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Woodside Raises Browse Gas Estimates as It Studies Sale

Woodside Petroleum Ltd., Australia’s second-largest oil producer, increased the estimate for its natural gas resources in the Browse Basin as it considers the sale of a stake in a venture to liquefy the fuel for export.

The estimate was raised by 17 percent to 15.5 trillion cubic feet (439 billion cubic meters) of gas, the Perth-based company said today in a presentation after reporting a 4 percent drop in full-year profit. Woodside shares rose to the highest in more than three months in Sydney trading.

Woodside has delayed a final investment decision on its proposed Browse liquefied natural gas venture in Western Australia as costs climb. The company, which owns a 46 percent stake in the project, said last month it’s assessing the potential sale of a “minority portion” of its holding.

“It’s always nice to have more gas, but what it doesn’t change is the cost of building this or the economics of what we see today,” Andrew Williams, a Melbourne-based analyst at RBC Capital Markets, said by telephone today. “The economics look pretty marginal.”

Woodside Chief Executive Officer Peter Coleman faces rising costs and competition from rival gas producers in North America as he seeks to develop more than $70 billion in LNG projects, including the proposed Browse venture. The project may cost $36 billion to build, compared with an earlier estimate of $30 billion, Credit Suisse said in November.

The company expects a final investment decision on Browse in the first half of 2013, according to today’s statement. Woodside could fetch $1.6 billion selling 16 percent of Browse, Citigroup Inc. analysts wrote in a report last month.

The estimate for condensates was increased by 16 percent, according to Woodside.

Pluto Venture

The shares rose 0.7 percent to A$36.21 as of 12:34 p.m. local time, the highest since Nov. 15, while the benchmark S&P/ASX 200 index fell 0.3 percent.

Net income dropped to $1.51 billion in the 12 months ended Dec. 31 from $1.58 billion a year earlier, including expenses for the delay of its Pluto project in Western Australia, Woodside said today. Excluding one-time charges, profit rose 17 percent to $1.66 billion, according to the company.

The A$14.9 billion ($15.9 billion) Pluto venture is among eight LNG projects under development in Australia. Woodside found more gas at the Ragnar-1 well to support an expansion of the project, the company said today. Pluto is nearing completion, with no “material change” to its previous expectation for exports to begin in March, according to Woodside.

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