Woodside Petroleum says its full-year production target remains on track and talks with other gas owners about buying volumes to underpin an expansion of its Pluto field were “active and maturing”.

The oil and gas producer on Wednesday posted an 8.1 per cent drop in net profit to $US828 million ($A792.65 million) for the six months to June 30, compared with the previous corresponding period.

The fall was due largely to last year’s first half being boosted by a gain on the sale of the company’s interest in the Otway gas assets in Victoria and a lower income tax expense, Woodside said in a statement.

However, higher commodity prices boosted revenue resulting in a near-record result for the underlying business.

Underlying profit, which strips out one-off charges, was up 3.6 per cent at $US842 million, the second-highest in the company’s history.

New chief executive Peter Coleman said the result highlighted the ongoing strength of the company’s base business.

“Woodside’s extensive production facilities are performing well and delivering strong revenues,” Mr Coleman said in a statement.

Production of 31.9 million barrels of oil equivalent (MMboe) was down 13 per cent due to planned maintenance and project outages, cyclone interruptions, field decline and divestments.

Mr Coleman told the teleconference that talks with other gas owners about buying volumes to underpin an expansion of Pluto were “active and maturing”.

At the same time, Woodside continues to strive to find more gas on its own permits for the expansion.

“We continue to build volumes, but we just don’t have enough yet,” Mr Coleman said.

“We are close.”

Woodside reiterated its target date for first liquefied natural gas (LNG) from the initial stage of the Pluto project of March 2012.

Mr Coleman also said he would soon meet with the East Timor government to discuss the stalled Sunrise LNG development.

He stopped short of saying Woodside would reconsider the onshore processing option favoured by the East Timor government.

Woodside is instead pressing ahead with a floating vessel concept.

“I’m hoping for a re-establishment of earlier relationships,” Mr Coleman said.

Woodside said demand for LNG had increased by about 10 million tonnes a year after the shutdown of some nuclear power generation following the Fukushima disaster in Japan in March.

The outlook for LNG demand remained strong, particularly in China and Japan, as nuclear power plans were reviewed in the wake of Fukushima, Mr Coleman said.

“I would even suggest there is potential upside in this market as we see the full flow through of the Fukushima issues and how sovereign governments deal with that.”

Woodside declared an interim dividend, fully franked, of 55 US cents per share, up from 50 US cents per share in the first half of 2010.

Its shares reversed earlier losses to finish up 44 cents, or 1.18 per cent, at $37.76.

Chief financial officer Lawrie Tremaine told a teleconference that stronger oil prices had more than offset the effect of lower production volumes.

Woodside said its full year production target of 62 to 64 MMboe remained on track.

Ratings agency Standard & Poor’s said its views on Woodside were not immediately affected by the company’s interim results.