Australia's second-largest oil and gas producer Woodside Petroleum (WPL) fell as much as 7.65% percent today after it cut its 2008 production forecast by as much as 20 percent.
At its investor briefing held today in Sydney, Woodside said it is now expecting 2008 production of between 80-86 million barrels of oil equivalent (boe), down from last year's forecast of between 95 million and 100 million boe.
Woodside said exploration expenditure in 2008 would be A$260 million, down from about $465 million in 2007.
At the presentation the company said that it had failed to meet output targets for the last two years because projects in Australia, Africa and the U.S. were either delayed or had produced less than forecast.
Last month, Woodside cut its 2007 forecast to between 70 and 71 boe down from an earlier estimate of 72 to 78 boe due to the sale of its Legendre oilfields off Western Australia as well as the sale of its Mauritania assets in West Africa.
Woodside sold its business in Mauritania for US$418 million in September because it said it had become difficult to compete in Africa.
This move has thus allowed it to reduce its African output and shift focus to its resources in Australia where it is building a $12 billion Pluto liquefied natural (LNG) gas project which was approved in July.
The company tried to put a positive spin on the situation, saying that despite the disappointing forecast, 2007 output would still be 4 or 5% higher than 2006.
Woodside said the company will be a global player in LNG supply at a time when LNG prices will be underpinned by strong demand.
"I personally think in the long term LNG will trade at higher than oil parity when the environmental benefits of gas are slowly recognized around the world," said Woodside's president of marketing, Reinhardt Matisons.
Mr Matisons also commented that with LNG demand rising and new supply being delayed, Woodside sees a gap in the market up to 2015 and beyond.
CEO Mark Chatterji also said at the presentation that the increase in ourtput would come via full-year output from the company's Otway project in Western Australia, along with the start of several other projects.
Set to come onstream in the fourth quarter are projects including the Neptune oil project in the Gulf of Mexico as well as the Stybarrow oilfield off the coast of Western Australia.
Woodside said that it is positioning itself for growth in the Asia Pacific.
Shares in Woodside fell by $3.80 today, closing down at $48.20.
