Woodside prepared to weather the storm

Woodside’s production fell in the first quarter of 2015 due to cyclone activity near Pluto.

Woodside’s production fell in the first quarter of 2015 due to cyclone activity near Pluto.

By Courtney Pearson

April 16, 2015

WOODSIDE is planning for several years of lower oil prices, the company’s chairman Michael Chaney told shareholders.

Oil prices have fallen by nearly 60 per cent in the past year, from a high of US$155 per barrel in June 2014 to US$47/bbl in January.

“It is impossible to predict just how long this lower oil price environment will last, but the company is planning on the basis that it could be for several years,” Mr Chaney said.

“Fortunately, Woodside is in a relatively strong position compared to some of its peers because we had already started the hard work of embedding reliability and productivity initiatives across the business at a time when the oil price was high, and we have a strong balance sheet.”

Mr Chaney also warned shareholders that the lower oil prices would bring lower profits and dividends.

Sales revenue for the first quarter of 2015 was 20 per cent lower than the previous quarter, reflecting lower oil prices and volumes, with production falling 6.8 per cent due to cyclone activity.

In February the company entered into an agreement to raise US$1 billion on the US bonds market to fund future activities.

Woodside chief executive and managing director Peter Coleman said it entered the downturn “ahead of the curve”. The company’s projects were well-placed to fill a potential LNG supply shortfall from as early as 2021 if financial investment decisions were not made on a number of major projects in the next few years.

The company is planning to drill six exploration wells this year in Australia and overseas.