Low energy prices have caused $US4.4 billion of write-downs for Woodside Petroleum, as the company gave the markets an insight into valuations of major operations today.
Low energy prices have caused $US4.4 billion of write-downs for Woodside Petroleum, as the company gave the markets an insight into valuations of major operations today.
Six oil and gas production assets are expected to be impaired nearly $US2.8 billion after tax the company told the ASX, including the Chevron-operated Wheatstone LNG, where Woodside has a 13 per cent stake.
Wheatstone’s value was clipped nearly $US1 billion (after tax), reducing Woodside’s carrying value for its share to be $US3 billion.
That implies the Wheatstone carrying value across all partners would be about $US23 billion.
Woodside’s 16.7 per cent share of the North West Shelf Venture was impaired $US320 million (after tax), to a carrying value of $US1.9 billion.
That figure provides perhaps the best guide yet as to the potential value of Chevron’s own 16.7 per cent share of the venture, which was announced last month.
Woodside’s exploration properties would also impaired a combined $US1.2 billion after tax, subject to board approval
That included the WA-404-P title, which reportedly includes the Martell, Noblige, Larsen and Larsen Deep gas fields.
The company said those developments were given lower prioritisation than the Scarborough LNG fields.
There was further pain, with a $US447 million onerous contract provision for the sale of Corpus Christi LNG.
“The combined impact of the impairments and the onerous contract provision is a post-tax loss of US$4.37 billion,” the company told markets today.
“Woodside’s balance sheet strength and liquidity are not materially impacted.
“Approximately 80 per cent 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, impacting Woodside’s products in the prevailing economic climate.
“Additional contributors are increased longer term demand uncertainty impacted by the COVID-19 pandemic and macroeconomic dynamics, and increased risk of higher carbon pricing.”
Woodside chief executive Peter Coleman said the company was in a strong position to act on opportunities during uncertainty.
He said the focus remained on capital discipline and cash preservation.
“Woodside’s disciplined approach to financial management gives us options to pursue inorganic growth opportunities as and when they emerge, at the same time supporting our strategy to develop the Scarborough and Browse gas resources located offshore Western Australia through our proposed Burrup Hub when the time is right,” hMr Coleman said.
