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April 19, 2024

Woodside Energy’s Revenue Dips in Q1 Due to Lower LNG and Oil Prices, Production Declines

Woodside Energy, Australia’s leading LNG exporter, faced a downturn in revenue during the first quarter of the financial year, primarily attributed to a decline in liquefied natural gas (LNG) and oil prices. The company reported a decrease in revenue compared to the previous quarter, citing lower realised prices for oil and LNG. Additionally, production volumes at key projects experienced a decline, contributing to the overall decrease in performance.

During the first quarter, production from Woodside’s Bass Strait project in Victoria, as well as the Pyrenees and Pluto LNG projects in Western Australia, witnessed a decrease. This decline in production was a significant factor in the company’s financial performance. Consequently, Woodside Energy’s shares experienced a decline of up to 3.1 per cent, reaching their lowest point since May 2022, while the benchmark stock index also saw a 1.5 per cent decrease.

The company’s revenue fell by 12 per cent from the fourth quarter of the previous financial year to $2.97 billion. Although LNG and crude oil prices had seen a rise during the March quarter due to geopolitical tensions, they remained lower compared to the December quarter. Woodside’s quarterly average realised price dropped to $63 per barrel of oil equivalent (boe) from $67 in the prior quarter.

Analysts provided varying perspectives on Woodside’s performance. Adrian Prendergast, an analyst at brokerage Morgans, described the quarter as reasonably performing, with revenue and growth projects remaining on track despite production trailing behind. However, Citi analysts expressed concerns about Woodside’s concentrated portfolio and lack of growth, emphasizing the need for substantial mergers and acquisitions (M&A) to address these issues.

Despite the challenges, Woodside Energy is actively pursuing expansion projects. Commissioning activities are underway at the company’s Sangomar project in Senegal, with maiden oil production anticipated in the middle of 2024. Furthermore, Woodside maintained its full-year production estimates, signaling confidence in its operational capabilities despite the current setbacks.

In addition to focusing on expansion, Woodside Energy is also addressing concerns raised by major shareholders regarding climate risk management. CEO Meg O’Neill acknowledged the challenges of navigating the energy transition and emphasized the importance of feedback from investors and stakeholders in shaping the company’s approach.

In conclusion, Woodside Energy’s first-quarter results reflect the volatility and challenges inherent in the energy sector. While revenue declined due to lower LNG and oil prices, the company remains committed to its expansion projects and addressing climate-related concerns. Moving forward, effective management of these challenges will be crucial for Woodside’s long-term growth and sustainability in a rapidly evolving market landscape.

Jhumpa Lahiri

Jhumpa Lahiri

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