MELBOURNE, Australia--Woodside Petroleum Ltd. (WPL.AU) flagged a strong pick-up in annual liquefied natural gas production this year as it braces for stronger oil prices to flow through to the revenue it gets for exporting natural gas.
The Australian oil-and-gas producer on Thursday forecast an improvement in volumes across its operations in 2018, as a jump in LNG output with the recent start up of Chevron Corp.'s (CVX) Wheatstone venture in Western Australia offsetting weaker output of liquids and gas piped to the domestic market.
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The guidance follows a quarter-on-quarter increase in production and sales revenue in the final three months of 2017, although declines against the same quarter the year before that left annual output at the lower end of guidance narrowed by the company in October after a delay in first LNG from the Wheatstone project.
Woodside said it expects production in 2018 to rise to between 85 million and 90 million barrels of oil equivalent, after falling 11% last year to 84.4 million. That is set to be driven by a rise in LNG output to 69 million-71 million barrels from 61.7 million in 2017, the company said.
Woodside's production was expected to recover over the coming years as new projects begin operating. Chevron's US$34 billion Wheatstone venture began producing in October, after previously targeting a mid-year start, and delivered its first cargo to Japanese buyers in November.
The performance in the final quarter of last year was underscored by the launch of Wheatstone as well as record production and 100% reliability at the Pluto LNG operation, Chief Executive Peter Coleman said. Stronger oil prices in the latest quarter are likely to flow through to higher realized LNG prices this quarter, he added.
Fourth-quarter output reached 21.9 million barrels, up 7.9% on the previous quarter but down from 23.8 million a year earlier. Revenue for the quarter rose 2.7% versus the prior three months but was down 6.9% on-year at US$939 million despite stronger prices.
Woodside said the second production line at the Wheatstone venture is set to produce its first LNG in the second quarter, and domestic gas production during the current half.
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 in 2016 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.
In mid-November, Royal Dutch Shell PLC (RDSA) sold its final 13% stake in Woodside for about US$2.7 billion, removing what analysts had viewed as a share overhang. Shell became a shareholder in the 1960s when it partnered with the Australian company on the North West Shelf project, but had been steadily reducing its investment for years.
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(END) Dow Jones Newswires
January 17, 2018 18:18 ET (23:18 GMT)