Woodside profit sinks on lower prices for fossil fuel exports
By Nick Toscano and Peter Milne
Woodside Energy, the largest Australian oil and gas producer, has posted a steep fall in full-year profit as global fossil fuel prices retreated from record highs.
Prices for one-off cargoes of liquefied natural gas (LNG) in Asia soared to record levels in 2022 after Russia’s invasion of Ukraine deepened a historic energy crisis and unleashed a global scramble for spare shipments of the super-chilled fuel.
The Woodside-operated North West Shelf Project Karratha Gas Plant on Burrup Peninsula near Dampier in Western Australia.Credit: Krystle Wright
However, prices for oil and gas began sinking in 2023 as the supply crunch eased and China’s weaker-than-expected economic recovery weighed on energy demand.
“Compared with 2022, [the] 2023 full-year financial statements primarily reflected lower prices across all commodities, partly offset by higher sales volumes,” Woodside said.
For the 12 months to December 31, the Perth-based energy producer earned an average of $US68.6 per barrel of oil and gas it sold, compared with $US98.40 a year ago, it said, despite sales volumes growing 19 per cent.
Woodside reported a bottom-line profit of $US1.6 billion ($2.5 billion) for 2023 – just a quarter of what it earned the prior year.
The result was dragged down by a 30 per cent fall in prices of its oil and gas, and write-downs at its Shenzi project in the Gulf of Mexico and the Wheatstone LNG project in Western Australia.
Stripping out one-off costs, Woodside’s underlying earnings were 37 per cent lower beating market analysts’ forecasts. The board announced a better-than-expected final dividend of US60¢ are share, down from the 144¢ declared for 2022.
Woodside chief executive Meg O’Neill on Tuesday pointed out that the company had achieved record production in 2023 and 98 per cent reliability from its key gas export facilities.
“While realised prices were down year-on-year to levels closer to historic norms, annual sales volume topped 200 million barrels of oil equivalent, generating revenue of almost $US14 billion,” she said.
Meg O’Neill has led Woodside for close to three years.Credit: Oscar Coleman
UBS analyst Tom Allen said a core focus for investors would be Woodside’s plans for “de-risking” its $16.5 billion Scarborough LNG project off WA from soft global gas prices, including through striking more binding sales agreements.
Last week, Woodside struck a deal to sell a 15 per cent stake in its Scarborough field to Japanese utility giant JERA for an estimated $US1.4 billion ($2.1 billion), as well as a non-binding, 10-year deal for the sale and purchase of six LNG cargoes to supply energy to Japanese customers from 2026.
LNG – natural gas that has been cooled to minus 160 degrees, turned into a liquid and transported on specialised ships – has become one of Australia’s top exports over the past decade and a major money-maker, accounting for a $92 billion in export revenue last year alone.
However, the LNG industry’s expansion has also attracted environmental concerns because it is a major source of greenhouse gas emissions, including methane, which scientists warn must be urgently reduced to combat the worst impacts of global warming.
Woodside’s Scarborough project, expected to begin production in 2026, has been a particular focus for climate campaigners in Australia who are fighting to halt the expansion of new fossil fuel projects, and has been embroiled in legal challenges.
Woodside shares were 1.3 per cent higher in early trade.
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