When Woodside Petroleum CEO Peter Coleman was named to the job in May 2011, the price of US West Texas Intermediate crude (one of the two global marker crudes) was a smidge over $US100 a barrel and the Woodside share price was around $45.
Yesterday oil prices were around $US45 a barrel and the Woodies share price had almost halved to $23.11 – illustrating the extent of the slump in prices since 2011.
And that includes the extraordinary negative $US37 a barrel reached in the crazy trading period in late April on an enormous supply overhang swamped markets.
Since then it has been downhill, with the slump accelerating after the price plunge in the back half of 2014 kicking off the great re-rating of the entire energy sector.
Blame the rise of concerns about global warming, renewables, and the enormous fall in prices of many green services and technologies, including electric cars, and this year the pandemic and lockdowns which have destabilised energy markets even more.
When Mr. Coleman departs next year he will have spent more than 10 years leading the country’s largest independent oil and gas producer.
Mr. Coleman notified Woodside’s board of directors on Tuesday that the second half of 2021 was the right time for him to stand down and for the company’s leadership to transition.
Mr. Coleman said Woodside was well-positioned for the future after taking difficult decisions to protect its operations and growth plans amid what he has previously described as the worst oil and gas market conditions in his 40-year career.
“I am extremely proud of how our Woodside team has managed the uncertainty and is on track to deliver record production and exceptional safety performance,” Mr. Coleman said in a statement from the company.
The coronavirus and various restrictions on vehicle use, closed borders which have damaged jet fuel demand and others, have slammed energy demand lower, triggered a slide in production as companies and countries have tried to rebalance supply and demand.
Oil supply has fallen from more than 1010 million barrels a day at the start of 2020 – pre-COVID, to a range of 92 to 94 million barrels a day now.
Many energy analysts don’t see production and demand back in balance before 2024-25.
Next year may see a small uptick if the current waves of new infections in the US, Europe and parts of Asia (Japan and South Korea) are contained. If they aren’t and there’s a new wave in late winter or the early northern Spring, then oil demand could very well remain as recessed as many economies will be through 2021.
Certainly, demand, prices, and production will not regain 2019 levels any time soon (and certainly without some sort of cap deal to limit production, as there is now).
The border lockdowns have prevented jet fuel demand from recovering and demand for petrol also remains weak – US Thanksgiving petrol prices were the lowest in 20 years and US foot traffic on Black Friday and through the weekend was only 52% of past-year figures.
Mr. Coleman said retiring in 2021 would ensure continuity to support Woodside’s investment decision in the $17 billion Scarborough project off the WA coast – next year – while ensuring the company’s international projects in Senegal and Myanmar maintained their “positive momentum”.
“I will miss being part of the Woodside team,” Mr. Coleman said. “The company has been reset with a strong platform for the future, with the next stage of our journey ready for a new CEO to take the required ownership of Woodside’s significant growth projects.”
Woodside on Tuesday told investors it had commenced an internal and external search for the company’s next CEO.
The company’s chairman, Richard Goyder, said Mr. Coleman had been an outstanding CEO. “His focus on safety, base business and operational excellence have crafted a resilient and future-focused organisation,” he said.
“His commitment to prudent capital management and maintaining a strong balance sheet and liquidity has complemented his track-record for operational excellence.”
