In today’s daily we have covered stock research on Woodside (HOLD). To view Dividend Calendar click here

S&P 500 was up 11.38 points or 0.6% and closed at 1911.91 on Tuesday. U.S. stocks advanced on Tuesday after the S&P 500 touched a record high, buoyed by the latest round of merger activity and as expectations for rate cuts at the European Central Bank stoked investors' appetite for equities. U.S. markets, which were closed Monday for Memorial Day, were catching up to the ECB news.

Pfizer shares edged up 0.3 percent to $29.59 a day after the U.S. drugmaker walked away from its bid to buy AstraZeneca for nearly 70 billion pounds ($118 billion). U.S.-traded AstraZeneca shares fell 0.8 percent to $71.69. Investors are returning to smaller companies and technology stocks with NASDAQ rising more than 3.4% in the last 4 days. Utility stocks accounted for three of the 10 best performers in the S&P 500. Financial companies had the second biggest group gain in S&P 500 adding nearly 1%.



S&P ASX 200was down by 1.1 points or 0.02% on Tuesday and closed at 5511.7 points. Woolworths is contemplating spinning out its portfolio of pubs into a separately listed $600 million real estate vehicle. Peters ice cream has been sold toR&R, Europe’s second biggest ice cream producer. NAB has become a substantial shareholder inIncitec Pivot (IPL) representing 6.73% of the voting power. Westpac (WBC) has become a substantial shareholder in Intueri Education Group (IQE) listed on the NZ stock exchange representing a voting power of 5.23%. The Aussie was fetching US92.66¢ late on Tuesday. US-based Starbucks has sold its 24 coffee outlets in Australia to The Withers Group while entering into a licensing agreement with the buyer.


S&P ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 




Stock of the Day – Woodside Petroleum (WPL)
 
Woodside reported marginally higher first quarter 2014 revenue of USD 1.7 billion up 1.5% sequentially an upside surprise. The rise came courtesy of strong LNG prices despite steady sales volume of 23 million barrels of oil equivalent and a slightly weaker crude price of USD 107.87 per barrel. LNG price achievement for NWS/JV was marginally better than anticipated USD 13 per million British thermal units (/mmBtu), steady on the December quarter.


Areas of activity in Australia (Source - Company Reports)

But the Pluto LNG price of USD 10.65/mmBtu was once again well ahead of expectations, reflective of 28% of sales at a new higher price following a review. Pluto customers had been given a sweetened start up price that is unwinding faster than anticipated. Woodside’s 90% equity Pluto LNG start up volumes are 50% greater than its 16.7% equity NWS/JV volumes.


North West Shelf (Source - Company Reports)

Woodside is a high quality Australian oil and gas name with a leading growth profile. Appeal remains low cost production, tenement prospectivity and first mover advantage in LNG infrastructure which can drive superior production and earnings growth and excess returns on invested capital. Returns on invested capital should exceed mid double digits by decade’s end as full leverage on existing infrastructure is realized by capital efficient expansions. 


WPL's 10 year performance against ASX All Ordinaries (Source - Company Reports)

To us the decision to walk from leviathan is a demonstration of Woodside’s commitment to value creation, its clear the value Woodside initially ascribed to Leviathan has been eroded via the higher entry cost, tax changes and a preference for regional gas markets versus LNG exports. Looking forward Woodside says it will target new investments in the $1-5bn range and has preference for early stage investments. We gave a buy on the stock on 04/02/2014 at 37.55. We are putting a hold recommendation on the stock at the current price.

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