The ratings on Woodside Petroleum Ltd. reflect our opinion of the Australia-based company's cost-competitive operations, long reserve life, and the favorable outlook for the liquefied natural gas (LNG) market. We also consider positively the company's predictable cash flow from long-term take-or-pay domestic gas and LNG contracts. Partly tempering these strengths are: the company's limited, albeit improving, geographic diversity; and the cyclical and capital-intensive nature of the exploration and production industry. Woodside recorded total production of 77.3 million barrels of oil equivalent (mmboe) for the trailing 12 months ended Sept. 30, 2012. About 60% of Woodside's production came from natural gas in 2011, while 40% comes from liquids. The company's exposure to natural gas will increase with the production contribution from
