If you wanted to see the top-line impact of rising oil prices on our energy stocks, you only need to take a peek at Woodside Petroleum Limited’s (ASX: WPL) latest quarterly production report released today.
The 60% surge in the crude price accounted for 82% of the revenue uplift for our largest oil & gas producer in the June quarter, when sales rose US$1.1 billion from US$868 million for the same period last year.
The price the company received for its liquified natural gas (LNG) from the North West Shelf jumped nearly 20% to US$7.90 per million British thermal units (MMBtu), while the price it received for its oil increased 41% to US$72 a barrel.
But the share price of Woodside Petroleum fell in early trade, although it recovered to trade flat at $34.50 at the time of writing even as the price of oil bounced overnight and the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index jumped 0.4%.
Investors had anticipated the strong increase in the realised prices of its products and the update hasn’t done anything to address the shortcomings levelled against Woodside – namely its lack of growth and overstretched valuation.
While Woodside continued to enjoy the benefits of the higher oil price over the March quarter, detractors might point out that the June quarter revenue fell when compared to the previous quarter when the company booked sales of US$1.2 billion due to a drop in the amount of oil and gas it produced.
But there are some positives that the market may be overlooking. Firstly, its Wheatstone LNG project is firing up with LNG Train 2 starting production last month and its domestic gas plant scheduled to start producing in the current half.
What’s more, Woodside has finally struck a deal to process gas from Browse at its North West Shelf (NWS) joint-venture.
The deal was supposed to have been finalised before the end of June but the difficulties in getting all parties to agree on commercial terms is believed to have hampered progress.
Woodside operates both the Browse and NWS projects and not all partners in one are involved in the other.
The sales results also don’t account for the currency benefit. The Aussie was trading closer to US80 cents a year ago and is currently hovering around US74 cents. All things equal, that’s worth another 8% boost to Woodside when it translates the sales into Australian dollars.
The lacklustre performance of Woodside’s share price can also be seen from a glass half-full perspective given that Oil Search Limited (ASX: OSH) is down 1% and Origin Energy Ltd (ASX: ORG) is weaker by 0.5%, although Santos Ltd (ASX: STO) has jumped 1.4% on management’s promise to restart paying dividends.
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Motley Fool contributor Brendon Lau has no position in any of the 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 Scott Phillips.