Woodside Petroleum (WPL) is Australia’s largest oil and gas explorer and producer. WPL operates the $27 billion North West Shelf (NWS) Venture in offshore WA, which produces around 40% of Australia’s oil and gas.
The company also has several key LNG projects, which include, Pluto (WA), Browse (WA) and Sunrise (East Timor). The Pluto project is up and running, but the Browse basis LNG project has been delayed for a period of the two years.
WPL reported strong production of 21.9 mmboe for the 3Q13, which was up 9.5% quarter on quarter, the result was mainly due to increased production from the North West Shelf following planned maintenance shutdowns in 2Q13
Sales volumes of 20.9 mmboe up 33.5% on 2Q13
Revenue came in flat at US$1.34 billion, with the higher sales offset by slightly lower realised average prices
Leviathan and Browse
|>>||The groups growth profile has been questioned over the past few years, with issues and delays over two potential projects, Browse LNG project in WA and the Leviathan fields located offshore Israel. However a number of key issues in these projects have been alleviated of late.|
|>>||The Browse project which was shelved early in the year looks to be back on the table. WPL and its Joint Venture partners have decided to take USE floating LNG technically to commercialise the Browse gas fields.|
|>>||While no costing has been done for the new concept, we would expect it to be less capital intensive than its previous options.|
|>>||The Leviathan gas fields is one of the world’s largest off shore gas finds of the past decade.|
|>>||WPL successfully bid for a 30% stake in project almost 12 months ago, but the deal is yet to be finalised, with the Israeli government trying to set gas reservation on the field.|
|>>||The Israel Supreme Court has recently dismissed the right to do this which paves the way for WPL to proceed with its offer.|
WPL’s quarterly results were solid with lower pricing offset by higher production.
Interestingly a majority of its sales were done via previous contracts; we expect repricing of these contracts in the coming quarters which should lead to a higher average price.
We expect WPL would want a deal to be finalised in the next few months for the Leviathan Gas fields as it is expected to begin drilling in 1QCY14. In our view a Leviathan deal coupled with a clearer outlook on the Browse project will continue to lead to share price appreciation.