Woodside Energy’s underlying net profit slipped 14 per cent in the first half of 2024 to $2.36 billion, as lower prices for its oil and gas products weighed heavily.
Woodside Energy’s underlying net profit slipped 14 per cent in the first half of 2024 to $2.36 billion, as lower prices for its oil and gas products weighed heavily.
Lower average realised prices shaved US$1 billion ($1.5 billion) off the company’s post-tax net profit in the first half of 2024 compared with the same period a year earlier.
Woodside’s operating revenue fell by 19 per cent in the first half, to almost US$6 billion, with the company focused on reducing its production costs in an inflationary environment.
This focus delivered success. Unit production costs dipped from US$8.80 per barrel of oil equivalent in the first half of 2023 to US$8.30/boe in the half just gone, despite the pressures of inflation.
Production globally fell two per cent compared with the corresponding half last year. Woodside said it remained on track to meet its full-year guidance.
In Western Australia, the company produced 15 per cent more gas from its Pluto facility compared with the first half of 2023 – at 26.9 million barrels of oil equivalent.
The ageing North West Shelf project turned out 14 per cent less gas, at 19.6MMboe, a result attributed to planned maintenance and natural field decline.
Woodside plans to take one LNG train offline at the North West Shelf project at some point later this year, or in early 2025, in a move to manage costs and emissions.
Its Scarborough project is now 67 per cent complete and on track for first LNG in 2026.
The company has invested heavily in US prospects since the end of the half, while Browse field remains in the approvals process, with Woodside noting a carbon capture and storage solution had been incorporated into its offshore infrastructure plan at the proposed development.
Woodside chief executive Meg O’Neill took a veiled swipe at regulators around Browse, which has a price tag of $12 billion but is yet to get the financial go-ahead as Woodside seeks approvals to get going.
Ms O’Neill noted the project had been subject to media speculation around its environmental approvals in recent weeks, and backed it in as an important solution to gas security in WA into the 2030s.
“Browse, as you know, we’ve been working on environmental approvals for six years and we continue to seek them,” she said.
“We’re not going to make any significant capital investments until we have confidence in those approvals.”
Ms O’Neill said the Greater Sunrise project off Timor Leste was in a similar position to Browse – largely down to the geopolitical complexities of a field which could be tapped from two jurisdictions.
“Sunrise has a lot of complexities, straddling the border of both Australia and Timor Leste,” she said.
“Trying to get all of the governing documents negotiated has complexities, and then getting to the point where we’ve got an investable project – we’ve got a bit of work to do.
“There’s no priority. They’re two horses that want to get into the race, but they’re both in the training track right now.”
Woodside’s most recent investment moves have been focused on the US, where it has entered agreements to acquire the undeveloped Driftwood LNG project in Louisiana and OCI Global’s clean ammonia project in Texas.
Ms O’Neill said the Sangomar project off Senegal and its investment in Trion, currently 10 per cent complete, showed it was committed to increasing its portfolio output alongside the acquisitions.
Woodside is exploring opportunities to bring in partners at Driftwood.
Woodside shares were up 3.9 per cent to $27.42 per share.
Balance will be key: S&P
Responding to Woodside's results, S&P Global Ratings flagged the company's ability to balance its growth projects with tight financial policy objectives over the years ahead.
S&P expects Woodside to continue along a path of higher capital expenditure in the years ahead, and forecast capex of between US$5 billion and US$5.5 billion in 2025.
"Capex at these levels coupled with Woodside maintaining its distributions at the top end of its policy range of 50 per cent to 80 per cent of net profit after tax will cause a material decline in headroom," S&P wrote.
"This exposes the company to risks stemming from falls in oil and gas prices or cost overruns at its growth projects."
Woodside delivered a dividend at the higher end of its target range for the half year.
S&P said it expected the cashflow from Scarborough to help alleviate some of the pressure on the company's balance sheet, and that Woodside had a strong liquidity position.
It maintained its current credit rating of BBB+ for the company.
