Australian LNG group Woodside sees first-half profits drop 39%

By JAMES PATON
Bloomberg

Woodside Petroleum, Australia’s second-largest oil and gas producer, posted a 39% decline in first-half profit following the slide in crude prices.

Net income fell to $679 million from $1.1 billion a year earlier, Perth-based Woodside said Wednesday in a statement.

That exceeded the $649 million median estimate of four analysts surveyed by Bloomberg News.

Crude prices that have dropped by about half over the past year have forced Woodside and other producers to slash costs.

Woodside told investors in May that it’s targeting A$680 million ($499 million) of cost savings by next year and had let about 600 people go since the start of 2014.

Woodside faced a fall in liquefied natural gas (LNG) prices in Asia as new supply combined with weakened demand in key markets such as Japan, Korea and China.

The operator of the Pluto and North West Shelf LNG projects in Australia aims to make a decision on whether to go ahead with its Browse project in the second half of 2016, it reiterated Wednesday.

Interest in Browse among potential customers has “gone up quite significantly” since the project entered the key engineering and design phase, CEO Peter Coleman said.

LNG prices are expected to be little changed over the next 18 months, he said. “We think it’s a short- to medium-term issue that will get worked through,” Coleman said.

Spot LNG cargoes in Northeast Asia were selling at $8.15/MMBtu earlier this month, down about 24% in the last year, according to data from New York-based Energy Intelligence Group.

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