Woodside Narrows Production Range as Wheatstone Starts Up

By Robb M. Stewart Features Dow Jones Newswires

MELBOURNE, Australia--Woodside Petroleum Ltd. (WPL.AU) softened its production target for the year to reflect the delayed start-up of a massive new liquefied natural gas plant in Western Australia, even as its existing Pluto LNG operation continued to set production records.

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The Australian oil-and-gas producer's output declined as expected over the recent quarter, though higher prices and an increase in sales volumes on the preceding three months bolstered third-quarter revenue.

Woodside 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 began producing this month after previously targeting a mid-year start.

The company on Thursday said it now expected 2017 production of between 84 million and 86 million barrels of oil equivalent, narrowing its January guidance of a fall in output to 84 million-90 million. It said the change mainly reflected the timing of the start-up of the Wheatstone project's first production line.

A tanker has now arrived at Wheatstone's marine terminal, and commissioning of the loading system was underway, Woodside said. The start-up of a second production line at the project is expected in the next six to eight months, and when output ramps up it will contribute more than 13 million barrels a year to Woodside's production.

In the third-quarter, Woodside's output slipped to 20.3 million barrels from 20.7 million barrels the quarter before and 25.2 million barrels in the same period a year earlier. Chief Executive Peter Coleman said the Pluto project achieved a number of production records for a second quarter in a row, with output in July 3% higher than the prior volume record set in the same month last year.

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Sales revenue was up 5.4% at US$914 million in the third quarter, although a drop in sales volumes against a year earlier offset higher realized prices for its oil and gas and led to a drop from US$988 million in the same quarter of 2016.

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.

The company said Sherry Duhe had been appointed chief financial officer, joining from Royal Dutch Shell PLC (RDSA) where she had held a number of senior positions, most recently as vice president of finance for unconventionals based in Houston. She is set to begin in the role in December, subject to finalizing her visa, Woodside said.

Former CFO Lawrie Tremaine joined Origin Energy Ltd. (ORG.AU) in June as its finance chief.

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

(END) Dow Jones Newswires

October 18, 2017 19:14 ET (23:14 GMT)