The Woodside Petroleum Limited (ASX: WPL) share price is outperforming the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) thanks to its latest production update and the firmer overnight oil price.
The WPL share price jumped 1.3% to $33.97 in morning trade while peers like the Oil Search Limited (ASX: OSH) share price and Origin Energy Ltd (ASX: ORG) gained around 1% each compared to the more modest 0.2% increase in the ASX 200 index.
The improving outlook for crude is giving the energy sector a kick with the Brent oil benchmark adding 1.1% to US$61.32 a barrel last night but Woodside shareholders have an extra reason to cheer as the company posted its quarterly production report.
Big revenue surge
Revenue in the 2018 December quarter surged 43% over the same period in 2017 to US$1.4 billion, which was driven by a ramp up in production and higher prices.
The sales figure was also higher than in the previous quarter when Woodside posted revenue of US$1.2 billion despite the volatile oil price.
Production in the latest quarter increased by 10% over the previous corresponding period to 24.1 million barrels of oil equivalent (MMboe), and this takes its 2018 full year production figure to 91.4 MMboe – slightly ahead of company guidance and 8% higher than 2017.
Its Wheatstone LNG project continues to exceed expectations while its Pluto project hit 99.7% reliability.
"A highlight of the quarter was the start-up of the Greater Western Flank Phase 2 project in October, six months ahead of schedule and $630 million under total budget," said Woodside's chief executive Peter Coleman.
"In addition to the outstanding result in delivering Greater Western Flank Phase 2, we achieved significant milestones in the development of our next wave of projects, which will underpin Woodside's future growth."
Risk of downgrades
However, it's not all good news. Woodside issued a 2019 production guidance of between 88 MMboe and 94 MMboe.
This implies a potential slowdown in production this year as it undertakes major maintenance work on some of its facilities, including Pluto.
Some brokers like UBS and Citigroup are forecasting 2019 output for Woodside at 93.6-93.7 MMboe, according to the Australian Financial Review.
I won't be surprised to see some consensus forecast downgrades although I don't think any revision will be material.
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