In today’s daily we have covered stock research on Woodside Petroleum (BUY).









 
The S&P 500 was up by 12.83points or 0.62%on Tuesday to 2066.88 points.  U.S. stocks inched up at the open on Tuesday as a pair of big M&A deals boosted market optimism a day after the S&P 500's worst performance in a month. Biogen Idec Inc. led gains in health-care shares after its Alzheimer’s drug showed promising early results. Energy shares climbed 1.7 percent even as oil resumed a selloff. Stanley Fischer, the vice-president of the Federal Reserve, became the latest high-profile name to stress thegrowth-enhancing impact of lower oil prices – while playing down the deflationary risks.

Chevron Corp. andExxon Mobil Corp. increased more than 2.2 percent, pacing gains in the Dow for a second straight day. Apple increased less than 0.1 percent, after losing 3.3 percent yesterday. Apple’s retreat was mirrored in technology stocks from Tesla Motors Inc. to TripAdvisor Inc. and Facebook Inc. TripAdvisor rebounded 5.2 percent today, while Facebook jumped 0.7 percent. Tesla slipped 0.3 percent.Russia’s economy ministry predicted that the slide in oil prices – Brent has tumbled nearly 40 per cent since June – plus the impact of sanctions on Moscow, would cause the country’s GDP to contract by 0.8 per cent next year.


Chevron Daily Chart (Source – Thomson Reuters)
S&P ASX 200was up by 73.6points or 1.41%on Tuesday and closed at 5281.3 points. Brent crude oil bounced 2.8 per cent to $US72.11 a barrel before the local market opened on Tuesday, after losing more than 13 per cent in a five-day slide. Santos, which lost more than 25 per cent of its market cap in the three days previous, bounced 0.9 per cent to $9.19. Resources giant BHP Billiton added 3.9 per cent to $30.40, while main rival Rio Tinto rose 2.2 per cent to $57.93
Commonwealth Bank of Australialifted 1.2 per cent to $80.74, while Westpac Banking Corporation rose 1.5 per cent to $32.73. ANZ Banking Group added 0.2 per cent to $31.72, and National Australia Bank gained 0.8 per cent to $32.39. The Australian dollar is trading at US84.44¢ at 5.19am AEDT, compared with US85.16¢ at Tuesday’s local close. The following stocks will trade ex-dividend today: BT Investment Management, Fisher & Paykel.

BHP Daily Chart (Source – Thomson Reuters)
 
Top Performers on the ASX 200 were :-


 
Stock of the Day - Woodside Petroleum (BUY)
Woodside Petroleum (WPL) is in our spotlight today in view of its progressing third quarter updates for period ended 30 September 2014 and other recent announcements. The Company quite recently announced for entering into a contract for an exclusive Reconnaissance License (RL) with the Office National des Hydrocarbures et des Mines, the National Oil Company of the Kingdom of Morocco, for exploring a block offshore Morocco. This block (the Rabat Ultra Deep Offshore area) comprises a total of 36,737 km2 with depths ranging from 1700m to 4400m. The grant is subject to Ministerial approval.


Executing Global Exploration Growth (Source – Company Reports)

Another latest announcement entails that the North West Shelf (NWS) Project participants have approved the Persephone Project off the north-west coast of Australia. The Persephone Project is associated with a total investment of about A$1.2 billion with start-up expected in early 2018; and is the third major gas development for the NWS Project in the past six years. The project has been defined to involve a two well, 7 km subsea tieback from the Persephone field to the existing North Rankin Complex. The participants include Woodside Energy (Operator 16.67%); BHP Billiton Petroleum; BP Developments Australia; Chevron Australia; Japan Australia LNG (MIMI); and Shell Development Australia.

WPL’s sales revenue for Q3 was up 16.7% on Q2 2014 to US$1,959 million, and up 46.4% on Q3 2013. The Company has signed an LNG Sale and Purchase Agreement with Cheniere Energy, Inc. subsidiary, Corpus Christi Liquefaction, LLC. WPL’s drilling activities progressed in Australia with the Toro-1 exploration well in permit WA-430-P intersecting ~150 metres gross gas and 65 metres net gas within the Mungaroo Formation target.


