SYDNEY, July 19: Woodside Petroleum, Australia’s largest oil and gas firm, lifted its full-year production forecast by as much as 13 percent on Thursday after its Pluto liquefied natural gas (LNG) project performed better than expected in the last quarter.
The industry’s No. 2, Santos, reported a 9 percent hike in second-quarter production, its best quarterly result since 2009.
Woodside shares jumped 7 percent to $32.49 on the news, on track for the biggest one-day percentage gain in three years, while Santos rose 3 percent at $10.41 by 0213 GMT, outperforming a 1 percent rise in the broader market.
The LNG market has tightened sharply following the Fukushima nuclear disaster which has stoked Japan’s demand for gas, with global LNG demand growth expected to average around 4 percent a year to 2025.
But several projects, including Woodside’s Pluto and Browse plants and Santos’ Gladstone, have suffered setbacks and cost blowouts in recent months, raising concerns they may struggle to find gas that has already been pre-sold to Asian customers.
Against that backdrop, Woodside reported that the A$15 billion ($15.5 billion) Pluto plant, which began production in April and shipped its first cargo in May, had exceeded expectations with the delivery of eight cargoes.
Woodside Chief Executive Peter Coleman said the ramp up of the plant had seen production beat contracted volumes and three spot cargoes were sold during the quarter.
As a result, it boosted its full-year production guidance to 77 to 83 million barrels of oil equivalent (mmboe), up from the 73 to 81 mmboe it forecast in its March quarterly report.
Production at Pluto – Australia’s first LNG project in six years and, alongside Angola LNG, the only new supply due to enter the market until 2014 or 2015 – is expected to more closely align with its annual delivery plan in the second half, the company added. Woodside said earlier this year that Pluto would contribute up to 21 mmboe to its 2012 production.
Woodside’s sales rose 13 percent to 18.6 mmboe in the quarter, while revenue lifted 14 percent to $1.43 billion.
The company also predicted that the Australia’s recently introduced carbon tax would cost it between $20 million and $40 million for the year ending June 30, 2013.
Pluto was a year behind its original target and $900 million over-budget, while Woodside’s Browse LNG project has been plagued by in-fighting among stakeholders, including Shell , BP, Chevron, and BHP Billiton , about the best location for the project and opposition from some Aboriginal landowners and environmentalists.
Woodside said last month that it and Taiwan’s CPC Corp had let lapse a provisional agreement for the supply of LNG from Browse in Western Australia, in a move that CPC said was prompted by the project’s unclear production timeframe.
Santos maintained its full-year guidance at 51 to 55 mmboe after second-quarter production rose 9 percent to 13 mmboe, compared to the corresponding period a year ago.
Santos last month hiked the cost of its Gladstone LNG project by over 15 percent to $18.5 billion, saying it needed to drill 300 more wells to find gas for a planned 2015 start-up, underlining the hurdles facing Australia’s coal seam gas industry. (agencies)
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