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Woodside Petroleum: Full year production exceeds guidance

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Woodside Petroleum Ltd. (ASX: WPL) recently released their fourth quarter report for the period ended 31 December 2011 showing higher than anticipated production for the period, driven mainly by the strong performance of the company’s oil assets. Despite the positive report, Woodside’s shares failed to fire, and remain at half the price they traded at in 2008.

So what: Woodside managed to produce 64.6 million barrels of oil equivalent for the quarter, which was at the top end of their November guidance of 63 – 64 million barrels.

Oil and gas production fell 11% but Woodside still maintains its 2012 targets of between 73 – 81 million barrels of oil equivalent (MMboe). Sales also fell 11% but full-year sales revenue was up 15% due to the average realised oil price increasing 41% to US113.80 per barrel.

Chief Executive Peter Coleman said, “One of our significant growth projects will come to fruition in 2012 with the start-up of the Pluto LNG project, providing a substantial boost to our already strong production base”.  The strong production base comes from the ongoing contribution from the North West Shelf Project which posted record annual revenue for Woodside of nearly US$3 billion in 2011.

Now what: Woodside have a good record of forecasting production amidst the unexpected divestments, bad weather or shut-ins.

Woodside’s production target range for 2012 includes 56 – 60 MMboe from the underlying business and 17 – 21 MMboe from the Pluto LNG Foundation Project which will be commencing this year

Woodside shares have slumped almost 30 per cent since April 2011, a time when rumours had it that BHP Billiton (ASX: BHP) were interested in taking over the company.

Value investors for the long term might want to take a further look and investigate more.

For investors looking to upgrade from Woodside Petroleum, our free special report — “The Motley Fool’s Top Stock for 2012“  — highlights one such company. Grab a free copy of that report by clicking here.

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This article was written by Motley Fool contributor Jonathan Lee. Jonathan does not own any shares mentioned in the article. The Motley Fool’s purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Click here to be enlightened by The Motley Fool’s disclosure policy.

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