The rebound in oil – and gas – prices saw a apparent sharp surge Woodside Energy’s (WPL) earnings for the year to December, 2016 as it looks to higher output in the year ahead to maintain the growth momentum.
The improvement in 2016 was made to look stronger than it was because the comparison was with 2015 when net profit was $US26 million, which was after accounting for impairments and other losses of more than $US1.1 billion.
Putting those write-offs to one side, the net profit was $US1.1 billion in 2015, so the net result in 2016 of $US868 million was sharply lower.
That makes the 19% fall in revenue to just over $US4 billion more easily reconciled against the apparent surge in earnings last year.
Perhaps that’s why the shares lost 3 cents yesterday to $A31.41.
The jump in oil prices at the end of 2016 to more than $US50 a barrel after the OPEC production cap deal, came too late to have any real impact, but if sustained until June (when OPEC meets again to discuss it), Woodside should have a banner half year.
The company, our second biggest oil and gas group (after BHP Billiton’s petroleum division) lifted net profit to $US868 million ($A1.1 billion), up sharply on the performance in 2015 and allowed the company to boost in the final dividend to 49 US cents a share from 43 US cents paid a year ago.
But the full payout for the year of 83 US cents a share is well short of 2015’s $US1.09 a share.
The 2015 net profit of just $US26 million reflected the low oil price which bit heavily into revenues and prompted a series of asset write-downs.
In 2016, output rose 3% to 94.9 million barrels of oil equivalent, with production of liquefied natural gas (LNG) running at 63.7 million barrels of oil equivalent, up 9% on the previous record of 2014.
For 2017, LNG output is expected to rise to an estimated 63-66 million barrels of oil equivalent.
On top of the stronger pricing the year ahead also sees Woodside share in the start-up of the giant Wheatstone export LNG project, with other plans such as accessing a greater portion of the output from Pluto to help underwrite a 15% lift to output over the next three years.
Full output at the Gorgon project (near Wheatsone off the northern WA coast) is now not expected until later this year. Gorgon suffered start up problems last year and is taking time to ramp up.
