The first half of 2020 has been characterised by unprecedented disruptions to Woodside’s operations and markets in Australia and around the world. Despite these challenges, Woodside achieved its highest ever first-half production and is on track to meet its guidance for increased output in 2020.

Woodside has recorded a half-year reported net loss after tax of US$4,067 million, principally due to the impairment losses and onerous contract provision announced on 14 July 2020. Underlying net profit after tax was $303 million. Production in the first half was 50.1 MMboe and operating revenue was $1,907 million.

The directors have declared an interim dividend of 26 US cents per share (cps), representing an approximately 80% payout ratio of underlying net profit after tax. The dividend reinvestment plan remains active, allowing eligible shareholders to reinvest their dividends directly into shares at a 1.5% discount.

Woodside CEO Peter Coleman said the company and its people had proved their resilience and adaptability over the course of the first half.

“I would rate the external conditions created this year by the COVID-19 pandemic and oversupply in global oil and gas markets as the most difficult I’ve seen in nearly four decades in the industry.

“Woodside began 2020 in a strong financial position, built over the previous two years as we prepared for a period of increased capital spending. This position has been consolidated through the first half thanks to the strong performance of our high-reliability, low-cost operations.

“Our balance sheet strength and disciplined approach to capital management ensures we can deliver appropriate returns to shareholders. It also allows us to progress our existing strategic growth plans, and provides optionality to pursue the right external opportunities, should they arise.

“Woodside’s operational performance during the first half was nothing short of outstanding. In February, we successfully weathered Tropical Cyclone Damien - the most severe storm ever to pass over our Western Australian facilities - with very limited impact on production.

“In the immediate wake of Damien, we faced the emerging challenge of COVID-19, requiring us to take swift and decisive action to protect our workforce, communities and operations, and ensure safe and secure gas supplies to customers in Western Australia and overseas.

“The record production achieved in the half is a credit to our people’s ongoing commitment to sustained operational excellence, helping Woodside deliver underlying net profit after tax of $303 million, despite the challenging market conditions.

“Oil and gas prices were negatively impacted by the confluence of geopolitical dynamics, global economic uncertainty and energy demand destruction brought about by the COVID-19 pandemic. Oil price fell as much as 80% from the start of the year and LNG spot prices have seen historic lows.

“In response to the pandemic and lower oil and gas prices we have taken the difficult decisions needed to guarantee the financial integrity of Woodside’s business: cutting planned total expenditure in 2020 by 50% and delaying final investment decisions (FIDs) on our Scarborough, Pluto Train 2 and Browse developments.

“Woodside remains committed to developing the Scarborough and Browse gas resources through our proposed Burrup Hub and has continued work on commercial agreements and regulatory approvals to ensure we are ready to take FIDs when investment conditions improve.

“Milestones were reached for our near-term growth projects during the half. We achieved FID and began execution of Sangomar Field Development Phase 1 in Senegal and the North West Shelf’s Greater Western Flank Phase 3, as well as continuing work on Pyxis Hub and Julimar-Brunello Phase 2 offshore Western Australia,” he said.

Financial headlines for H1 2020

• Net loss after tax of $4,067 million.
• Underlying net profit after tax of $303 million.
• Positive free cash flow of $264 million.
• Liquidity of $7,552 million, increased 43% from H1 2019.
• Secured additional debt funding through the completion of a seven-year $600 million syndicated facility.
• Declared an interim dividend of 26 US cents per share.
• Strong credit ratings of Baa1 and BBB+ were reaffirmed by Moody’s and S&P Global respectively with a negative outlook.

Key business activities

• Delivered record first-half production of 50.1 MMboe and operating revenue of $1,907 million.
• Achieved strong LNG production performance, including approximately 98% reliability at NWS Project and Pluto LNG.
• Achieved low unit production cost of $4.5/boe across our portfolio.
• Implemented controls to protect our people and assets from the COVID-19 pandemic.
• Achieved FID on Sangomar Field Development Phase 1 in January 2020.
• Deferred major capital expenditure in response to lower oil and gas prices, with FIDs for Scarborough and Pluto Train 2 now targeted for H2 2021 and Browse from 2023.

KeyFacts Energy: Woodside Australia country profile