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Woodside Petroleum Ltd, sales revenue impacted by lagged oil price

Team Veye | 27 Oct 2020 ASX - WPL
Woodside Petroleum Ltd, sales revenue impacted by lagged oil price

Woodside Petroleum Ltd. (ASX: WPL)

Third Quarter Report for the period ended 30 September 2020

Woodside Petroleum Ltd. (ASX: WPL) on 22 October 2020 announced that its year-to-date production of 75.4 MMboe was an increase of 18% compared with the first three quarters of 2019.

(Chart source: TradingView)

Performance

  • Delivered production of 25.3 MMboe, up 2% from Q3 2019.
  • Delivered sales volume of 26.7 MMboe, up 10% from Q3 2019.
  • Delivered sales revenue of $699 million, down 9% from Q2 2020 and 42% from Q3 2019.
  • Continued to implement appropriate responses to the combined impact of COVID-19 and lower commodity prices.
  • Conducted an organisational review of the company’s future workforce requirements, resulting in an approximately 8% reduction in the size of our direct employee workforce.

Executing a clear plan

  • Executed a binding sale and purchase agreement to increase Woodside’s participating interest in Sangomar.
  • Completed drilling activity for Pyxis Hub and Julimar-Brunello Phase 2.
  • Shortlisted to apply for funding from the Australian Renewable Energy Agency (ARENA) for two renewable hydrogen projects.
  • Concluded the first phase of the Greening Australia and Woodside Native Reforestation Project.

The changes implemented in March in response to the COVID-19 pandemic and lower commodity prices were now embedded in its operating model and it continues to pursue opportunities to reduce cost while maintaining safe and reliable operations.

(Graphic Source – Company Reports)

Woodside was increasing its stake in the Sangomar Field Development offshore Senegal and had executed a sale and purchase agreement with Capricorn Senegal Limited for its entire participating interest. The additional interest was expected to increase 2P reserves by approximately 68 MMboe. Delivery of project execution activities continued to plan. (Data Source – Company Reports)

 

Veye’s Take

The operating performance of Woodside Petroleum’s LNG facilities during the quarter was strong. Pluto again demonstrated high reliability, with LNG production climbing by nearly four percent compared with the second quarter. Sales revenue in the third quarter was impacted by lower realised LNG prices, reflecting the oil price lag in many of its contracts. Pricing in the fourth quarter and in Q1 2021 was expected to be stronger given the improvement in oil price in recent months. Asian LNG spot price strengthened, which was now above $6.50/MMBtu for December deliveries. The stock is moving in a channel where it has strong support at $18.19 from where it may rebound. Breaking this channel on the upper side can lead it to having the potential of growing up nicely in the medium term. Veye maintains a "Hold" on “Woodside Petroleum Ltd.” at the current price of $18.62

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