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WPL, WOODSIDE PETROLEUM LIMITED
wolverine
post Posted: Jul 1 2014, 08:02 PM
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from MS

Woodside Petroleum: Quick Comment: Step up into trading
WPL has signed a binding Sale-and-Purchase agreement with Cheniere Energy (LNG.A; US$71.70; OW), for the purchase by WPL of LNG from Cheniere’s proposed second LNG train to be built at Corpus Christi, Texas. Key terms of the deal are: (1) 850 ktpa of LNG p.a. for 20 years, with an option to extend by another 10 years; (2) cargoes to be bought by WPL FOB; (3) FOB price of 115% x HenryHub + US$3.50/mmbtu; (4) deliveries expected in Q4, 2019, from the second LNG train planned to be built at Corpus Christi. This train is not yet sanctioned and construction has yet to commence. WPL will presumably leverage its position as key supplier to Asia to on-sell this gas into spot markets, and capture whatever price differentials exist between the FOB price and final destination prices. At the current HH gas price of US$4.50/mmbtu, WPL will pay US$8.7/mmbtu for LNG FOB. Given current spot prices in Asia are in the order of US$13/mmbtu, there is a reasonable price differential, sufficient to cover the expected shipping and other costs which we anticipate are +/-US$3/mmbtu. How much of this margin WPL ultimately captures, will depend on whether or not it deploys vessels from its existing fleet or charters from dedicated LNG vessel operators. If for example, WPL could capture US$1/mmbtu of this as profit, then it would translate into around US$50m pa of NPAT, which is small in context to current profit levels and would not materialize until 2020. Thus, financially this deal is small, but we think it makes sense strategically. Rising US LNG export volumes will drive increased spot trade in Asia over time. As an incumbent supplier, WPL is a natural participant. However, maintenance of profit levels and future growth require WPL to develop Browse and maintain existing price structures. The risk to both from increased US exports is to the downside. We retain an Underweight rating.



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wolverine
post Posted: Jun 18 2014, 01:27 PM
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from MS


Woodside Petroleum: Shell exits again, almost
Shell’s sell-down and WPL’s “selective” buyback of part of its shareholding frees up the share register and enhances current financial metrics. It does not address re-growth in oil & gas assets for the longer term. Shell will almost end its major shareholding of 30 years: It is (1) undertaking an institutional sell-down and (2) entering a “selective buyback” with WPL. The combined impact will be to reduce Shell’s shareholding from 23.1% to a residual 4.5%. Shell is selling 78.3m shares in an underwritten institutional sell-down at a price of A$41.35/sh. Following this, and subject to shareholder approval, WPL will buy back from Shell 78.3m shares at a price of A$36.49. This will cost WPL US$2.68B and be funded from WPL’s existing cash and credit facilities. The impact on WPL’s earnings and dividend profile is significantly positive over the outlook: Increases in EPS and DPS are on the order of 6-7% from FY2015, with a much smaller increase in FY2014. Offsets are increases in gearing and less FCF for re-investment. Our DCF valuation has increased by 30cps and flows through to our revised price target. This transaction does nothing to address the greater concerns we have – WPL’s declining reserves, which peaked in 2008, and declining production after 2015. High dividends are welcome but are backed by production that must be replaced. Our rating is Underweight: Our price target has increased to A$40.60 (A$40.4 previously), reflecting the underlying increase in our DCF. Earnings metrics are not compelling for a company with no growth.



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balance
post Posted: Jun 18 2014, 01:02 PM
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In Reply To: mullokintyre's post @ Jun 18 2014, 12:43 PM

I was having a read on Morningstar's site about it last night. Maybe the market has expected this and bought it up on that expectation?

Key points: Fair value remains at $50, earnings per share forecast to improve by 5.5% and 8.3% over the next 2 years.
Debt to equity up to 27% still below their target of 30%.
Removal of perceived overhang of stock.
Franking of >1.8 billion remains, about 3 years worth at 80% pay out ratio.



