Investors have been waiting for it, and it’s finally here – Woodside Petroleum Limited’s (ASX: WPL) lagged pricing schedule has finally caught up with market prices, leading to a revenue crunch in its latest quarterly report this morning.

Despite a decent increase in production, revenues slumped 30% as lower average realised prices crushed sales. Here’s what you need to know:

  • Production was up 9% on the prior corresponding quarter
  • Sales revenue fell 30% (sales made were slightly ahead of production)
  • Average realised price of US$40.57 per barrel of oil equivalent (boe)
  • Credit ratings reaffirmed by Standard & Poor’s and Moodys, albeit with negative outlook
  • Investigating 10 million tonne per annum (mtpa) gas liquefaction facility in Texas
  • Entered Front-End Engineering and Design (FEED) process for North West Shelf project
  • As previously announced to the market, Browse Floating LNG plant will not proceed in current market conditions
  • Development, drilling, and appraisal work continued at key Wheatstone, Persephone and Kitimat projects
  • Fourth Mega-LNG tanker chartered by Woodside

Like other resource companies, Woodside has been playing the conservative game recently, deferring major capital expenditures like the Browse LNG, whilst steadily progressing evaluation work required to exploit a number of future opportunities.

Along with Oil Search Limited (ASX: OSH), Woodside remains one of the better positioned oil and gas companies, and its balance sheet and cash flows are hard to equal. Woodside’s financial position gives it the ability to make a number of big purchases if it chooses, as we saw with the recent aborted attempt to buy out Oil Search.

What’s next?

Woodside has already demonstrated it has an eye for opportunities, and investors might expect further earnings-accretive acquisitions to be in the pipeline. Other mega-mergers don’t appear likely however, and investors must remain prepared for continuing volatility in Woodside’s share price as the value of oil fluctuates.

For investors with patience and an eye for looking through the cycle however, Woodside is probably the most ‘blue chip’ oil and gas stock on the ASX.

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Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.