Woodside lifts annual production forecast after quarterly output hits record high

Woodside’s record quarterly output on the back of a Senegalese operation is expected to ease concern it has been prioritising growth at the expense of financial returns.

Woodside has lifted its annual production forecast by more than 2 per cent after the company said it achieved record quarterly output following the commencement of a new project in Senegal.

The result will placate some shareholder concern triggered when the company announced two major acquisitions costing more than a billion dollars in the United States, which fuelled worries that shareholder returns would be jeopardised in the hunt for new growth.

But in a sign that Woodside can deliver growth and strong capital returns, it said production for the three months ended September 30, 2024 totalled 53.1m barrels of oil equivalent (mmboe), up 20 per cent from the previous quarter. The company said revenues during the period totalled $3.68bn, up 21 per cent from the previous three months.

Woodside said that as a result of the record quarterly output, it now expects annual production to between 189-195 mmboe, up from a previous range of 185 to 195 mmboe.

Woodside chief executive Meg O’Neill described the result as “fantastic”, highlighting the contribution of its recently completed development in Senegal known as Sangomar.

“At Sangomar the 24-well drilling program has been completed and the project has achieved nameplate capacity of 100,000 barrels per day,” Ms O’Neill said.

The production result surpassed market expectations and shares in the company edged higher on Wednesday despite broad weakness in the energy sector following a slump in oil prices overnight.

RBC Capital Markets analyst Gordon Ramsay said the result was positive.

“Overall, a very good September quarter report with sales revenue, sales volume and record production volume ahead of the consensus,” Mr Ramsay said.

Sangomar’s success was the key driver and the company reported first oil in June, propelling the West African nation into the world’s newest oil producer.

The project, however, is still short of being formally completed and as in the final stages of development – known as commissioning.

Ms O’Neill said commissioning, involving the injection of water in the wells, was close to being completed. Analysts said the outlook for the project would only be cemented once that task was completed.

Ms O’Neill stopped short of rubber stamping the ongoing nameplate capacity of Sangomar, but stressed early indications were strong.

Sangomar is the first project in Woodside’s development pipeline, several of which are rapidly advancing.

Woodside said its $16.5bn Scarborough project in Western Australia was 73 per cent complete as of September 30. The first LNG cargo is expected in 2026.

The company said its Trion oil project in the Gulf of Mexico was 15 per cent complete and first production was targeted for 2028.

The expansion plans have put Woodside in the crosshairs of environmentalists. However, its Australian assets will be subjected to the government’s centrepiece Safeguard Mechanism, which requires emission reductions by the 215 largest emitters by about 5 per cent a year.

Enforcing that policy is a hot-button issue, although the WA government said it would leave that to the federal government – a stance endorsed by Ms O’Neill.

Meanwhile, Woodside said it would delist from the London Stock Exchange after determining that depositary interests account for approximately 1 per cent of Woodside’s issued share capital.

“Trading volumes of Woodside shares on the LSE are low and delisting from the LSE will reduce Woodside’s administration costs,” the company said.