Why the Woodside Petroleum Limited share price just hit a 3-year high

Shares in oil and gas producer group Woodside Petroleum Limited (ASX: WPL) hit a 3-year high of $36.22 in trade this afternoon to bring some cheer to investors in Australia’s leading pure play oil and gas business.

The group was hit hard by the oil price crash that bottommed at the end of 2015, with prices on an upward trajectory since the start of 2016, amidst some regular price volatility.

This afternoon benchmark oil futures are both near multi-year highs, with Brent crude at US$77.61 and WTI at US$74.14 in a price move that is leading investors to bid Woodside higher.

The energy industry also received a shot-in-the-arm today with news that UK energy giant BP is reportedly prepared to bid US$10 billion for BHP Billiton Limited’s shale oil assets concentrated around the south-western United States.

Woodside itself has been active in the mergers and acquisitions recently in a failed bid for LNG-producing rival Oil Search Limited (ASX: OSH), while the group also raised $2.5 billion in February 2018 to acquire a further 50% interest in the Western Australian located Scarborough gas field.

In financial year 2017 the group posted a gross profit margin of $23 per barrel of oil equivalent for a total profit of $1 billion. Investors’ eyes will be focused on these two metrics when it hands Woodside hands in its full year results next month.

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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 Scott Phillips.

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