Woodside/Sunrise articles

Greater Sunrise stands to lose if floating LNG plan sinks

DARWIN: Shell Australia has said potential lucrative North American customers for the Greater Sunrise gasfield in the Timor Sea would be lost if the venture did not commit to a floating LNG project by October.

The Sunrise venture has been locked in conflict, with operator Woodside Petroleum and Royal Dutch/Shell supporting a floating LNG project while Phillips Petroleum would like to see the gas brought onshore to Darwin to service the domestic gas market.

Shell Eastern Developments wants to use Greater Sunrise gas to supply markets in South California and Mexico.

''We have a customer, we have an opportunity, but it will not be there forever. We have to get out there and capture that if it is the way we are to go with Sunrise,'' Shell Australia chief executive officer Alan Parsley told the South East Asia Australia Offshore Conference (SEAAOC).

However, Shell and Woodside agreed to a review of potential Australian domestic gas partners, which is currently being carried out, following pressure from the Northern Territory government in Australia.

''In the current review of the domestic gas option for Sunrise we will examine potential customers to determine if a credible commercial proposition exists as a realistic alternative to the North American energy market opportunity which is open to us now,'' Parsley said.

''But if there is genuinely a real commercially viable project then we will do it.''

However, both Parsley and director of Woodside's Northern Gas Business unit, David Maxwell, told the conference that domestic gas opportunities in Australia were unlikely to emerge until 2017.

''LNG supply windows are rare and only remain open for a short time so one must catch these opportunities,'' Maxwell said.

He said Sunrise was looking to sell 250 billion cu ft per year to the US, which is less than one per cent of the total US market.

Phillips Oil Company Australia president Stephen Brand told the conference that Phillips remained committed to the Greater Sunrise project regardless of the outcome.

Woodside says Sunrise gas project likely to stall

Australia's Woodside Petroleum Ltd said the A$6.6 billion (RM19 billion) Greater Sunrise gas project in the Timor Sea would likely stall amid a dispute between Australia and East Timor over splitting revenues.

Woodside previously said the project, scheduled to produce its first commercial liquefied natural gas (LNG) by 2010, could be delayed several years unless East Timor ratified a pact covering the development by the end of the year.

Ratification now seems unlikely after negotiations between East Timor and Australia collapsed last month on dividing revenues from the Greater Sunrise field -- the biggest single resource in the Timor Sea, with reserves estimated at US$22 billion-US$25 billion (RM83.6 billion-RM95 billion).

"The project is likely to stall, that looks like the most likely scenario," David Maxwell, Woodside director of gas and commercial, told an investor briefing on Nov 17.

Maxwell said the project, operated by Perth-based Woodside, was ready to enter the design phase. Project start-up would be another five years after that, he said.

Woodside has a 33.44% stake in the development. ConocoPhillips has a 30% stake, Royal Dutch/Shell a 26.56% and the balance is held by Osaka Gas. Woodside is 34%-owned by Royal Dutch/Shell.

The dispute between Canberra and Dili is primarily over sea borders. East Timor says the border should be drawn at the midpoint between the two countries, while Australia believes the boundary should be defined the continental shelf which in some places lies less than 80km (50 miles) from East Timor's southern coastline.

Until a permanent boundary exists, revenues from some oil and gas fields from a shared 62,000 sq km (23,900 sq miles) zone are split 90:10 in East Timor's favour.

A separate pact exists for Greater Sunrise because it straddles the disputed zone.

Woodside shares, which have been propelled to record highs this year on surging oil prices, were trading up 2.53% at A$19.04 in late morning trade in a slightly firmer overall market.

Woodside Pulls Out of US$5.2 Billion Timor Sea Gas Project

Woodside Petroleum, Australia's biggest oil and gas producer, said on Wednesday it would halt its investment in the A$6.6bn (US$5.2bn) Sunrise project in the Timor Sea following the breakdown of talks between Australia and East Timor over how to split the revenues.

David Maxwell, Woodside's director of gas, told investors in Sydney that the liquefied natural gas project "was likely to stall". Income from the project is seen as vital to ensuring the economic viability of the fledgling East Timorese state, which won independence from Indonesia in 1999 through a United Nations-backed referendum.

