Woodside Trims Full-Year Output Forecast; Sales Jump

By Angela Macdonald-Smith

Oct. 16 (Bloomberg) -- Woodside Petroleum Ltd., Australia's second-largest oil and gas producer, trimmed a forecast for full-year output as hurricanes curtail output in the U.S. and volumes from new projects miss some analyst estimates.

Production this year may be between 81 million and 84 million barrels of oil equivalent, compared with an earlier forecast of 80 million to 86 million barrels, Perth-based Woodside said today. Third-quarter sales jumped 84 percent as prices rose and fields started up in Australia and the U.S.

Hurricanes Gustav and Ike shut down the Neptune oil project in the Gulf of Mexico twice in the quarter and while production has been restored there, output is still reduced at the Power Play oil venture and was curtailed at gas fields, Woodside said. The company needs to beat the record 21.7 million barrels of oil equivalent produced during the third quarter in the three months ending Dec. 31 to reach its narrowed annual forecast.

``You'd have to see it as a downgrade because the average has been cut,'' Mark Greenwood, an oil and gas analyst at JPMorgan Chase & Co. in Sydney, said of the adjusted forecast. Third-quarter sales were ``a little soft compared with what we were going for,'' he said, citing lower-than-expected output at new oil projects such as Vincent in Australia and Neptune.

Woodside fell A$2.15, or 5.5 percent, to A$37 in Sydney trading, recovering from an earlier low of A$36.21. The decline compared with a 9.1 percent slump in the exchange's benchmark energy index as crude-oil prices fell in New York.

Neptune, Vincent

Sales in the three months ended Sept. 30 surged to A$1.77 billion ($1.2 billion) in the three months ended Sept. 30 on output that rose 23 percent from a year earlier, Woodside said in a statement to the Australian stock exchange. Morgan Stanley said in a report that third-quarter output was ``in line'' with its forecast.

Chief Executive Officer Don Voelte, 55, has started operating new fields in Australia and the U.S., gaining from a 56 percent advance in Asian benchmark crude prices in the quarter from a year earlier, according to data compiled by Bloomberg. The $1.1 billion Neptune oil project in the U.S. began output in July, while the $720 million Vincent venture in Australia pumped its first oil in August.

The gain in sales revenues was ``driven by additional production and higher commodity prices, but partially offset by a stronger Australian dollar,'' Woodside, 34 percent owned by Royal Dutch Shell Plc, said in the statement. Production from the Enfield and Stybarrow oil ventures off Australia's northwest coast was ``strong,'' it said.

Tapis Crude

The price of Tapis crude, an Asian benchmark variety, averaged $123.63 a barrel in the third quarter, up from $79.36 in the same quarter a year earlier, according to Bloomberg data. The Australian dollar averaged 88.88 cents, up from 84.8 cents.

Woodside's sales of pipeline gas in Western Australia were boosted in the quarter by additional demand resulting from the shutdown of Apache Corp.'s Varanus Island gas plant off the northwest coast. LNG output fell from the second quarter because of a scheduled maintenance shutdown at the fourth LNG unit, which has been completed, it said.

Woodside's average price for gas sold into Australia rose to A$3.82 a gigajoule while LNG prices averaged A$602 a metric ton, Morgan Stanley said. The average realized oil price, after hedging, was A$116 a barrel, the firm said.

Full periods of production from Vincent, Neptune and a fifth liquefied natural gas production unit in Karratha will bolster output this quarter, said Roger Martin, a spokesman. Woodside's full-year forecast is ``still within the range'' originally estimated, he said.

Pluto Plant Bids

Construction of the A$12 billion Pluto LNG project was 30 percent complete at the end of the quarter and the first of the LNG processing plant modules are due to arrive from Thailand this quarter, Woodside said. Foster Wheeler Ltd., Technip Chiyoda Fluor and KBR Inc. have submitted proposals for design and engineering work on the expansion of the project.

Woodside said it expects to drill an appraisal well at its Browse gas fields this quarter and to select a preferred location for the project by the year-end. It started drilling an appraisal well at the Sunrise venture in the Timor Sea on Aug. 30 and expects to decide whether to build a floating LNG plant or an onshore plant in Darwin by June, it said.

Woodside said it concluded a transaction with Repsol YPF SA and Anadarko Petroleum Corp. for an exploration venture in Liberia covering three permit areas.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net