Company Profile - Woodside Petroleum Ltd (Woodside) is an oil and gas company. The Company is engaged in exploration, development and production of hydrocarbons. The Company operates in five segments: North West Shelf Business Unit, Pluto Business Unit, Australia Oil Business Unit, Browse Business Unit and Others. North West Shelf Business Unit segment develops, produces and sales liquefied natural gas (LNG), pipeline natural gas, condensate, liquefied petroleum gas and crude oil. Pluto Business Unit segment develops, produces and sales liquefied natural gas and condensate in assigned permit areas. Australia Oil Business Unit segment evaluates, develops, produces and sales crude oil in assigned permit areas. Browse Business Unit segment evaluates and develops liquefied natural gas and condensate in assigned permit areas. Other segment consists of activities undertaken by the trading and shipping, United States, exploration, International and Sunrise Business Units.



WPL Dividend Details
 
Achieved a major milestone in Western offshore area, Myanmar: Woodside Petroleum Ltd (ASX: WPL) recently reported that their Shwe Yee Htun-1 exploration well at Block A-6 of the Rakhine Basin in western offshore area of Myanmar intersected a gross gas column of over 129 m. The drilling and wireline logging indicated the presence of a gas column via pressure measurements and gas sampling. Management reported that this positive evaluation of the prospect indicates for a working petroleum system in the Rakhine Basin deep water and accordingly the group is also undertaking a further analysis to gain more clarity over the entire potential of the prospects. The group has 40% interest in A-6 via its Myanmar firm, while the project’s joint venture partner MPRL E&P has over 20% interest, which is an operator regarding all the  government liaisons. Meanwhile, Woodside Myanmar is the operator of the project and has interests in six blocks in the Rakhine Basin which comprise over 46,000 km² and contribute around 20% of group’s total global exploration acreage.
 


Shwe Yee Htun-1 exploration well at Block A-6 of the Rakhine Basin (Source: Company Reports)
 
Received approval for developing Greater Western Flank Phase 2 project: The group reported that they got approval for Greater Western Flank Phase 2 (GWF-2) Project at the north-west coast of Australia from the project’s participants. WPL has been improving its resource base as well as getting project approvals in NWS Project since the last seven years, with GWF-2 Project being the fourth major gas development, indicating that the project is an economic world class asset with significant value. With regards to the highlights of the project, WPL, being the Operator of the North West Shelf (NWS) Project intends to develop a 1.6 trillion cubic feet of raw gas (2P 100% project basis) from Keast, Dockrell, Sculptor, Rankin, Lady Nora and Pemberton fields by subsea infrastructure as well as via a 35 km, 16 inch pipeline which is linking to the current Goodwyn, which is a platform in GWF-2 Project. Woodside has 16.67% stake in the project followed by other holders including BHP Billiton Petroleum (North West Shelf), Chevron Australia , BP Developments Australia, Japan Australia LNG (MIMI) and Shell Australia who have a stake of 16.67% each. WPL estimates to incur an investment of over US$2.0 billion for the project while the initial project start-up is forecasted by second half of 2019. Gas delivery is expected to start from the five wells in the Lady Nora, Pemberton, Sculptor and Rankin fields, while the rest of the three wells in the Keast and Dockrell fields are expected to deliver by first half of 2020.
 
Delivered better third quarter results: Woodside Petroleum delivered several milestones during the third quarter of 2015, enabling the group to deliver better production and volumes. The group finished the capacity enhancement activities during the Pluto turnaround period and as a result, the group’s production rates outdid the 4.3 mtpa nameplate capacity by 3% during the quarter. Hence, WPL achieved a production volumes rise by 25.9% during the third quarter of 2015, as compared to second quarter of 2015, driven by strong LNG and related condensate volumes at Pluto, post the finishing of the major turnaround during the second quarter coupled with better oil volumes from Vincent, as well as an entire quarter of production from the Phase IV in-fill well. Consequently, the group’s sales volumes improved by 23.6% during the quarter as compared to the earlier quarter and offset the timing impact of shipments. The sales revenue for the quarter rose by 20.9% due to better LNG and condensate sales volumes and increase in oil sales volumes. However, the ongoing decrease in realized oil prices during the quarter impacted the sales revenue to a certain extent. On the other hand, the group delivered a production volumes rise by 0.4% during the quarter against the prior corresponding period on the back of oil production from the Balnaves oil asset which started production from April 2015. But the lower LNG and related condensate production decrease at NWS due to planned LNG Train 5 maintenance turnaround during the quarter impacted the production volume. Therefore WPL’s sales revenue for the quarter plunged by 44.6% in the third quarter as compared to the prior corresponding period in previous year due to decrease in realized prices across the portfolio.
 


Third quarter performance (Source: Company Reports)
 
Built exploration and development activities in the third quarter: WPL finished primary resource evaluation for the Pyxis-1 gas discovery at Production Licence WA-34-L leading to further enhancement of 68 MMboe of net contingent recoverable resources. The group entered into the front-end engineering and design (FEED) phase for the Greater Enfield Development while got the Commonwealth environmental approval from the Department of Environment for the projected Browse FLNG Development. Woodside Petroleum is also focusing on its operating efficiency and accordingly delivered an ongoing LNG production runtime of 110 days in third quarter and 123 days as of October 13 in the NWS Project Karratha Gas Plant. WPL is also offloading its non-core assets to strengthen its capital position and hence made a conditional agreement to offload its interests in the Laminaria-Corallina Joint Venture. On the other side, WPL entered into an unsecured US$1.0 billion loan facility as part of its general refinancing activities, with the loan having two equal tranches with terms of three and five years at interest rates of USD LIBOR plus 0.90% and USD LIBOR plus 1.15% respectively.
 
Upgraded production outlook: Based on a series of positive events and developments, Woodside Petroleum upgraded its production target range for 2015 to the range of 91 to 93 MMboe as compared to its earlier production target range of 88 to 93 MMboe. This is also post the inclusion of Balnaves oil and Canadian pipeline natural gas production. Earlier, the group revised its production estimates as the same added over 1.0 MMboe on the back of strong Pluto performance which even includes the benefits of finishing the major turnaround ten days ahead of schedule. WPL added over 1.3 MMboe driven by strong performance from the recently drilled Vincent Phase IV in-fill well coupled with better facility performance delivery. But, around 1.25 MMboe is decreased from Canadian pipeline gas impacted by the delay in completing two Liard wells. Meanwhile, Woodside has also decreased its total expenditure expenses forecast to USD 6,000 million as compared to its February estimates of USD 6,170 million.
 


Updates as on December 2015 (Source: Company Reports)
 
Attractive valuations: The shares of Woodside Petroleum have been under pressure over the last year and witnessed a decline of over 25.50% (as of January 12, 2016) impacted by the falling oil and commodity prices. Moreover, the stock was also impacted by the rejection of the Woodside merger proposal by Oil Search with their management stating that the proposal from Woodside was grossly undervaluing their Company. As a result, Woodside had to withdraw their merger proposal. On the other hand, investors need to note that Woodside Petroleum has a strong resource base and a series of exploration and development pipeline activities which is expected to contribute to its performance in the long term. The group’s efforts to increase production and control costs would add support to its financial performance in the coming periods. In addition, we believe that the heavy correction in the stock with an attractive valuation could be considered as an investment opportunity. WPL is trading at a relatively cheaper P/E and has an outstanding dividend yield. Meanwhile, WPL stock rallied over 2.54% in the last four weeks (as of January 12, 2016). Based on the foregoing, we give a “BUY” recommendation on WPL at the current stock price of  $27.44
 
 
WPL Daily Chart (Source: Thomson Reuters)

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