As expected, Woodside Petroleum suffered a sharp fall in 2009 sales because of the slump in world prices (compared to much of 2008).
Woodside said underlying earnings were up slightly, but dividend has been cut from 2009’s high levels.
It joined the likes of Santos, Oil Search, AWE and other resource companies in taking a hit from weak world prices during 2009, and the added factor of the stronger Australian dollar
And despite the impact of the higher Australian dollar, the company actually reported some positive impact overall from currency movements with the stronger Aussie cutting the value of US debt and interest payments.
It wasn’t enough to offset the $1.9 billion all in sales, but it softened the blow.
Woodside said net profit was $1.824 billion for 2009, up 2.1% from the $1.786 billion earned in 2008.
The shares fell 41.09 yesterday to $43.32. Weaker world oil prices didn’t help either.
Directors declared a final dividend of 55 cents per share, steady on 2008.
But that took the full year dividend to $1.10 per share, down from $1.35 in 2008 on capital expanded by last year’s multi-billion dollar fund raising issue.
But the steady 55c a share will be paid on shares issued in the $2.5 billion issue.
That tells us something about the board’s confidence in 2010.
The company said 2009 sales revenue of $4.352 billion stemmed from a record sales volume of 80.7 million barrels of oil equivalent (mmboe).
But these were sold into a weaker market, with the added impact of the higher value of the Australian dollar.
"The impact of lower commodity prices and the revaluation of our US dollar debt in a weaker US dollar environment had opposing but material outcomes on our 2009 financial results," Directors said yesterday in the announcement .
Average WTI (West Texas Intermediate) oil prices in (the US) 2009 approximately US$38 per barrel less than in 2008, revenue was negatively impacted by $1.9 billion while the revaluation of our US denominated debt resulted in a gain of $886 million.
"A record underlying net profit after tax of $1,906 million was achieved after minority interests.
"Significant items relating to asset write-offs, partially offset by a gain on the sale of equity in two exploration permits, reduced the net profit after tax by $82 million, resulting in a reported profit of $1,824 million after minority interests, directors said.
"Woodside says it expects a 2010 production range of 70 mmboe to 75 mmboe, following the divestment of its interest in the Otway Gas Project.
Woodside managing director and chief executive Don Volte says there are signs that economies around the world are starting to expand again, led by resurgence in Asia.
"Oil prices have recovered from their lows in early 2009 and, despite current global economic conditions, the fundamental drivers for medium and long term LNG demand remain strong for both the Asia-Pacific and Atlantic basins," Mr Volte said.
"Recession-moderated forecasts still indicate that LNG demand will double through 2009 to 2020.
"Woodside’s LNG portfolio provides a unique opportunity to deliver outstanding and sustained shareholder wealth.
Woodside said it produced 80.9 mmboe during calendar 2009, down 0.5% from the record result for the previous year, and ‘‘despite all of our oil assets being in natural field decline’’.
Woodside said construction of its Pluto LNG project at Karratha in Western Australia was 83% complete at year’s end.
The company said it was on track for first gas production from Pluto by late this year, with first LNG output to follow in early 2011 ‘‘contingent on a productive industrial relations environment’’.
That’s a reference to recent industrial activity and strike action taken by workers at Pluto regarding accommodation arrangements.
"A risk mitigation plan is in place, if required, to ensure LNG delivery obligations are covered," Woodside said.
Woodside said a final investment decision on a second and third processing ‘train’ at Pluto was due to be given by the end of 2010 and the end of 2011 respectively.
This depended on whether it could access enough gas through exploration success or by other buying it from third parties.
The company said its flagship North West Shelf operations achieved record LNG production following the first full year of output from the fifth train.
Woodside continues to investment huge amounts of money.
Last year it spent a record $5.7 billion in capital and exploration expenditure, this year that is expected to fall to a still large $4.7 billion as spending on Pluto eases.
The company said its oil and gas reserves replacement ratio last year was 146%.
Proved plus probable reserves at the end of 2009 were 1,651 mmboe, which represents a reserves-to-production ratio of 21 years.
