PERTH (miningweekly.com) – Oil and gas producer Woodside Petroleum has reported a significant upswing in profits for the full 2016, as the company exceeded its production targets and reduced its operating costs.

Net profit for the 2016 financial year reached $868-million, compared with the $26-million reported for 2015.

Woodside has reported a 28% reduction in unit production costs, which were recorded at $5/bl of oil equivalent during the full year, while portfolio gross margins increased by 16%, to 45%.

The ASX-listed company produced 94.9-million barrels of oil equivalent during the full year, up 3% on the previous financial year, and the second highest production ever. The company also delivered record annual liquefied natural gas (LNG) production of 63.7-million barrels of oil equivalent.

“Our production results demonstrate we are a world-class operator. We achieved our second-highest annual production, record LNG production and reduced gas unit production costs to $3.50/bl of oil equivalent. All while improving safety and environmental performance,” said Woodside CEO Peter Coleman.

“We look forward to the first LNG cargo from Wheatstone in mid-2017, followed by the start-up of Train 2, six to eight months later. Wheatstone LNG is expected to provide more than 13-million barrels of oil equivalent of annual production once fully operational,” Coleman said.

During 2016, Woodside also made two acquisitions in Senegal and Western Australia, at an average cost of around $1.10/bl of oil equivalent. At the Senegal oilfield, the company has started a two-well appraisal campaign to improve its understanding of the reservoir and inform development planning.

“In Myanmar, where we announced back-to-back gas discoveries in 2016, we are preparing to commence a significant drilling programme that includes a minimum of two appraisal and two exploration wells, with scope for an additional three wells. This programme will improve our understanding of the resource base and assist in identifying a path to commerciality.”

Coleman said Woodside is also evaluating opportunities to maximise its investment in the Pluto LNG project, by understanding further capacity enhancements and mid-scale or large-scale expansions.

“In addition, we are planning for the construction of infrastructure that will enable us to supply LNG from Pluto to fuel the local mining and marine sectors. This is part of our broader objective of growing the LNG market.”

Looking ahead, Woodside expected production between 2017 and 2020 to grow by some 15% through existing operations and sanctioned projects.