Moody's gives good grade to LNG player Woodside

The company has improved its cash flow potential, but still could deepen its geographical bench, ratings agency said.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  Feb. 19, 2018 at 6:45 AM
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Feb. 19 (UPI) -- Australian energy company Woodside should post positive cash flow for 12 months, though its lack of geographical diversity may be an issue, Moody's said.

Moody's Investors Service on Monday affirmed the Baa1 rating for the company, but changed its rating outlook from negative to stable.

"The change in outlook to stable reflects our expectation that Woodside's earnings and cash flow will remain at solid levels over the next for 12-18 months which, combined with lower net debt following the recently announced equity issuance, will lead to improved credit metrics for the rating level," Matthew Moore, a Moody's vice president and senior credit officer, said in a statement.

Woodside last week reported a net profit after tax of nearly $80 million, an 18 percent improvement over 2017. Free cash flow increased to $660 million and the company said its break-even point was well below the current price of oil, which was around $65 per barrel for the global benchmark, Brent, early Monday.

Production gains are anticipated across Woodside's global portfolio, though its footprint expanded last week in Western Australia when it acquired a 50 percent stake in the Scarborough gas field from Exxon Mobil. That acquisition gives Woodside a larger presence in the regional gas sector, though Moody's said its rating for the company was constrained somewhat by a lack of geographical diversity.

The first cargo of liquefied natural gas from Woodside's flagship Wheatstone project in Australia was planned shortly after production started in October. Drawing on a global portfolio, Woodside said in its quarterly report it executed sales and purchase agreements for more than a dozen cargoes of LNG for delivery between 2017 and 2019.

The consortium behind Wheatstone had expected a startup by midyear 2017. Woodside said in a third quarter statement that its production guidance for the year was narrowed because of a delay in the start of the first liquefaction facility, or train, at its Wheatstone project in the state of Western Australia.

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