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mullokintyre
post Posted: Jun 18 2014, 12:43 PM
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Interesting that no one has commented on the shell divestment.Would have thought it might a bit higher than some other things posted.
Mick



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wolverine
post Posted: May 22 2014, 10:51 PM
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from Morgan Stanley


Woodside Petroleum: Value over volume
WPL strategy is to grow value rather than volume, and this requires a grass-roots rebuild of exploration, and a disciplined approach to asset acquisitions. It’s a sensible, classic E&P strategy but it will take time to drive the bottom line, and value equation higher. WPL held an ‘Investor Day” day re-iterating growth ambitions, and there is not magic solution. There is a ground-floor rebuild of exploration underway, and a disciplined approach to asset acquisitions. The decision not to pursue Leviathan evidences this, but does not help meet growth targets. We discount speculation of various M&A or asset deals purely to drive volumes higher, with the focus instead on value. WPL needs to re-invest to grow, and the approach will be to look for $1-$5B asset deals, that fit with WPL’s existing LNG and deep-water, offshore skill-set. Organic growth options are few and very long dated. Exploration is being rebuilt, from ground-floor entry into new frontiers. Browse gas field development is moving through the FLNG design phase, and will likely enter development, however production from the first of up to 3 floaters won’t be before late 2020. Returns look reasonable, in the mid-teen IRR’s. WPL defend maintainability of the 80% dividend payout, but this remains subject to servicing debt and re-investment needs. On our analysis WPL will be net debt free by early 2015 and can fund 2 FLNG projects organically. We retain our UW recommendation. Our price target has increased to $40.4 ($39.20 previously) reflecting latest peer group relativity.



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wolverine
post Posted: May 21 2014, 02:00 PM
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In Reply To: apache123's post @ May 21 2014, 12:31 PM

Oh well just more ff divs and maybe a special



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apache123
post Posted: May 21 2014, 12:31 PM
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Hmmm.... the on again.... off again Leviathan investment seems to have finally bitten the dust this morning!



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wolverine
post Posted: Apr 17 2014, 08:38 PM
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from MS


Woodside Petroleum: LNG re-pricing evident
Quick Comment: WPL has made a solid start to 2014 with Q1 production of 23.0 mmboe (MS 23.1 mmboe, Q4 2013 23.2mmboe), sales revenue of US$1,675m (Q4 2013: US$1,648m and MS estimate US$1.558m). The NWS LNG price averaged US$691/t (approx US$13.4/mmbtu) while Pluto LNG averaged US$567/t (approx US$11/mmbtu). At Pluto, 28% of sales volume benefitted from the price review, with the average realized price equating to $11/mmbtu, compared to approx. $8/mmbtu for initial contract volumes. Higher prices are guided for 35% of volumes in Q2 and 75% of volume from Q3 2014. This is a key driver of profit growth in 2014. Importantly, it should dispel misconceptions that seem to persist regarding LNG pricing structures over the outlook and beyond. In terms of growth projects – there was no further insight on Leviathan and discussions continue between WPL, potential partners and the Israel Government. On Browse - FLNG basis of design activities continue with FEED to be considered in 2H 2014. Capex was low at US$206m, reflecting minimal development activity. WPL’s only exploration well in the quarter, Rydal-1 was dry. WPL has two wells planned for Q2 in the Carnarvon and Outer Canning Basins – both wells are targeting gas. In new ventures, WPL entered four offshore blocks in Myanmar (two as operator and two as non-operator). In Peru, WPL acquired a further 15% of Block 108 from its JV partner, Reliance Exploration. We retain our Underweight rating: 1) WPL is currently at the top of its trading range over the past 24 months; 2) there doesn’t appear to be enough short-term catalysts to drive a re-rating; and 3) 2014 is the peak year in terms of earnings based on our forecasts. We see better relative value in other energy stocks.



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flower
post Posted: Apr 3 2014, 03:06 PM
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Courtesy of CVN:
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Good luck, Woodside a follow up to the "Next Big Thing"

