Woodside Energy recently reported a significant 74% decrease in its annual net profit, primarily due to impairing assets in the U.S. Gulf of Mexico and Australia.
Financial Overview
-
Net Profit: Woodside recorded a net profit of US$1.66 billion for the 12 months ending December, a sharp decline from US$6.5 billion in 2022.
-
Impairment Charges: The company took impairment charges worth $1.5 billion against its Shenzi oil and natural gas field and the Wheatstone natural gas project.
-
Underlying Earnings: Annual underlying earnings decreased by 37% to US$3.32 billion.
-
Revenue: Woodside’s annual revenue dropped to US$13.99 billion, down from US$16.82 billion in 2022.
Dividend Declaration
- Final Dividend: Directors declared a final dividend of US$0.60 per share, resulting in a full-year payout of US$1.40 per share.
CEO Statement
Chief Executive Meg O’Neill commented, “Underlying profit was strong, enabling us to maintain an 80% dividend payout ratio.”
Merger Update
This annual financial report follows the termination of talks between Woodside and Santos regarding a potential merger. The merger, which would have created a global gas giant valued at $57 billion, fell through. Woodside remains optimistic about the demand for liquefied natural gas as countries shift away from coal and look for dependable energy sources. Woodside’s Growth Challenges
Some analysts have pointed out the challenges that Woodside faces in expanding its oil and natural gas production from its current assets, especially as projects like Sangomar in Senegal and Scarborough off the coast of Western Australia near completion.
Downgrade Impact In a recent report, Macquarie highlighted the tough road ahead for Woodside, emphasizing the downgrade of Shenzi’s reserves by around 30.2 million barrels of oil equivalent. The firm predicts that Woodside might consider an international acquisition this year, potentially targeting a deepwater asset.
Drive for M&A The motivation for potential mergers and acquisitions, as seen in the discussions with Santos, stems from Woodside’s ongoing benefits from its significant purchase of BHP’s oil and gas unit. This deal has propelled Woodside into the ranks of the world’s largest energy players.
Production and Pricing Woodside achieved a milestone by producing 187.2 million barrels of oil equivalent last year, hitting the top end of its guidance range. However, weak realized prices have affected its bottom line, with average prices dropping from $98 per barrel of oil equivalent to $67 in just a year.
Future Outlook Despite pricing challenges, Woodside remains optimistic about its growth prospects. The company aims to increase its annual output to a range of 185-195 million barrels of oil equivalent this year, maintaining this guidance to investors.
As Woodside navigates through these challenges and opportunities, its strategic decisions will be key in shaping its future in the energy sector.