It seems wrong to call Woodside Petroleum Limited (ASX: WPL) a 'standout performer' of the oil and gas industry when shares have dropped 12% in the last 12 months.
But compared to the 41% fall in shares of Santos Ltd (ASX: STO), or the 44% slump of Senex Energy Ltd (ASX: SXY) the company has been a rock.
Woodside has shown strength that other energy companies can only dream of with LNG contract prices rising over 2014, low production unit costs and reduced capital expenditure driving massive free-cash flows and a huge 9% dividend.
So is the company worth adding to your portfolio today?
Value
With a price-to-book (P/B) ratio of 1.75x Woodside isn't as cheap as Santos Ltd with a P/B of 0.85, nor are the company's recently revised 1,599.4 million barrels of oil equivalent (mmboe) especially cheap. Woodside's enterprise value to 2P reserves (EV/2P) ratio of 17.8 is rich compared to just 12 for Santos.
The company trades for a modest price-to-earnings ratio of 9, but this can be expected to rise going forward as the effect of low oil prices kick in and because Woodside is forecasting lower production in 2015.
Growth and outlook
The impact of low oil prices has been pronounced in Woodside's first quarter. Sales revenue for the first three months fell 16% over the prior year, despite total sales volumes growing 3%.
The recent acquisition of interests held by Apache Corporation has helped to plug the gap in near-term reserve growth and provided a buffer until a Final Investment Decision is reached on the massive Browse floating LNG project in 2016.
Should you buy today?
Woodside's low debt position and strong cash flows elevate it in the ranks of oil and gas producers. It is less exposed to the volatile oil price than most energy producers, however the company's shares don't look cheap which would have me holding out for a lower price.
