Woodside flags $1.2 billion charge against asset bought under BHP merger

By Thomson Reuters Feb 15, 2024 | 12:11 AM

By Rishav Chatterjee

(Reuters) -Woodside Energy, Australia’s largest energy firm, flagged a non-cash post tax-asset impairment of around $1.2 billion from its Shenzi oil and gas field in its 2023 fiscal earnings, sending its shares down to close at a two-month low on Thursday.

Woodside had acquired the Shenzi deepwater oil and gas fields in the Gulf of Mexico off the coast of Louisiana as part of its merger with the petroleum assets of BHP Group in 2021.

Shenzi represented around 5% of 2023 production for Woodside.

Woodside, which recently shelved plans for a $52 billion oil behemoth tie-up with smaller rival Santos, said it also expects a non-cash post-tax impairment of $300 million for the Wheatstone project in Western Australia that is operated by Chevron.

The oil and gas firm is set to record around $1.5 billion of total asset impairments for 2023.

Shares of the company closed down 3% at A$30.24 to hit their lowest since Dec. 14.

The company also flagged a reduction in reserves at the Shenzi assets, which offset improved performance at its North West Shelf and Pluto LNG projects.

“The reduction in reserves at Shenzi are mainly associated with the performance of infill sidetracks and performance of the Shenzi North development following start up,” Woodside said in a statement.

Henry Jennings, senior market analyst at Marcus Today, said the fall in reserves at Shenzi and the expected impairments “could have been one of the reasons” why the merger with Santos did not happen.

“Woodside has been weak for a while, so suspect the market assumed it was in the wind,” added Jennings.

The company said it had also sanctioned reserves additions from deepwater projects in Gulf of Mexico, adding that the boost in performance at North West Shelf and Pluto helped the firm in achieving record production in 2023.

(Reporting by Rishav Chatterjee in Bengaluru; Editing by Rashmi Aich and Sonia Cheema)