Woodside Petroleum has trimmed its earnings guidance by more than $300 million, thanks to foreign exchange losses and asset impairment charges.
In its December quarter and 2008 production statement, the company said that net earnings will be in the range of $1.75 billion and $1.8 billion for the year ended December 31.
But that will still be vastly higher than the 2007 result: Woodside said the increase would be of the order of 70% to 75%.
Revenue jumped by almost $2 billion, or 50% to nearly $6 billion.
But the record slump in world oil prices in the final months of 2008 had a noticeable impact.
"Increased production and higher commodity prices led to record revenues over the last 6 and 12 month periods.
The second-half revenues also had some assistance from a weakening A$-US$ exchange rate, compared to the first half 2008
"Despite the Q4 production being higher than the previous quarter and a favourable movement in the A$-US$ exchange rate, the significant drop in commodity prices during the last quarter of 2008 reduced the Q4 2008 revenue compared to the previous quarter," Woodside said in its statement.
That drop was actually 7% and no doubt worried some analysts who have been looking for signs of falling returns from the lower price being greater than the boost from the weaker Australian dollar. Sales were up 1% in volume terms in the December quarter on September.
The company said the foreign exchange losses and an impairment charge on US assets will reduce underlying profit by about $260 million, while one-time charges will also cut net income by about $50 million.
Woodside last week announced the suspension its plan to import liquefied natural gas into California because of weaker market conditions. It said in yesterday’s statement that the move will see it take a charge for a write-down of the venture.
The company also said that it has had to make a provision in its 2008 accounts of about $120 million to cover new charges related to an excise tax on condensates production from the North West Shelf venture. That tax was changed in the 2009 budget last May.
The company’s shares traded through a $1.30 range yesterday as they firstly responded to the rise in oil prices overnight, and then the news in the ASX report. They were up, down, but ended at $34.76, up 35 cents at the close.
Fourth-quarter sales revenue rose 40% (from the same quarter of 2007) as new projects boosted output. Sales rose to $1.64 billion in the three months ended December 31, from $1.17 billion a year earlier (and $1.77 billion in the September quarter).
The $US1.1 billion Neptune oil project in the U.S. began output in July, while the Vincent venture in Western Australia pumped its first oil in August, followed by the startup of an expansion of the North West Shelf venture’s gas output.
“Increased production and higher commodity prices led to record revenues over the last six- and 12-month periods,” Woodside said
Fourth-quarter production rose 28% from a year earlier to 23.1 million barrels of oil equivalent.
Oil output that rose 15% to 81.3 million barrels of oil equivalent, which was at the lower end of the company’s October forecast of 81 to 84 million barrels.
