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WPL

Woodside Petroleum Ltd – Third Quarter 2019 Report

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Woodside Petroleum Ltd (ASX: WPL) is a global energy supplier that is specialised in the upstream petroleum sector. Woodside supplies oil and gas and is the largest natural gas producer in Australia. Woodside’s market capitalisation is A$30 billion.

Woodside Petroleum - Report

The main points for Woodside’s Third Quarterly Activities are as follows:

  • Production for the third quarter of 24.9 MMboe, up 44% from the previous quarter.
  • Sales revenue for the third quarter of $1,164 million, up 58% from the previous quarter.
  • First oil produced from the Greater Enfield Project
  • Signed mid-term agreements for the supply of approximately 3.5 million tonnes of LNG in the period 2020 to 2026

What were the drivers of this positive result?

The main driver of the increase in production was the positive result at Woodside’s Pluto LNG facility. Woodside’s management notes :

"Pluto LNG is performing strongly and demonstrating outstanding reliability following the turnaround. We are also achieving pleasing performance from the Ngujima-Yin FPSO following completion of the Greater Enfield Project, with over 2.5 million barrels of oil (100%) produced from the facility since the restart. Pluto LNG and the near term growth delivered by the Greater Enfield Project will be key contributors to our 2020 production target of approximately 100 MMboe."

Another positive factor was the strong sales revenue for the third quarter. This can be an attitude to the increase in production but also the stronger spot price of liquefied natural gas over the September quarter compared with the June Quarter.

What is the outlook for Woodside?

The outlook for Woodside is positive with a number of key projects that should underpin future long-term growth.

  • Firstly, the developments of the SNE field located on the west coast of Senegal, Africa. This project is estimated to begin production in 2022, with 100,000 barrels per day production capacity. The final investment decision of this project should take place in the second half of 2019. Woodside has a 35 per cent interest, Cairn Energy Senegal has a 40 per cent interest, FAR has a 15 per cent interest and PETROSEN has a 10 per cent interest.
  • Secondly, the development of the Scarborough gas field located offshore Western Australia. This project is estimated to begin upstream production in 2023 and provide an additional 4 – 5 million tons per annum (MTPA) gas delivered to Pluto LNG. The final investment decision should be made in 2020. Woodside has a 75 per cent interest in the project, while BHP has a 25 per cent interest.
  • Thirdly, the Browse Basin gas field located offshore Western Australia. This field is Australia’s largest untapped conventional gas resource. It is estimated that there are 13.9 trillion cubic feet (TCF) of dry gas located in this field. The project should deliver 10 million tons of gas to the existing North West Shelf infrastructure per year. Woodside has a 30.60 per cent interest, Shell Australia has 27.0 per cent interest, BP Developments Australia has 17.33 per cent interest, Japan Australia LNG has 14.40 per cent interest and PetroChina International Investment has 10.67 per cent interest.

What is the market reaction?

The initial market reaction to Woodside’s Third Quarterly update was slightly positive (17 October 2019). However, Woodside’s share price today is down around 1% and is currently trading at around A$31.79 (1.00 pm, 18 October). Woodside trades on a P/E ratio in the mid-teens and an annual dividend yield of around 5 per cent (fully franked).

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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