OilVoice - Woodside Reports First Quarter Highlights

Woodside Reports First Quarter Highlights

Sunday, April 26, 2009

Woodside Petroleum has reported first quarter results for period ended 31 March 2009.

Production and sales volumes up compared to Q1 2008:
• Quarterly production was higher than the previous corresponding period due to additional contributions from new projects. These projects largely came online in the second half of 2008 at Neptune and Power Play (GoM), LNG Train 5 and Angel (NWSV) and Vincent (Greater Enfield area). In addition, the purchase of Shell’s equity in NWSV oil has been contributing to production since May 2008.
• Compared to the previous quarter volumes were lower, due to several factors including mechanical and maintenance shutdowns, cyclone interruptions and natural decline.

Sales revenue at similar levels to Q1 2008:
• Although sales volumes increased by 21% compared to the previous corresponding period, adverse movements in commodity prices resulted in sales revenue that was 1% lower than that of Q1 2008.
• Compared to previous quarter, revenues were lower due to lower commodity prices and sales volume.

Activities:
• Pluto - LNG1 on schedule and budget. FEED on future trains under consideration. Martell-1 intersected a gross gas column of 110 metres.
• Browse - Heads of Agreement signed regarding James Price Point as an LNG precinct in the Kimberley.
• Sunrise - work continues to progress a decision between FLNG and Darwin LNG.
• North West Shelf gas - fabrication work continues on North Rankin B.
• North West Shelf oil - refurbishment and conversion works commenced on the FSO Okha.
• Vincent oil - production was shut in on 13 April due to a fire in a compressor unit on the facility. Production remains shut in while investigations continue. It is anticipated that an update will be provided to the market by the end of next week.
• Funding - after a successful round of debt raising, through bilateral facilities and issue of US bonds, Woodside held around US$1.64 billion in undrawn debt facilities at the end of the quarter.

Development Activities

AUSTRALIA

North West Shelf
• North Rankin Redevelopment Project: North Rankin B substructure fabrication continues on schedule at the PT McDermott site in Indonesia. Deck strengthening work has now commenced on NRA platform for landing of the interconnecting bridge. Topsides fabrication is on schedule to commence Q2 2009.
• Cossack Wanaea Lambert Hermes Redevelopment Project: Following FID for the $1.8 billion project in December 2008, outright purchase and title transfer of the FSO Okha took place in January 2009.

Refurbishment and conversion works have commenced at the Keppel Tuas Shipyard in Singapore.

Engineering design and procurement activities continue and negotiations are underway for the related subsea scope.

Pluto LNG Project
At the end of the quarter, the Pluto LNG Project had reached 55% construction completion.

During Q1, pipe-lay operations commenced and the main cryogenic heat exchangers for the LNG plant sailed away from Germany for Dampier.

In addition to flowline pipe installation, the subsea team also installed six flowbases for the project’s production wells.

At the onshore site, preparation earthworks were completed in the main process areas and civil works progressed with the pouring of some 50,000 cubic metres of structural concrete.

Seventy six modules and supporting structures for the LNG train (out of a total 263) have now arrived from Thailand and are being installed on site.

The LNG tanker chartered for the project from AP Moller Maersk was floated for fit out in Korea in January.

The 480-bed expansion of the Gap Ridge Accommodation Village started during the quarter. At completion the village will house more than 2100 construction workers for the project.

The 2009 exploration campaign for Pluto expansion made a positive start with the Martell-1 exploration well discovering gas in February. Wireline logs indicated a gross gas column of about 110 metres in good quality reservoir sandstones.

Browse
Development locations in the Kimberley (James Price Point) and Pilbara (Karratha) are currently under consideration. Commercial discussions, technical, environmental and social impact studies are ongoing. With respect to the Kimberley option, on 21 April Woodside signed a Heads of Agreement between the State of Western Australia and the Kimberley Land Council on behalf of Traditional Owners, in relation to the establishment of a LNG Precinct in the James Price Point area, north of Broome.

The Heads of Agreement was made on the basis that the Kimberley LNG Precinct is Woodside’s preferred site for the processing of LNG from the Browse Basin gas fields.

The Heads of Agreement is subject to a number of conditions, and will require the conversion of the Heads of Agreement to an Indigenous Land Use Agreement to be negotiated and entered into later in 2009. The Indigenous Land Use Agreement will enable the State to secure land for an LNG Precinct at James Price Point.

The Browse Joint Venture continues to consider the location for processing Browse gas at either the Kimberley LNG Precinct or at the Woodside operated facilities in Karratha.

Sunrise
Work is progressing on the floating and Darwin LNG development concepts with concept location selection anticipated in 2H 2009.

Exploration and Appraisal Activities

Panoramix-1 well testing operations
Following an unsuccessful attempt at testing the Lower Santonian reservoir interval in well 1-REPF-3DSPS (Panoramix) due to mechanical difficulties, a second DST was performed in the shallower Upper Santonian turbidite reservoir between 4,410 and 4,480m depth. On 8 April 2009 a maximum gas flow rate of 13.7 MMscfg/d was achieved through a 32/64" choke together with 1,570 Bbl/d of condensate. A stabilised flow rate of 9.6 MMscfg/d was later obtained using a 20/64" choke size. Analysis of the test data suggest that the well could be capable of delivering up to 30 MMscfg/d. Having collected sufficient highquality data and samples of gas and liquids, the Operator (Repsol) is now preparing to plug and abandon the well as planned. A third, oil-bearing reservoir interval of Early Campanian age in Panoramix was not programmed for testing in this well. The Joint Venture is currently considering plans to return to Panoramix at a later date to appraise the oil and gas discoveries.

PERMITS AND LICENCES:

Key changes to permit and licence holdings during the quarter are noted below (some transactions may be subject to government and regulatory approval).

Australia
Woodside has relinquished its 42.73% interest in WA-294-P (Beagle Sub Basin).

Woodside has signed a conditional SPA for the purchase of a 50% interest in WA-401-P. WA-401-P is a 3 graticular block permit that lies immediately to the south west of WA-404-P.

Woodside was awarded a 70% interest in the following permits:
• AC/P48 and WA-429-P in the Browse Basin.
• WA-428-P and WA-430-P in the Carnarvon Basin.

Gulf of Mexico
Woodside exited the following lease blocks as part of ongoing portfolio management:
G21349/ HI 85; G24764/ WC,S 545.

Corporate Activities

Treasury
Woodside previously advised that agreements had been reached in early 2009 for US$800 million in bilateral debt facilities. In March 2009, Woodside raised US$1.0 billion through the issue of Rule 144A bonds, which included US$400 million in five year bonds expiring in 2014 and US$600 million in ten year bonds expiring in 2019.

Subsequently Woodside reduced its bilateral and 364-day portfolio from US$1.85 billion to US$1.65 billion. As at 31 March 2009, Woodside held around US$1.64 billion in undrawn debt facilities.

A number of additional debt facilities are under consideration for 2009.

Indicative 2009 expenditure
In November 2008 Woodside had advised that the indicative 2009 capital expenditure on its various projects and exploration activities (including capitalized interest) could be in the order of A$7.3 billion.

Following the management initiatives announced in February 2009, Woodside’s spend for 2009 is more likely to be in the order of A$6.6 to $6.7 billion. Management initiatives continue to be implemented and a more detailed breakdown will be provided with the interim profit announcement in August 2009.