Woodside Quarterly Production Slips But Eyes Wheatstone Startup

By Robb M. Stewart Features Dow Jones Newswires

MELBOURNE, Australia--Woodside Petroleum Ltd. (WPL.AU) said its sales volumes and revenue declined over the second quarter as production slipped, due partly to an unplanned outage at its gas-processing plant on Australia's west coast.

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The Australian oil-and-gas producer has flagged waning output this year before production picks up again as new projects begin operating. At the heart of near-term growth is Chevron Corp.'s (CVX) US$34 billion Wheatstone gas-export project, which Woodside on Thursday said was nearing completion on the first production line.

The company said it also was seeking to process natural gas from new sources through its Karratha plant, which it has proposed could act as a hub in Western Australia.

Woodside produced 20.7 million barrels of oil equivalent in the second quarter, a drop of 6.6% year-over-year and down 3.3% on the earlier quarter due to outages at the Karratha plant and planned maintenance at the Pluto liquefied natural gas project in Western Australia.

That led to a 3.1% fall in sales revenue from the first quarter to US$867 million, although compared with a year earlier revenue was up 5.1% as higher prices offset the decline in sales volumes.

In January, Woodside forecast a fall in output to 84 million-90 million barrels in 2017, after lifting it 3% last year. That is because of a decline in oil output and a drop in domestic natural gas as its equity stake in pipeline volumes from the North West Shelf project in Australia's west falls as planned.

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Woodside Chief Executive Peter Coleman said the company had performed to plan, with the Pluto operation achieving a number of production records and the Wheatstone liquefied natural gas project near to completing commissioning of the first line. A second production line at Wheatstone is expected 6-8 months after the first begins operating.

Mr. Coleman added the partners in Woodside's North West Shelf LNG project were now negotiating with other owners of gas resources in the region to pipe their fuel through the Karratha plant, and were targeting preliminary agreements in early 2018.

In Western Australia, Woodside has stakes in the North West Shelf LNG project, which has been operating since 1984 and the Pluto LNG plant that began producing in 2012. It closed a US$2.8 billion deal in 2015 with Apache Corp. (APA) that included a 13% stake in the Wheatstone project, and last year agreed to buy BHP Billiton Ltd.'s (BHP.AU) Scarborough natural-gas assets in the Carnarvon Basin far off Western Australia state for as much as US$350 million.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

July 19, 2017 20:23 ET (00:23 GMT)