Subject: Woodside's foot on gas in Timor

also Woodside to spend $5b on projects this year

The Age

Woodside's foot on gas in Timor

Barry Fitzgerald

February 21, 2008

WOODSIDE has swept aside concerns that the recent assassination attempt on East Timor's political elite could stall its aggressive development plans for the multibillion-dollar development of the Sunrise export gas project in the joint development area of the Timor Sea.

Woodside has gone one better by promoting Sunrise up the ranks of the liquefied natural gas expansions and new LNG developments with which it plans to become the world's biggest LNG producer by 2015. It now ranks Sunrise ahead of the Browse project, which faces possible delays because of uncertainty where its onshore plant will be based, now reduced to a choice of the the Burrup Peninsula or the more environmentally sensitive Kimberleys.

Woodside now hopes to have first production from Sunrise ­ including its rich condensate (light oil) stream ­ from as early 2013 after a final investment decision (FID) in 2009. But before it gets to FID it must have government clearance for the preferred development concept ­ a three-way choice between linking with the existing Bayu-Undan project in the Timor Sea and its Darwin-based treatment plant, a floating production facility, or an offshore development linked to a treatment plant in Timor.

Woodside and the other joint venture partners (Shell, ConocoPhillips and Osaka Gas) have yet to announced a decision on their preferred development route but Woodside's surprise confidence in meeting FID in 2009 suggests that the Timor option has been ruled out. But the way in which the oil and gas riches of the Timor Sea are shared and developed remains a hot issue in East Timor.

The sharemarket was yesterday enthused by the aggressive timetable for the development of Sunrise, as well as Woodside's plan to be in a position to make a final investment decision on building a second LNG processing train for its Pluto LNG project on the North West Shelf by the end of 2008.

Construction of the first Pluto train is only just under way at a cost of some $12 billion. Add in oil's new flirtation with the $US100 a barrel level and stage was set for Woodside shares to shrug off yesterday's general market fall by rising $2.33 or 4.5% to $53.59.

Strong prices and production increases in (calendar) 2007 increased Woodside's revenue to a record $4 billion. But the strong dollar, higher exploration expenses and increased depreciation and amortisation reduced underlying net profit to $1.18 billion, down by 15% on 2006.

That was bang on market expectations. Pro forma profit of $1.03 billion for 2007 was 28%, due mainly to the previously reported loss on the sale of the group's oil assets in Mauritania. Woodside has maintained its production forecast for 2008 of 80-86 million barrels of oil equivalent. But that needs to be updated after the recent acquisition of Shell's Cossack Pioneer oil interests.

The final dividend is 55¢ a share (fully franked), payable on March 31. That is down from final dividend of 77¢ a share in 2006. The latest final dividend takes the annual payout to $1.04, down from $1.26 a share in 2006 but continuing the policy of a payout ratio of 60%.


Sydney Morning Herald

Woodside to spend $5b on projects this year

* Jamie Freed

* February 21, 2008

WOODSIDE Petroleum plans to spend $5 billion this year to help boost production.

The company yesterday reported a 15 per cent fall in annual underlying earnings to $1.18 billion due to higher exploration spending and a weaker US dollar.

But Woodside remains focused on growth plans, such as the $12 billion first production train at its wholly owned Pluto liquefied natural gas project in Western Australia. Pluto will account for $3.3 billion of the company's project spending this year.

Woodside's chief executive, Don Voelte, said his company hoped to build a second production train as soon as possible to help improve the project's returns.

The engineering work on a second train will be completed by the end of the year but Woodside still needs to firm up enough gas resources to underpin the development.

Mr Voelte said third-party gas purchases were a viable option, depending on the success of Woodside's own exploration program in the region.

"A reasonable assumption is we have [companies] who have all of a sudden figured out, gee whiz, Pluto is being built and we can get our gas to the market an expedient fashion," he said.

Macquarie Equities analyst Andrew Blakely said possible third-party gas sources could include the Gorgon joint venture or Apache's nearby Julimar discovery.

Woodside is also advancing its Browse and Sunrise LNG projects. The company last year said it was unsure which would be developed first but Mr Voelte yesterday indicated Sunrise was the more advanced.

The Sunrise project - a joint venture with ConocoPhillips, Shell and Osaka Gas - is in the Timor Sea between Darwin and East Timor. Woodside, the operator, has not yet chosen the preferred development option.

But Mr Voelte implied the best option might be the construction of a second train at the Darwin LNG plant owned by ConocoPhillips and Santos.

"We are very happy for ConocoPhillips to mimic their current Train 1 and work through there," he said.

At a media briefing in November, ConocoPhillips said it was still looking to source gas for a second train at the site. The first train produces 3.7 million tonnes a year but ConocoPhillips said the second train could produce as much as 6 million tonnes a year depending on the size of the gas resource.

Mr Voelte said Sunrise could begin production in 2013, while Browse was slotted for a timeframe between 2013 and 2015. But Woodside has indicated the construction of a second train at Pluto is its first priority.

Woodside reiterated its previous production guidance of 80 million-86 million barrels of oil equivalent this year, not including its recently acquired Shell's North-West Shelf oil production assets

It declared a final dividend of 55c a share fully franked, down from 77c a share last year.

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