Woodside Petroleum Limited cans Browse LNG Project

Woodside Petroleum Limited (ASX:WPL) puts Browse floating LNG project on hold due to low oil price

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Woodside Petroleum Limited (ASX: WPL) has announced that it and its partners in the Browse Project have decided not to go ahead with it, given the current market conditions.

Those market conditions include low oil prices – and hence low gas prices – making the project commercially unattractive at this stage. Brent Crude oil is currently at US$41.79 a barrel according to Bloomberg, and while prices may hold up, there is still the major risk of further falls ahead.

Brent oil had been trading consistently above US$100 a barrel until September 2014 when prices plummeted to below US$30 a barrel earlier this year.

As the company stated in its announcement, "While significant progress was made to improve project value, this has been offset by an extremely challenging external environment."

CEO Peter Coleman said, "Woodside remains committed to the earliest commercial development of the world-class Browse resources and to FLNG (floating LNG) as the preferred solution, but the economic environment is not supportive of a major LNG investment at this time."

It also suggests Woodside will pull the pin on progressing its controversial and disputed Sunrise LNG project in the Timor Sea – at least until oil prices recover – which could be many years.

Woodside's Browse leases expire in mid-2020 and says it remains focused on satisfying its work program commitments under the Browse retention leases.

The Browse LNG project partners and their share of the project are Woodside (30.6%), Shell (27%), BP (17.33%), Japan Australia (MIMI) (14.4%) and Petrochina (10.67%).

Foolish takeaway

With Browse and more than likely Sunrise LNG projects likely on hold, Woodside will be casting its eye around for more growth levers. The company has already attempted and withdrawn a merger proposal of Oil Search Limited (ASX: OSH). Could struggling Santos Ltd (ASX: STO) be next?

In early trading, Woodside's share price was down 1.3% to $27.02.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »