Oil Search Limited
September Quarter Revenues Grew 81% QoQ: Oil Search Limited (ASX: OSH) had earlier reported their results for the quarter which ended on September 2018. As per the report, the company generated revenues amounting to US$474.9 million in the September 2018 quarter which reflects the rise of 81% as compared to the June 2018 quarter. The rise in the revenues on a quarterly basis was encountered because of growth witnessed in the sales of gas and LNG as it rose 68% and liquids sales which rose 31%. However, increased realised prices of LNG as well as gas and of oil and condensate also supported the rise in the revenues mentioned above. The company has also maintained the levels of the important margins higher than the industry median levels.
At the end of 1H 2018, the company’s EBITDA margin stood at 63.6% which happens to the higher than the industry median of 37.1%. The company’s net margin at the end of 1H 2018 was 14.2% while the industry median was 11.9%.
Key Metrics (Source: Company Reports)
Broader Oil Markets Might Remain Sensitive to Macro Variables: Broadly, the oil markets are expected to witness the impacts of the tensions related to the oil demand largely because the concerns about global downturn are rising. The oil markets are also dealing with concerns related to the increased supply. The momentum in the financial markets determines the performance of the oil prices.
Stock Analysis and Outlook: As demonstrated by the first half of 2018 results presentation, Oil Search Limited happens to possess robust balance sheet. The presentation had stated that the robust balance sheet coupled with the capabilities of the company of the generation of cash from the operations would help the company in achieving the growth prospects moving forward.
On the daily chart of Oil Search Limited, one technical tools named Moving Average Convergence Divergence or MACD has been applied and default values have been considered. After observing, it was noticed that the MACD line has crossed the signal line and is trending in the upward direction. This signifies that the stock might witness favourable momentum moving forward.
As a result, we maintain our “Buy” rating on the stock at the current market price of A$7.120 per share (up 2.594% on January 03, 2019).
Woodside Petroleum Limited
Production at Wheatstone LNG Supported YoY Rise in Output: Woodside Petroleum Limited (ASX: WPL) had earlier published the report which contained information related to the September 2018 quarter. As per the report, production with respect to Wheatstone LNG have witnessed positive trend and it had moved ahead of the plan which has supported the YoY increase of 13.8% in the September 2018 quarter with respect to the output.
Quarterly Production Highlights (Source: Company Reports)
In the September 2018 quarter, the company posted sales revenues of $1,157 million which implies the rise of 25.4% on the YoY basis due to increased prices.
Decent Footing in Terms of Key Ratios and Margins: Woodside Petroleum Limited had managed to maintain decent footing in terms of the important ratios as well as margins. The company’s gross margins were 49.9% at the end of June 2018 (1H 2018) which implies the YoY rise of 2.1%. The company’s current ratio stood at 1.70x at the end of June 2018 (1H 2018) which happens to be higher than the industry margin which is 1.35x.
Investment Proposition Might Attract Investors: As demonstrated by the half-yearly results presentation of 2018, Woodside Petroleum happens to have an outstanding base business. The company is also possessing a robust financial position which could benefit the company from several fronts moving forward. The presentation also stated that it is also focusing towards the shareholder value with the help of dividends as well as cash flows.
Stock Analysis: On the daily chart of Woodside Petroleum, Exponential Moving Average or EMA has been applied and default values have been used for the purposes. As per the observation, the stock price has crossed the EMA and is moving upwards which signifies that there might be bullish momentum moving forward.
As a result, we maintain our “Buy” rating on the stock at the current market price of A$31.540 per share (up 3.444% on January 03, 2019).
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