"That looks like the most likely scenario," Mr Maxwell said. "What does stall mean? It means we won't spend any more money."

Woodside, which holds a 34.4 per cent stake in the development and is slated to be its operator, had said earlier this year that if an agreement was not in place between Australia and East Timor by the end of 2004 it might be forced to mothball the project.

But Wednesday's tough remarks put additional pressure on the two countries to resume talks, which broke down last month with both sides blaming each other for the deadlock.

The Sunrise project, which would tap estimated gas reserves worth as much as A$25bn, involves the most significant resource in the Timor Sea, which lies between Australia and East Timor.

Revenues from the project are expected to eventually provide the biggest income stream for East Timor, which now ranks among the poorest countries in Asia.

Jose Teixeira, East Timor's resources and energy minister, said on Wednesday that no further talks with Australia were planned.

"It was the Australian delegation that cut the talks short and said no more talks," he said. "We think quite clearly the ball is now in the Australian government's court."

Royal Dutch/Shell, which has a 34 per cent stake in Woodside, also has a 26 per cent stake in the Sunrise project, while Conoco Phillips has a 30 per cent share. The remainder is held by Osaka Gas.

The Sunrise partners have already spent A$250m on the project, and had planned to spend another A$80m next year. But that future investment is now unlikely to go ahead bar a surprise deal between Australia and East Timor.

The disagreement between the two countries hinges on a disputed maritime boundary. Canberra contends the boundary should be the continental shelf which comes within 70km of the East Timorese coast. East Timor argues the border should be drawn at the midway point between the two countries.

Talks between the two countries broke down last month after East Timor rejected an offer of up to A$3bn in extra revenues if it agreed to defer boundary talks for 100 years.

Woodside said that until the sea boundary negotiations were resolved it would concentrate on other projects, including the Browse project, which sits in Australian waters in the Timor Sea.

East Timor Laments Likely Shelving of Timor Sea Gas Project Over Border Dispute With Australia

CANBERRA, Australia (AP) -- A senior East Timorese official Thursday lamented the likely scrapping of a $5 billion (euro3.8 billion) natural gas project in the Timor Sea because of a deadlocked border dispute with Australia.

Woodside Petroleum Ltd., the Australian energy company responsible for the project, has said development of the massive Greater Sunrise oil and gas field -- believed the richest in the Timor Sea -- could be shelved if a revenue-sharing agreement is not struck between Australia and East Timor before the year's end.

"We lament that it hasn't been able to proceed," said East Timor's Secretary of State, Jose Teixeira, adding that he doubted a solution would be found in the next six weeks -- or that the two sides would even meet again before 2005.

East Timor wants to divide the seabed midway between its southern coast and northern Australia but Canberra insists on maintaining a maritime border closer to East Timor, as agreed in 1989 when East Timor was still a province of Indonesia.

Where the line is finally drawn will determine the countries' respective share of billions of dollars of oil and gas revenue.

Teixeira, East Timor's head negotiator in the dispute, has been critical of Australia, which continues to issue drilling licenses for disputed seabed areas. He said East Timorese Prime Minister Mari Alkatiri was keen for the project to go ahead, but only if the proceeds are divided fairly between the two countries.

Australian Resources Minister Ian Macfarlane says the maritime border is still being negotiated.

Woodside owns 33.4 percent of Sunrise. Its partners are ConocoPhillips with 30 percent, Royal Dutch/Shell Group (RD) with 26.6 percent and Japan's Osaka Gas Co. with 10 percent.

Australia's Woodside sees Timor Sea gas project as viable although stalled

SYDNEY (AFX) - Woodside Petroleum Ltd said the 5 bln aud Greater Sunrise gas project in the Timor Sea is stalled but remains viable.

Woodside chief executive Don Voelte told an analyst briefing a decision to progress depends on the governments of East Timor and Australia reaching agreement. Last year the East Timor Government refused to present to its parliament for ratification an agreement it signed with Australia in 2003 covering legal and fiscal terms for the Greater Sunrise development.

