Woodside Sees Up to $1.2 Billion in Writedowns Amid Oil Rout

  • Producer's fourth-quarter sales fall 37% to $1.1 billion
  • Woodside may seek M&A after dropping Oil Search bid: Morgans

Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, expects writedowns of as much as $1.2 billion for 2015 after the slide in energy prices.

The charges will be finalized when it reports earnings next month, Perth-based Woodside said Thursday in its fourth-quarter production report. Sales in the quarter fell 37 percent to $1.11 billion from $1.76 billion a year earlier.

Woodside is among energy companies coping with worsening market conditions and oil prices that have fallen to the lowest levels since 2003. With a relatively strong balance sheet and new projects across the industry in doubt, Woodside may seek acquisitions after abandoning its pursuit of Oil Search Ltd. last month, according to Morgans Financial Ltd.

“Given that they walked away from their approach for Oil Search, perhaps they are in the hunt for additional acquisitions to fill that growth profile,” Adrian Prendergast, an analyst at Morgans in Melbourne, said by phone. “They certainly have the firepower.”

The Australian producer is weathering oil’s slump better than competitors, its shares sinking 22 percent in Sydney trading over the past year compared with a 33 percent slide in the MSCI AC Asia Pacific Energy Index and a 60 percent tumble for rival Santos Ltd.

Shares Drop

Woodside dropped 0.7 percent to A$25.21 as of 1:27 p.m. local time, while Australia’s benchmark index increased 1.1 percent.

Investment this year will total about $1.96 billion and production is forecast at between 86 million and 93 million barrels of oil equivalent. Output in 2015 fell 3 percent to 92.2 million barrels.

BHP Billiton Ltd. said last week it expects to take a writedown of $4.9 billion on the value of its U.S. shale assets due to the tumble in oil prices.

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