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- Only a month into the job, acting Woodside (WPL) CEO Meg O’Neill is making some big changes, most recently with the decision to exit the Kitimat LNG (KLNG) project in Canada
- Held under a joint venture with Chevron as the operator, the 50 per cent stake was acquired in 2014 through the purchase of assets held by Apache
- The exit is anticipated to result in a hit to Woodside’s 2021 profit of between US$40 million and US$60 million (roughly A$51.4 million to A$77.1 million)
- However, it will allow the company to focus on “higher value” projects in Australia and Senegal
- Shares in Woodside are up 1.87 per cent to $22.94 each
Only a month into the job, acting Woodside (WPL) CEO Meg O’Neill is making some big changes, most recently with the decision to exit the Kitimat LNG (KLNG) project in Canada.
Held under a joint venture with Chevron as the operator — which unveiled its exit plans in December 2019 — the 50 per cent stake was acquired in 2014 through the $US2.75 billion (roughly A$3.53 billion) purchase of assets held by Apache.
However, that was long before last year’s massive collapse in oil and gas prices, which further harmed the prospects for large LNG projects.
According to this morning’s announcement, the exit will include the divestment or wind-up of assets, leases and agreements that cover the 480-kilometre-long Pacific Trail Pipeline, as well as the site for a proposed LNG facility at Bish Cove.
The chief downside, however, is that it will result in a hit to Woodside’s 2021 profit of between US$40 million and US$60 million (roughly A$51.4 million to A$77.1 million). That said, the impact will be excluded when calculating dividends.
“The Kitimat LNG proposal was designed to develop a new source of LNG to supply Asian markets in the latter part of this decade,” O’Neill said.
“However, we have decided to prioritise the allocation of capital to opportunities that will deliver nearer-term shareholder value.”
Those opportunities relate to projects deemed to be of “higher value” in Australia and Senegal.
As a result, Woodside said it is working towards a final investment decision later this year for its Scarborough LNG development in Western Australia, as well as the continuation of work at the Sangomar oil project off the coast of Senegal.
While the exit from the Kitimat LNG project signals a distinct shift away from Canada, O’Neill noted that would retain a position in the Liard Basin, which “provides Woodside a low-cost option to investigate potential future natural gas, ammonia and hydrogen opportunities in British Columbia.”
Shares in Woodside are up 1.87 per cent to $22.94 each at 12:50 pm AEST.
