As expected the fall in oil and gas prices hit Woodside Petroleum in the first half of the 2009 financial year to June 30 and resulted in a 12% fall in earnings.
Woodside said net profit for the six months to June 30, 2008 was $898 million, down 12% on the prior first half, but struck after production rose 10% to 40.1 million barrels of oil equivalent in the latest period.
Revenue of $2.028 billion was down 21% on the $2.5 billion for the first half of 2009 because the fall in oil and gas prices was greater than the rise in output, the company said in a statement to the ASX yesterday.
"The result was assisted by strong first-half production and favourable exchange rate movements, however weaker commodity prices outweighed these positives and resulted in a lower profit for 1H 2009," Woodside said.
The market liked the result and the shares jumped 3.6% or $1.56 to $44.28.
A rise in the oil price overnight of more than $US2 a barrel also helped, along with the company maintaining 2009’s production guidance.
The cut in dividend was expected. Woodside declared an interim dividend of 55 cents a share fully franked, down from 80 cents for the first half of 2008.
"Additionally a foreign exchange gain of $347 million occurred, largely due to the revaluation of US dollar net liabilities after taking into account the Hedge of Net Investment," the company said.
Woodside said it expected stronger production in the current half, with additional contributions from the Enfield Sliver South block, Corallina-2 sidetrack-2 plus a full second-half production from North West Shelf train 5 and Vincent.
"Consequently Woodside’s 2009 production target of 81 to 86 MMboe is unchanged," the company said.
Woodside said remedial work in May at the North West Shelf increased Train 5’s production capacity to 4.4 million tonnes per annum (mtpa) bringing the plant’s life cycle production capacity to 16.3 mtpa.
"This helped Woodside deliver 118 cargoes of LNG in the first half of 2009 compared to 99 in the first half of 2008."
North Rankin 2 fabrication continues on schedule with the project expected to be completed in 2013.
At Sunrise, Woodside and the other Sunrise joint venture participants are progressing a detailed commercial and technical evaluation of two development concepts – floating LNG and expansion of the Darwin LNG plant – with a location decision anticipated during the current second half.
"During the first half of the year, capital expenditure (including capitalised interest) was $3.2 billion, up 34%, primarily as a result of major construction activities at Pluto.
"Following management initiatives announced in February 2009, expenditure reductions in the order of $500 million have been implemented across the company.
But the recession and resources slump made for a tougher time for mineral sands miner Iluka Resources, which revealed a net loss for the first half of 2009 yesterday.
Iluka posted a $55.8 million loss for the six months to June 30, down from a profit of $15.6 million in the first half of 2008.
Iluka reported revenue of $182.3 million, down 57. %, and omitted interim dividend.
Despite the news, the market had been anticipating the red ink and the lack of a dividend and the shares rose 30 cents to $3.65 yesterday.
Iluka said an improvement it had expected in earnings and cash flow had been "delayed due to the global economic crisis".
The crisis had "brought into play both an extremely challenging sales environment across the mineral sands industry but also some opportunities to accelerate the rate of change in the business," the company said.
"Iluka is well placed to benefit from China’s continuing growth and global economic recovery, with the impending completion and integration of the company’s two new higher margin projects, the conclusion of the current major capital expenditure phase and the company’s continued intention to invest in market development activities."
The company said yesterday in a statement that his result includes a significant non-cash charge of $47.3 million after tax and profit from the sale of Iluka’s interest in Consolidated Rutile Limited ("CRL") in the period of $23.3 million.
"Earnings after tax from continuing operations (excluding the CRL profit on sale) was a loss of $78.9 million (first half 2008 loss: $16.8 million).
"The significant non-cash charge relates to the company’s decision to write-off the fair value ascribed to certain ore bodies, acquired in 1998 and 2002, which, in the context of focusing on high value opportunities in the portfolio, are considered unlikely to be mined.
"The result also includes restructuring and idled capacity costs amounting to $16.1 million, resulting mainly from the reconfiguration of the Western Australian asset base, as a direct result of responding to global economic conditions as well as the company’s transition of its production base to the new assets in the Murray Basin and Eucla Basin.
"Mineral Sands EBITDA increased 53.1 per cent to $66.3 million.
"Total mineral sands sales volumes for the first half of 2009 declined by 51.7 per cent compared with the
