Sonali Paul

MELBOURNE (Reuters) – Woodside (OTC) Petroleum slashed Thursday the estimate of the Wheatstone gas reserve for its Wheatstone project. This was done by Chevron Corp (NYSE 🙂 from Western Australia in an unanticipated downgrade which knocked shares of the largest Australian oil-and gas company.

According to Woodside’s third quarter report, total proved reserves for Wheatstone have been reduced by 27% to 112.6 million barrels oil equivalent (MMboe). The 27% reduction in probable and proved reserves was also reflected.

Woodside’s shares fell by as high as 1.8% during a flat market.

Woodside owns a 13% share in Wheatstone (an 8.9 million tonnes per year LNG project). Chevron has 64% of the shares, and Japan’s JERA holds a minority share.

Chevron spokeswoman was unavailable to speak on Wheatstone’s downgrade. Woodside claimed that the Wheatstone downgrade resulted from well drilling and performance data, as well as reservoir studies.

Woodside reported that its quarterly revenue increased more than 50% to $1.53 Billion from $699 Million a year earlier. This was due to the sales of third party volumes into a hot market. It missed the $1.69 billion consensus estimate of brokers.

Positively, the company indicated that they expect to gain more from strong oil prices in the fourth-quarter, since most of their contracts have a three-month delay and are linked to oil prices.

Meg O’Neill, chief executive officer, said that “we expect the fourth quarter will see the benefit of higher pricing on our realized prices”, reflecting the oil pricelag in many contracts and recent increases at gas hubs prices.”

Woodside’s exposure to spot LNG price fluctuations, which are at record levels, is greater than that of local rivals Santos Oil Search, Oil Search, and Origin Energy. According to Woodside, 17% of the LNG it produced will be exported into the spot market during the fourth quarter.

The planned maintenance of Woodside’s two LNG plants – North West Shelf, and Pluto – caused a drop in third-quarter production from last year to 22.22 million barrels oil equivalent (mmboe).