Australian FY22 earnings preview - WDS

Woodside Petroleum Limited (WDS) is an Australian petroleum exploration and production company. It is the largest oil and gas production operator in Australia and reports its half-year numbers tomorrow, August 30th.

In FY 2021, Woodside benefitted from rising oil and gas prices. The company reported an underlying NPAT of Us$1,620 million, up 262%. Production was 91.1 MMboe, and a final dividend of US 105 cents per share (CPS) was declared, bringing the full-year fully franked dividend to US 135 cps.

In June of this year, Woodside completed its merger with BHP’s Petroleum business transforming Woodside into a top 10 global independent energy producer by hydrocarbon production and making Woodside the largest energy company listed on the Australian Securities Exchange.

On completion, Woodside acquired the entire share capital of BHP Petroleum International Pty Ltd and issued 914,768,948 new Woodside shares to BHP. It also received net cash of approximately $1.1 billion, which included the cash remaining in BHPP bank accounts immediately prior to completion.

In a trading update released in late July, for the second quarter for the period ended June 30th, Woodside reported revenues of $3,438m, up 44% from Q1 2022. Woodside also produced 33.8 million barrels of oil equivalent (MMboe), a 60% increase from Q1 2022.

The company noted full-year 2022 production guidance of 145 – 153 million barrels of oil equivalent (MMboe) which combines:

2022 production guidance for the pre-merger Woodside assets
2022 production guidance for the BHPP assets from June 1st 2022, and
alignment of the conversion factors for the reporting of boe for all gas products

Woodside Share Price

Last week the share price of Woodside hit a new post-Covid high of $36.20, just a week after the price of crude oil fell to a six-month low.

Behind the push to new highs, the market is taking a bullish medium-term view of the oil price and by association Woodside along with expectations of a bumper earnings report tomorrow - including a large, fully franked dividend.

The chart below shows that the share price is testing downtrend resistance from the 2014 $43.74 high. A sustained break and close above here would allow the share price to retest the $39.38 high of October 2018 before a move towards the all-time $43.74 high.

The most significant risk to the bullish view is a re-emergence of growth/recession concerns into year-end.

Source Tradingview. The figures stated are as of August 29th 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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