IMPAIRMENTS in the range of US$1 billion to US$1.2 billion (pre-tax) have been flagged by oil and gas major Woodside Petroleum in its fourth quarter report with the company citing lower sales revenue a result of the ongoing oil price slump.
Woodside reported a decrease of 1.6 per cent in production volumes when compared with the previous quarter, which the company said is a result of lower volumes from its Balnaves asset.
Sales revenue compared with the previous quarter was 1.7% higher, which Woodside said reflected higher LNG and condensate sales volumes.
However, sales revenue was 37.3% lower when compared with the corresponding period in 2014, highlighting the impact of lower prices across the company’s portfolio.
In 2016 Woodside’s production target range is 86 to 93 million barrels of oil (mmboe), with around 42% coming from Pluto LNG, 25% North West Shelf (NWS) LNG and 14% NWS pipeline natural gas.
Woodside reported output of 92.2 mmboe in 2015, its second highest result on record.
The remaining 18% of production is expected to come from condensate, oil and LPG and the final 1% the Canadian pipeline natural gas.
Estimated investment expenditure in 2016 is expected to be about US$1.96 billion, this excludes post final investment decision (FID) expenditure for Browse LNG.
In December 2015, production at Greater Western Flank Phase 1 project commenced.
In addition, Woodside reported the NWS project participants approved the US$2 billion project to develop gross proved plus probable (2P) reserves of 1.6 trillion cubic feet (tcf) raw gas.
Gas will be taken from the combined Keast, Dockrell, Scultor, Rankin, Lady Nora and Pemberton fields using subsea infrastructure and a pipeline connecting to the Goodwyn A platform.
Woodside expects gas delivery to start in the second half of 2019 from five wells and the remaining three wells commencing production in the first half of 2020.
FID for the company’s Browse floating LNG project is expected in the second half of 2016, with Woodside saying it is delivering cost savings in the front-end engineering and design phase of the project.
Woodside chief executive Peter Coleman said the fourth quarter results are strong.
“The recent significant fall in oil and gas prices has highlighted the quality of our low cost production and approach to balance sheet risk management.”