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AFX Europe (Focus): Australia’s Woodside may miss internal profit targets – report

Published: Jul 20, 2006

SYDNEY (XFN-ASIA) – Woodside Petroleum Ltd is in danger of missing its internal profit targets after a string of production and exploration problems, and has ordered heavy cuts in costs to ensure it can maximize returns from record high oil prices, The Australian reported, quoting an unidentified source in the company.

The newspaper said some employees had been advised this week that the company is aiming for a record profit this year, with the challenge of topping 1 bln aud in the second half alone.

But internal projections say earnings are running hundreds of millions of Australian dollars below this level.

The board is understood to have endorsed a strategy to “eliminate all costs not associated with runtime, mechanical integrity, safety, environment or training”, the newspaper said.

Woodside has reduced its forecast of production for this year to 72 mln barrels of oil equivalent from 76 mln.

Managers have told employees that Woodside is regarded as being about 50 pct less profitable than it should be for the assets it holds.

In February, Woodside reported that underlying profit last year increased 1.0377 bln aud from 671.8 mln aud in 2004.

The company does not give the stock market guidance about its earnings, but it is due to release today its production figures for the second quarter.

Woodside is 34 pct owned by the Royal Dutch Shell group.

(1 usd = 1.33 aud)

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