Like most of its industry peers, Woodside has been struggling with low realized prices for its oil and LNG exports following and a coronavirus-induced slump in demand. BP, Royal Dutch Shell and Eni have already announced similar write-downs and impairments on their assets.
Woodside Petroleum reported a 29 percent drop in revenue for the three months ended June 30, with sales for the period fell to US$768 million, from US$1.08 billion in the previous quarter.
Slump in realised LNG and oil prices
Badly hit by an oil and gas price slump, Woodside said its realised LNG prices in the quarter came to US$5.00 per MMBtu compared with US$8.10 MMBtu in the first quarter of 2020 and US$7.10 per MMBtu in the year-ago quarter.
Realised oil prices came to US$31 per barrel compared with US$52 per barrel in the first quarter and US$69 per barrel in the 2019 second quarter.
Australia’s largest oil and gas exporter had taken a risk by making a US$447 million provision for a LNG offtake agreement from Cheniere Energy’s Corpus Christi liquefaction plant in Texas, at a time when several Asian and European buyers have started to cancel cargo as the Covid-19 crisis unfolded.
Expansions projects delayed
Fitch Ratings affirmed Woodside Petroleum long-term Foreign-Currency Issuer Default Rating at 'BBB+' with a Stable Outlook. The agency said the rating “reflects Woodside's strong balance sheet and limited leverage” as well as the company’s decision to reduce expenditure and delaying final investment decisions (FID) on its major expansion projects.
Woodside’s earnings report also gave updates on its main overseas developments, the Sangomar oil project offshore Senegal and the Myanmar natural gas venture, as well as on its delayed Australian West Coast gas hub. The company said it submitted applications for production licences and retention lease renewals for the Burrup Hub project in Western Australia.