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Woodside shares rise following Q4 production update

Here are some of the key things we learnt from Woodside’s fourth quarter production update.

Woodside share price rises on Q4 results

When Woodside Petroleum (ASX: WPL) – the now $33.73bn energy company reported its fourth quarter production results today – its share price rose slightly when the market opened. All up, Woodside now trades ~7% higher than it did a year ago – and currently sits at $36.14 per share.

Looking at WPL’s core quarterly production metrics, the company revealed production figures of 25.7 MMboe in Q4 – a 3% increase on the quarter prior.

In step with those production figures, the company reported robust fourth quarter sales revenue of $1,304m – a 12% increase on the quarter prior.

In response to these results, analysts from Ord Minnett today noted that the ‘December 2019 quarter was slightly soft against our estimates but in line with guidance.' Regardless, the broker today retained their target price on WPL – which currently stands at $41.00 per share.

Commenting on some of the company’s longer-term ambitions, Woodside today also reported on the successful execution of 'a long-term sale and purchase agreement with Uniper Global Commodities SE (Uniper) for the sale of LNG for a period of 13 years, commencing in 2021.'

All up, the fourth quarter marked one of good progress for a number of Woodside’s growth projects, according to CEO, Peter Coleman.

'In another step towards realising our vision for the Burrup Hub, we took a final investment decision for the pipeline component of the Pluto-KGP Interconnector.’

The Burrup Hub project, which will see 20 to 25 trillion cubic feet of gas resources developed, is expected to create thousands of jobs over the years as well as positively impact Australia's gross domestic product, all the way up to 2063.

Other projects, such as the $30bn Browse toll/FEED natural gas project – located in Western Australia – were also touched upon in today's production release. Here it was noted that:

'For Browse, Woodside is ready to enter FEED subject to finalising the gas processing agreement and we are progressing key approvals, including the release of the environmental impact statement and environmental review documents for public comment.'

Analysts weigh in

Just prior to the release of today's Q4 production results, Credit Suisse increased their price target to $37.10 and maintained their OUTPERFORM rating on Woodside Petroleum (ASX: WPL).

In saying that, Credit Suisse also pointed out that:

'With the recent rally in energy equities, we see the upside window as narrowing across most energy names (including WPL).'

Mind you, the investment bank did also note that Woodside still provides 'the best value vs peers, in our view.'

Looking at the performance of the sector as a whole, the S&P/ASX 200 Energy Sector (AXEJ) – broadly comprised of Australia’s largest and most important energy companies – currently trades ~12% higher than it did a year ago.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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