LNG Journal editor
Woodside, the operator of two Australian liquefaction plants and with a stake in Kitimat LNG project in Canada, said its LNG processing hub on the Burrup Peninsula of Western Australia was taking shape as the Perth-based company recorded lacklustre earnings hit by low prices and operational issues.
Woodside reported full-year net profits of US$343 million. Production was 89.6 million barrels of oil equivalent with operating cashflow at $3.3 billion.
Underlying the net income of $1.06Bln was the deduction of a $720M non-cash impairment for the Kitimat LNG assets in Western Canada.
“We faced numerous challenges both financially and in our operations, but ended the year having achieved significant progress in our growth plans, while strengthening our cashflows and balance sheet,” said Chief Executive Peter Coleman.
The Karratha Gas Plant achieved strong LNG reliability, while completing major maintenance activities as the North West Shelf Project continued with investments in extending the life of the facilities.
“Our vision for an integrated LNG processing hub on the Burrup Peninsula is taking shape as momentum builds towards final investment decisions amidst progress on approvals, engineering work and commercial alignment,” said Coleman.
“In a complex and at times challenging environment, we have worked hard to bring all stakeholders with us as we advance proposals to produce 40 trillion cubic feet of gas resources, including from Scarborough and Browse, and deliver value to our shareholders and communities,” he added.
The CEO said that he was disappointed to have an earnings impairment against the Kitimat LNG asset in Canada.
He said this was a result of continuing significant oversupply in the North American gas markets and increasing costs for carbon that were not foreseen when Woodside initially acquired the asset from Apache Corp. in 2015.
“However, very pleasingly, our team has significantly enhanced the fundamental attributes of the asset, reducing development costs and improving reserve recovery from the drilling program,” he added.
Coleman said the base operations and results were affected by lower prices, a major plant turnaround at Pluto LNG, direct cyclone impact on our processing facilities and accounting and internal tariff changes.
“Our business plan proved to be robust in the face of these challenges, with a gross margin of 44 percent, and company-wide breakeven costs reducing by 27 percent to $22/boe, as we have refocused our spend in preparation for growth,” stated the CEO.