The Woodside Petroleum Limited (ASX: WPL) share price is edging higher, up 0.57% in early afternoon trading. This morning's gains bring Woodside's share price up 31% since crude oil prices started to rally on 1 November. That compares to a 12% gain for the broader S&P/ASX 200 Index (ASX: XJO).
Woodside shareholders have 2 new developments to analyse today.
First, Woodside has opted to pre-empt independent oil and gas explorer Far Ltd's (ASX: FAR) sale of its stake in the Sangomar asset in Senegal. (Note, FAR shares have been suspended since 14 September.)
Second, OPEC+ has reached an interim decision on its 2021 output levels.
We'll look at both below. But first…
What does Woodside do?
Woodside Petroleum is the largest operator of oil and gas production in Australia and also Australia's largest independent dedicated oil and gas company.
Founded in 1954 and headquartered in Perth, Woodside also has a portfolio of offshore platforms, oil floating production storage and off-loading vessels. It holds operating assets both in Australia and internationally. Woodside shares first listed on the Australian exchange in 1971.
What did Woodside announce about FAR's Sangomar transaction?
In an announcement to the ASX this morning, Woodside revealed it is exercising its right to pre-empt the sale of FAR's entire participating interest in the Rufisque, Sangomar and Sangomar Deep (RSSD) joint venture in Senegal to India's ONGC Videsh Vankorneft Pte Ltd.
FAR has a 13.67% interest in the Sangomar exploitation area and a 15% interest in the remaining RSSD evaluation area.
Woodside will match the terms of the pre-empted transaction. That includes a payment of $45 million and the reimbursement of FAR's share of working capital from 1 January 2020 through to completion. FAR may also be entitled to certain contingent payments, with those payments capped at US$55 million.
Woodside is funding the acquisition from its current cash reserves.
Commenting on the transaction, Woodside CEO Peter Coleman said:
Sangomar is an attractive, de-risked asset in execute phase, offering near-term production. The acquisition is value accretive for Woodside shareholders and results in a streamlined joint venture which will assist in our targeted sell-down in 2021.
We plan to commence development drilling next year as we progress the project to targeted first oil in 2023.
FAR shareholders and the Senegal government still need to approve the acquisition before it's finalised.
OPEC+ opts for small increase
In other developments with the potential to impact Woodside's share price, OPEC+ reached a belated decision yesterday (overnight Aussie time) on its production levels for 2021.
The group, which includes Russia, agreed to up total crude production by 500,000 barrel per day commencing in January. Acknowledging the crimp in demand from the ongoing pandemic, OPEC will meet monthly to determine future production levels.
Brent crude edged higher overnight and is up 2.7% since 1 December, trading for US$48.71 per barrel.
Any further rises in the price of oil should add a welcome tailwind to the Woodside share price.
