Woodside Petroleum Ltd., Australia’s top natural gas producer, reported a steep 42% fall in third-quarter revenue from a year ago despite higher sales volumes, as its long-term liquefied natural gas (LNG) export contracts were hit hard by low oil prices from last quarter.

Most of Woodside’s LNG contracts are with Asian customers and are indexed to oil prices with roughly a three-month time lag. Management said last week it expects revenues to improve this quarter because oil prices increased in the third quarter and spot LNG prices are higher.

“As expected, sales revenue in the third quarter was impacted by lower realized LNG prices, reflecting the oil price lag in many of our contracts,” said CEO Peter Coleman. “Pricing in the fourth quarter and in Q1 2021 is expected...