Woodside Petroleum Limited (ASX: WPL) announced this morning that it has awarded contracts for the Scarborough Project, is it a buy?

Woodside was established in the 1950s, it is Australia’s largest oil and gas business with a market capitalisation of over $31 billion.

The Scarborough Project

Woodside’s Scarborough plan includes 12 subsea, high-rate gas wells tied back to a semi-submersible floating production unit moored in 900 metres of water close to the Scarborough field.

The gas will be transported by a pipeline running more than 400km to the existing infrastructure on the Burrup Peninsula, Western Australia.

Woodside has now awarded four contracts for numerous front-end engineering activities. These contracts have been awarded to McDermott Australia Pty Ltd, Subsea Integration Alliance, Saipem Australia Pty Ltd and Intecsea Pty Ltd.

Woodside states that each contract has an option to progress to execute phase activities but is subject to conditions and a positive final investment decision being taken on the project by the Scarborough Joint Venture.

Each contract will be initially funded by Woodside on a 100% basis.

Woodside CEO Peter Coleman said, “We want to continue to maintain the momentum that has been generated during 2018 towards a targeted final investment decision in 2020.”

Is Woodside A Buy?

The market hasn’t been moved much with this news with the share price down 0.1% today, but since the beginning of October, Woodside shares have dropped 13%.

This might present an attractive price to some investors focused on the dividend income. However I’m not a fan of the cyclical and commodities based nature of oil businesses.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).