By David Winning

SYDNEY--Woodside Petroleum Ltd. returned to an annual profit as higher energy prices combined with the reversal of some earlier writedowns of key assets in Australia.

Woodside reported a net profit of US$1.98 billion for the 12 months through December, compared to a loss of US$4.03 billion in 2020 when the company absorbed US$3.92 billion of one-off charges. Directors of the company declared a final dividend of US$1.05 a share, bringing the full-year payout to US$1.35 a share.

Supporting Woodside's fiscal 2021 result was a non-cash impairment reversal of US$582 million detailed by the company on Jan. 20. This comprised a US$319 million reversal related to its Pluto-Scarborough development, and a US$263 million reversal related to its investment in the North West Shelf gas project. Woodside also reduced its onerous contract provision for the Corpus Christi LNG sale and purchase agreement by US$95 million.

Annual underlying earnings, which strip out one-off items, totaled US$1.62 billion.

The 2021 result comes as Woodside prepares to combine with BHP Group Ltd.'s oil-and-gas business, which will see its shareholders own 52% of the combined basis. The Perth-based company has forecast savings from the deal at more than US$400 million, with the deal creating one of the world's 10 largest producers of liquefied natural gas.

Woodside, like other energy producers, has benefited from the sharp upswing in oil prices from pandemic lows. Brent crude--the global oil-price benchmark--rose by 50% to US$77.78 a barrel in 2021 and has lifted another 22% this year as demand for oil outpaces production growth. More recently, investors have worried that tensions between Russia and Ukraine will escalate into war, disrupting energy supplies.

Woodside produced 91.1 million barrels of oil equivalent last year, down from 100.3 million barrels in 2021. However, sales revenue nearly doubled to US$6.79 billion as the average realized price fetched by its oil and gas production rose sharply.

On Thursday, Woodside reaffirmed a target of producing between 92 million and 98 million barrels of oil equivalent in 2022, excluding any benefit from the planned merger with BHP's oil and gas unit.

Its investment expenditure is forecast at US$3.8 billion-US$4.2 billion, excluding the impact of any sales of stakes in the Sangomar project in Senegal and the Scarborough natural-gas development in Australia. It also excludes any benefit from the proposed merger with BHP.


Write to David Winning at david.winning@wsj.com


(END) Dow Jones Newswires

02-16-22 1739ET