Profits at oil and gas producer Woodside have slumped, dragged down by falling gas prices and a one off asset sale in the prior year.

Full-year net profit dropped to $US1.75 billion [$1.95 billion] down 41.4 per cent on the year before.

The 2012 statutory result was boosted by the sale of a stake in the Browse LNG project off the Western Australian coast.

Underlying profit fell to $US1.7 billion, which is below the $US1.85 billion that was expected by the market according to Thomson Reuters.

Shareholders will receive a final dividend of $US1.03 [$1.14] a share payable on March 26.

Total dividends for the year are up 92 per cent, and the company says this reflects its strong financial position.

Chief executive Peter Coleman says the higher dividends can be maintained despite expected investment in major projects.

“We’ve indicated that we expect to maintain the ratio with the growth projects in place, but it is going to depend a lot on commodity pricing,” he said.

Revenue dropped 6.6 per cent to $US5.9 billion, and Woodside says lower gas prices were partly responsible for this.

“Underlying profit had been impacted by a higher proportion of lower priced gas volumes, which saw a decline in average realised pricing,” the company noted.

Chief executive Peter Coleman says the company’s balance sheet is strong and able to fund future growth.

“Over the past two years we have generated in excess of $US5.9 billion in free cash, we have low debt, and we are in a strong position and in a strong position to fund our growth aspirations,” he said.

These include continuing with the Browse floating LNG development, off the Western Australian coast, the Leviathan joint venture in Israel, as well as exploration in emerging areas such as Myanmar, New Zealand and Ireland.

In Australia, Woodside will also be drilling three wells in the outer Canning Basin in Western Australia.

The company hopes the new projects off Western Australia, Israel and Myanmar will drive long-term growth.

Woodside has reaffirmed that it expects to produce 86-93 million barrels of oil equivalent in 2014, compared with 87 million last year.

Woodside Petroleum recently sealed a deal to buy into the Leviathan gas field off the coast of Israel, but at a higher price and for a smaller stake than originally expected.

Mr Coleman says it remains a good investment with numerous growth options in the project being considered.

“There are a number of pipeline options, such as pipelines to Turkey, Cyprus and a pipe across to Jordan or down to Egypt, so all of those things are in play at the moment,” he said.

Woodside’s boss also warned employees that the company is following in the steps of mining companies by ramping up its productivity drive.

“We do see a lot of opportunity within the business to reduce our cost structure overall, but also to pursue other revenue enhancing opportunities,” he added.

Woodside’s shares were down just 0.05 per cent at $38.46 by 10:30am (AEDT), but remain around 5 per cent higher over the past year, underperforming the near 7 per cent rise in the broader market.