The Woodside Petroleum Limited (ASX:WPL) share price jumped 4% to $30.22 after it released its half-year report to the market today. Here's what you need to know (all figures in US Dollars):
- Revenue fell 4% to $1,869 million
- Net profit after tax rose 49% to $507 million
- Earnings of 60 cents per share
- Dividends of 49 cents per share
- Break-even oil price of US$34/barrel
- Gearing of 24%
So what?
Woodside continues to operate conservatively, using only its existing cash flows to fund the dividends and drill new wells for exploration. Debt remains controlled. Woodside could cut exploration expenditure if it had to reduce costs or free up cash, but is not overly indebted and its debts have a long lifespan.
Also, Woodside needs to keep drilling to bring new resources online to replace drilled out fields. Production in this half was 42.2 million barrels of oil equivalent (Mmboe), down from 45.9mmboe in the same half last year. This was due to a combination of:
- Reduced equity share from the North West Shelf (NWS) pipeline gas
- Discontinued operations, and
- Unplanned outages
Several new fields including Wheatstone are expecting to contribute to increased production in the near future.
Now what?
Woodside continues to invest in its business with new wells and ongoing exploration. Huge cost savings have been achieved with some of its projects coming in as much as 30% under budget. I would guess that this reflects at least in part the sacrifices of contracting companies who have had to bid at very low margins in order to win work.
The company remains in a very good position compared to some of the more marginal gas producers out there. Woodside's survival is not in doubt, and it remains in a strong position if oil and gas prices make a recovery – or even if they plunge further.
