Australian oil and gas giant to review spending, write down assets after oil plunge

SYDNEY (BLOOMBERG) - Woodside Petroleum, Australia's second-largest oil and gas producer, will write down the value of some assets by as much as US$400 million (S$533.62 million) and is reviewing its spending plans after crude prices plunged.

Output this year should decline to between 84 million barrels of oil equivalent and 91 million barrels, from 95.1 million barrels in 2014, due to a planned shutdown at its Pluto gas project, aging fields and Gulf of Mexico asset sales, the Perth-based company said on Jan 15 in a statement.

Oil companies including Woodside have been hit by the biggest drop in oil since 2008 as the Organisation of Petroleum Exporting Countries resisted calls to cut output even as the US pumped at the fastest rate in more than 30 years. The writedown of between US$250 million and $400 million will apply to US2014, Woodside said.

At the same time, Woodside's fourth-quarter sales rose 6.9 per cent to US$1.76 billion from US$1.65 billion a year earlier. That exceeded an estimate of US$1.73 billion from UBS. Production gained 0.9 per cent to 23.4 million barrels of oil equivalent, from 23.2 million barrels. UBS had expected output of 22.1 million barrels.

A lag between oil and liquefied natural gas prices means Woodside's sales were expected to hold up better than crude in the fourth quarter, according to the UBS report earlier this week. LNG prices in the last three months of 2014 were linked to oil prices in the previous quarter, the analysts wrote.

Woodside last month agreed to pay Apache Corp US$2.75 billion for stakes in two gas projects, while delaying approval for its own proposed Browse LNG development in Australia.

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