The agreement would have split revenues from Greater Sunrise 80:20 between Australia and East Timor.

But since signing the agreement, East Timor has been demanding a more equitable share of returns from the Greater Sunrise reservoirs, located about 450 km northwest of Darwin but only about 80 km from the East Timor coast.

'The project has stalled but 9 tcf (trln cubic feet) of gas is still there - it is a viable project,' Voelte said.

Woodside has a 33.4 pct stake in Greater Sunrise, ConocoPhillips has 30 pct and Royal Dutch/Shell 25.56 pct, with the balance held by Osaka Gas.

The Royal Dutch/Shell group of companies is Woodside's largest shareholding owning about one-third of the company.

Voelte said Woodside will continue to carry Greater Sunrise in its accounts at about 60 mln aud and is not intending currently to writedown this value.

Woodside boosts stake in Timor Sea oil

AAP, March 11, 2005

Woodside Petroleum Ltd has signed a deal to purchase part of Shell Development (Australia) Pty Ltd's interests in a Timor Sea oil field.

Australia's largest independent oil and gas producer said the acquisition would increase its stake in the production licence that covers most of the Laminaria-Corallina project by 16.67 per cent.

It would also boost its share of the floating production storage and offloading vessel Northern Endeavour by a similar amount.

Woodside said the purchase price of $US93.3 million ($A117.95 million) would be reduced after adjustments for working capital and cash flow movements between the effective date of 1 July 2004, and the expected closing by April 2005.

Paladin Oil & Gas (Australia) Pty Ltd, the other participant in the Laminaria-Corallina project, has agreed to purchase Shell's remaining interests in the AC/L5 permit and its 15 per cent interest in the adjacent exploration permit, AC/P8.

Following the purchase, Woodside will own 66.67 per cent of the Corallina field and the Northern Endeavour as well as a 59.9 per cent interest in the Laminaria field, which is unitised over production licences AC/L5 and WA-18-L.

Paladin will hold the remaining 33.3 per cent of both the Corallina field and Northern Endeavour and the remaining 41.1 per cent of the unitised Laminaria field.

Woodside chief executive Don Voelte said the agreement would consolidate Woodside's ownership in one of its key assets.

"We are keen to make further investments to increase production from the project as well as to pursue further opportunities in the area," Mr Voelte said.

Woodside already plans to drill an infill appraisal well in the Laminaria field in the second quarter of 2005 and an exploration well in the AC/P8 permit later in the year.

At closing, the transaction will add about 7.2 million barrels of oil equivalent to Woodside's proved and probable reserves and increase production by about 970,000 barrels of oil equivalent in 2005 and one million barrels of oil equivalent in 2006.

Woodside remains operator of the Laminaria-Corallina project and has the option to buy on fair market terms Paladin's interest in the Northern Endeavour at the end of the project's life.

Shell Development Australia chief operating officer Chris Gunner said the focus of Shell's upstream business in Australia was on the development of its large gas resources.

"Although it is a quality asset, Laminaria is a declining oil field and there is not a strong fit with this strategic direction either on gas or on our growth aspirations," Mr Gunner said.

He said Shell remained committed to Australia and would maintain significant investment.

Demand for natural gas ignites shares of Woodside Petroleum

The Wall Street Journal, December 30, 2005
By STEPHEN BELL Staff Reporter

Surging demand for natural gas has fired up the share price of Australia's Woodside Petroleum to record levels in the past few weeks, and further gains may be just over the horizon.

Despite a near doubling in its share price in 2005, most energy analysts don't expect the heat to come out of Perth-based Woodside any time soon.

Aside from critical milestones due in the new year on its multibillion-dollar Pluto and Sunrise projects, the company is poised to lift production by a third in 2006 as new oil and gas fields come on stream.

And recent overseas deals, namely ConocoPhillips's US$35.6 billion cash-and-stock proposal to acquire Burlington Resources Inc., have reminded investors that Woodside may look cheap to cashed-up global energy groups looking to acquire gas producers.

