The company's financial statements for the period are also expected to include a non-cash, post-tax onerous contract provision for the Corpus Christi LNG sale and purchase agreement of US$447 million.
The combined impact of the impairments and the onerous contract provision is a post-tax loss of US$4.37 billion.
Approximately 80% of the oil and gas properties impairment losses are due to the significant and immediate reduction in oil and natural gas prices assumed up to 2025, impacting Woodside’s products in the prevailing economic climate. Additional contributors are increased longer term demand uncertainty impacted by the Covid-19 pandemic and macroeconomic dynamics, and increased risk of higher carbon pricing.
Woodside CEO, Peter Coleman, said: “We’ve taken some tough decisions over recent months in response to the Covid-19 pandemic and oversupply in our key markets, but Woodside’s focus remains on cash preservation, capital discipline and maintaining the strength of our balance sheet. This will ensure we can deliver appropriate returns to shareholders and maintain our investment grade credit rating over the long term.
“We have low gearing and high liquidity, and announced significant expenditure reduction activities in March. Woodside’s balance sheet provides a resilient, long-term basis for creating shareholder value.
“The unique confluence of events that has unfolded through 2020 will challenge all participants in the global energy sector and we expect to see adjustment of capital allocation priorities by other asset owners as the cycle plays out.
“Woodside’s disciplined approach to financial management gives us options to pursue inorganic growth opportunities as and when they emerge, at the same time supporting our strategy to develop the Scarborough and Browse gas resources located offshore Western Australia through our proposed Burrup Hub when the time is right.
“Although these are difficult and uncertain times, the medium-term outlook for Woodside’s growth prospects and for our core product, natural gas, is positive. In the longer term, our commitment to innovation and new technologies will ensure we can also take advantage of emerging markets for hydrogen and ammonia which will be a crucial part of the world’s transition to a lower-carbon future,” he said.
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/14072020/woodside-anticipates-us437-billion-impairment-in-1h20/