Woodside Share Price Still Feeling Pain from Lower Prices (ASX:WPL)

Australia’s largest independent oil and gas company, Woodside Petroleum Ltd [ASX:WPL] is still feeling the pain from lower oil and gas prices.

Third quarter 2020 results showed Woodside produced 25.3 MMboe and sold 26.7 MMboe. That is a 2% and 10% increase respectively from the same quarter last year.

Yet sales revenue was $699 million, down a whopping 42% from this same period last year and 9% from the previous quarter.

The main culprits are lower prices. The company received an average realised price of US$26 per barrel oil for the quarter, as you can see below. That’s close to a 50% drop from the US$50 it got in the same period last year:

Oil and Gas Prices - ASX WPL

Source: Woodside Petroleum

Year-to-date production stands at 75.4 MMboe, an 18% increase from the first three quarters in 2019. But again, sales revenues are down year-to-date by 25% compared to the same period last year.

Woodside CEO Peter Coleman remains optimistic, saying:

As expected, sales revenue in the third quarter was impacted by lower realised LNG prices, reflecting the oil price lag in many of our contracts. Pricing in the fourth quarter and in Q1 2021 is expected to be stronger given the improvement in oil price in recent months. In particular, I am encouraged by the strengthening Asian LNG spot price, which is now above $6.50/MMBtu for December deliveries.

Woodside had to write-down a total of US$4.37 billion, with US$3.92 billion of it in oil and gas properties and exploration assets earlier this year.

What could happen next for the WPL share price?

The market didn’t take the news too well. The WPL share price is down over 1.5% today, trading at $18.29 at time of writing. Year-to-date shares are down by over 46%.

With the pandemic still hitting global demand and the likelihood of new lockdowns on the way, it doesn’t look like prices will be recovering soon.

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Selva Freigedo

Selva Freigedo is a research analyst for The Rum Rebellion.

Born in Argentina, her passion for economic analysis started at a young age. Her father was an economist for the Argentinean governments and the family used to discuss politics and economics at the dinner table.

Argentina is a country with an unusual economic history. Growing up there gave Selva first-hand experience on different economic phenomena such as hyperinflation, devaluation and debt default.

Selva has also lived in Brazil, Spain and the USA.

Back in 2000 she was living in the US as the dot com bubble popped…
And in 2008 she was in Spain as the property market exploded and then collapsed…

She has seen first-hand what happens when bubbles burst.

Selva joined Fat Tail Investment Research’s team in 2016, as an analyst. She now writes from her vantage point in Australia, where she settled in 2015.

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