All eyes will be on Woodside Energy Group Ltd (ASX: WDS) shares this week.
That's because the energy giant will be releasing its third quarter update on Wednesday.
Ahead of the release, let's take a look at what the market is expecting from Woodside.
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Woodside Q3 preview
According to a note out of Goldman Sachs, its analysts see scope for Woodside to outperform expectations during the quarter.
The broker is forecasting production comfortably ahead of consensus estimates at 54.6 mmboe. It said:
We see potential for WDS to beat production, sales volume and revenue expectations this quarter.
Our total 54.6 mmboe production estimate is 9% above Visible Alpha Consensus Data primarily from stronger observed LNG sales at the NWS and Pluto QoQ, and assuming Sangomar delivered 90 kbbl/d average oil rates over Q3.
In light of this stronger-than-consensus production forecast, Goldman believes sales volumes and revenue will be ahead of expectations at 56.8 mmboe and US$3,673 million, respectively. It explains:
Our production estimates contribute to sales volume and revenue 9% & 13% above consensus respectively. Though we see some uncertainty surrounding the accounting treatment of Sangomar's Production Sharing Contract and impacts to reported production and revenue.
We assume 90 kbbl/d average oil production over Q3, with an effective WDS interest of 79% in line with reported Q2 interest assuming 25% of production & revenue is entitled to Government profit take at a 20% rate.
A final positive that could give Woodside shares a boost, if it proves accurate, is Goldman's belief that management may narrow its guidance towards the top end of its range. It adds:
We also see potential for WDS to tighten 2024 production guidance towards the upper end of the current 185-195 mmboe range, where we forecast 194 mmboe.
Should you buy Woodside shares?
Goldman Sachs currently has a neutral rating on Woodside's shares with a price target of $27.20. Based on its current share price of $25.87, this implies a modest potential upside of 5.1% over the next 12 months.
The team at Morgans is far more positive. Its analysts think that the energy giant's shares are dirt cheap and have an add rating and $33.00 price target on them. This suggests that there's potential for its shares to rise almost 28% from current levels.
Last week, the broker stated that "despite Brent oil trading in line with our long-term forecast, WDS' share price implies a near cycle-low oil price level." As a result, it believes "WDS offers attractive long-term value".
