ASX200: Woodside Energy Group FY22 earning preview

Woodside Energy Group was one of few ASX-listed stocks to see its share price perform well in 2022, as investors looked towards energy stocks with optimism amidst the supply constraints created by Russia's invasion of Ukraine.

The company's FY22 earnings could be hampered, however, by a decline in both sales and revenue volumes in the final quarter of last year, despite record levels of production.

When will Woodside report its latest earnings?

Woodside will report its full-year 2022 results on Monday, 27 February at 10:00 AEDT.

What should traders look out for

First founded in 1954 in the Victorian town of Woodside, Woodside Energy Group has its origins as an oil producer with operations in Victoria, the Bass Strait and Western Australia.

The company has since evolved into Australia's largest oil and gas company, according to figures from Bank of America Global Research. It is a top 10 global E&P and LNG supplier, with annual production of around 200 million barrels of oil equivalent (MMboe).

Woodside touts a diversified portfolio of projects, including the Scarborough natural gas resource in the Carnarvon Basin in Western Australia, and the Sangomar field in Senegal - the country's first oil project which is scheduled to commence production in 2023.

The company's share price recently saw a dip following the release of an update on 14 February, indicating the recognition of a non-cash, post-tax asset value impairment reversal of approximately $630 million for the Wheatstone asset in its upcoming full-year results.

Woodside said the impairment was primarily the result of revision of both long and short-term LNG price assumptions.

Woodside also expects to recognise a Pluto petroleum resource rent tax (PRRT) deferred tax asset of approximately $1,360 million, primarily due to higher income in 2022, alongside improved future price assumptions and additional volumes processed through the Pluto-KPG Interconnector.

The company's underlying net profit after tax (NPAT) will exclude both the Wheatstone impairment reversals and Pluto PRRT DTA when it comes to calculation of the 2022 full-year dividend, however.

Full-year production guidance for 2023 will also remain unaffected, at 180 million to 190 million barrels of oil equivalent. When these figures were first released in November last year they triggered a decline in Woodside's share price of around 5%.

Analysts speculate that investors found the guidance underwhelming given third-quarter production came in at 51.2 MMboe, which would translate into annual output of 204.8 MMboe.

Woodside saw record output in Q4

In its fourth-quarter report released on 25 January 2023, Woodside reported record-high production 2022, albeit sizeable declines in sales volumes and revenue.

Woodside saw record quarterly production of 51.6 MMboe (561 Mboe/day), for an increase of 0.7% compared to the preceding quarter.

'The result lifted output for calendar 2022 to 157.7 million boe, surpassing guidance and marking the highest annual production in Woodside's history,' said Woodside CEO Meg O'Neill.

O'Neill highlighted the strength and reliability of Woodside's operations as the key to this record level of output.

'Consistent strong operational performance and favourable operating conditions across the combined portfolio was a key driver in achieving record quarterly and full-year production, she said.

'Reliability at our Australian-operated assets was exceptional with Pluto LNG and the North West Shelf (NWS) Project both achieving 98.3% reliability for the quarter.

'During the quarter, Woodside celebrated a milestone at Pluto LNG, passing 50 million tonnes of LNG production since the facility started up in 2012. Internationally, asset performance was boosted by completion of planned turnaround work.'

In sharp contrast to this record production, however, both sales and revenue saw significant declines.

Sales volume fell 8.5% compared to Q3 2022 to 52.2 MMboe, a fall that Woodside imputed to declining third-party trades.

Revenue posted an even larger in percentage terms decline, falling 12.0% to $5,160 million, on the back of declines in international crude oil and LNG prices.

Woodside's average realised price was $98/boe, down from $102/boe in the preceding quarter.

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