By Kim Christian
Energy giant Woodside Petroleum will slash shareholder returns as a cloud hangs over its massive Browse project due to plummeting oil prices.
The company has cut its dividend payout as full year profit slumped to $US26 million ($A36.62 million) following $US1.1 billion worth of writedowns.
Chief executive Peter Coleman said despite the slump in oil prices, the business was in good shape but not immune to weakness affecting the sector.
He said Woodside and its Browse joint venture partners expect to meet several times this year to consider the future of the massive floating LNG project which is scheduled for a final investment decision in the second half of 2016.
"This is not the time to be reckless at all with respect to capital deployment," Mr Coleman told reporters on Wednesday.
"It's not the time to make bets that the future is going to be rosier just simply because we hope it will be."
He declined to provide break-even figures on the Browse development off Western Australia, but pointed to previous expectations that break-even costs would be around $US50 to $US55 a barrel.
Woodside is forecasting oil prices will trade around $US35 a barrel in 2016/17, reflecting a "lower for longer" future.
The Browse joint venture partners would now have to form a collective view about pricing forecasts after cost reductions had been offset by lower forward price estimates, Mr Coleman said.
"We don't have firm sales in hand and a key for us is it really does need to be economically robust," Mr Coleman said.
Woodside's profit was a major slump on last year's $US2.4 billion net profit, which was the second highest in the company's history.
The company slashed its final dividend to 43 US cents a share, well below the $US1.44 payout a year ago.
IG market strategist Evan Lucas said Woodside had demonstrated its resilience in a low oil price environment.
"Browse has been further pushed to the backburner and they're probably going to have to fight the (Western Australia) Barnett government over whether they get to keep the tenement," Mr Lucas said.
"In this market they're not going to rush into anything."
WA Premier Colin Barnett said it was understandable Woodside remained "justifiably cautious in the face of a very challenging oil and gas market".
"But I am confident the project will go ahead," Mr Barnett said.
Mr Lucas said Woodside was not the growth stock it was five years ago, but the company's shares were sold off on Wednesday because of inaction by oil producers.
Fat Prophets resources analyst David Lennox said Woodside's headline numbers were terrible, but the underlying result was ahead of consensus.
"Browse will go ahead in due course, but in light of the current pricing environment and the capital costs required you just move it along slowly," Mr Lennox said.
Woodside shares were $1.68, or 6.0 per cent, lower at $27.77 at 1400 AEDT.
WOODSIDE'S DIVIDEND SHRINKS
* Full year net profit of $US26m, down from $US2.4b.
* Revenue of $US5.3b, down from $US7.4 billion.
* Final dividend of 43 US cents, down from $US1.44.
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