Woodside shares fall on lower Q2 production, Tellurian deal
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More news: Woodside Energy shares slumped on the ASX after the oil and gas major reiterated full-year production guidance despite a dip in June quarter output.
Shares were down 3.4% to $27.63 by 2:17pm AEST.
RBC Capital Markets analyst Gordon Ramsay noted that Woodside's Q2 sales revenue was in line with consensus, with sales volumes benefiting from higher pipeline gas and liquids pricing and positive timing of shipments over the quarter.
Product pricing for produced LNG was also in line with consensus, though production volume was 4% lower, largely from planned maintenance that was not forecast, weather effects and unplanned outages.
Meanwhile, Ramsay said Sangomar oil production had "started up well with production ramping up", while the Scarborough project remained on schedule, albeit with a 4% higher capital expenditure.
Macquarie analysts retained their 'outperform' rating on Woodside, supportive of the company's move to deploy capital into growing its LNG business in "arguably the lowest cost free-market region to build" and allocating additional capital overseas, given climate activist pressure in Australia and "inability to progress local growth options".
Elsewhere, Citi analysts opened a "short term negative trading view" on Woodside, due to an expected negative reaction to Woodside's $1.3 billion deal to buy energy firm Tellurian, including its Driftwood LNG project being developed in the US Gulf Coast.
What they said: Citi analyst said: "We don't think the market will give Woodside the benefit of the doubt in their trading capabilities earnings an acceptably high return on the capital outlay for Driftwood versus the alternative uses of capital, particularly shareholder returns".
Woodside quarterly output steady, keeps FY guidance
The news: Woodside Energy is sticking to its full-year production guidance after recording a small drop in June quarter output.
The numbers: Australia’s top oil and gas producer said second quarter production was down just 1% from the prior quarter to 44.4 million barrels of oil equivalent (mboe).
Sales volumes lifted 5% from the March quarter to 48 mboe, helping boost quarterly revenue by 2% to USD3.03 billion ($4.56 billion).
Woodside shares were down 1.7% to $28.09 in early trading on the ASX.
The context: Woodside CEO Meg O’Neill said the company is on track to achieve its full year production guidance of 185 million to 195 million barrels of oil equivalent.
Work on the company’s major growth projects is continuing at pace with the Scarborough Energy Project in Western Australia now more than two-thirds complete and on target for first LNG cargo in 2026.
Woodside on Monday announced a $1.3 billion deal to buy energy firm Tellurian, including its Driftwood LNG project being developed in the US Gulf Coast.
Analysts have backed the transaction, with Morningstar calling it a “reasonable deal” that is expected to be “value-accretive”.
What they said: “We are seeing ongoing demand for Woodside’s LNG in Asian markets, as evidenced by our long term sale and purchase agreement with CPC Corporation Taiwan and the $1 billion loan agreement executed with JBIC [Japan Bank for International Cooperation] to fund Woodside’s Scarborough Energy Project,” O'Neill said.
The sources: ASX announcement, RBC Capital Markets research
