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Woodside Petroleum expecting third quarter recovery

Australian energy company says there's a lag time in some markets that inhibits revenue growth.

By Daniel J. Graeber
Woodside Petroleum expecting third quarter recovery
Australian energy company Woodside Petroleum says there's a lag time in some energy prices that's getting in the way of revenue growth. Photo courtesy of Woodside Petroleum.

PERTH, Australia, July 21 (UPI) -- Australian energy company Woodside said it was posting lower revenues for the second quarter because of a lag-time in product price recovery.

Woodside Petroleum said its production year-on-year was up about 10 percent in part because of successful operations at its Pluto liquefied natural gas project in Western Australia, though second quarter revenue was down 8.1 percent.

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Peter Coleman, the chief executive officer at Australia's largest independent oil and gas producer, said the weak revenue stream was a reflection of a three-month lag in the price for LNG compared with crude oil.

"We will see higher realized LNG contract prices reflected in the third quarter," he said in a statement. "Our strong operating cash flow and balance sheet will continue to support business growth opportunities."

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Crude oil prices plummeted below $30 per barrel in early 2016, but have since recovered to around the mid- to upper-$40 range. The price for the global benchmark Brent is 8.5 percent higher than three months ago.

Australian rival BHP Billiton this week said its spending on petroleum-based exploration and production was lower because of lingering market weakness. The company reported total petroleum production for the fiscal year ending June 30 is down by 6 percent to 240 million barrels of oil equivalent and is expected to drop off to as low as 200 million boe in the 2017 fiscal year.

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Woodside in February acquired a 65 percent interest in a production sharing contract offshore Senegal and Guinea-Bissau from Impact Oil & Gas for an undisclosed sum. Last month if moved deeper into Senegalese waters with a similar deal with Conoco Phillips.

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Woodside said early this year that, even with front-end engineering and design work completed, weak economic and market conditions meant it was necessary to put a hold on the $50 billion Browse LNG facility.

Coleman at the time said discipline was needed in the era of lower crude oil prices, with patience trumping short-term growth ambitions.

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