The Woodside Energy Group Ltd (ASX: WDS) share price has dropped around 4% after the energy giant announced a FY23 update.
FY23 guidance
Woodside said that it had completed a review of its 2023 corporate plan, including cost, production and sales forecasts.
Its full-year 2023 guidance is now US$6 billion and US$6.5 billion, assuming no change to current participating interests. It’s expecting to split this as follows: 20% to Sangomar, 50% to Scarborough, 15% to the Gulf of Mexico and Caribbean and 15% to Australia, corporate and other.
Woodside is expecting to produce 180 million barrels of oil equivalent (MMboe) to 190 MMboe. How much it produces can have a key influence on the Woodside share price. Energy prices are important too, but Woodside can’t control that.
Production breakdown
The Sangomar field development phase 1 is targeting first oil in late 2023, so no credit is taken for any production in 2023.
The Mad Dog phase two is undergoing commissioning , and Woodside is assuming for production purposes that it will start-up in the middle of 2023.
A major turnaround is planned at Pluto LNG in the second quarter of 2023, with an expected duration of approximately four weeks.
Of the three main types of product types it’s planning to produce, LNG production is expected to be between 83 MMboe to 85 MMboe. Pipeline gas production is expected to be between 40 MMboe to 42 MMboe. Crude and condensate production is expected to be between 50 MMboe to 55 MMboe.
However, it has changed its methodology for calculating its production. The production guidance using the previous conversion factors would be approximately 6 MMboe higher.
Gas hub exposure
Woodside revealed that it expects approximately 20% to 25% of its 2023 produced LNG to be sold at prices linked to gas hub indices.
Woodside share price thoughts
With Woodside shares down 4%, the oil giant is only up by 56% this year. So, I think this still reflects a strong rise in 2022. Who knows what energy prices are going to do next? But, it seems that oil could remain high enough for Woodside to keep generating strong profit and pay dividends.
However, I’m not sure how much higher energy prices will go – if at all. So, I don’t think it makes sense buy Woodside shares at this price.
