Australia's largest liquefied natural gas (LNG) producer, Woodside Energy Group Ltd (WDS.US), stated that while the global LNG market is expected to face a supply surplus which may pressure prices, demand growth remains robust, and uncertainties surrounding new supply additions cannot be overlooked. "Additional supply could exert downward pressure on prices," commented acting Chief Executive Officer Liz Westcott in a Tuesday interview. However, she emphasized that "caution is warranted regarding expectations for a persistent or structurally disruptive supply glut."
Both the International Energy Agency (IEA) and BloombergNEF forecast that the global market could enter a state of oversupply as early as this year, driven by the commencement of new LNG facilities in North America and the Middle East. Former Woodside CEO Meg O'Neill, who stepped down in December to join BP p.l.c. (BP.US), had championed capacity expansion during her tenure, targeting a near-doubling of the company's operated liquefaction capacity by 2032.
Westcott noted that despite increased global production, over 50 countries now possess LNG import capability, indicating continuously strengthening market liquidity. Furthermore, several higher-cost projects have been shelved. This includes an LNG export project in Louisiana, USA, which was abruptly halted by Energy Transfer LP (ET.US) late last year. "The supply landscape is in a constant state of flux," Westcott said, adding that Woodside is "well-positioned to navigate industry cycles" due to its cost competitiveness, advantageous geographical footprint, and established marketing capabilities.
Woodside itself is developing the Louisiana LNG project in the United States. The company is currently evaluating the potential for constructing a fourth and fifth liquefaction train at the site and plans to further divest a 20% equity stake in the large-scale facility.
Financial results released earlier on Tuesday showed the company's annual net profit declined, impacted by lower oil and gas prices; however, this was partially offset by record-high production volumes mitigating the revenue impact. For the year ended December 31, net profit fell 24% to $2.7 billion, yet surpassed market expectations of $2.54 billion. Total oil and gas production increased by over 6% year-on-year to a record 198.8 million barrels of oil equivalent. This growth helped counterbalance a 5% decline in the average realized price to $60 per barrel of oil equivalent.
The production increase was primarily driven by the commencement of operations at the Beaumont synthetic ammonia facility in Texas last year and the final investment decision on the Louisiana LNG project, which anticipates its first LNG shipment in 2029. Additionally, the Scarborough project in Australia is 94% complete and remains on track to deliver its first LNG in the fourth quarter. The Trion oil field project in Mexico is still expected to achieve first oil in 2028.
Furthermore, the Australian company announced a final dividend of 59 US cents per share, compared to 53 cents per share a year earlier. Boosted by the earnings report, Woodside's share price rose over 2% on Tuesday, closing at its highest level in 18 months.
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