Woodside reports 6pc jump in half-year profit as production hits record high
Investors dump Woodside shares after the energy major slashed its dividend by 27 per cent, despite its profit rising to $2.7bn.
Woodside Energy had branded global gas markets “fragile” as the threat of strikes crippling major West Australian LNG exports puts the industry on edge ahead of a crunch meeting with unions on Wednesday.
Gas prices in Europe hit a two-month high on Monday after unions warned that they could begin industrial action as soon as September 2 if no deal is reached in pay talks on Wednesday.
In comments hinting at Woodside’s confidence that it can strike a deal and avert industrial action, chief executive Meg O’Neill said talks with unions have progressed and the wild price swings reflect an extremely tight market.
“I think the market response to the rumour of potential industrial action is a sign of how fragile the market is. Whilst it’s not as heated as it was last year, the gas market still is quite fragile,” Ms O’Neill told The Australian.
”Woodside is committed to the bargaining process and we continue to engage very actively and constructively with our employees, both in the bargaining process as well as in the day to day running of the business. We’ve been listening and we understand their areas of concern and I think we’ve made good progress in addressing a number of those areas. of concern.”
Still, The Offshore Alliance – made up of the Australian Workers Union and Maritime Union of Australia – said it was determined to reap their share of Woodside profits and “won’t be copping the ‘cupboard is bare’ narrative when we sit down with the Woodside HR bosses tomorrow.”
Ms O’Neill said there was a wide range of different industrial actions that the unions could elect to use if no agreement can be reached, ranging from short work disruptions through to full strikes - and the company will not receive notice until any ballot has been held.
Market jitters of strikes are evaluated by the prospect of industrial action at Chevron.
Industrial action at Chevron appears most likely with Electrical Trade Union members warning talks had made little progress and large discrepancies exist.
Woodside and Chevron’s facilities together supply about 10 per cent of the global LNG market.
Ms O’Neill’s comments came as Woodside reported a 6 per cent jump in half year profit, as production hit a record high following its merger with BHP’s petroleum business.
Woodside said net income totalled $US1.74bn ($2.71bn) in the six months ended June 30, up from $US1.64bn reported a year earlier.
The oil and gas giant declared an interim dividend of US80c a share, little changed from its dividend issued one year earlier when stripped out of a special one-off payment. When including the BHP-related dividend, Woodside issued a dividend of $US1.09 last year.
Ms O’Neill described the result as a strong financial six-month period but marred by the death of a worker on an offshore platform in early June.
“The tragic fatality is something that is very sobering but the rest of the financial and operating performance we’re very pleased with,” Ms O’Neill said.
Woodside has been a lightning rod for opponents to fossil fuels as it makes bumper profits and invests in future fossil fuel production.
Ms O’Neill rejected any suggestion that Woodside’s boom is not being enjoyed by the wider community.
“Woodside also continues to make a significant contribution to the economic prosperity of the communities where we operate. Woodside’s total tax and royalty payments to state and federal governments in Australia in the first half was $3.7bn.”
Woodside has enjoyed strong recent returns amid a global energy crunch, and the company is moving to capitalise on an expected ongoing demand for gas.
It is pushing to develop its $16.5bn Scarborough and Pluto Train 2 projects, which Woodside is targeting 8 million tonnes a year of new gas from offshore wells starting in 2026.
In August, Woodside said it agreed to sell a 10 per cent stake in the Scarborough liquefied natural-gas project to a consortium of Japanese companies in a deal worth $US880m despite intense environmental opposition to the development.
It is not the only fossil fuel development Woodside is working on. In June, Woodside approved the development of its $US7.2bn ($10.5bn) deep water oil project in the Gulf of Mexico, which it expects to begin production in 2028.
Woodside kept its production guidance for the remainder of the year unchanged at the equivalent of between 180 and 190 million barrels of oil.
Ms O’Neill said the company this year is expected to make a final investment decision on whether to proceed with its US hydrogen production facility known as H2OK and a giant solar and battery development in Western Australia.
The company is considering a 500 megawatt facility that could have 1m solar panels and battery energy storage infrastructure of up to 400 megawatt hours.
Woodside shares fell 1 per cent or 40c to $38.06 on Tuesday.