Woodside Share Price Up On Full Year Results, Improved Dividend

At time of writing, the share price of Woodside Petroleum Limited [ASX:WPL] is up 2.18%, trading at $35.62.

It’s been a reasonably good year for the Woodside share price, punctuated by a fall between October and December as lower oil prices took their toll:

Woodside Share Price

Source: marketindex.com.au

The latest news out of the company is its full-year results — which missed analyst estimates, but still revealed improved profit, which was underlined by an improved dividend.

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Highlights of the full year results for Woodside

Today, the Woodside share price was reacting to two things — rising profits and an improved dividend.

Australia’s largest oil and gas producer announced an NPAT (net profit after tax) of $1.36 billion for 2018 which was up from $1.07 billion in 2017 — a 28% rise.

Analysts had estimated a 2018 result of $1.45 billion.

Crucially, Woodside raised its final dividend by 86% to US$0.91 cents, which takes its full-year dividend to US$1.44 per share.

On a conference call, Woodside CEO Peter Coleman said, ‘We thought it was prudent to reward our shareholders for supporting us last year in the equity raising, given that pricing and production has been stronger than we expected when we raised that equity’.

Woodside Petroleum has big plans in motion, with money flowing into its Scarborough and Browse gas developments as well as expansion of its Pluto LNG plant.

You can see what these projects look like below:

Woodside Share Price

Source: Woodside Petroleum Limited

What’s next for the Woodside share price?

Last year saw a capital raise which was intended to in part, fund Woodside’s purchase of a 50% stake in Scarborough for $744 million, raising its stake to 75%.

According to Nine Finance, Woodside is now looking to sell that stake by the end of the year. It’s speculated that Saudi Aramco is one of the interested buyers, after Saudi Arabia’s energy minister indicated that it was looking at overseas investments, including Australia.

As Australia’s largest oil and gas producer, Woodside’s prospects are closely tied to the price of oil, but also to LNG.

Below you can see how Woodside’s share price (blue) has tracked along with the price of WTI crude oil(orange/red):

Woodside Share Price

Source: tradingview.com

As for LNG, Mr. Coleman said, ‘Our plans for the Burrup Hub will more than double Woodside’s equity LNG production by 2027, providing long-term gas supplies for both domestic and export markets, and delivering significant benefits to shareholders and the community’.

The Asia Pacific region accounts for an estimated three quarters of global LNG demand, and you can see the projected future demand for LNG below:

Woodside Share Price

Source: Woodside Petroleum Limited

This diversification of energy sources could prove crucial going forward.

Switching back to oil however, the short-term future of the commodity appears clouded.

Slowing global growth, the risk of a global recession and the massive amount of US shale currently in the system could be concerning.

Long-term demand of oil however is projected to increase by around 1.2 mb/d this year, according to the International Energy Agency:

Woodside Share Price

Source: International Energy Agency

So, taking it all in, Woodside looms as an intriguing investment, given the growth and stronger dividend. Assuming you are willing to wait out any short-term volatility, that is.

Regards,

Lachlann Tierney

For Money Morning

PS: Interested in commodities? Check out our top 10 mining stocks in our free report which can be downloaded here.


Lachlann Tierney is a writer for Money Morning and has been investing for nearly a decade. With an MSc from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently, he has been working with Phil Anderson and Terence Duffy. They have three publications:

Phil Anderson’s Time Trader
Cycles, Trends & Forecasts
Money Morning Trader


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