What? Oil and gas producer Woodside Petroleum Limited (ASX: WPL) has announced a massive half year result to 30 June 2014, reporting Net Profit After Tax (NPAT) of US$1.105 billion, a jump of 27% over 2013.
The profit was driven by a 24% increase in operating revenue, but significantly for investors, this increase was largely from higher negotiated prices for Pluto LNG, while total production was up 11%.
There are four other important points for investors to note:
- Reported earnings per share (eps) are up 27%
- Woodside Petroleum holds US$2.7 billion in cash
- Browse Floating LNG on track for front-end engineering and design (FEED) decision in 2H 2014
- The interim dividend was increased by 33.7%, from 83cps to 111cps (in USD)
So What?
The massive jump in dividend truly secures Woodside as a company for income investors. Combined with the full-year dividend of US$1.03 (A$1.149) per share, at the current exchange rate Woodside yields approximately 5.4%. The ex-dividend date to pick up the interim dividend is 27August 2014.
The reason higher Pluto LNG prices are so significant is because according to Woodside's 2013 Annual Report, it was only applicable to 25% of sales in Q1 and 35% in Q2. From the third quarter onwards Woodside will achieve a higher negotiated price on 75% of total sales from Pluto LNG, suggesting revenue in the second half of FY14 could again soar.
Now What?
With such a strong result, investors will be asking is it time to buy? For investors looking for a strong, regular dividend, at current prices Woodside Petroleum looks attractive.
The company's full year production target has been increased from 89 to 94 million barrels of oil equivalent (MMobe) and with higher pricing the outlook is very positive.
Growth focused investors may also be tempted by Woodside for its longer-term outlook. The company has announced the acquisition of several exploration areas in the last few months and maintains a continued focus on progressing Browse LNG.
In the short term though, Woodside is set to be outpaced by Santos Limited (ASX: STO), which is expecting to more than double cash-flows over the next two years as major projects come online.
