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Woodside Petroleum Limited, revenue boosted by improving market

Team Veye | 25 Jan 2021 ASX - WPL
Woodside Petroleum Limited, revenue boosted by improving market

Woodside Petroleum Limited (ASX: WPL)

Fourth Quarter Report for the period ended 31 December 2020

The company Woodside Petroleum Limited (ASX: WPL) on 21 January 2021, provided its fourth quarter report for the period ended 31 December 2020

Highlights

  • Q4 production was down by 2% from Q3 2020 at 24.9 MMboe, contributing to a record annual production of 100.3 MMboe.
  • Sales revenue reported growth of 32% from Q3 2020 at $920 million
  • 9% growth in sales volume at 29.1 MMboe from Q3 2020.
  • Completed the Installation of the Pluto water handling module on the Pluto offshore platform.

(Chart source: TradingView)

Recent Developments

Cairn Sangomar acquisition completed:

The company had completed the acquisition of Cairn’s interest in the Sangomar offshore oil development. The contract was awarded for the operations and maintenance of the floating production storage and offloading facility. The development remains on track for targeted first oil in 2023.

North West Shelf Project Extension

The NWS Project participants executed key commercial and governance agreements, and fully-termed gas processing agreements (GPAs) in December 2020 for processing third-party gas through the NWS.  Execution of these agreements is a key milestone in the transformation of KGP to a world-class third-party gas tolling facility and secures gas to utilise emerging processing capacity.

FID for the infrastructure required to receive gas from the Pluto-KGP Interconnector and Burrup Extension Pipeline has successfully been achieved by the project participants

Scarborough production licences granted:

  • Received production licences by the Commonwealth and Western Australian Offshore Petroleum Joint Authority in respect of WA-61-L (Scarborough) and WA-62-L (North Scarborough).
  • The design capacity of the offshore development was increased by approximately 20% to 8.0 Mtpa of LNG. Technical feasibility studies were completed in December 2020.
  • Construction plan of the Pluto Train 2  was reviewed and optimised to improve execution efficiency with the chosen engineering, procurement and construction contractor, Bechtel (Western Australia) Pty Ltd
  • Engineering and construction contracts of Scarborough were extended in readiness for the targeted final investment decision (FID) in H2 2021 subjecting to commercial arrangements and joint venture and regulatory approvals.

(Graphic Source – Company Reports)

Expansion of Uniper LNG agreement:  Woodside and Uniper Global Commodities SE (Uniper) agreed to double the supply of LNG under their existing long-term sale and purchase agreement.

  • Initial supply commencing in 2021 is now for a volume of up to 1 million tonnes per annum (Mtpa), increasing to approximately 2 Mtpa from 2026.
  • The majority of LNG supply from 2025 is conditional upon Scarborough FID.
  • The LNG produced and sold on a spot basis in 2020 was approximately 30%

Woodside’s 2021 Production and Expenditure Guidance:

  • Production guidance is 90 – 95 MMboe
  • Investment expenditure guidance is $2,900 – 3,200 million
  • Production cost guidance is $460-510 Million
  • Trading Cost guidance is $190-230 Million
  • General and administrative cost guidance is $170-210 Million (Data Source – Company Reports)

 

Veye’s Take

WPL has showcased significant progress on its growth projects during the fourth quarter. Right from Production licence approval to execution of gas agreements, acquisition of Cairn’s interest, doubling the volume of gas to be supplied to Uniper from 2021 WPL remains on track for a targeted final investment decision on the development in the second half of this year. The formation of “Doji at the upper band of the Bollinger with long wicks is indicating rejection to the downside. RSI and MACD are pointing towards a positive uptrend indicating its upside potential. Veye maintains “Hold” on “Woodside Petroleum Limited” at the current price levels of $26.56

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