UBS analyst Gordon Ramsay believes Woodside is underpriced, despite its shares surging to a high of A$39.39 (US$28.72) in December on the back of a 15-year sales deal for its Pluto field, off the coast of Western Australia. News of the deal, which strongly increases the chances of Pluto getting a go-ahead in mid-2007, prompted Mr. Ramsay to lift his Woodside target price to A$44.11 from A$38.13. The stock closed Thursday at A$38.90.

"I just love the long-term story, so if you look at Woodside more than a year out, the stock is not expensive," he said. Already Australia's biggest energy group, Woodside may lift production 30% in 2006 as it brings three projects on stream, starting with the Chinguetti oil field off the coast of Mauritania in February.

Longer-term, Woodside may double production by the end of the decade as it lifts exports of liquefied natural gas from its one-sixth-owned, and operated, North West Shelf venture, alongside new developments such as Pluto. It aims to produce up to seven million metric tons a year of LNG from Pluto. The 100%-owned field lies 190 kilometers off the coast near the North West Shelf, which recently approved an A$2 billion (US$1.46 billion) expansion.

Woodside is also boosting exploration spending by 50% in 2006 to around A$500 million. The number of exploration wells will roughly double to around 40 as drilling activity rises steeply in Libya and the Gulf of Mexico.

"We still see Woodside as ranking better than average across the market," said Don Hamson, head of active equities, Asia-Pacific, for State Street Global Advisers, which holds Woodside shares as part of its A$5 billion active Australian equities fund.

Mr. Hamson is comfortable with Woodside's share-price valuation, despite the recent leveling off in booming oil prices. Credit Suisse First Boston is also bullish on the stock, recently upgrading it to "buy" from "neutral" and lifting its 12-month share-price target from to A$42 from A$36. The broker said Woodside remains its preferred oil-sector growth story, based on new developments that are skewed toward high-margin crude-oil projects.

Deutsche Bank energy analyst John Hirjee rates Woodside a "buy" with a price target of A$40. He expects to see "two years of very strong earnings per share growth."

But Stuart Baker, an analyst at Morgan Stanley, takes a contrarian view, regarding Woodside as "expensive" after its share-price surge this year.

"Some of its performance could get unwound because our view is that oil prices will be lower next year and the year after," he said, adding that Morgan Stanley has a "sell" on the stock with a price target of A$30.

"When we add up all of the projects, including Pluto, we can't get to A$37 a share," he said.

Deutsche Bank's Mr. Hirjee agrees that oil may soften. His firm predicts prices will average just US$45 a barrel in 2007, down from an expected US$60 a barrel in 2006. "But even if oil prices come off, they [Woodside] have the ability to withstand that downdraft because of their strong production growth," Mr. Hirjee said.

High energy prices have helped the cause of Don Voelte, who took over as chief executive of Woodside in April 2004 with a mandate to expand the company beyond the North West Shelf.

Mr. Voelte has raised eyebrows in Perth's tightly knit energy sector by his aggressive marketing of Pluto, which was only discovered in April. He wants to fast-track the field because it will dramatically lift Woodside's share of world LNG trade by the time a forecast shortfall of the fuel develops next decade.

In contrast, Chevron's much bigger Gorgon field, situated relatively close to Pluto, was discovered in the 1970s. Yet the Gorgon partners -- the others are Royal Dutch Shell and Exxon Mobil -- only secured major customers this year. Deutsche Bank's Mr. Hirjee said Mr. Voelte can take some of the credit for "rallying the troops" at Woodside and making it his mission to develop at least one LNG project in his expected five-year term.

Investors and gas customers, meanwhile, will be watching closely the results of Woodside's Pluto-2 appraisal well, which is due to be drilled over the next few weeks. "The Japanese will want comfort that there are enough gas reserves at Pluto to underpin those sales contracts," Mr. Hirjee said, in a reference to Tokyo Gas's recent agreement to buy up to 1.75 million tons of LNG a year from Pluto starting in late 2010.

Over the next six months, Mr. Voelte will aim to boost Pluto's estimated 3.5 trillion cubic feet of gas to four-to-five trillion cubic feet, Mr. Hirjee said. Second in line behind Pluto is Woodside's 50%-owned Browse venture, further offshore, which could come on line in 2012 if it secures customers in Asia and the U.S.

