PERTH (miningweekly.com) – Oil and gas major Woodside Energy has seen a significant drop in its full year net profits after tax after recording a $720-million non-cash impairment for the Kitimat liquefied natural gas (LNG) asset, in Canada.
The ASX-listed major on Thursday told shareholders that the net profit after tax for the 2019 financial year was down to $343-million, from the $1.36-billion reported in the previous financial year.
The underlying net profit after tax was $1.06-billion prior to the deduction of the non-cash impairment.
“The impairment of Kitimat reflects increased uncertainty, particularly in the timing of the development of the upstream Liard resource, and follows sustained depressed gas market conditions in Western Canada. We will continue to evaluate development opportunities for this world-class asset,” said CEO Peter Coleman.
He told shareholders that 2019 was a pivotal year for the company, which delivered a solid performance and laid the foundations for the future, while progressing long-term sustainable growth.
“Our underlying full year profit of $1.06-billion and strong free cash flow of $2.1-billion along with our good cost performance, demonstrate the strength of our base business and its ability to fund growth.
“This was a good outcome given the challenges of Tropical Cyclone Veronica in the first quarter and major turnaround activity.”
Coleman noted that at the Pluto LNG project, Woodside safely executed the first major scheduled maintenance turnaround since the startup of the project in 2012, and the facility has gone on to achieve record daily production and production rates in the second half.
The Karratha gas plant also achieved strong LNG reliability, while completing major maintenance activities as the North West Shelf project continued investment in extending the life of the facilities.
“In the first major installment of our growth trajectory, the Sangomar Field Development phase 1, in Senegal, has progressed into execution phase, targeting first oil in 2023. After working throughout 2019 to secure relevant approvals, the joint venture sanctioned the development early in January 2020,” Coleman said.
“We have delivered our near-term growth projects with the completion of the Greater Enfield project on schedule and budget.
“Our vision for an integrated LNG processing hub on the Burrup Peninsula is taking shape as momentum builds towards final investment decisions amidst progress on approvals, engineering work and commercial alignment.
“In a complex and at times challenging environment, we have worked hard to bring all stakeholders with us as we advance proposals to produce 40 Tcf of gas resources, including from Scarborough and Browse, and deliver value to our shareholders and communities.”
Coleman said that the increased value of the Scarborough resource was realised through the application of new technology confirming a 52% increase in the estimated resource volume, unlocking the huge potential of this resource and extending the expected cashflow from the development.
“The revised volume, in conjunction with an agreement on a tolling price for processing Scarborough gas through Pluto LNG, places the development in a strong position ahead of final investment decision targeted for 2020.”