Woodside Petroleum will write down $6.3 billion after slashing the value of its oil and gas assets. Image by Kim Christian/AAP PHOTOS

Energy

Woodside takes $6.3b hit, Q4 revenue drops

2020-07-16 11:25:03

Woodside Petroleum has flagged first-half write downs of $US4.37 billion ($A6.27 billion), as it joined global energy majors that have slashed the value of their assets after a coronavirus-induced slump in oil prices.

The bulk of the impairment – $US3.92 billion ($A5.63 billion) – is related to writing down the value of its oil and gas properties and exploration assets, the company said in a statement late on Tuesday.

Nearly 80 per cent of the impairment losses on its oil and gas properties were because of the drop in crude prices but it also factored in longer term demand uncertainty and an increased risk of higher carbon pricing.

Woodside joins BP, Royal Dutch Shell and Eni in announcing write-downs and impairments on their assets as the slump in fuel demand has led to a dire outlook for energy prices.

The company made a $US447 million provision for an onerous liquefied natural gas supply deal in Corpus Christi, Texas, at a time when several Asian and European buyers have cancelled cargoes.

Australia’s largest listed oil and gas explorer on Wednesday reported a 29 per cent drop in revenue for the three months ended June 30, hurt by weaker realised prices for its oil and gas as demand plunged due to COVID-19 lockdowns.

Its sales revenue for the period fell to $US768 million, from $1.08 billion in the previous quarter.

For the June quarter, the average realised price for Woodside’s products was $US28 per barrel of oil equivalent, down from $US45 per barrel it earned in the quarter ended March 31.

Woodside produced 25.9 million barrels of oil equivalent (mmboe) during the period, up from 24.2 mmboe in the March quarter but lower than the UBS forecast of 26.2 mmboe.

The company also said it was targeting final investment decisions for its Scarborough and Pluto Train 2 projects in the second half of 2021.

In March, Woodside had deferred final investment decisions for Scarborough, co-owned by global miner BHP Group , and its Pluto LNG expansion to 2021. It had earlier targeted go-ahead decisions for the twinned projects in mid-2020.

Woodside will report its first-half fiscal 2020 earnings on August 13.