PERTH (miningweekly.com) - Despite reporting record full year production for 2020, oil and gas producer Woodside has announced a net loss after tax of $4.02-billion on the back of non-cash impairments and "onerous" contract provisions.

Woodside on Thursday announced that production for the full year was up 12%, to 100.3-million barrels of oil equivalent, while sales volumes also reached a record 106.8-million barrels of oil equivalent, up 10% on the previous financial year.

However, operating revenues for the year were down 26%, to $23.6-billion, and operating cash flow was down by 44% in the full year, to $1.8-billion.

“Strong production outcomes were delivered even though we weathered a direct hit from Tropical Cyclone Damien in February, followed by operational challenges posed by the pandemic,” said CEO Peter Coleman on Thursday.

“The outstanding performance of our base business in 2020 was reflected in our low unit production cost of $4.8/barrel of oil equivalent and the high reliability of our operated liquefied natural gas (LNG) facilities.

“The decisions to defer the targeted final investment decision on our Scarborough and Pluto Train 2 developments and the review of the value of our assets were appropriate responses to extraordinary market uncertainty caused by the pandemic and lower oil and gas prices.

“Our disciplined balance sheet management has safeguarded Woodside’s financial resilience and positioned us to take advantage of emerging growth opportunities as markets recover. The potential strength of that recovery is already being signalled by the recent increase in oil price and record spot LNG prices achieved in Asia over the northern hemisphere winter.”

Coleman told shareholders that significant milestones were achieved on Woodside’s Australian growth projects over the course of 2020, with the company executing the Pxyis Hub and Julimar-Brunello Phase 2 drilling campaigns, which would develop new gas supplies for Pluto and Wheatstone.

“Scarborough remains firmly on track for a targeted final investment decision in the second half of 2021, with around 50% of our expected equity gas production now under contract. In the second half of the year, we seized the opportunity to optimise the project schedule and increase the offshore capacity of Scarborough by approximately 20% to eight-million tonnes per year of LNG, adding considerable shareholder value to an already world-class development.

“At year-end the North West Shelf project participants took an historic step towards transforming Australia’s first and largest LNG plant into a third-party tolling facility, executing agreements to process gas from Pluto and Waitsia.”

In Senegal, Woodside took final investment decision on the Sangomar offshore oil project early in the year, with Coleman noting that the company’s project team worked tirelessly managing pandemic-related risks and impacts on the supply chain and remained on target for first oil in 2023.

Looking at targets for 2021, Woodside expects to produce between 90-million and 95-million barrels of oil equivalent, of which between 70-million and 72-million barrels will be LNG.

The company has also set an investment expenditure target of between $2.9-billion and $3.2-billion for the full 2021, which will reduce with equity sell downs of Pluto Train 2 and Sangomar.