$US1.2 billion writedown is coming for Woodside, sale revenue slides by a third

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Woodside Petroleum’s sales revenue, and the value of its assets, have been falling as fast as the price of oil.

And the outlook is dark. The International Energy Agency says the world could “drown in oversupply” of a commodity once called black gold.

In a quarterly report released today, Woodside reported 2015 full year revenue of $4.496 billion, or about 36% less than the $7.076 billion in 2014.

This was despite the second highest production result on record, about 92.2 MMboe (million barrels of oil equivalent).

CEO Peter Coleman said the company has been relentlessly focusing on delivering the fundamentals of the business.

“The recent significant fall in oil and gas prices has highlighted the quality of our low cost production and approach to balance sheet risk management,” he says.

However, the company is looking at significant writedowns for its oil and gas properties. Woodside says impairment charges for full year 2015 are anticipated to be in the range of $1 billion to $1.2 billion pre-tax.

The exact numbers will be released next month before the full year results are announced.

Like most resources companies, Woodside has been cutting spending in a bid to catch falling commodity prices.

However, Woodside also has been taking advantage of depressed prices by buying assets.

The company bought out Texas-based Apache Corporation’s interests in the Australian Wheatstone natural gas project, plus the Balnaves oil and the Kitimat gas projects in Canada for a total of US$2.75 billion (AU$3.348 billion).

It launched, but later withdrew, a $11.65 billion bid for Oil Search which it would have created a regional oil and gas champion for both Papua New Guinea and Australia.

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