Woodside 1st Half Net Profit Rises 11%, Dividend Payout Ratio Stays Around 80%

By David Winning

SYDNEY--Woodside Energy kept its payout ratio at the top end of its target range after its first-half net profit rose by 11%, as the company moves to reshape its portfolio by acquiring two U.S. projects.

Woodside reported a net profit of US$1.94 billion for the six months through June, up from US$1.74 billion a year ago. On an underlying basis, which helps to determine dividend payouts, Woodside said its profit totaled US$1.63 billion, down 14% on a year ago.

Directors of the company declared an interim dividend of US$0.69 per share, down from US$0.80 a year ago. Still, Woodside said it represented a payout of approximately 80% of underlying net profit, in line with levels of recent years.

Chief Executive Meg O'Neill said the results showed how Woodside's operations continue to deliver strong returns for shareholders. The period included first production from Woodside's Sangomar oil field in Senegal.

"Production ramp-up at Sangomar has progressed well and subsequent to the period, peak gross production rate of 100,000 barrels per day was achieved, demonstrating Woodside's world-class project execution capability," she said.

Woodside's first-half sales revenue fell by 19% to US$5.99 billion, outpacing a smaller 2% drop in oil and natural gas production during the period. The chief culprit was a 15% drop in the average realized price of its products to US$63 a barrel of oil equivalent.

That operational performance has been overshadowed in recent weeks by Woodside's aggressive push to add new assets to a portfolio that already spans multiple continents.

Earlier this month, Woodside said it has agreed to an around $2.35 billion deal to buy an ammonia plant in Beaumont, Texas, from OCI Global that aims to come online next year.

The deal, which fits Woodside's strategy of investing some US$5 billion in new energy projects by 2030, came just weeks after Woodside the company separately agreed to buy U.S.-listed Tellurian for around US$900 million. Tellurian owns the Driftwood LNG development near Lake Charles, Louisiana, and has secured permits to produce as much as 27.6 million metric tons of liquefied natural gas annually.

Both deals deepen Woodside's commitment to the U.S. where it majority owns the Shenzi oil-and-gas field, about 120 miles off the coast of Louisiana.

The increase in M&A activity led some to question whether Woodside would need to cut its dividend payout ratio to ensure it retained enough cash to fund its capital commitments, which include the development of the Scarborough natural-gas project. At its latest quarterly update, Woodside said construction costs at Scarborough had risen by US$500 million to a new estimate of US$12.5 billion.

On Tuesday, Woodside said its gearing had risen to 13.3%, from 8.2% a year ago.

Still, some analysts think Woodside will reduce pressure on its balance sheet once it takes over Tellurian by selling a stake in the Driftwood LNG project. O'Neill previously told The Wall Street Journal that conversations were already underway with strategic partners.

"We believe this will be fundamental to Woodside balancing its new energy and growth aspirations, with its financial policy objectives," S&P Global Ratings said this month.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

August 26, 2024 18:57 ET (22:57 GMT)

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