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Australia’s top oil and gas explorer Woodside Energy has posted a 37% drop in annual underlying profit, as lower realised prices for its products offset higher sales and production.

Oil and natural gas prices softened in 2023, as slowing global growth and a weaker-than-expected economic recovery in China weighed on demand.

“Compared with 2022, 2023 full-year financial statements primarily reflected lower prices across all commodities, partly offset by higher sales volumes,” Woodside Energy said in a statement.

For the year ended December 31, Woodside received $US68.6 per barrel of oil equivalent (boe), compared with $US98.4 per boe a year earlier, while annual sales volume rose 19% to 201.5 million barrels of oil equivalent (mmboe).

As a result, underlying net profit after tax (NPAT) came in at $US3.32 billion for 2023, down from $US5.23 billion in 2022. However, that beat an LSEG estimate of $US3.03 billion.

Shares of the company rose 1.1% to $US30.33, while the benchmark index was down about 0.1%.

“Today’s underlying NPAT reflects a 10% ROE (return on equity), well below offshore peers of about 19%,” analysts at Citi said in a note.

“With no credible new growth projects after Trion in the hopper, the company will likely have to acquire assets to generate shareholder wealth,” they said, adding that there was little reason to own Woodside shares on Tuesday.

Woodside’s Sangomar oil and gas project in Senegal remains on track for its first oil production in mid-2024, while the Scarborough gas project off the Pilbara coast in Western Australia continues to target its first LNG cargo in 2026.

Last week, the company announced the sale of a 15.1% non-operating stake in its Scarborough project to Japan’s JERA for about $US1.4 billion — its second stake sale to a Japanese LNG buyer in six months.

Woodside, which recently scrapped talks on a potential $80 billion merger with smaller rival Santos, announced a final dividend of 60 cents per share, lower than the 144 cents apiece declared for 2022.

It maintained its fiscal 2024 production guidance of between 185 and 195 mmboe and reaffirmed its capital expenditure forecast of between $US5.0 billion and $US5.5 billion.