Free Cash Flow (Source – Company Reports)

Another highlight is the finalization of the agreement with Chariot Oil & Gas to farm-in to the Rabat Deep permits offshore north western Morocco, and Beach Energy to farm-in to the basin of Lake Tanganyika in western Tanzania. The Company also acquired a participating interest in an exploration, exploitation and production sharing contract (EESPC) for Block F15 in the Gabon Coastal Basin.

WPL further advised that an agreement had been finalized with Noble Energy and Glencore to farm-in to the Tilapia Production Sharing Contract (PSC) off the coast of Cameroon.

As opposed to Q2 2014, production updates for Q3 indicate a 7.2% rise in production volumes owing to higher LNG and condensate volumes produced at the NWS and Pluto LNG. This although was partly equipoised by lower oil volumes produced across WPL’s Australia oil assets. Sales volumes were up by 14.0% due to higher production and timing of shipments. The production volumes were 15.1% higher and sales volumes were 17.2% higher relative to the Q3 2013. This was owing to higher LNG reliability at NWS and Pluto and the re-start of the Vincent FPSO in late 2013. WPL has revised its production target range for 2014 to 93 to 95 MMboe (previously 89 to 94 MMboe) indicating a strong operating performance.


Comparative Performance (Source – Company Reports)

Under WPL’s development activities in Australia, WPL concluded key basis of design documentation for the proposed Browse floating LNG (FLNG) development with a decision to make an endorsement for entering front-end engineering and design (FEED) targeted late 2014. Development opportunities for Greater Enfield also continue to be evaluated. Drilling of Xena Phase 1 commenced at Pluto during Q3. Xena first gas is expected in 2H 2015.

The Company stated that the A$2.5 billion Greater Western Flank Phase 1 project progressed with subsea installation (expected to be completed by Q4 2014) and topside modifications. The project is on track for start-up in early 2016.


Record Reported Profit, EPS and Interim Dividend (Source – Company Reports)

At the international front, the Company is still committed to develop Greater Sunrise in view of the fact that the Timor-Leste and Australian Governments have agreed to a six-month adjournment to a dispute relating to the Treaty on Certain Maritime Arrangements in the Timor Sea in order to negotiate towards an acceptable settlement. WPL is progressing well with environmental and regulatory approval obligations under the Sole Proponent Agreement in Canada. Another highlight is start of geotechnical investigations at the Grassy Point site for LNG development feasibility assessment.


Development Pipeline (Source – Company Reports)

WPL is showing progressive trends in exploration activities. Wells such as Toro-1 well in WA-430-P and Hannover South-1 well in WA-466-P were spudded. On 1 September 2014, WPL farmed-down 11.1% in Outer Canning permits WA-462-P and WA-466-P to BP Developments Australia Pty Ltd. In New Zealand, preparations progressed in support of 3D seismic acquisition planned for Q1 2015. Similarly, data processing from Muneo 3D seismic survey in the Ulleung Basin Block 8/6-1N in Republic of Korea was completed. In Peru, 2D seismic operations started.


Investment Expenditure (Source – Company Reports)

The Company mentioned that a proposed selective buy-back of 78.3 million WPL’s shares held by Shell was not approved by the requisite 75% of votes of eligible shareholders at the Company’s General Meeting on 1 August 2014. The Company declared an interim dividend for 2014 of 111 United States (US) cents per share (cps), which was to be paid on 24 September 2014 to shareholders registered on the record date of 29 August 2014. WPL’s Board has determined that the Dividend Reinvestment Plan will continue to be suspended.


Gearing, Net Debt and 1H 2014 Production & Sales Revenue (Source – Company Reports)

One aspect that can’t be ignored is the oil price outlook that may play over WPL’s performance to some extent.


WPL Daily Chart (Source - Thomson Reuters)

Looking at the entire story, we put a BUY recommendation for this stock at the current price of $34.86.

 
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