Woodside Petroleum is planning on low oil prices continuing for years to come, according to chairman Michael Chaney.
“It is impossible to predict just how long this lower oil price environment will last,” he told the oil and gas company’s annual general meeting. “But the company is planning on the basis that it could be for several years.”
The price of oil has dropped 60% from a high of $US115 a barrel in June to a low of $US47 in January.
“Fortunately, Woodside is in a relatively strong position compared to some of its peers, because we had already started the hard work of embedding reliability and productivity initiatives across the business at a time when the oil price was high,” Chaney said.
However, he warned about profits. “Of course with lower oil prices, our profits and dividends will also be lower,” he said.
Woodside had record production of 95.1 million barrels in 2014 and an underlying net profit of $2.4 billion, a 42% rise.
However, the March quarter sales dropped 20.1% to $US1.408 billion on weaker production, down 6.8% on the previous quarter to 21.8 million barrels of oil equivalent. The lower production was mainly due to increased cyclone activity.
The company is cutting jobs — another 300 this year — and slashing costs in response to falling oil prices.
Woodside is also picking up assets in a buyer’s market. In December it announced the purchase of 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).
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