The Woodside Energy Group Ltd (ASX: WDS) share price is up after reporting its 2022 half-year result, including a big dividend.
Woodside is one of the world’s largest oil and gas companies. It produced 54.9 million barrels of oil equivalent (MMboe) in the first six months of 2022.
Woodside HY22 result
The company reported the following financial measures:
- Operating revenue increased 132% to US$5.8 billion
- EBITDA (EBITDA explained) increased by 165% to US$3.97 billion
- Net profit after tax (NPAT) soared 417% to US$1.64 billion
- Free cash flow surged 688% to US$2.57 billion
- The interim dividend got a massive 263% boost to US$1.09 per share
Woodside attributed the result to a strong operational performance and achieving the benefits of the merger with the BHP Group Ltd (ASX: BHP) petroleum business. Production for the half-year was 19% higher at 54.9 million of oil equivalent, benefiting from the contribution in the month of June from the former BHP assets and improved reliability of its LNG facilities.
Production from ‘Pluto’ was increased by the start-up of the Pyxis hub and the commencement of gas flows through the interconnector pipeline to the Karratha Gas Plant. This also marked the beginning of the North West Shelf’s Project’s transformation into a tolling facility, which is “essential” to the long-term future of Australia’s first and largest LNG plant.
I’d also point to higher commodity prices as a key factor for this result. The Woodside CEO Meg O’Neill noted that the oil price more than doubled year on year to US$96.4 per barrel of oil equivalent.
Woodside dividend
The oil and gas business said that it continues to deliver a “disciplined approach” to capital management. The dividend is made of two different parts.
One part is US$0.76 per share, this was an 80% payout of underlying net profit, which was at the top end of Woodside’s target range of between 50% to 80%.
The other part was US$0.33, being 80% of the net cash payment received from BHP after the completion of the merger, adjusted for a minimum working capital requirement.
In total, the interim dividend amounts to US$2.07 billion.
Outlook and thoughts on the Woodside share price
The CEO, Meg O’Neill, said:
The upheavals in global and Australian energy markets witnessed over the course of the past six months have shone a spotlight on the importance of gas in the world’s energy mix and underscores our confidence in the longer-term demand outlook for gas, which makes up 70% of Woodside’s portfolio.
Safe and reliable supplies of gas are not only critical to global energy security but will play a key role as our customers seek to decarbonise, alongside new energy sources such as hydrogen and ammonia that Woodside is investing in.
Our strategy to thrive through the energy transition as a low-cost, lower-carbon energy provider continues to progress through recently announced initiatives across hydrogen refuelling, carbon capture and storage and carbon to products technologies.
As a resources business, Woodside seems to have played things almost perfectly to benefit from the higher commodity prices. The exclusion of Russian energy from Europe offers potential upside (or at least a continuation) for strong energy prices, particularly as winter approaches in the northern hemisphere.
I’d rather buy resource shares when sentiment is weak, which I wouldn’t describe the current situation as. So, for me, Woodside isn’t a great buying opportunity today, though the dividend yield is strong. However, oil prices could be stronger than some people expect over the next few years. And I like the decarbonisation investing that Woodside is doing with solar power and green hydrogen.
