Woodside Sales Rise 48% on Oil Prices, `Ramps Up' Gas Search for Pluto LNG

Woodside Petroleum Ltd., Australia’s second-biggest oil and gas producer, said sales rose 48 percent in the second quarter and it “continues to ramp up” efforts to find gas to expand a liquefied natural gas project.

Sales increased to $1.07 billion in the three months ended June from $728 million a year earlier, Woodside said in a statement today to the Australian stock exchange. UBS AG had expected revenue to climb to $927 million, while analysts at JP Morgan Chase & Co. estimated sales of $971 million.

Benchmark crude oil prices averaged about 30 percent higher in New York in the quarter from a year earlier, helping Woodside overcome a 10 percent drop in production to 17.5 million barrels of oil equivalent. Output weakened from the preceding three months because of maintenance shutdowns at the North West Shelf project, the sale of the company’s Otway assets and aging fields, the Perth-based company said.

Woodside advanced 2.4 percent to A$42 at 2:43 p.m. in Sydney trading, compared with a 2.1 percent gain in the benchmark S&P/ASX 200 Index.

A decision to expand the A$13 billion ($11.6 billion) Pluto project, one of more than a dozen proposed LNG ventures in Australia targeting Asian demand for cleaner-burning fuels, depends on the results of a drilling campaign or talks with other gas suppliers, Woodside said.

‘Challenging’ Target

The company’s year-end target for making an investment decision on the expansion “looks challenging,” JPMorgan analyst Benjamin Wilson said.

“The longer Woodside goes without defining a resource, the greater the imperative there is to do a deal with other resource owners,” Wilson said by telephone from Sydney today. New York- based Hess Corp. is the company most likely to feed gas to the Pluto development from fields off Western Australia, he said.

Pluto was 91 percent complete at the end of June, Woodside said. Crane operations restarted at the Pluto site in Karratha, about 1,600 kilometers (994 miles) north of Perth, after the national labor tribunal, Fair Work Australia, it said.

Some 12 crane drivers and forklift operators, employees of Dutch contractor Mammoet, began striking on April 28 seeking pay raises, Woodside said last month. The Pluto venture is due to start exports in early 2011, even though labor disputes have disrupted construction, the gas producer said in June.

Drilling to find gas to support an expansion of Pluto “continues to ramp up” with the arrival of the Ocean America rig in late June, and the company is preparing to drill the Alaric prospect off the Western Australian coast, Woodside said today. “In addition, discussions continue with other resource owners.”

To contact the reporter on this story: James Paton in Sydney

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