNG from the proposed Browse venture to Japanese customers.
Woodside continues to talk with regional gas buyers over potential sales from projects including Browse.
The Japanese companies, which reached a deal in 2012 to buy a stake in Browse for $2 billion, withdrew a year ago from an accord to buy LNG from the project.
Woodside last month agreed to pay Apache Corp. $2.75 billion for stakes in two gas projects, while delaying approval for Browse as energy prices tumbled.
Woodside’s 2015 production forecast is lower than expected, Mark Wiseman, a Sydney-based analyst at Goldman Sachs Group Inc., wrote in a note today.
The company’s fourth-quarter sales rose 6.9% to $1.76 billion from $1.65 billion a year earlier.
That exceeded an estimate of $1.73 billion from UBS AG. Production gained 0.9% to 23.4 million barrels of oil equivalent, from 23.2 million barrels.
UBS had expected output of 22.1 million barrels.
A lag between oil and liquefied natural gas prices means Woodside’s gas sales were expected to hold up better than crude in the fourth quarter, according to the UBS report earlier this week.
That’s because LNG prices in the last three months of 2014 were linked to the oil prices of the previous quarter, the analysts wrote.
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