Australia’s Woodside Energy Group will book a nearly £3.6bn ($4.4bn) expense this year, as changes in its asset depreciation calculation method outweighed a tax benefit and a reversal of an impairment charge.
The country’s biggest independent gas producer revealed it had reviewed the methodology it follows to calculate depreciation of its oil and gas properties, after taking into account the scale of its portfolio since acquiring BHP Group’s petroleum assets.
It now plans to depreciate oil and conventional gas assets based on proven reserves, instead of the prior method where proven and probable reserves were both considered.
Analysts at Citi said the 2023 expense guidance was “materially higher” than Visible Alpha consensus of $3.1bn.
Woodside Energy said it would add back $630m post-tax to the valuation of its stake in the Wheatstone liquefied natural gas (LNG) project in Western Australia, after revising up its LNG price assumptions.
The company also said it would recognise a deferred tax asset of about $1.36bn due to higher income in 2022, higher volumes of gas going through its Pluto-to-Karratha pipeline and improved future price assumptions.
Both the Wheatstone project impairment reversal and deferred tax asset will be recognised in 2022 annual results due on February 27, Woodside said.
The company said it would undertake planned maintenance activities across several key LNG operations this year, including an about four-week maintenance at its Pluto LNG project in Western Australia in the second quarter.
The turnaround at the North West Shelf LNG Train 1 is planned for the third quarter, which is likely to last about four weeks.
Woodside reiterated that its full-year production forecast remained unchanged at 180–190m barrels of oil equivalent.
Reuters – Himanshi Akhand and Harish Sridharan