Woodside Petroleum will slash spending by 50 per cent and is deferring a final investment decision on a number of key projects amid the the uncertain economic climate arising from the spread of COVID-19.
The Perth-based company on Friday said “decisive and swift action” was required in an uncertain global investment environment.
The pandemic, as well as a global oversupply of crude oil and LNG, has led to a collapse in benchmark crude prices.
Woodside will defer an investment decision on its $US11 billion ($A18.2bn) Scarborough gas project in Western Australia, which it jointly owns with BHP.
It will also defer final investment decisions for the Pluto Train 2 and the $US20 billion Browse projects.
Chief executive Peter Coleman said the company was responding to the lower, more volatile oil price environment by reducing its expenditure for 2020 and delaying final investment decisions on growth projects.
“These are extraordinary times, that no one could have foreseen,” he said.
“But Woodside enters this period of significant uncertainty with one of the stronger balance sheets in our industry and world-class, low-cost producing assets, which are resilient to commodity price fluctuations.”
He also said all steps were being taken to protect those who worked for the company.
“Our immediate priorities have been minimising the risks from COVID-19 to staff, contractors and the communities where we operate, and maintaining our ability to deliver gas to Western Australia and overseas customers who depend on us,” he told the ASX on Friday.
Mr Coleman said the development of Scarborough and Browse gas resources through Woodside’s proposed Burrup Hub remained a highly competitive LNG investment opportunity and would provide significant economic returns for decades to come.
He also said Woodside’s production guidance remained unchanged.
Meanwhile, smaller firm Beach Energy has targeted a 30 per cent deferral in FY21 capital investment relative to prior planning.
The Adelaide-based company has also lowered its earnings guidance by about eight per cent to $1.175 to $1.250 billion to reflect the lower oil price environment.
Beach managing director and chief executive Matt Kay said the company’s balance sheet was in a strong position while revenues from its gas sales would cover operating and staying-in-business costs.