Woodside expects up to US$1.2b in writedowns amid oil rout

An oil tanker passing under Sydney Harbour Bridge in Sydney.
An oil tanker passing under Sydney Harbour Bridge in Sydney.PHOTO: AFP

SYDNEY (BLOOMBERG) - Woodside Petroleum, Australia's second-largest oil and gas producer, expects writedowns of as much as US$1.2 billion for 2015 after the slide in energy prices.

The charges will be finalised when it reports earnings next month, Woodside said on Thursday (Jan 21) in its fourth-quarter production report. Sales in the quarter fell 37 per cent to US$1.11 billion (S$1.6 billion) from US$1.76 billion a year earlier.

Woodside is among energy companies coping with worsening market conditions and oil prices that have fallen to the lowest levels since 2003. BHP Billiton said last week it expects to take a writedown of US$4.9 billion on the value of its US shale assets due to the tumble in oil prices.

With a relatively strong balance sheet and new projects across the industry in doubt, Woodside may seek acquisitions after abandoning its pursuit of Oil Search last month, according to Morgans Financial.

"Given that they walked away from their approach for Oil Search, perhaps they are in the hunt for additional acquisitions to fill that growth profile," said Mr Adrian Prendergast, an analyst at Morgans, said by phone. "They certainly have the firepower."

The Australian producer is weathering oil's slump better than competitors, its shares sinking 22 per cent in Sydney trading over the past year compared with a 33 per cent slide in the MSCI AC Asia Pacific Energy Index and a 60 per cent tumble for rival Santos.

Woodside dropped 0.7 per cent to A$25.21 as of 1:27 pm local time, while Australia's benchmark index increased 1.1 per cent.

Investment this year will total about US$1.96 billion and production is forecast at between 86 million and 93 million barrels of oil equivalent. Output in 2015 fell 3 per cent to 92.2 million barrels.