Woodside to Return Cash After Abandoning $45 Billion LNG Project

Woodside Petroleum Ltd. (WPL), Australia’s second-largest oil producer, will return about $520 million to investors in dividends after dropping plans to build a liquefied natural gas project estimated to cost $45 billion.

Woodside’s shares rose the most since December 2008 after deciding to pay a special dividend of 63 cents a share and to boost the dividend payout ratio. Woodside climbed as much as 8.5 percent to A$37.53 in Sydney and traded at A$37.33 as of 11:21 a.m. local time. The benchmark index gained 1.2 percent.

The Australian energy company said earlier this month it would consider accelerating the return of capital to investors after scrapping the proposal to build the Browse project on shore in Western Australia in favor of studying cheaper options. Woodside also signaled a delay to the next stage of its A$15 billion ($15.4 billion) Pluto LNG project, ending talks with companies to obtain gas supplies needed for its expansion, the company said April 18.

Woodside’s sales and production have risen since the initial phase of the Pluto venture started a year ago. The company’s first-quarter sales climbed 21 percent to $1.45 billion, while production rose 55 percent to 21.9 million barrels of oil equivalent, according to a statement last week.

The company will target a dividend payout ratio of 80 percent of underlying net profit after tax and expects to maintain that level for several years, Woodside said in the statement today. The special dividend will be paid May 29 to all shareholders registered on May 6, Woodside said.

The board made those decisions “given the lead times involved with the growth projects and forecast reductions in the company’s debt levels,” according to the statement. Woodside will “continue to pursue growth opportunities where we believe they will create value,” the company said.

A new onshore Browse development would have cost about $45 billion, JPMorgan Chase & Co. said in an April 12 report. Woodside said it’s studying alternatives including floating LNG.

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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