Woodside Petroleum is forecasting a boost to production as it gets back to basics and focuses on exploration rather than expensive overseas deals.
The Perth-based oil and gas company lifted its annual production target on the back of a better-than-expected quarterly report on Thursday.
Analysts say the company’s Pluto operations have driven the result and led to an improved outlook as it looks to exploration rather than acquisitions or costly developments.
Woodside’s sales revenue rose 24.8 per cent to $US1.679 billion in the three months to the end of June, compared to the same period in 2013.
Production levels rose 17.5 per cent to 23.5 million barrels of oil equivalent (mmboe).
Given its strong operating performance, the company said it was lifting its production target range for 2014 to between 89 and 94 mmboe, up from 86 million to 93 million mmboe.
State One Stockbroking analyst Peter Kopetz said the report showed that Woodside was looking at exploration once again with projects in Morocco, Ireland, Tanzania, Myanmar and another deal in the US.
“Woodside’s developed everything they can for the time being and getting future cashflows out of it, and they’re going back to basics so they can save on costs and make value for the shareholders through exploration,” he said.
It appeared that making a major acquisition or paying for brownfields expansion was off the cards for the time being, he said.
Woodside’s proposed Browse floating LNG joint venture off Western Australia remains the company’s prime development prospect after it walked away from the $US2.5 billion Leviathan project in Israel in May.
Woodside expects its first half LNG processing revenue to be between $US90 million and $US100 million, before tax.
It also expects a pre-tax loss of $US20-$US40 million on the sale of non-core assets during the half.
Meanwhile, the company is continuing with design work for the Browse development and plans to enter the front-end engineering and design phase in the second half of 2014.
RBC Capital Markets analyst Andy Williams said the production report was broadly positive and stronger than expected.
“The lift in the guidance was a natural consequence of that,” Mr Williams said.
But, he said, there had been little change on the Browse joint venture since the first quarter report.