Australia's Woodside Petroleum sees higher than expected 2019 investment costs

The logo for Woodside Petroleum, Australia's top independent oil and gas company, adorns a promotional poster on display at a briefing for investors in Sydney, Australia, May 23, 2018. REUTERS/David Gray

(Reuters) - Australia’s Woodside Petroleum Ltd on Thursday flagged higher than expected investment costs as it steps up early work on the two big gas developments that will drive its growth in the next decade.

Australia’s largest independent gas and oil producer said its investment expenditure for 2019 will be between $1.6 billion to $1.7 billion, significantly higher than a UBS estimate of $1.2 billion.

Australia in December overtook Qatar as the world’s largest LNG producer by capacity, with the start-up of Inpex’s Ichthys and Royal Dutch Shell’s Prelude projects, the last two in a $200 billion LNG investment boom over the past decade.

The Perth-based firm is expected to lead the next leg of LNG investments in Australia with its Scarborough and Browse projects. Final investment decisions for both projects are scheduled in 2020.

Meanwhile, the company said it expects 2019 annual production to grow by up to about 3 percent, and posted a 43 percent jump in quarterly revenue on rising output at its Wheatstone LNG project.

Revenue for the quarter ended Dec. 31, 2018 rose to $1.42 billion, compared to $990 million a year ago. UBS had estimated quarterly revenue of $1,349 million.

Woodside said 2018 production rose 8.3 percent to 91.4 million barrels of oil equivalent (mmboe). It expects annual production in 2019 between 88 mmboe and 94 mmboe.

“Base business turned in another strong performance in the fourth quarter, with Wheatstone’s production continuing to exceed expectations,” Woodside Chief Executive Officer Peter Coleman said in a statement. The Pluto LNG project achieved 99.7 percent reliability, he said.

Total production across operations over the quarter was 24.1 million barrels of oil equivalent (mmboe), higher than 21.9 mmboe a year ago.

Reporting by Aditya Soni and Nikhil Kurian Nainan in Bengaluru; editing by Chris Reese and Grant McCool