Woodside also owns one-third of the US$5 billion Sunrise field, in the Timor Sea, where work has stalled because of a long-running border dispute between Australia and East Timor.

East Timor Prime Minister Mari Alkatiri said recently that a revenue-sharing deal with Australia will be signed in Sydney on Jan. 12. But analysts warn that the official signing won't automatically push Sunrise to the front of Woodside's project-development queue.

Mr. Ramsay, the UBS analyst, said the deal still needs to be ratified by the East Timor parliament. "I worry about that," he says. ConocoPhillips owns 30% of Sunrise, while Royal Dutch Shell owns 26.6% and Japan's Osaka Gas Co. has 10%. Shell also owns 34% of Woodside. The Anglo-Dutch group tried to take over Woodside several years ago, but the A$10 billion bid was blocked by Canberra on grounds of national interest.

High oil prices mean that Shell has plenty of cash to do a deal. But a new Woodside takeover costing around A$30 billion is considered unlikely.

Aside from the political obstacles, Shell has said that it would be hard to find an attractive big target at today's valuations. Another theory has Shell selling the Woodside stake, potentially to China's Cnooc, following that group's failed bid for Unocal earlier in 2005.

But Shell Australia Chairman Tim Warren said recently that he is "more than happy" with the stake, given Woodside's strong share-price gain over the past two years.

Territory awaits dawn of Sunrise

By Alison Bevege, Northern Territory News (Australia), July 18, 2007

Nearly 10 times the amount of gas Australia uses each year lies beneath the Timor Sea in the Greater Sunrise project.

The NT Government holds regular talks with Woodside Energy about exploiting the gas field.

But Chief Minister Clare Martin's spokesman Richard O'Leary would not reveal whether the Government had asked for access to Greater Sunrise gas.

Ms Martin said the Government encouraged potential gas suppliers to provide a portion of their gas for ''downstream'' gas-related industries.

The Woodside Energy project team is now tossing up whether to pipe the Greater Sunrise gas to Darwin or to Timor Leste for processing.

Woodside said it would not speculate on a production timeline until issues such as the marketing of the gas were resolved.

This would involve signing agreements on price and sales quantity before a final investment decision on the project can be taken, Woodside Energy spokeswoman Hannah Fitzhardinge told BusinessWeek.

Energy producers often sell their entire resource before the project is started.

Darwin's Wickham Point LNG plant has sold its gas for the next 17 years to Japanese buyers Tokyo Gas and Tokyo Electric.

Guaranteed access to large reliable gas reserves would enable a $3 billion Dow Chemicals plant to be built in Darwin.

Alcan Gove is also looking to source gas after intended supplier Oil Search shelved its Papua New Guinea gas pipeline project.

In February this year, Woodside Petroleum mobilised a team to look at developing the gas reserve, estimated to have about 7.68 trillion cubic feet of gas, after treaties between East Timor and Australia came into force in February, splitting future royalties from the Greater Sunrise field 50-50.

Woodside Petroleum said the development of the Greater Sunrise gas fields was now also subject to the finalisation of a development plan and a fiscal stability agreement being signed with the Timor Leste Government.

East Timor unrest will hamper LNG project

By Nigel Wilson, The Australian, August 13, 2007

But competition among Greater Sunrise's owners may delay the project even further

Images of the burning Customs House in Dili have probably put the kybosh on early development of Greater Sunrise in the Timor Sea -- at least as a stand-alone LNG project.

If ever there was an example of political or country risk it was the violence that greeted the appointment of East Timor's new prime minister Xanana Gusmao and the country's coalition government.

Supporters of the Marxist Fretilin party took to the streets to complain that President Jose Ramos Horta had disregarded that Fretilin was the most successful party at East Timor's recent elections.

Being excluded from government appeared to give Fretilin supporters the incentive to attempt to destroy the new administration with former prime minister and Fretilin leader Mari Alkatiri, a long-time opponent of Mr Gusmao, saying he and other party officials would traverse the country over the next few days urging supporters to protest against the new government, including using civil disobedience.

