Woodside Energy Group (ASX: WDS) Profit Rises as Prices Offset Lower Output

Woodside Energy Group reported a 27% increase in first-half profit as stronger oil and liquefied natural gas prices outweighed lower production and rising costs.

Net profit after tax reached US$1.67 billion for the six months ended June, while underlying profit increased 7% to US$1.33 billion.

Operating revenue rose 13% to US$7.45 billion, helped by a 20% increase in Woodside’s average realised price to US$74 a barrel of oil equivalent.

The stronger result came as Woodside continued spending heavily on three major growth projects that are expected to reshape its production base over the next several years.

Higher Prices Offset Lower Output

Production fell 13% to 86.5 million barrels of oil equivalent, reflecting cyclone disruptions, a planned turnaround at Pluto LNG and the divestment of Greater Angostura.

Those lower volumes were more than offset at the revenue line by stronger commodity prices. Woodside said conflict in the Middle East disrupted global energy supplies during the half, supporting prices and customer demand.

“We once again delivered strong production, cash flow and shareholder returns, while continuing to execute the next phase of growth,” Chief Executive Officer Liz Westcott said.

Costs, however, moved higher. Unit production costs increased to US$8.80 a barrel from US$6.80, while total production costs rose 12% to US$749 million.

Woodside’s reported profit also benefited from several sizeable tax items.

The company recognised a US$417 million post-tax benefit from an additional Pluto petroleum resource rent tax deferred asset and a further US$90 million deferred tax asset relating to US operating losses.

Post-tax impairment adjustments totalled US$169 million. Those items were excluded from Woodside’s underlying profit, which the company notes is unaudited and not prepared under IFRS.

Dividend Rises as Cash Flow Holds Up

Operating cash flow declined 10% to US$3.01 billion, although free cash flow increased 159% to US$352 million under Woodside’s revised calculation.

The company also received US$1.73 billion in partner contributions for the Louisiana LNG development during the half.

Woodside declared a fully franked interim dividend of 57 US cents a share, 8% higher than a year earlier.

The US$1.08 billion payout represents 80% of underlying profit and will be paid on September 25. The shares trade ex-dividend from September 3.

Woodside ended June with US$8.19 billion of liquidity. Gearing increased to 20.6%, slightly above the company’s target range of 10% to 20%.

Lease liabilities, hedge settlements and higher trade receivables contributed to the increase. Woodside recorded a US$419 million cash outflow from hedge settlements during the period.

Scarborough Approaches the Finish Line

Attention is increasingly turning to Woodside’s next wave of production.

Scarborough was 98% complete at the end of June, with first LNG still expected in the fourth quarter of 2026.

The Trion oil development in Mexico was 64% complete and remains on track for first production in 2028, while the foundation phase of Louisiana LNG was 28% complete and is targeting first LNG in 2029.

Woodside narrowed its full-year production guidance to between 174 million and 185 million barrels of oil equivalent, compared with its previous range of 172 million to 186 million.

Capital expenditure guidance was maintained at US$4 billion to US$4.5 billion.

The company is also targeting US$350 million of annual cost savings from 2028, putting execution and cost control firmly alongside commodity prices as the key drivers of earnings growth over the next several years.