Bloomberg News

Woodside Falls Most in a Year on 2012 Production Forecast

November 27, 2011

(Updates with closing share price in second paragraph.)

Nov. 25 (Bloomberg) -- Woodside Petroleum Ltd., Australia’s second-biggest oil and gas producer, fell the most in more than a year in Sydney trading after forecasting a less-than-expected increase in output in 2012.

The Perth-based company dropped 5.8 percent to A$33.36, the most since Nov. 9, 2010, at the close of Sydney trading. The benchmark S&P/ASX 200 Index declined 1.5 percent.

Production next year may range from 73 million barrels of oil equivalent to 81 million barrels, Woodside said in a statement today. Johan Hedstrom, a resources analyst at Bell Potter Securities Ltd. in Melbourne, said he expected 2012 output of about 91 million barrels.

The main difference is forecast output from the A$14.9 billion ($14.4 billion) Pluto liquefied natural gas project, Hedstrom said today in a phone interview. The company forecasts output of 17 million to 21 million barrels, compared with his estimate of 29 million barrels, he said.

Chief Executive Officer Peter Coleman, who took control of Woodside in May, plans to develop an estimated A$75 billion in Australian LNG projects with existing partners including BP Plc and Chevron Corp. The company aims to approve the Browse venture in mid-2012 and expects to develop a second stage at Pluto after the project begins exports in March.

Second Train

“There’s a slower ramp up at Pluto than the market was expecting, so that’s not good,” Di Brookman, a Sydney-based resources analyst with CLSA Pacific Markets, said by phone. “Ideally with these things you don’t have the second train not very far behind the first train but in this particular case they haven’t been able to find the gas molecules and everybody knows about that. The second train is nowhere in sight at the moment, so they have no backup.”

Woodside had sought to make Pluto one of the fastest LNG projects built. The company discovered the gas field in 2005 and decided to proceed with the venture in 2007. Pluto has since faced cost overruns and delays as raw materials and labor expenses rose.

Royal Dutch Shell Plc, Chevron and Santos Ltd. are among producers building or planning almost A$250 billion in LNG projects in Australia, Deloitte Access Economics said in a July report.

--Editors: John Chacko, Ryan Woo

To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net.


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