As expected, Woodside Petroleum (WPL) reported a sharp fall in interim profit and a lower dividend, thanks to weak oil prices which the company believes will continue into 2016.
The company, our second biggest oil and gas group, believes the global oil market is likely to remain in oversupply through the next year.
Woodside’s underlying profit for the six months to June 30 dropped to $US679 million ($A923 million).
Sales fell 28% to $US2.556 billion, thanks to the 50% fall in oil prices and the subsequent fall in liquefied natural gas prices. A 9.7% drop in output in the half helped drag down revenue, compared to 2014.
Woodside chopped interim dividend to US66c a share, from the $US1.11 a year ago as it maintained its 80% payout ratio.
WPL 1Y – Oil slump whacks Woodside
Chief executive Peter Coleman said the drop in profits was "a direct result of the fall in the oil price over the period”.
But he said Woodside’s “resilient business is still set to provide growth”, given low capital commitments, accelerating reductions in costs and existing LNG sales contracts that provide a "solid base" despite the softer market.
Mr Coleman said Woodside had achieved some “significant milestones” in the half, with the acquisition of LNG and oil assets from Apache, which have lifted reserves and added to growth prospects.
He also pointed to advantages from the softer oil services sector, which was benefiting from projects such as Greater Enfield and the Pluto LNG venture, which had completed a maintenance shutdown 10 days ahead of schedule.
Woodside is also working to bring down costs at its Browse floating LNG venture, which it is targeting for a final go-ahead in the second half of next year.
It kept its full year production target unchanged at 86 million-94 million barrels of oil equivalent.
The shares rose 2.5% to $32.86.
