Woodside Petroleum Limited (Woodside Petroleum) has suspended a $100 million (AUD138.3 million) extension of Stybarrow oilfield off Western Australia’s North-West it steps up trials to preserve cash to pay for its liquefied natural gas (LNG) strategy, media sources reported. BHP Billiton is the operator of the oilfield with 50% stake, while the rest is held by Woodside Petroelum.
It remains undecided whether the partners can agree for BHP Billiton to continue on its own, in return for an increased Stybarrow stake.
BHP Billiton’s spokesman said a technical evaluation of the project was still in progress, and that its development was yet to be formally sanctioned.
BHP Billiton has planned to release its most recent exploration and development report next week.
Stybarrow North is understood to involve the drilling of a new production well and laying of a subsea pipeline to tie back to the Stybarrow production and storage and offtake vessel (FPSO). The Stybarrow field, which is anticipated to include up to 90 million barrels of recoverable oil, is one of Woodside Petroleum’s most important Australian oil producers.
The $760 million project produced first oil in the previous year and has been producing as many as 80,000 barrels of oil per day. The field’s natural decline rate ever since has cut output to about 55,000 to 65,000bpd.
Although Woodside Petroleum’s contribution in Stybarrow North is likely to have cost only about $50 million, the $27.4 billion oil major has become ever more drastic in its moves to cut costs from non-core and non-operated projects to deal with the heavy capital expenditure requirements of its wholly owned Pluto LNG project.
Almost half of Pluto’s $12 billion is planned to be exhausted in 2009, at a time when Woodside Petroleum’s income streams are being strictly dented by a falling oil price.
The company has up to now refused to conduct an equity rising to free up its tight cash position and, in defiance of many sections of the investment community, is instead depending upon on debt markets to fund its capital budget of about $7 billion for 2009.
About $5.1 billion of 2009 budget is given to advancing Pluto, which is not schedule for completion and first gas and revenue production until 2010.
Woodside Petroleum’s cost-cutting efforts so far has ranged from axing in-house coffee machines for staff to slashing contract-employees’ pay by up to 20% , in addition to putting its halfstake in the Otway oil project off Victoria on the market.
Woodside Petroleum has already cut $500 million off its cost base during the removal of some activities and delay of others. This year’s budget, initially is as high as $7.3 billion, has been cut considerably.