Woodside Energy Group Ltd (ASX: WDS), a prominent player in the energy sector, has recently unveiled its financial results for the half-year period ending 30 June. These results have sparked significant interest as they showcase both the company's challenges and notable achievements during a period of fluctuating market conditions for this ASX energy stock.
For the first half of the year, Woodside reported a substantial 19% decrease in operating revenue, which amounted to US$5,988 million. This drop was largely due to a decline in liquefied natural gas (LNG) revenue, which overshadowed the gains made from increased crude oil revenue. The decrease in LNG revenue reflects broader market pressures and fluctuating demand in the global energy market.
The company's earnings before interest, tax, depreciation, and amortization (EBITDA), excluding impairments, fell by 11% to US$4,371 million. This decline was consistent with the lower operating revenue and increased operational costs. Additionally, the underlying net profit after tax (NPAT) saw a notable decrease of 13.9%, settling at US$1,632 million. This drop highlights the challenges Woodside has faced in maintaining profitability amidst a tough economic environment.
On a more positive note, Woodside's reported net profit after tax increased by 11%, reaching US$1,937 million. This improvement was significantly influenced by the recognition of a net deferred tax asset of $305 million, related to the Sangomar project. This project, which marked Senegal's first offshore oil production, contributed positively to the financial results by offsetting some of the declines in other areas.
In response to the decrease in underlying profit, the company announced a 14% reduction in its interim dividend, which is now set at 69 US cents per share. This adjustment reflects the company's cautious approach to distributing profits while navigating the current market challenges.
Comparison to Expectations
Woodside’s performance during this half-year period fell short of some market expectations. Analysts had forecasted an EBITDA of US$4.41 million and an interim dividend of 73 US cents per share. The company's results did not meet these projections, which could influence its stock performance in the short term. However, recent increases in oil prices might help counterbalance some of the negative impacts of the lower-than-expected results.
Management’s Insights
Despite the mixed financial outcomes, Woodside’s CEO, Meg O’Neill, conveyed a positive outlook on the company's performance. O'Neill highlighted several key achievements, including the high operational reliability of 97.9% at Woodside’s LNG assets. This level of reliability underscores the company’s effective management and operational efficiency in a challenging inflationary environment.
A significant highlight for Woodside was the successful initiation of the Sangomar project, which achieved its first oil production in June. This project represents a major milestone, not only for Woodside but also for Senegal, as it marks the country’s debut in offshore oil production. The production ramp-up at Sangomar has progressed smoothly, with the project recently reaching a peak production rate of 100,000 barrels per day. This achievement demonstrates Woodside's strong project execution capabilities and positions the company to deliver long-term value to shareholders. Additionally, the benefits of the Sangomar project extend to Woodside’s partner, Petrosen, and contribute positively to the local communities in Senegal.
Looking ahead, Woodside has maintained its production guidance for FY 2024, reflecting confidence in its strategic initiatives and operational capabilities. The company remains focused on navigating market challenges while continuing to pursue growth and operational excellence.
Woodside Energy Group Ltd has faced some challenges in the first half of the year, the company’s strategic achievements and ongoing projects provide a foundation for future growth and stability.