Woodside shares fall 6.57% following 2019 half-year results

When Woodside Petroleum Ltd, the A$29 billion energy company reported its half-year results to the market yesterday, it saw its share price slide some 6.57%.

Though equities were hit across the board yesterday – as recession fears circulated through the market – lower revenues and earnings certainly didn’t help matters for Woodside (ASX: WPL).

When trading resumed today, Woodside’s shares traded flat at A$31.27 per share, as market panic eased.

First-half results: revenue lower, profits fall

Across a number of key financials Woodside Petroleum Ltd saw declines, though the company remains optimistic as it concerns future growth potential.

In the first-half, production volume fell modestly, hitting 39.0MMboe compared to 44.3MMboe in H1 2018.

These production figures were impacted by both Woodside’s Pluto LNG’s turnaround program and by cyclone Veronica.

Operating revenue and earnings (NPAT) both also fell in the first-half.

From the perspective of sales, Woodside reported revenue figures of A$2,260 million in H1 2019, a minor decrease when compared to 2018’s first-half operating revenue of A$2,388 million.

Earnings also took a hit: with the company reporting profit figures of A$419 million, some 22% lower than the corresponding period.

Through all this, Woodside management has maintained an excellent cash position: with the company reporting free cash flow of A$869 million – an increase of 123% from the first-half of 2018 – primarily driven by the Pluto LNG project.

Speaking of the company’s strong cash position, Woodside’s CEO Peter Coleman said:

'The strong cashflow generated by Pluto LNG will contribute significantly to the delivery of Woodside's vision for the Burrup Hub, which will unlock the future value of our world-class processing facilities in Karratha, and the rest of our growth strategy.'

Growth opportunities in focus

Though Woodside Petroleum Ltd saw some of its front-line financials weaker in the first-half of 2019, there remains a number of promising growth opportunities on the horizon for the company.

For one, the company has finalised the turnaround of Pluto LNG – a cornerstone of Woodside’s base businesses.

Though this turnaround created additional costs and saw production impacted, the company now expects ‘strong production performance’, with the cash flow generation stemming from Pluto LNG set to support the company’s growth strategies.

Moreover, speaking of these half-year results and the opportunists they imply, the company said:

'The foundations for a strong second half of 2019 and is on track to achieve targeted annual production of approximately 100 million barrels of oil equivalent in 2020.'

LNG demand robust

Maybe most promisingly for current and prospective investors is the overall outlook for the LNG market.

Here, Woodside has pointed out that forecasted ‘global LNG demand continues to grow,’ a fact, that Woodside believes will support future growth opportunities.

Woodside: the analyst take

As we noted above, it was general market panic that likely exacerbated Woodside’s share price declines we witnessed Thursday.

Even with this volatility and according to the Wall Street Journal, analysts have a positive outlook on the stock, with Woodside (ASX: WPL) carrying an overweight rating.

Of the 15 analysts covering the energy company: seven rate it as a buy while only two rate it as a sell.

Dividend details

Finally, speaking to the company’s strong cash position, Woodside also declared an interim dividend of US$0.36 per share.

According to the ASX, Woodside currently commands an impressive dividend yield of 6.41%.

Even with this hefty dividend, since January, Woodside Petroleum Ltd has seen its share price rise a mere 2% – well below the ASX 200 blue-chip index.