Woodside Says Full-Year Profit to Be Cut by Charges

By Angela Macdonald-Smith

Jan. 22 (Bloomberg) -- Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, said full-year profit will be cut by about A$430 million ($283 million) of charges for foreign exchange losses, a suspended project and a tax provision.

Net profit was probably between A$1.75 billion ($1.2 billion) and A$1.8 billion in the year ended Dec. 31, the Perth- based company said today in a statement. That’s as much as 24 percent lower than the A$2.3 billion median estimate from 11 analysts, according to data compiled by Bloomberg.

Woodside last week suspended a plan to import liquefied natural gas into California because of weaker market conditions and said today it will take a charge to write down the venture. Foreign exchange losses, which have cut the value of U.S. dollar liabilities, and an impairment charge on U.S. assets will reduce second-half profit by about A$260 million, it said. Fourth- quarter sales rose 40 percent as new projects lifted output.

“It’s a bit of a surprise with the one-offs; there will be some question marks over that,” said Luke Maffei, a resources analyst at Shaw Stockbroking Ltd. in Melbourne. “Production- wise and sales it all looks in line” with expectations, he said.

The oil producer, 34 percent owned by Royal Dutch Shell Plc, dropped as much as 80 cents, or 2.3 percent, to A$33.61 in Sydney trading, lagging behind a decline of as much as 1.4 percent in the Australian Stock exchange’s benchmark energy index. The stock was at A$33.88 at 11:16 a.m. local time.

Condensates Tax

The writedown of the OceanWay LNG venture will contribute to one-time charges that will cut full-year net income by about A$50 million, Woodside said. The company also said it had to make a provision of about A$120 million in its 2008 accounts to cover the government’s removal of an exemption on excise tax on the A$25 billion North West Shelf venture’s condensates output.

Woodside can’t provide further details of the charges, said Roger Martin, a spokesman in Perth.

The reported profit, which is yet to be audited, will still be between 70 percent and 75 percent higher than in 2007, Woodside said. The company is due to report earnings on Feb. 18.

Woodside said it reached an agreement with banks in January for debt of $800 million and is considering further debt, with the expectation that it will raise as much as $1.5 billion this half. The company said in November its capital investment may jump 33 percent in 2009 to A$7.3 billion as spending increases on the construction of the Pluto LNG project in Western Australia.

Sales rose to A$1.64 billion in the three months ended Dec. 31, from A$1.17 billion a year earlier on production that advanced 28 percent to 23.1 million barrels of oil equivalent.

Neptune, Vincent

Chief Executive Officer Don Voelte has started up new fields in Australia and the U.S., helping buoy production. The $1.1 billion Neptune oil project in the U.S. began output in July, while the $720 million Vincent venture in Western Australia pumped its first oil in August, followed by the startup of an expansion of the North West Shelf venture’s LNG output.

“Increased production and higher commodity prices led to record revenues over the last six- and 12-month periods,” Woodside said in the statement, sent to the Australian stock exchange. Second-half sales were boosted by a weaker Australian dollar, it said.

Full-year sales advanced 50 percent to A$5.99 billion on output that rose 15 percent to 81.3 million barrels of oil equivalent, which was at the lower end of the company’s October forecast of 81 million to 84 million barrels.

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