WOODSIDE chief executive Peter Coleman has attributed a rise in 2014 net profit to US$2.41 billion after tax to the flexibility of the company’s growth portfolio.
The result, up 38 per cent on the 2013 full year profit, was the second highest in the company’s history and second only to the 2012 result, which Woodside said was supplemented by the sale of a stake in the Browse project.
Speaking to media following the release of the results, Mr Coleman said Woodside’s business plan had been revised to reflect an extended low oil price environment.
This had led to the company to reduce its 2015 operating expenditure by about 15% and its capital expenditure by about 20%, relative to its original plan.
“What that really means is, we’ll continue our Australian activities,” he said.
“Most of that’s come out of the international portfolio where we had more flexibility. We’re continuing to drill in Australia and we’re still on the Outer Canning wells in that commitment program.”
Exploration expenses would make up roughly US$500 million, the company said.
Mr Coleman said Woodside did not have a hard target for reductions in job numbers, but added that the company was looking for a similar outcome in 2015 as it was in 2014, when 320 positions in the company were eliminated.
Deutsche Bank analysts said that Woodside was doing the right things to positon itself to withstand a weaker oil price.
“Improved asset efficiency, reduced operating expenses (albeit aided by a declining Australian dollar), balance sheet strength and management discipline should all stand the company in good stead in the current macro environment,” the Bank said.
While the Browse joint venture continued to target Front End Engineering and Design by mid-2015, and a final investment decision by 2016, Deutsche Bank said the project remained at risk of further delay given the challenges posed by recent oil price movements.
But Mr Coleman said the company was in talks with floating LNG developers in a bid to ensure that the cost base would reflect the pricing outlook over the next four to five years as it looked to enter FEED.
The company recorded a production level of 95.1 million barrels of oil equivalent, driven by Pluto and the North West Shelf project – up 9% on 2013 levels.
But Woodside reaffirmed its 2015 production target of between 84 million and 91 million barrels of oil equivalent – excluding any contributions from Apache’s Wheatstone, Balnaves and Kitimat interests.
At the same time, the company had ceased work on trying to find a development concept for the Sunrise LNG project, in waters located between Australia and East Timor, which would satisfy all parties.
The Australian and East Timorese governments have been locked in a stalemate on regulatory and fiscal regimes governing the area, as well as a broader debate about the preferred development options for the project.
“Where we are today is, we’re at a point where we’ve pretty well exhausted the activities that we can progress at this time,” he said.
“At this point in time we don’t know what the regulatory framework is, we don’t know what the fiscal framework will be, so we can’t evaluate this project and we can’t put it up to buyers as to being a viable project that they would be interested in.”
The company was more optimistic about future investments, with Mr Coleman saying assets that might appeal to Woodside could become free in the near future.
“I think for us market perturbations are interesting and they provide opportunities but you can’t base a business plan off that, to be quite honest,” he said.
“Very importantly, we’ve not committed significant capital to any major projects at this point in time. So Woodside’s in an envious position in being able to make choices with respect to where we allocate our capital over the next two to three years.”