Oil and gas producer Woodside Petroleum Ltd has maintained its production target for calendar 2008, after reporting a 5% rise in revenue for 2007 and leaving the suggestion in the minds of some in the market that the record oil prices seen in the closing half of 2007 passed the company by.
There were some who saw the company as producing a flood of new revenue in the closing months of 2007 but revenue rose to $4.0 billion, from $3.81 billion in 2006, following a 4% rise in production to 70.6 million barrels of oil equivalent (MMboe).
The stronger Australian dollar was obviously a factor limiting the sharp rise in US dollar oil prices when translated to Australian dollars.
Over the December quarter, production was 18 MMboe, up 17.6% from the third quarter and up 19% from the same period in 2006.
Woodside said its fourth quarter production was boosted by the start-up of the Stybarrow oil field, off the Western Australia coast and improved production at Enfield.
The Stybarrow field is expected to produce a maximum of 80,000 barrels a day in early 2008.
The recoverable reserves range between 60 million and 90 million barrels of oil, giving the $680 million project a 10-year lifetime.
And while there was a very solid improvement at Enfield after work in 2005 and 2006 to improve the production, there now seems to be another problem.
The importance of Enfield cannot be underestimated. Its higher production was the difference between the 5% rise in revenue, and a sharp fall.
Enfield earned Woodside $901.1 million in revenue in 2007 compared to just $333.5 million in 2006. This is what Woodside said in yesterday's report about the production performance of Enfield.
"Production of 50,241 bbl per day (Woodside share: 30,144 bbl per day) was higher than the previous quarter of 45,890 bbl per day (Woodside share: 27,534 bbl per day) due to the return to production in late September of ENA-03L.
"The production well ENA-01 was shut-in on 3 January due to sand accumulation in the well stream.
"Laboratory and analytical analysis will determine whether production can resume or if an intervention will be required to mitigate sand production.
"The field is currently producing at about 30,000 bbl per day."
If the field is now producing 30,000 barrels a day (which was WPL's share in 2007) its share must be lower, and the longer that goes on the greater the impact on production, revenue and earnings, even with Stybarrow ramping up to full production.
Overall, Woodside said "A seven per cent increase in sales revenue was achieved through increased production of higher value products and stronger commodity prices, which outweighed an overall decrease in production due to natural field decline and ongoing repairs at Corallina and Mutineer-Exeter"..
The company also said its record full-year production and revenue followed higher production and commodity prices.
"The production target for 2008 is 80 to 86 MMboe," it said.
Increased production is expected to come from a full-year of production at Stybarrow, the first quarter ramp-up of Otway plus the start-up of oil and gas projects at the Neptune, Vincent and Angel fields in the third quarter.
Fourth-quarter sales rose 7% as prices climbed and the impact of the start-up of the Stybarrow field lifted oil output.
Sales rose to $1.17 billion in the three months ended December 31, from $1.1 billion a year earlier.
Woodside cut its output forecast for 2008 by as much as 20% because of slower start-ups of new projects and the sale of fields in Africa (Chinguetti). Output in 2007 was 70.6 million barrels, within a reduced forecast given in October.
