As expected the bottom lines of Woodside Petroleum (WPL) and Santos (STO) both suffered thanks to volatile oil prices in the six months to June (that volatility has continued into the second half of the 2016 year).
The duo are two of the country’s major energy groups, with exposure to LNG in Australia and offshore (PNG in the case of Santos).
The country’s other LNG player, Oil Search, reports its interim results tomorrow. Oil Search and Santos are big shareholders in the PNG LNG project in Papua New Guinea.
Woodside said net profit after tax halved from a year ago to $US340 million in the six months to June 30 on a 22% slump in sales revenue to $US1.807 billion.
The company said both production volume and sales volume rose in the six months to June 30 compared to a year ago (up by 9% and 5%, respectively).
That wasn’t enough to offset a 46% slide in oil prices in the first half of 2016 from the same period of 2015.
Woodside CEO, Peter Coleman, was confident about the outlook into next year. He said in Friday’s statement that “Combined with the low cost of our operations and a continued focus on cost reduction we are in a robust position as oil price forecasts improve in 2017.”
Mr Coleman added that Woodside would add “significant volumes” from its Wheatstone liquefied natural gas project to the company’s portfolio in mid-2017, and further low-cost production from its Greater Enfield project in 2019. Woodside cut its interim dividend to 32 US cents a share from 34 US cents, a not unexpected outcome.
And it was red, not black ink on Santos’s profit line for the six months to June 30 after a $US1.05 billion impairment loss on its Queensland LNG project.
That saw the company report a net loss of $US1.1 billion for the half, against a profit of $US30 million a year earlier.
Excluding the impairments, the company swung to a small underlying loss of $US5 million in the first half from the $US25 million underlying profit a year ago.
Santos’s averaged realised oil prices were down 29% producing a 6% fall in sales revenue. This was despite production volume rising 10% and sales volume increasing 32%. Unlike Woodside, the company won’t pay an interim dividend.
On Thursday, the country’s other major LNG group, Origin Energy revealed a 41% drop in profit for the 12 months to June 30 and dropped its final dividend.