Dr Alkatiri's rhetoric that he "hoped it will not lead to a people power (uprising), but we cannot stop the people protesting for their rights" led officials close to Sunrise to suggest negotiations would inevitably slow.

When the Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS) became legally binding in February it was thought in Woodside, which is operator of the Greater Sunrise joint venture, that the project could get back on track.

More than two years of recalcitrance in East Timor -- mainly the result of Fretilin's continued objections to Australia controlling the reservoir -- appeared to be over.

It has always rankled among Fretilin's rank and file that in securing a 50:50 revenue sharing equation with Australia on Greater Sunrise (as opposed to the original 20:80 arrangement), East Timor had to put on hold its claims to jurisdiction and maritime boundaries in the Timor Sea for 50 years.

The Greater Sunrise reservoirs, crossed by the boundary of the Joint Petroleum Development Area, are currently regarded as the biggest reserves in the Timor Sea available to underpin East Timor's fragile economy.

Woodside chief executive Don Voelte said shortly after CMATS became law that Greater Sunrise could fit in the company's development pipeline after Pluto and before Browse because "it is well advanced".

Before serious work on a Sunrise LNG project is resumed, more appraisal drilling will need to be undertaken -- and the two mooted appraisal wells are not yet in Woodside's drilling program.

It was noticeable also that in Mr Voelte's presentation concerning Woodside's $12 billion investment in Pluto LNG, there was no mention of Greater Sunrise even though Pluto 2 and Pluto 3 came in alongside potential Browse Basin developments.

The other question facing Woodside and its Greater Sunrise partners -- ConocoPhillips, Shell and Osaka Gas -- is whether a stand-alone LNG development is necessary.

As one observer said last week, if you think the machinations of the Gorgon joint venture between Chevron, ExxonMobil and Shell might expose competing commercial interests, then the Greater Sunrise partnership is an even bigger minefield.

Woodside, ConocoPhillips and Shell are all competitors for the north Asia LNG market in the decade to 2020 to meet the demands of Japan, South Korea, China and possibly Taiwan.

But Chinese demand for LNG is not growing anywhere near as fast as was predicted when the North West Shelf gas project won its controversial $25 billion over 25 years deal to supply Guangdong province.

Which means the potential north Asia market in the next decade is less capable of supporting all the potential LNG suppliers after 2014.

ConocoPhillips wants to expand its Wickham Point LNG plant in Darwin but lacks sufficient gas from its existing resource at Bayu Undan in the JPDA.

It's probable that for ConocoPhillips the best supply bet would be the Greater Sunrise reservoirs even though its exploration program with Santos at Caldita is not yet fully evaluated.

But would Shell and Woodside want a competitor for their north Asia aspirations?

Woodside is spending a fortune on Pluto and its various permutations, never mind the Browse, while Shell is putting huge investment into proving up its gas potential in the Browse Basin.

That means Sunrise has real competition among its owners which might make East Timor developments irrelevant.

Woodside Profit Rises 16 Percent as Oil Fields Start

By Angela Macdonald-Smith, Bloomberg, August 22 2007

Woodside Petroleum Ltd., Australia's second-largest oil and gas producer, said first-half profit rose 16 percent on an increase in output and the sale of a stake in a field off the northwestern coast.

Net income increased to A$610.1 million ($488 million), or 92 cents a share, in the six months ended June 30, from A$524.4 million, or 80 cents, a year earlier, Perth-based Woodside said today in a statement. The profit beat a consensus estimate of A$600 million, according to Credit Suisse Group.

The start-up in July last year of the A$1.48 billion Enfield oil project off Australia's northwest coast boosted sales and contributed to a 59 percent jump in cash flow. Chief Executive Officer Don Voelte today reiterated that full-year output is expected to increase as much as 15 percent to between 72 million and 78 million barrels of oil equivalent.

"Most things seem to be in order, cash flow is very strong," said John Colnan, senior resources analyst at Shaw Stockbroking Ltd. in Sydney. "The production guidance has been maintained, which is the first thing the market will look at."