Thursday, 3 April 2014. David Upton EnergyNewsPremium.net
THIS column recently looked at forthcoming drilling in the Roebuck Basin and pointed out it could herald the next big thing in Australia’s petroleum sector.
The focus of that story was on Apache and its junior partners in Phoenix South-1 (Carnarvon Petroleum, Finder Petroleum).
The other well about to spud is the Woodside-operated Hannover South-1, which will be followed in quick succession by Steel Dragon-1 and Anhalt-1.
All three wells are targeting multi-trillion cubic feet gas prospects in untested Triassic reservoirs between the Carnarvon and Browse Basins.
It is difficult to recall more important wildcats in the history of Woodside.
Gnarlyknots-1 in the Great Australian Bight a decade ago might match these wells in terms of upside from a frontier. It targeted oil and could have been transformational even for a company as large as Woodside.
However, a decade ago, Woodside did not need a big new discovery as badly as it does today.
Recent annual reports show Woodside’s reserve life (2P developed and undeveloped reserves divided by annual production) has shortened alarmingly from 25.3 years in 2011 to only 15.9 years in 2013.
This reflects the lack of commercial discoveries in Australian waters since Ragnar-1/1A in early 2012, and, far more significantly, the commissioning of Pluto LNG.
Pluto has dramatically increased the rate Woodside is burning through its reserve base from about 65 million barrels of oil equivalent to 90MMboe per annum.
Woodside is engaged in many different projects to turn this around. The best of these in terms of immediate fixes is the 4000sq.km Fortuna 3D seismic survey over the heart of the North West Shelf.
The survey has just been completed with Schlumberger’s remarkable Isometrix technology, which collects 60 times more data than a conventional 3D survey.
One of the major objectives of the technology is to penetrate the carbonate rocks along the Madeleine Trend that have defied seismic exploration efforts for the past 30 years.
The Madeleine Trend is parallel to the coast and slightly inboard from the main fields and production facilities.
If there is still undiscovered oil and gas in the core areas of the North West Shelf, Woodside and its partners will find it soon.
Woodside’s other hopes for boosting its 2P reserve base are quite a mixed bag.
A final investment decision on a floating Browse LNG project, which is scheduled for the third quarter of next year, would convert a contingent resource of 955MMboe (Woodside’s share) to 2P reserves, and add about 10 years to reserve life.
However, given it might take five years from now to reach production, even Browse LNG would not restore the company’s reserve life to pre-Pluto LNG levels.
Sunrise LNG, if development agreement with Timor-Leste could ever be reached, would add only four years to the company’s reserve life.
Against this background, it is easy to see why the idea of buying a large volume of 2C resources from Leviathan’s partners is such a priority.
Woodside has, over the past year, ventured into a number of international frontiers with big upside, including Myanmar, Ireland and New Zealand.
All of these projects are at least two years behind the Roebuck Basin and work in the adjacent Beagle sub-basin of the Northern Carnarvon Basin.
Woodside and its partner Shell wrapped up 11,000sq.km of 3D seismic at the end of 2012, and have the Deepwater Millennium on site spudding the first of up to eight wells by the end of next year.
There are plenty of critics out there that hope Woodside and Shell will fail.
It will add to the narrative of a company that has lost its way, with an exploration department that cannot seem to make discoveries any more.
All Australians at this point ought to be sending their good wishes to Woodside, though, because it is the closest thing we have to a national oil company.
Discovery in the Roebuck Basin could open a rich petroleum frontier for the country and solve many of Woodside’s most pressing challenges.
It would also revive the spirits of the beleaguered exploration department, and encourage continued investment by Woodside in Australia’s petroleum geoscientists.
Exploration is a difficult and unpredictable business. It is not understood by most finance people, despite the fact they owe their jobs to the explorationists.
Geoscientists are the real wealth creators in the petroleum business.
When discoveries are not made for a period of time, the finance people start questioning why all this money is being wasted and demand budgets be cut.
Woodside’s exploration budget was halved in 2012 to $260 million compared to the previous year, and remained at this level in 2013. It is budgeted to reach about $450 million this year, but is still well short of the historical levels of $600 million or more per annum.
If exploration in the Roebuck Basin is not successful, Woodside’s support for petroleum geoscience in this country will come under greater challenge.
There will also be a sharp rise in pressure from the finance people for Woodside to engage in mergers and acquisitions of the Leviathan kind.
Let us wish them good luck for the 2014 exploration program.





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apache123
post Posted: Feb 11 2014, 08:47 AM
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In Reply To: wolverine's post @ Feb 7 2014, 07:36 PM

Wolv

Other Spin Doctors comments on the Leviathan Deal

http://www.fnarena.com/index2.cfm?type=dsp...D37BDA2A9A7AB8E



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Buyer beware: Do your own research before investing....

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