Woodside Petroleum (ASX:WPL) has announced it will accelerate its cost cutting program that was announced earlier in the year. The program has already cut 600 jobs, but the company now says it plans to invest the savings in future growth and acquisitions. After reducing redundancies, organisational savings are now at about 20 per cent and the company is inline to save an additional US$800m by the end of 2016. “The balance sheet is in good shape,” said Chief Executive Officer Peter Coleman.
Earlier in the year Woodside announced it would be cutting 15 per cent of its operating expenditure. This included cutting around 20 per cent of the company’s workforce. Part of the decision to cut costs was in response to low oil prices. “Low oil price makes achieving structural change in costs critical," Woodside said in a report. “Cultural change is in progress.” Mr. Coleman said the company still had flexibility in its balance sheet, and cited this fact as the reason for the ramped up cost cutting program and acquisitions.
Woodside acquired a set of liquefied natural gas (LNG) assets in Western Australia and Canada earlier in the year for US$2.82bn. The Wheatstone LNG project, which was acquired from the US-based company Apache, received US$29bn in funding for its first round of LNG production. The company also required extra capital to fund its Browse floating LNG project, with its final investment decision due in the second half of 2016. Shares of Woodside are up 50c, or 1.46 per cent, at $34.83 per share around 3:37pm on Thursday. WPL has fallen 15.54 per cent in the last 12 months and 8.38 per cent so far this year.