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Analisys of Woodside Petroleum Ltd

Analisys of Woodside Petroleum Ltd

15 December 2021

Woodside is an oil exploration and production company. It is Australia’s largest independent oil and gas company.

Just a few months ago, the company changed its CEO, who had been in office for 10 years. The new CEO is very much counting on the success of the $11 billion Scarborough gas project. The former CEO said there are no other opportunities for big business growth in Western Australia as assets are being depleted. The company’s other big projects include Pluto Train 2 and Sangomar, but Woodside is looking for buyers.

The Scarborough gas field is located on the coast of Western Australia. Volume – 7.3 trillion cubic feet of gas. Woodside owns 75% of this project and BHP owns 25%. In August 2021, Woodside entered into an agreement with BHP to combine the company’s oil and gas assets. This will be an all-share deal with Woodside owning 52% and BHP 48% of the combined company.


P / E 37.8 forward P / E 8.4 (current average across competitors 36.3)

P / B 1.1 (industry average 7.7)

P / S 3.3 (industry average 15.1)

Debt $ 6.7 billion with current operating cash flow of $ 2 billion

Dividends are 2.5% per annum

Share Price: $ 15.63

Last year the company had a loss of $ 4 billion, and this is the only negative figure in the reporting, even free cash flow remained positive. This is due to the fact that last year’s losses are on paper. However, over the past 12 months FCF is 2-3 times lower than before the pandemic. Net income is also only $ 356 million, against $ 1.3 billion in 2018.

The discounted cash flow model shows a fair price of $ 16.4. Simply Wall Street values the company at $ 11. 3 analysts leading the company give an average valuation of $ 16.3.

The stock is trading above the 20-day moving average, but below the 50 and 200-day MA. There is a powerful support line at $ 15, a rebound from it upwards is possible. If the fundamental continues to be worked out, then the shares may go to $14 and below.

Conclusion: in this company the idea can only be in combination with BHP, that possible synergy will increase production and performance. But the resource base of the company is depleting, and Woodside is ready to sell its largest deposits and it is not clear what is going to do with the money further. We believe there are more interesting value companies in the industry.

Get advice on the company’s shares:

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