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Woodside upbeat despite profit slump

AAP logoAAP 18/08/2016 Prashant Mehra

Weak oil and gas prices have taken a toll on Woodside Petroleum's profit, but the energy giant and its investors appear upbeat about its future.

Woodside reported a 50 per cent slide in profit to $US340 million ($A442 million) in the six months to June, primarily driven by a 26 per cent decline in its average realised prices, plus small losses on LNG trading and foreign exchange.

The result was weaker than analyst expectations of around $US400 million.

Operating revenue in the six months to June rose nine per cent to $US1.9 billion.

Despite uncertain market conditions, shares in the company rose as much as three per cent in a flat market. Chief executive Peter Coleman was also optimistic on the company's short-term outlook.

"There is a lag in pricing. We are expecting overall prices to firm up in the second half of the year," he told analysts.

Crude oil prices, which slumped to a 13-year low under $US27 a barrel earlier this year, have partially recovered and currently trade just above $US50 a barrel.

Woodside has slightly improved its production guidance for 2016, now expecting to produce between 90 million and 95 million barrels of oil equivalent (mmboe).

That is up from an earlier forecast of 86 to 93 mmboe, with the increase mainly on the back of stronger-than-expected production at its Pluto liquefied natural gas plant in Western Australia.

The company has delivered lower production costs, managing a 38 per cent reduction in the half year to June, compared to the same period a year earlier.

"It's really about squeezing our existing assets, providing certainty around our revenue stream, and ensuring our balance sheet remains in good shape," Mr Coleman said.

The cash-rich company finds itself in a better position than debt-laden peers who have struggled amid the price downturn, and said it would look out for acquisition opportunities even as competitors are retreating from international acreage.

Woodside in July snapped up ConocoPhillips' stake in three deepwater oil blocks off the coast of Senegal for $US350 million. On Friday, the company said it sees a near term opportunity to develop the blocks, and is also looking at options to develop its recent gas discoveries in Myanmar.

Woodside will pay a sharply reduced interim dividend of 34 US cents per share, but said it will suspend the dividend reinvestment plan.

"This potentially indicates Woodside is comfortable with its debt trajectory and after the Senegal acquisition is taking a breather before considering further acquisitions," RBC Capital Markets analyst Ben Wilson said.

Shares in the company were up 63.5 cents, or 2.2 per cent, at $29.185 at 1318 AEST.

WOODSIDE'S HALF YEAR PROFIT SLIDES

* Net profit down 50pct to $US340m

* Operating revenue down 24pct to $US1.9b

* Interim dividend down 32 US cents to 34 US cents

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