Woodside, 34 percent owned by Royal Dutch Shell Plc, dropped 1 cent to A$40.99 after earlier rising as much as 90 cents, or 2.2 percent, to A$41.90 in Sydney trading.

Profit before one-time items rose 11 percent to A$545.4 million, lagging a consensus estimate of A$555 million.

"The market has treated Woodside more softly today than it has in the past few weeks with the oil price falling," said Angus Gluskie, who helps manage the equivalent of about $380 million at White Funds Management in Sydney. The result "was fractionally up and had no particular negatives," he said.

The average price Woodside got for oil produced in Australia fell 9.6 percent in the first half from a year earlier, to A$81.21 a barrel, Woodside said last month.

"Increased profit was driven by production and higher sales volumes, with contribution from Enfield and strong performance from the Cossack Pioneer" oil venture on the North West Shelf, Woodside said in the statement. Second-half output will be boosted by the start-up of the delayed Otway gas project off the southeast coast, it said.

The cost of both the Otway gas project and the expansion of the Woodside-operated North West Shelf liquefied natural gas plant has increased beyond the original budget, Woodside said. The Otway project, forecast to cost A$811 million, should be less than 20 percent over budget, while the LNG expansion, originally budgeted at A$2 billion should be under A$2.6 billion, it said.

Woodside said it may exit its business in Africa, which includes the Chinguetti oil project in Mauritania, which has produced less than expected since starting production in February 2006. The African business involves exploration ventures in Libya, Kenya and Sierra Leone, and a stake in the producing Ohanet natural gas venture in Algeria.

Options include selling or trading the assets, splitting them into a separate company, or an initial public offer of the business, Voelte said on a conference call with analysts and reporters.

"You could sit on those assets for the next 10 years and over time they could be more economic, but Woodside probably has better things to do in the next 10 years," Shaw's Colnan said. "It might free up some funds to finance some projects here."

Woodside last month approved the fully owned A$12 billion Pluto LNG project off the northwestern coast and is seeking to develop the Browse LNG project, further to the northeast, and the Sunrise LNG project in the Timor Sea. The company is close to initial accords for the sale of LNG from Browse and Sunrise with customers in Asia, Voelte said.

The possible exit from Africa represents "a dramatic change in strategic focus for the company," said Bernard Picchi, an analyst at Wall Street Access in New York. "They're going back to their knitting. The company seems to be focusing now on these mammoth projects which are going to use an awful lot of cash and provide terrific growth for the company for a long time."

Capital expenditure in the first half jumped 30 percent from a year earlier to A$1.3 billion due to an increase in spending on Pluto and Browse. Full-year capital expenditure may be A$3.9 billion, 70 percent higher than in 2006, Woodside said in a separate presentation.

Woodside drilled five exploration wells in the first-half, including two off the Libyan coast. None were successful.

Net income included a A$56.8 million after-tax gain on the sale of a stake in the Legendre oil field and a A$7.9 million gain on the sale of an exploration license in Papua New Guinea.

Sales rose 19 percent to A$1.87 billion, helped by a 17 percent increase in output to 35 million barrels of oil equivalent. Woodside declared an interim dividend of 49 cents a share, on a par with a year earlier.

Karoon Buys Woodside Acreage in Timor Sea

www.oilvoice.com, November 15, 2007

Woodside has sold its 66.67% stake in Bonaparte Basin permit AC/P8, located in the Timor Sea 500km north of Darwin, to Karoon Gas for $1 million.

Karoon told the market today that the acquisition was conditional on approval from the other partner, Talisman Oil & Gas, and the extension of the permit for a further five years.

The company said the AC/P8 permit offered good exploration potential, due to its location in an existing oil and gas producing province.

It is also located near several large producing oil fields including Woodside's Laminara and Corallina fields.

AC/P8 contained two prospects and at least three leads, which Karoon said needed to be defined further before it would make a drilling decision.

"This exciting acquisition represents a major new exploration interest for Karoon and continues the company's strong organic growth," it said.

Woodside's foot on gas in Timor

Barry Fitzgerald, The Age, 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%.

Woodside to spend $5b on projects this year

Jamie Freed, Sydney Morning Herald, 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.