Woodside Petroleum Limited (ASX: WPL) has reported its full year result for FY18, is it a buy?
Woodside Petroleum is Australia’s largest independent oil and gas company with a global portfolio. It is an explorer, developer, producer and supplier of energy. The company has been operating for over 60 years and is now Australia’s leading LNG producer. Some of its current development projects are in Senegal (SNE), Myanmar, Canada (Kitimat) and Timor-Leste / Australia (Sunrise).
Here’s what Woodside reported
Operating revenue increased by 32% to US$5.24 billion, with production increasing by 8% to 91.4 MMboe (Million Barrels of Oil Equivalent).
Woodside increased its net profit after tax (NPAT) by 28% to US$1.36 billion. Free cash flow increased even further by 83% to US$1.52 billion.
Part of the strong result came about from reducing the LNG unit production cost at Pluto LNG and NWS Project to $3.6/boe.
There were two achievements that management were happy about the will help near-term growth. The company company commenced production from the Greater Western Flank Phase 2, $630 million under budget and six months ahead of schedule. Woodside also commenced production at Wheatstone LNG train 2, with production from trains 1 and 2 “exceeding expectations.”
During 2018 Woodside increased its ownership of the Scarborough project and assumed operatorship.
There have been contracts awarded for Scarboorugh front-end engineering design activities in Woodside’s corporate capacity and funded by Woodside on a 100% basis.
Woodside Dividend and Balance Sheet
Woodside Petroleum increased the full year dividend by 47% to $1.44 per share. Woodside also said that its gearing was down 50% to 12%.
Woodside Management Comments
Woodside CEO Peter Coleman said:
“The past year has been a busy one for Woodside, but we are looking forward to achieving even more in 2019 when we plan to start production at Greater Enfield and take a final investment decision on SNE. At the same time, we will be preparing for final investment decisions in 2020 on Scarborough, Pluto LNG Train 2 and Browse.”
Is Woodside a buy for dividend income?
The Woodside share price rose 2.3% today. After delivering 91.4 MMboe in 2018, Woodside is targeting MMboe of 88 to 94 in 2019. In 2020 it is targeting around 100 MMboe.
Woodside says that long-term buyers of LNG are returning, with demand from Asia growing due to clean air policies and urbanisation. European demand for LNG is growing due to rising carbon prices and declining domestic supply. Woodside says an additional 230 mtpa supply is required by 2030, which is not far off a necessary doubling in supply.
Woodside is steadily growing its dividend again, with a fully franked yield of around 5.6% at the moment. However, as we saw between 2015 and 2016, the dividend can be severely cut when commodity prices fall. I like my dividends to consistently grow, which is why I’m attracted to the proven shares in the free report below.
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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).