Woodside tops 2022 production guidance but revenues ease on falling oil prices

Woodside Energy (ASX: WDS) on Wednesday posted a record quarterly production of 51.6 million barrels of oil equivalent for the December quarter – surpassing both its guidance and marking the highest annual production in the company’s history.

“Consistent strong operational performance and favourable operating conditions across the combined portfolio was a key driver in achieving record quarterly and full-year production,” said CEO Meg O’Neill.

December quarter results vs. expectations

Here’s how the December quarter results fared against StreetAccount expectations:

• Production 51.6MMboe vs. est 48.8MMboe

• Sales volume 52.2MMboe vs. est 54.3MMboe 

• Sales revenue $5.16bn vs. est $5.33bn

Woodside said full-year 2022 production was a record 157.7MMboe, tracking above its upgraded guidance of 153-157MMboe.

The company reaffirmed its full-year 2023 guidance of 180-190MMboe, reflecting a year-on-year increase between 14% to 20.5%.

Revenues ease on falling oil prices

Revenue in the December quarter was $5.16bn, a 12% decrease from the previous quarter due to a decrease in international crude oil and LNG prices and a reduction in trading activity.

Woodside’s average realised oil prices fell from US$102 in the September quarter to US$98 in the December quarter.

To add some perspective, Brent crude oil prices fell -21.9% in the September quarter from US$109 to US$85 a barrel. 

Prices were rather volatile in the December quarter, trading at peaks of almost US$100 and lows of US$75. Surprisingly, prices finished the quarter up just 0.8% to US$85.95.

Brent crude oil (Source: TradingView)

Year-on-year revenue was up 77.6% but that comparison remains unreliable given the company’s merger with BHP’s petroleum assets. 

Broker views

Brokers have yet to run the ruler for the December quarter results. The broker ratings and target prices from the past two weeks include:

• UBS: Neutral rated with a $33.40 target price

• Macquarie: Neutral rated with a $38.00 target price

• Morgan Stanley: Overweight rated with a $41.00 target price

• Citi: Buy rated with a $38.50 target price

The average target price among the four brokers is $37.73. Based on Tuesday’s close of $37.75, this implies pretty much zero upside.