Woodside Energy Annual Net Profit Falls 74%, Payout Ratio Steady

By David Winning

SYDNEY--Woodside Energy reported a 74% fall in annual net profit, in large part driven by impairing assets in the U.S. Gulf of Mexico and Australia.

Woodside reported a net profit of US$1.66 billion for the 12 months through December, down from US$6.5 billion in 2022. A lower result was widely anticipated after Woodside said on Feb. 14 that it would take impairment charges totaling around $1.5 billion against its Shenzi oil and natural gas field and the Wheatstone natural-gas project.

Annual underlying earnings, which strip out one-off items, fell 37% to US$3.32 billion. Woodside said its annual revenue fell to US$13.99 billion, from US$16.82 billion in 2022.

Directors of the company declared a final dividend of US$0.60 a share, bringing the full-year payout to US$1.40 a share.

"Underlying profit was strong, enabling us to maintain an 80% dividend payout ratio," said Chief Executive Meg O'Neill.

The annual result is the first by Woodside since the collapse of talks with Santos over a merger that would have created a global gas giant worth some $57 billion. Woodside pursued a deal because it believes that demand for liquefied natural gas will remain strong as governments push for an end to coal use and seek reliable energy supply.

Some analysts said the discussions with Santos highlighted the challenge facing Woodside in growing oil and natural gas production from assets it already owns, especially once projects under construction, including Sangomar in Senegal and Scarborough off the coast of Western Australia, are completed.

In a recent note, Macquarie said that challenged outlook was given added ballast by this month's downgrade of Shenzi's reserves of some 30.2 million barrels of oil equivalent. Macquarie said it expects Woodside will look to make an overseas acquisition this year, probably for a deepwater asset.

Motivation for M&A, illustrated by the Santos talks, comes as Woodside continues to reap the benefits of its transformational purchase of BHP's oil and gas unit. The deal with BHP catapulted Woodside up the ranks of the world's largest energy companies.

Woodside produced 187.2 million barrels of oil equivalent last year, representing a record for the company and at the top end of guidance of 183 million-188 million barrels. Still, realized prices have been weaker. Its average price of $67 per barrel of oil equivalent in the final three months of 2023 was well down on the $98/BOE its output fetched a year earlier.

Woodside has suggested it could grow production again this year, forecasting annual output of between 185 million and 195 million barrels of equivalent. It reaffirmed that guidance on Tuesday.

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

(END) Dow Jones Newswires

February 26, 2024 17:32 ET (22:32 GMT)

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