Woodside Petroleum has upgraded its full year production target, thanks to a stellar start to its giant Pluto liquefied natural gas project (LNG) that helped boost second quarter output by 43 per cent.
Investors piled into the stock on Thursday amid hopes the oil and gas producer has now turned the corner with new, more conservative management after the Pluto project was plagued with cost blowouts and delays.
The upbeat outlook pushed Woodside shares 7.54 per cent higher to $32.67.
The giant $14.9 billion Pluto LNG project in Western Australia was commissioned four month ago and has delivered eight shipments since production began.
Woodside said the increase in the production target for fiscal 2012 was primarily due to better than expected performance from the Pluto LNG project and the rescheduling of the planned shutdown of its Vincent operations in WA from the fourth quarter of 2012 into 2013.
Woodside chief executive Peter Coleman said Pluto, which was commissioned in March, had achieved superior performance compared to the expected ramp-up.
“This quarter saw continued strong performance from the foundation business, further enhanced by Pluto production, which has exceeded expectations with the delivery of eight LNG cargoes,” Mr Coleman said in a statement.
The oil and gas producer has now increased its production target range for 2012 to 77 million barrels of oil equivalent(mmboe) to 83 mmboe from its previous forecast of 73 to 81 mmboe.
It produced 20.1 mmboe in the three months to the end of June, up from 14.1 mmboe in the first quarter.
Compared to the previous corresponding period, production was up 23 per cent.
State One Stockbroking analyst Peter Kopetz said the company’s impressive production report and outlook had come after a difficult 12 to 24 months, including cost blowouts and delays.
“But it seems like maybe they’re turning the corner with the new managing director … and slowing down everything which de-risks most of the projects,” Mr Kopetz said.
He said the North Rankin redevelopment project seemed to be going okay while the Browse project seemed to be progressing at a slower pace.
“To me it’s probably a better thing for that to happen,” Mr Kopetz said.
CMC Markets chief market strategist Michael McCarthy said Woodside stock had been seriously undervalued for some time and investors were happy with a change in management.
“Peter Coleman has proven himself as a more conservative driver of the business but a man who is focused on overdelivering, having underpromised,” Mr Kopetz said.
Treasurer Wayne Swan said the latest production reports from resource companies such as Woodside obliterated the opposition’s scare campaign over the federal government’s carbon and mining taxes.
