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Woodside (ASX:WPL) share price on watch as it exits project

The Woodside Petroleum Limited (ASX: WPL) share price is on watch this morning as it announced an exit of one of its proposed developments. What does this mean for the Woodside share price?

Woodside is Australia’s largest independent oil and gas company with a global portfolio and competes with Santos Ltd (ASX: STO).

WPL share price

Source: Rask Media WPL 2-year share price chart

Kitimat development exit

Woodside has decided to exit its 50% non-operated participating interest in the proposed Kitimat LNG (KLNG) development, located in British Columbia, Canada.

This exit is expected to impact FY21 net profit after tax (NPAT) by around US$40million to $60 million.

The company notes these costs will be excluded from the underlying NPAT for the purposes of calculating the dividend.

The KLNG project was initially designed to develop a new source of liquefied natural gas to Asian markets but Woodside has decided to prioritise the allocation of capital to opportunities that can deliver greater short term value.

My thoughts

It appears this decision may have been made in light of the growing adoption of renewable sources of energy. If so, it’s encouraging to see Woodside turning its mind to more value accretive opportunities.

In saying this, Woodside’s key revenue sources stem from fossil fuels, which is not a structurally growing industry.

Whilst it’s still quite sometime before renewable sources completely replace fossil fuels, I prefer to invest in businesses with long industry tailwinds.

If you are on the hunt for more ASX growth shares, I’d recommend signing up for a free Rask account to gain access to our stock reports.

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Are you stuck wondering where to invest right now? Have you got cash 'sitting on the sidelines'? Are you looking for dividend income AND growth but don't know where to start? Rask's expert ASX analyst team has just released a full report, detailing where we'd invest $10,000 right now.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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