Woodside Petroleum Half Year Result: WPL lift in profit & lower costs help to boost dividend

CommSec

West Australian based energy firm, Woodside Petroleum’s (WPL) half year results were largely in line with expectations. Investors were happy to see the first half dividend coming in higher than expected.

Woodside posted a 49% rise in first-half earnings helped by higher oil prices, as average realised price increased by 10% to $43/ barrel of energy (boe) and oil operations that were discontinued in 2016. The higher per barrel price helped offset a 9% drop in sales volumes on a year on year basis due to lower LNG production. WPL’s Liquid Natural Gas (LNG) prices increased year on year and the company managed to cut costs over the period.

Production costs decreased by $33 million and a lowering its cost of operations helped WPL post a gross margin of 48%, with unit production costs down 6% to US$4.90/boe, with a previous cost of US$5.20/boe the year before. Woodside’s average break-even oil price over the term was US$34 a barrel. Overall exploration and evaluation expense fell by $128 million.

Production over the year totalled 42.2 million metric barrels of oil equivalent (MMboe) with WPL’s Pluto LNG project achieving record daily production rates.

The Wheatstone LNG project has made significant progress, with LNG Train 1 close to first production. The projects expected commitment will underpin WPL’s targeted production growth of approximately 15% from 2017 to 2020. The Greater Enfield project was 28% complete at the end of the period and on schedule. The Woodside and Browse Joint Venture is still in the concept stage with the development concept still expected to be signed off in the second half of this year.

CEO Peter Coleman, said he expects greater emerging market demand, especially from Asia, to help reduce oversupply of LNG at present, explaining that the possible new LNG supply from Qatar is expected to be taken by Pakistan while any supply displacement from other supplies will compete directly with Woodside.

Woodside will pay out a US$0.49 first half dividend on 21 September 2017 with the record date on 25 August 2017.

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