Woodside's LNG revenue plunges as COVID-19 shocks persist
Australian energy producer Woodside has suffered a 42 per cent fall in September quarter sales as the full extent of this year's coronavirus-triggered oil price crash flows through to sales of natural gas.
Woodside on Thursday revealed its revenue fell to $US699 million ($983 million) in the three months through September, from $1.2 billion in the same quarter last year, missing analysts' forecasts.
After the COVID-19 outbreak pummelled fuel demand, unleashed a global oversupply of crude oil and sent benchmark prices falling 30 per cent, Australia's $50 billion liquefied natural gas (LNG) export industry has been bracing for the heaviest hit this quarter due to the three-month lag time between oil prices and LNG contracts.
Australian oil producers have slashed their price forecasts amid the coronavirus pandemic.Credit:Rob Homer
Trading at about $US65 a barrel at the start of the year, Brent crude oil collapsed below $US20 in April as the pandemic spread through major oil-consuming nations and a price war broke out between top producers Saudi Arabia and Russia, flooding the market with even more supply.
Woodside chief executive Peter Coleman said he expected LNG prices in the coming two quarters to be stronger in light of the improvement in benchmark oil prices. Brent has recovered to now trade at $US41 a barrel.
"In particular, I am encouraged by the strengthening Asian LNG spot price, which is now above $US6.50 per million British thermal units for December deliveries," Mr Coleman said.
Woodside, Australia's largest independent oil and gas producer, took heavy writedowns this year, wiping $6.3 billion off the value of its assets. It has pulled back from much planned spending, delayed making investment decisions on key growth projects and, last week retrenched 8 per cent of its workforce, or about 300 jobs.
After slashing future oil price forecasts due to the potentially longer-term effects of the pandemic, Woodside is exploring ways to improve the economics of its $17 billion Scarborough project and the $30 billion Browse project off the coast of Western Australia.
Business reporter for The Age and Sydney Morning Herald.