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The Guardian - AU
The Guardian - AU
Business
Ben Butler

Woodside and Santos reap bumper profits as Ukraine war drives energy prices higher

Santos natural gas plant in Darwin
The results from Woodside and Santos come after coalminer Whitehaven predicts a record profit for the year of $3bn – up from $200m – off the back of record-high coal prices. Photograph: AAP

High energy prices due to Russia’s invasion of Ukraine have delivered huge increases in revenue to oil and gas companies Woodside and Santos.

On Thursday, Woodside said revenue for the three months to the end of June was $3.4bn, up 44% from the previous three months, while Santos said its sales for the first six months of the year hit a new record of US$3.8bn, up 85% on the same period last year.

The bumper results come after coalminer Whitehaven this week predicted it would make a record profit for the year of $3bn – up from $200m last year – off the back of coal prices that are also at record highs, and amid calls from Nobel prize-winning economist Joseph Stiglitz for a windfall tax on super profits.

Woodside’s chief executive, Meg O’Neill, said the company’s takeover of BHP’s oil and gas business helped contribute to the result while Santos boss, Kevin Gallagher, said both high production and high prices helped deliver the company’s record revenue figure.

As part of the BHP deal, Woodside received $1.1bn in cash, which included the money in BHP Petroleum’s bank accounts immediately before the takeover.

Alex Hillman, lead carbon analyst at activist investor group the Australasian Centre for Corporate Responsibility, said Woodside’s management couldn’t take credit for the surge in revenue.

“Woodside’s 160% increase in revenue over the last year was driven by the company’s enhanced commitment to fossil fuels through the BHP Petroleum merger, along with a doubling of realised energy prices,” he said.

“Any tone of self-congratulation must be tempered by the reality that these results are the product of severe misfortune for many.”

ACCR declined to comment on the Santos result because the organisation is currently suing the company in the federal court, accusing it of misleading and deceptive conduct over its environmental claims.

However, analysts at broker Morgans expect high prices will underpin Santos’s profit for the first half of the year, which is due to be released next month, although they warn that the company has also struggled to control its costs.

Morgans said “higher oil and gas prices have removed any urgency” for Santos to sell assets.

Woodside is due to report its full-year profit next month, which Morgans said was a good chance to deliver a “positive surprise” due to soaring revenue.

The Ukraine war has caused oil and gas prices to soar due to disruption in Europe, which is heavily dependent on Russian gas.

Brent crude, which acts as a price-setting benchmark in Europe, fetched as much as US$128 a barrel in March but has since fallen back to about US$106 a barrel.

However, Tapis crude, which drives the price of petrol in Australia, has remained costly. According to Australian Institute of Petroleum statistics, it is currently fetching about $132 a barrel, which is about the same price level as it has maintained for the last two months.

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