While other energy companies have tumbled around it, investors in Woodside Petroleum Limited (ASX: WPL) have sheltered under the company's vast LNG umbrella. That's why only Woodside investors will truly understand these six things about the company:
1. The feeling of receiving a huge 9% dividend…
There's no feeling quite like receiving a big, fat 9% dividend. It's a rare feat for most companies in the current low interest rate environment and something Woodside investors can truly appreciate.
Woodside's huge 9% dividend yield was fuelled by record production and rising LNG pricing, and set alight by the falling Aussie dollar.
2. …but knowing that it probably won't last
Alas, Woodside investors also understand that the dividend yield probably won't last. Lower energy prices pushed Woodside's first quarter sales revenue down 15.9% over the same period in 2014, despite a 3% increase in sales.
And as capital expenditure rises going forward and exchange rates remain volatile, the super yield may not be sustainable.
3. Why the share price has been so solid
Woodside's share price was insulated from the falling oil price by contracted LNG pricing and record production. LNG made up 84% of the Woodside's sales revenue in 2014 compared to just 53.5% for Santos Ltd (ASX: STO). Santos was also hit hard due to increasing reliance on oil-linked LNG pricing.
4. Understanding how insanely massive the Browse floating vessel will be
Browse floating LNG (FLNG) is the biggest project on Woodside's radar, with a final investment decision pencilled in for 2016. But the scale of the proposed floating vessel is immense.
Source: Woodside Petroleum/Shell
At 488 meters long and weighing 600,000 tonnes the vessel would be longer than the Titanic and weigh 2.6x more than the mammoth Oasis of The Seas cruise ship.
5. Where the names 'Pluto' and 'Xena' came from
The Xena gas field was discovered by Woodside in 2006 and is a smaller 'satellite' field next to Woodside's crucial Pluto gas field. The name 'Xena' was actually adopted from a distant icy rock which orbits (former planet) Pluto. It is the he farthest known object in the solar system; its discovery announced a year before Woodside's Xena gas field discovery.
6. Why the company could be a long-term winner
Unlike oil, demand for LNG is forecast to exceed production from 2022 which would naturally push LNG prices up. If Woodside's Browse floating LNG project is approved in 2016, the project would likely be completed at a perfect time to meet this demand. With an estimated production life of 40 years, Woodside investors understand the company's long-term potential.
