WPL 1.26% $25.78 woodside petroleum ltd

talk about damage control

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    Nov. 17 (Bloomberg) -- Don Voelte, chief executive of Australia's Woodside Petroleum Ltd., said oil prices at $60 a barrel were ``fairly unsustainable.''

    Oil prices, which rose above $70 a barrel in August, were a threat to economic growth, particularly in developing countries, he said. Woodside, Australia's second-largest oil company, is spending almost A$10 billion ($7.5 billion) to double output in four years. The company's new projects are based on a long-term oil price forecast of between $22 and $24 a barrel, Voelte said.

    ``We would like to see oil prices moderate to a point where economies still are healthy and people are able to buy energy at an affordable price,'' Voelte said today in an interview. For some economies that level is around $40 a barrel, he said.

    Oil has fallen 22 percent since reaching a record $70.85 a barrel in New York on Aug. 30, the day after Hurricane Katrina made landfall on the U.S. Gulf coast, damaging platforms, pipelines and oil refineries. Oil for December delivery traded at $57.82 a barrel at 1:23 p.m. Singapore time in after-hours trading on the New York Mercantile Exchange.

    Woodside's oil and gas production next year is projected to rise to the equivalent of almost 80 million barrels of oil, beating an August estimate of between 72 million and 74 million barrels, the Perth-based company said today. Production is now forecast to increase 30 percent, with about a third of that coming from the Chinguetti field off the Mauritania coast.


    ``We feel very confident on the timing of the Chinguetti oil field in Mauritania, our Otway gas project in Southeastern Australia offshore and also our infield oil production facility in Western Australia,'' Voelte said.

    Woodside's shares rose 79 cents, or 2.5 percent, to A$32.82 on the Australian Stock Exchange today. The shares have rise 63 percent this year. The ASX/S&P 200 index has gained 14 percent in the same period.

    Woodside will produce at least 59 million barrels of oil and gas this year, up from 56 million last year and 1 million barrels more than the company forecast in August.

    Woodside has spent more than five years developing Chinguetti as part of a strategy to become a significant oil and gas producer in Africa. The field, half owned by Woodside, is expected to produce about 75,000 barrels a day from late February. The capital cost may be as little as $720 million, $30 million less than forecast, Chief Operating Officer Keith Spence told an investor conference in Sydney yesterday.
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