Woodside sale to secure payout
Woodside Petroleum is closing in on the sale of equity stakes in its Scarborough and Pluto development projects.
Woodside Petroleum is closing in on the sale of equity stakes in its Scarborough and Pluto development projects, with the deals likely to support the oil and gas producer’s elevated dividend payouts.
Woodside chief financial officer Sherry Duhe told The Australian yesterday it was now “overwhelmingly likely” the company would sell down its interests in Scarborough and Pluto after it was inundated with interest from numerous parties.
“We’ve got a large number of folks that are interested in investing in those projects and it’s looking very positive,” Ms Duhe said.
She added that the range of parties interested in investing in the projects had been much wider than Woodside had expected.
“There are traditional folks who are players in the upstream players, but we’ve also seen people coming in from the Middle East and more broadly,” she said.
“It’s really quite global and quite diverse in whether these folks are typical customers, are deep into trading or simply folks that want to get into that area and haven’t been already. It’s been across the board.”
Woodside owns a 75 per cent interest in the undeveloped Scarborough gas field and is studying a project that would see Scarborough’s gas piped to a new train at Woodside’s existing Pluto liquefied natural gas plant.
The company this week awarded a series of contracts for engineering and design work for the plan, keeping it on track for a final investment decision next year.
An equity selldown would both bring in cash and lower Woodside’s share of development costs, helping the company continue its current policy of paying out 80 per cent of its profits as dividends.
“There are no plans for any changes in the dividend,” Ms Duhe said. “Particularly in times like this where prices are on average favourable and we’re producing very well, we’re able to balance that with the growth plans we’ve had.”
The comments came as Woodside announced it had generated better-than-expected revenue and production figures for the December quarter. Woodside brought in $US1.42 billion ($2bn) in revenue in the last three months of 2018, up 43 per cent from a year earlier, while production for the quarter was up 10 per cent to 24.1 million barrels of oil equivalent.
It also issued production guidance for 2019 of between 88 and 94 million barrels, a figure that was weaker than many had expected given its 2020 production target of 100 million barrels.
Ms Duhe said the softer production guidance reflected major maintenance shutdowns scheduled for both the North West Shelf and Pluto this year.
Woodside is also continuing to make strides towards a binding agreement that will allow it and other parties to toll-treat their gas through the North West Shelf.
Woodside is counting on a deal in order to develop its long-stranded Browse gas fields, and Ms Duhe said formal negotiations would restart next week to crystallise the preliminary agreement struck last year.
RBC Capital Markets analyst Ben Wilson said that while Woodside had enjoyed a strong end to 2018, he was “sanguine” about the prospects of the market recognising value for Scarborough and Browse over the next year.
“We recognise Woodside as a low-cost producer which will continue to pay out earnings as dividends for the foreseeable future. However, in our view the current share price is fully valued and represents minimal potential upside,” Mr Wilson said.
Woodside shares closed 0.66 per cent higher at $33.74.
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