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Woodside (ASX:WDS) share price in focus after profit sank 74% in FY23 result

The Woodside Energy Group Ltd (ASX: WDS) share price is up 1% after announcing its FY23 result.

Woodside is Australia’s largest oil and LNG producer.

Woodside FY23 result

Here are some of the highlights for 12 months to 31 December 2023:

  • Operating revenue fell 17% to US$14 billion
  • Operating cashflow dropped 30% to US$6.1 billion
  • Underlying net profit after tax (NPAT) declined 37% to US$3.3 billion
  • Statutory NPAT sank 74% to US$1.66 billion
  • Free cashflow collapsed 91% to US$560 million
  • Full-year dividend down 45% to US$1.40 per share

There are a few things that drove this result.

The business actually achieved a 19% increase in the annual sales volume to 201.5 million barrels of oil equivalent (MMboe). However, the average realised price worsened by 30% to US$68.6 per barrel of equivalent (boe) and the unit production cost increased 2% to US$8.3 per boe.

The energy prices reduced closer to a “historic norm”, so recent profitability may have been Woodside overearning.

Woodside noted across the industry that contracts for LNG continue to be signed with long durations, “signalling confidence in the future strength of the market from both buyers and sellers.” The ASX share said it’s geographically advantaged to meet the forecast growing demand for LNG in Asia.

Project progress and decisions

Woodside said significant progress was made on its major growth projects in 2023, which will be important drivers for the Woodside share price in the future.

The floating production storage and offloading facility arrived at Sangomar oil field near Senegal in February. There are now 17 wells now drilled and completed at the project, it’s on track for first production in the middle of 2024.

The Scarborough energy project received four key environmental approvals in December 2023 and was 55% complete at the end of the year. Since the start of 2024, it has completed the initial drydock of the hull for the Scarborough floating production unit and the first modules for Pluto train 2 have arrived and been installed on the site in Western Australia.

In 2023, it took a final investment decision (FID) on Trion, a large resource which will be Mexico’s first deepwater oil development. The company is expecting returns from this development will be a “strong contributor” to Woodside’s future cashflows.

Final thoughts on the Woodside share price

Woodside made a lot of profit last year and now it’s making less because of the lower prices, while also investing heavily for growth.

The Woodside share price is down more than 20% from its recent high, so this is a better time to look at the company. Ultimately, it’s energy prices that will dictate what happens with the profit, dividends and Woodside share price. I don’t know what’s going to happen to prices, particularly with a long-term shift to greener energy. So, it’s not one I’m personally looking to invest in.

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