By David Winning
SYDNEY--Woodside Petroleum Ltd. said its annual profit fell by 75%, largely due to a US$720 million impairment charge against its Kitimat gas assets in Canada that was foreshadowed earlier this week.
Australia's largest independent oil and gas producer said its net profit dropped to US$343 million for the 12 months through December from US$1.36 billion in 2018. Annual revenue from its activities declined by 7.0% to US$4.87 billion.
Directors of Woodside declared a final dividend of US$0.55 a share, lower than the payout of US$0.91 per share a year earlier.
When signaling the impairment charge on Tuesday, Woodside said Kitimat remained a world-class project. Still, the writedown reflected increased uncertainty, particularly in the timing of the development of the upstream Liard resource, following sustained depressed conditions in western Canada's gas market.
Woodside's production fell by 2% last year to 89.6 million barrels of oil equivalent after a planned maintenance turnaround at the Pluto LNG operation in Western Australia was lengthened by technical problems. The company was also affected by cyclones disrupting Australian production in its fiscal first half and by its Ngujima-Yin floating production storage and offloading facility in Western Australia being taken offline for refurbishment.
Still, volumes picked up in the final quarter on the back of a strong performance from its Greater Enfield project offshore Western Australia. Woodside is targeting improved output of between 97 million and 103 million barrels in 2020 in anticipation of tightening supplies across the industry and continued demand growth from countries including China.
"This was a good outcome given the challenges of Tropical Cyclone Veronica in the first quarter and major turnaround activity," said Chief Executive Peter Coleman.
The bulk of Woodside's earnings are driven by LNG operations in Western Australia where the company runs the North West Shelf project that has been producing since 1984 and the Pluto LNG plant that began producing in 2012. Woodside also has a stake in Chevron Corp.'s Wheatstone LNG venture in Western Australia, which began exporting in 2017 and started shipping volumes from a second production line in mid-2018.
Woodside is advancing two more liquefied natural gas projects--Scarborough and Browse--with the potential to drive production growth in future years. The Perth-based company is building toward a final investment call on Scarborough after last year's increase to the resource volume there and a deal with partner BHP Group Ltd. on pricing processing gas from the field at the Pluto operation. Browse is seen as a longer-dated option.
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