Investors gave a mini-thumbs down for what was a weak quarterly and half-year production and revenue update on Tuesday.
After basking in the reflected glory of Monday’s US LNG project deal and many encouraging reports—both analyst and media—about how the Tellurian play was a bid for a "global LNG powerhouse,” Tuesday brought a reminder that in the end, demand, prices, and costs matter more, especially in the short term—say six months or so.
Woodside's (ASX:WDS) shares were down nearly 4% at the close on Tuesday, finishing at $27.53, following the June quarter report. While the quarterly report was okay, the figures for the first half of 2024 suggested a sharp drop in interim earnings in next month’s half-year report.
The company reported a 2% quarter-on-quarter increase in revenue to $US3.03 billion, which was better than the first quarter.
Quarterly production was down 1% from the March quarter, at 44.4 million barrels of oil equivalent (MMboe) or 488 thousand barrels of oil equivalent per day.
June quarter production was down 2% from the second quarter of last year when the company reported revenue of $US3.084 billion.
Woodside said the fall in the June quarter was due to planned maintenance activities, weather impacts at North West Shelf, and unplanned outages at Wheatstone and Julimar. These slowdowns were partly offset by higher seasonal demand at Bass Strait and first oil at Sangomar.
Encouragingly, Woodside reaffirmed full-year production guidance of 185 to 195 MMboe and capital expenditure of $US5.0 to $US5.5 billion.
In terms of the more important point of the company’s interim profit, six-month production was down 2% at 89.3 MMboe, but revenue tumbled 19% to $US6.002 billion from $US7.41 billion for the first half of 2023.
Woodside reported record statutory and underlying profits for the first half of 2023 at $US1.74 billion and $US1.9 billion. The $US1 billion drop in revenue for the June 2024 half year means there’s no hope of matching that result.
The fall was partly due to the small drop in production, but the big driver was the 15% drop in the company’s average per barrel price to $US63, down from $US74 a year ago. That price drop will drive a hole in interim earnings this year.
The fall in revenue could threaten the interim dividend, which was 80 US cents a share for the first half of 2023.
