The Woodside Petroleum Ltd [ASX:WPL] share price is down today after its subsidiary, Woodside Energy Trading Singapore signed a sale and purchase agreement (SPA) with RWE Supply and Trading GmbH.
Woodside Petroleum is Australia’s largest independent oil and gas company.
What’s the deal?
Woodside will be supplying RWE with 840,000 tonnes of liquified natural gas (LNG) per year. The deal starts in 2025 and has a length of seven years.
Woodside’s Meg O’Neill said the deal gives more proof that there’s still strong market demand for LNG through the second half of this decade.
As she said:
‘Customers are increasingly seeking to secure new energy supplies in a timeframe which supports the development of our Scarborough offshore gas resource and the expansion of the Pluto facility with the addition of a second LNG production train.
‘The SPA also provides the opportunity for Woodside and RWE to explore the potential for carbon-neutral LNG production and trading.’
The two companies also signed a memorandum of understanding in October last year to explore hydrogen-related opportunities. According to the release, RWE is developing around 30 hydrogen projects, the majority in Europe.
Much of the fall out could be continuing from yesterday’s result announcement
Markets haven’t taken the news well today with Woodside shares down around 4.5% at time of writing.
Yet much of the fall out could be stemming from yesterday’s release of their full year 2020 results. Woodside reported a net loss after tax of US$4 billion mostly from write downs after oil and gas prices took quite a hit from the pandemic.
CEO Peter Coleman remained upbeat though. As he said:
‘Our disciplined balance sheet management has safeguarded Woodside’s financial resilience and positioned us to take advantage of emerging growth opportunities as markets recover. The potential strength of that recovery is already being signalled by the recent increase in oil price and record sport LNG prices achieved in Asia over the northern hemisphere winter.’
Woodside declared a dividend of 12 cents, bringing the total dividend for the year to 38 US cents, a 58% drop from last year’s.
The WPL share price is trading at $24.18, dropping 7% from two days ago.
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