Woodside Petroleum Ltd
Boost from oil prices and LNG demand: Woodside Petroleum Ltd.’s (ASX: WPL) stock rose 2.5% on September 25, 2018 after the rise in LNG’s demand and boost coming in from oil prices. The company is also expected to benefit from the trade war fears between China and US. Moreover, for the first-half 2018, WPL has reported 6% growth in net profit to $541 million, 27% rise in revenue and has raised its 2018 production outlook after strong performances from its Wheatstone and Pluto LNG projects. The company for 1H 2018 has delivered production at 44.3 million barrels of oil equivalent, which was 5% higher than the first half of 2017. At Pluto LNG, the company has exceeded 99% reliability. For FY 18, WPL expects production to be between 87 mmboe to 91 mmboe, up from a prior outlook of 85 mmboe to 90 mmboe. As a result, WPL stock has risen 6.19% in three months as on September 24, 2018. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 37.990.
Origin Energy Ltd
Strong financial Performance: Origin Energy Ltd.’s (ASX: ORG) stock rose 1.6% on September 25, 2018 after the WTI crude oil witnessed price rise of 2.1% to US$72.26 a barrel and the Brent crude oil price surged 3.3% higher to US$81.43 a barrel. Brent crude oil price for the first time had broken through the US$80 mark in four years. The rise is on the back of news that Saudi Arabia and Russia had ruled out an increase in production in the near term to plug the gap caused by sanctions on Iran. On the other hand, for FY 18, ORG has reported Statutory Profit of $218 million, including the impairment charges (after tax) of $533 million reported at 1H2018. Underlying EBITDA from continuing operations grew 36% to $2.95 billion due to improved performance in both the Energy Markets and Integrated Gas businesses. As a result, Underlying Profit grew to $838 million, which is an increase of $438 million. Net cash flow from operating and investing activities (NCOIA) rose 92 per cent to $2.65 billion, on the back of increased earnings, asset sales and higher cash flow from Australia Pacific LNG. Meanwhile, ORG stock has fallen 18.91% in three months as on September 24, 2018. However, based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 8.150.
FY 18 Financial Performance (Source: Company Reports)
Liquefied Natural Gas Ltd
Loss narrowed down in FY 18: Liquefied Natural Gas Ltd.’s (ASX: LNG) stock rose 9.5% on September 25, 2018 on the back of rise in demand for LNG and commodity prices like other energy players. Reuters had last week reported that due to rise in demand for LNG in China and a lack of vessels to ship the product has led to significant rise in shipping rates. As per the report, September shipping rates have reached US$95,000 a day, whereas last year the shipping rates were on average in the range of US$30,000 to US$40,000 a day. Further, China has imposed a 10 per cent tariff on gas imports from the US, which are advantageous to Australian LNG exporters who are the main rival of US for the growing Chinese market. The tariff have been imposed on more than 5000 US imports, including LNG, which was done in response to US President Donald Trump on imposing 10 per cent tariffs and which may rise to 25 per cent at year-end, on a suite of Chinese imports. As a result, Chinese gas buyers now face a 10 per cent price penalty with US gas, that may rise to 25 per cent by December, and will erode their returns both as a gas buyer and a project investor. Australia is expected to overtake Qatar as the world's largest LNG exporter by 2020, and is already the largest LNG supplier to countries like China and Japan. Meanwhile, for FY 18, LNG reported net loss after income tax of $22.8 million, which compared with a loss of $29.3 million in the year ended June 30, 2017. The loss declined due to the mature status of development of Magnolia LNG and the impact of the company’s liquidity management plan. As a result, LNG stock has risen 12.39% in three months as on September 24, 2018. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 0.695.
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