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 64.6 million barrels of oil equivalent (mmboe) in 2011. About 60% of Woodside's production comes from natural gas, while 40% comes from liquids. The company's exposure to natural gas will increase with the production contribution from its Pluto project from 2012. Our view of Woodside's
