By Paddy Manning
Woodside shares have surged almost 5 per cent this morning after the company upgraded its production guidance citing a stronger-than-expected ramp-up of its Pluto project, which shipped its first LNG cargo during the June quarter.
Woodside shares jumped $1.45 to $31.83 after it lifted its 2012 production target to 77 to 83 million barrels of oil equivalent (MMboe), from a previous range of 73 to 81 MMboe. This comprised 57 to 60 MMboe from the underlying business (ex-Pluto) and 20 to 23 MMboe from Pluto LNG.
Woodside said the increase was primarily due to better-than-expected performance from Pluto LNG with a smaller increase due to the rescheduling of the planned Vincent shut-down into 2013.
Woodside gave guidance on a line-items for the June 2012 half-year, ahead of the August release of its interim accounts, including: $420-460 million in depreciation, depletion and amortisation costs; $10-50 million in petroleum resource rent tax expenses; $45-60 million in cargo mitigation and other one-off costs associated with the Pluto commissioning; and other charges of $55-85 million.
Woodside said the carbon tax would cost it between $20 million and $40 million over the year to June 30, 2013.
Woodside expensed $73 million in unsuccessful exploration during the quarter having drilled two ''duster'' wells in the Ragnar Hub, Vucko-1 and Banambu Deep. A third well, Ananke-1, will spud in the next quarter before Woodside takes a self-imposed break in exploration drilling for its Pluto expansion.
Woodside said discussions were continuing to with other resource owners who could supply gas to Pluto but CLSA analyst Mark Samter said his personal view was that ''even third-party gas might be sub-economic for the Pluto expansion.''
Mr Samter, who has a ''sell'' recommendation on Woodside, said the company would be ''a far better investment if they were not doing Browse and Pluto'' and ''stop throwing good money after bad'' to concentrate on their mature assets.
At the current share price, he said, the company would ''yield 8-9 per cent and even in a lower oil price environment they could sustain that for a good few years''.