Leading global energy company Woodside (WDS) has seen its full-year net profits more than triple as a result of rising energy prices and the acquisition of BHP Group’s (BHP) petroleum assets in June 2022.
The Perth-based oil and gas giant posted a full-year net profit of US$6.5 billion (A$9.7 billion) for the 2022 calendar year — up more than 228 per cent from the prior year.
Woodside Chief Executive Meg O’Neill labelled 2022 as “momentous”, with the company achieving goals and initiatives ahead of schedule.
“Throughout the year we took steps to maximise our exposure to favourable prices, expanding our global marketing presence and increasing trading activities,” Ms O’Neill said.
Woodside’s record profit figures also benefited from European nations scrambling to lock in non-Russian gas supplies as a result of the Russia-Ukraine war that started back in February 2022.
The giant rewarded its shareholders with a final dividend of $1.44 per share, bringing its full-year fully franked dividend to $2.53 per share.
Woodside announced it was also continuing development efforts at its “enormous” liquefied natural gas (LNG) project in Scarborough, Western Australia. It now sits at 25 per cent completion, remaining on budget and with production anticipated for 2026.
Woodside benefits from Russian energy sanctions
European nations were sent clambering for non-Russian energy supplies following Russia’s invasion of Ukraine as European Union officials continued to tighten sanctions on Russia.
The sanctions on Russian energy supplies helped increase the ‘realised price’ of Woodside’s production by 63 per cent to the equivalent of $98.40 per barrel.
“Woodside is now a larger, geographically diverse energy company with the financial and operational strength to grow our portfolio of high-quality assets while continuing to deliver returns to shareholders,” Ms O’Neill said.
Prior to the war, Russia supplied EU countries with 40 per cent of its natural gas in 2021. Of this, the nation sent off 56.2 per cent to Germany and 29.2 per cent to Italy.
Fast forward to November 2022, and the EU’s reliance on Russian gas lessened to just 12.9 per cent, with the union importing 87.1 per cent of its gas from other countries.
The unprecedented rise in energy prices as a result of Russia’s invasion has benefited Woodside and other Australian LNG producers.
Woodside strategy “undermined climate action”
On Monday, Woodside was also targeted by climate activists concerned about the environmental impact of the energy giant’s projects.
Activist group Market Forces accused the ASX 200-lister of promoting a strategy that “undermined climate action by paying big executive bonuses for increasing oil and gas production”.
It also said that the nation’s largest producer of gas was pursuing plans inconsistent with the Paris Agreement.
The activist group said that in order to abide by the Paris Agreement, which aims to limit global warming to 1.5 degrees Celsius, “global fossil fuel production must start declining immediately and steeply”.
Nevertheless, Woodside is continuing to pursue massive new oil and gas projects, including the controversial Scarborough project.
Woodside confirmed it remained on track to meet its target of reducing net equity scope one and two emissions by 15 per cent by 2025.
The company aims to achieve net-zero emissions by 2050 but has several growth projects in the works, with a final investment decision on its Trion deep-water oil project off the coast of Mexico.
All in all, shareholders seemed pleased with the giant’s annual report, with shares in WDS ending Monday’s trade in the green by 1.53 per cent, trading at $35.13.