Is It Time to Buy Woodside Petroleum?

Woodside Petroleum Ltd. [ASX:WPL] released its half year results today. It’s not great news for shareholders. But not totally unexpected either.

Net profit after tax (NPAT) is down 39%. This half, Woodside made just US$679 million ($925.8 million).

Operating revenue is down 28% compared to this time last year. Revenue is currently at US$2.6 billion ($3.5 billion).

Woodside will pay an interim dividend of US$0.66 ($0.90) per share.

Understandably, the market was impressed. Woodside opened at $32.92, up from yesterday’s close of $32.05.

WPL Woodside Petroleum 19082015
Source: Google Finance
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This is the cheapest Woodside has been since mid 2012.

Woodside WPL 5 years
Source: Google Finance
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Woodside blamed the result on oil prices. CEO Peter Coleman said ‘Our half year profit is downas a direct result of the fall in oil price over the period.’ That’s fair enough. Crude oil prices have fallen significantly. Even just over the past few months.

WTI and Brent crude oil one year to 19082015

Source: oil-price.net
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A similar thing happened with liquid natural gas. Prices didn’t plummet, but they didn’t grow either. They just stagnated. Or dropped off a bit at a time, in relation to the short term. Especially in Asia, where Woodside sends a lot of its gas. Woodside reported that ‘the LNG trading market has tended to be more volatile, as the industry responds to new supply additions and the emergence of new buyers and import facilities.’

Wondering if now is a good time to buy Woodside? The first question you need to ask is, will prices bounce back any time soon? Money Morning resources analyst Jason Stevenson thinks they will. He believes that a major conflict in 2017 will see some commodity prices skyrocket.

OPEC’s World Oil Outlook says it’ll take a bit longer. They think that oil prices won’t improve, in real terms, for another 20 years or so.

OPEC oil prices
Source: opec.org
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OPEC is a bit more optimistic about gas. They think demand and use of natural gas will increase. Along with other power sources, including renewables. Petrol, on the other hand, will peter off. Especially in non-OECD countries.

OPEC future energy sources
Source: opeg.org
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Jason believes Woodside is worth your consideration. But he also believes in certain short-term opportunities. He explains it all in his free report, ‘The Top 10 Mining Stocks in Australia for 2015’. Read this report and you’ll discover the names and ticker codes of nine more Aussie mining stocks that are currently at bargain basement prices. This year could be your last chance to buy these stocks so cheap. In this report, you’ll also find out the location of ‘ground zero for the Mining Boom Part 2’. Jason calls this country the ‘new China’. It’s set to spark the next iron ore frenzy. As early as 2016.

Click here to find out how to download your free copy of ‘The Top 10 Mining Stocks in Australia for 2015’.

Eva Mellors,
Contributor, Money Morning

Money Morning Australia