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Oil price slump slashes Woodside's half-year profit

Nicholas Grove  |  19 Aug 2016Text size  Decrease  Increase  |  

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Woodside Petroleum (ASX: WPL) has seen its net profit for the half year ended 30 June 2016 halved on the same period in the previous year to US$340 million, after benchmark oil prices slumped 46 per cent over the same period.

Production of 45.9 million barrels of oil equivalent (mmboe) was up 9 per cent on the first half of 2015, while operating revenue for the period was US$1.9 billion.

Half-year unit production costs were 38 per cent lower than the first half of fiscal 2015, the company said in a statement to the ASX.

Cash flow from operating activities rose 4 per cent to US$1.1 billion, while positive free cash flow stood at US$162 million, it said.

Woodside declared an interim dividend of 34 cents a share, down from 66 cents in the previous corresponding half.

The dividend will be paid on 30 September 2016 to shareholders on record as of 30 August 2016

The company also suspended its dividend reinvestment plan.

Despite the fall in profit, Woodside CEO Peter Coleman said the company was in a "strong financial position" and continued to prioritise value growth while delivering peer-leading returns.

"Our operational performance is world-class, with LNG production consistently exceeding original design capacity," he said.

"Combined with the low cost of our operations and a continued focus on cost reduction we are in a robust position as oil price forecasts improve into 2017.

"Moving forward, we will add significant production volumes from Wheatstone LNG to our portfolio in mid-2017 and further low-cost production from the Greater Enfield Project in 2019."

Coleman said work continues on North West Shelf plateau extension projects, while Woodside also sees near-term opportunities to commercialise a discovery in Senegal.

"In Myanmar we made back-to-back discoveries, increasing our contingent resources by 83 mmboe," he said.

"Both discoveries are located close to existing infrastructure and markets and we are working through development options with significant appraisal work scheduled for next year.

"We have also been successful in rebalancing our global exploration portfolio and plan to drill a series of wells in 2017."

Woodside said its liquidity buffer of US$2.0 billion provides funds for additional growth and "protects against future volatility".

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Nicholas Grove is a Morningstar journalist.

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