MENU

Will costs savings help Woodside Petroleum Limited?

Credit: greig davidson

The crashing oil price has continued to take its toll on Australia’s energy sector with Woodside Petroleum Limited (ASX: WPL) eliminating 300 jobs and freezing pay.

As reported by the Fairfax press, Woodside followed up on its warning of further job cuts after having reduced its workforce by 320 people last year in response to the 50% plunge in crude oil prices since June.

Although Woodside managed to report a 38% increase in net profit after tax to US$2.4 billion in 2014, the brunt of the impact of falling oil prices will be felt more this year due to a lag between changes in crude oil prices being reflected in the LNG sales price.

Job losses are an unfortunate consequence of the commodities downturn. Unable to achieve the same level of earnings as when oil prices are high, energy companies have been forced to shelve or scrap billions of dollars’ worth of projects which obviously requires business restructures.

US energy giant Chevron has recently stated that it will reduce worker numbers in Western Australia and Santos Ltd (ASX: STO) said in February that it had cut 520 jobs while there would be more to come.

Just as the oil crisis has taken its toll on Australia’s workforce, it has also left investors in the sector battered and bruised. Santos and Senex Energy Ltd (ASX: SXY) have been amongst the hardest hit, with their shares down 55% and 50% since June 2014, respectively. Others such as BHP Billiton Limited (ASX: BHP) and Origin Energy Ltd (ASX: ORG) have also dropped 11% and 18%.

Woodside Petroleum’s shares have fallen 17% since then and are trading at $35.41.

The next resources boom -- and how to get invested

NEW! The Australian Financial Review says: "Australian liquefied natural gas exports stand on the cusp of an unprecedented boom..." Discover one ultra safe way to invest in the Australian LNG revolution now in The Motley Fool's brand-new report. You'll receive the name and code of our favourite LNG play, FREE.

Note: No credit card required

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.