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MELBOURNE (Reuters) – Woodside (OTC:WOPEY) Petroleum on Thursday slashed the gas reserves estimate for the Wheatstone project, operated by Chevron Corp (NYSE:CVX) off Western Australia, in an unexpected downgrade that knocked the top Australian oil and gas company’s shares.
Total proved reserves at Wheatstone are now estimated at 112.6 million barrels of oil equivalent (MMboe), down 27% from 154.2 MMboe, Woodside said in its third-quarter report. Proved and probable reserves were also cut by 27%.
Shares in Woodside, which is poised to merge with the petroleum arm of BHP Group (NYSE:BHP), fell as much as 1.8% in a flat broader market.
Woodside holds a 13% stake in Wheatstone, an 8.9 million tonnes a year liquefied natural gas (LNG) project. Chevron owns 64%, while Kuwait Foreign Petroleum Exploration Co (KUFPEC), Kyushu Electric Power Company and Japan’s JERA have minority stakes.
A Chevron spokesperson was not immediately available to comment on the Wheatstone downgrade, which Woodside said stemmed from reservoir studies based on 4D seismic, well performance and well drilling results.
Woodside said its quarterly revenue more than doubled to $1.53 billion from $699 million a year ago, boosted by sales of third-party volumes into a hot spot market. However it missed a broker consensus forecast of $1.69 billion.
On the positive side, the company said it expects to benefit more from the strong prices in the fourth quarter, as most of its contracts are tied to oil prices with a three-month lag.
“We expect in the fourth quarter to see the benefit of stronger pricing on our realised prices, reflecting the oil price lag in many of our contracts and recent increases in gas hub prices,” Chief Executive Officer Meg O’Neill said in a statement.
Woodside has more exposure to spot LNG prices, which have soared to record highs, than local rivals Santos, Oil Search (OTC:OISHY) and Origin Energy. It said it expects about 17% of its produced LNG to be sold into the spot market in the fourth quarter.
Third-quarter production dipped from a year ago to 22.2 million barrels of oil equivalent (mmboe) due to planned maintenance at the two LNG plants that Woodside operates – North West Shelf and Pluto.
