Woodside's 2019 Profit Drops 75% on Kitimat Write Down

Australia’s Woodside February 13 reported a 75% drop in 2019 net profit owing to non-cash impairment of $720mn (after tax) in relation to the Kitimat assets in western Canada.

The company reported a net profit of US$343mn as against US$1.36bn in the previous year. Woodside’s underlying net profit, which excludes the impact of one-off items, stood at US$1.06bn, down 24%.

“Kitimat remains a world-class project and Woodside will continue to evaluate actively future development opportunities, including optimisation of gas supply into processing facilities. However, the impairment reflects increased uncertainty, particularly in the timing of the development of the upstream Liard resource, following sustained depressed gas market conditions in Western Canada,” Woodside said while announcing the write down on February 11.

Woodside acquired 50% of 18mn mt/yr Kitimat LNG project in 2015 from Apache – along with the US major's interest in the Wheatstone LNG project in Australia – in a transaction valued at US$2.75bn. Chevron owns the other half of the project, but is currently exploring a sale. The partners are yet to take a final investment decision. 

Meanwhile, the company’s 2019 production was 89.6mn boe versus 91.4mn boe in 2018. For 2020, Woodside expects production to range between 97mn boe and 103mn boe.