Playing off in their final game of the group stages in The Motley Fool's ASX World Cup, Woodside Petroleum Limited (ASX: WPL) and Oil Search Limited (ASX: OSH) take the field. Having already been knocked out by Santos Ltd (ASX: STO) and Origin Energy Limited (ASX: ORG), Oil Search will be looking to come away from today's game with at least a draw but they know Woodside, currently sitting on top of the oil and gas group, won't go down without a fight.
Here's how they line up.
Measure |
Woodside Petroleum (ASX: WPL) |
Oil Search (ASX: OSH) |
Market cap |
$34 billion |
$14.7 billion |
EV/2P |
24.6 |
39 |
Forecast Dividend Yield |
5.8% |
0.4% |
Forward P/E ratio |
12.4 |
24.4 |
Price to Book Ratio |
2.00 |
3.41 |
Data sourced from Morningstar.
As can be seen from the table above, Woodside is the favourite to win thanks to a better valuation across a number of important measures. Woodside, with a market capitalisation of $34 billion is Australia's largest independent oil and gas company. Its former managers were renowned for taking on big projects (such as the world class North West Shelf project) and turning them into great successes.
Oil Search is, quite clearly, more expensive but with production set to quadruple in the coming years, thanks to the giant PNG LNG project coming online, it might be deserving of its current price tag. In addition to holding the title of PNG's biggest producer, it's also got a number of highly prospective exploration blocks throughout the world.
Kick off
With a big fully franked dividend and captained by respected CEO Peter Coleman, Woodside's defence proves superior to Oil Search's attack early in the game. However after Woodside's most powerful forward, Leviathan, is dismissed for breaching the salary cap it seems the oil and gas giant is up against it. But, half-way through the first term, the hugely expensive Browse project floats an unconventional ball over Oil Search's goalkeeper and into the net. Then, true to form, Captain Coleman blasts a shot from 30 yards out straight in front and scores. At half time it's 2 – 0 to Woodside.
In the second half, both teams come out firing, but once again Woodside shows its superiority and more flexible balance sheet capabilities when it pressures Oil Search into an own goal. It seems all over for Oil Search and fans start leaving the stadium.
However, late in extra time, Oil Search produces a run rate through midfield that is truly remarkable and bags two quick goals. One from increasing dividends and another from the significantly higher revenues expected in 2015. In the end, those fans who stuck by their team have been well rewarded. Despite a late surge in production, Woodside takes the game 3 – 2.
Can Woodside go all the way?
Woodside will now progress through the group stages and into the first knockout game of The Motley Fool's ASX World Cup. However with stiff competition and a number of important players growing old and tired, it mightn't have what it takes to go all the way.