Double-digit growth and a big increase in dividends would normally fire up any stock but Woodside Petroleum Limited (ASX: WPL) share price will likely be influenced more by the volatile oil price.
This isn't unique to Woodside. It's peers such as the Santos Ltd (ASX: STO) share price, Oil Search Limited (ASX: OSH) share price and Beach Energy Ltd (ASX: BPT) find themselves much in the same boat.
This isn't to say that the 47% increase in Woodside's 2018 dividend to US$1.44 per share (which is made up of US91 cents per share final dividend) won't be warmly received by shareholders.
Rising to the top
The oil & gas major is flushed with cash and that has enabled management to be generous in handing out dividends. Woodside's free cash flow surged by 83% to $1.5 billion as net profit increased 28% to $1.4 billion and operating revenue lifted 32% to $5.2 billion.
Woodside also announced that it achieved record liquid natural gas (LNG) production from its Pluto LNG plant and said that production from its Greater Western Flank Phase 2 project has commenced six months ahead of schedule and is $630 million under budget.
It has also started production at Wheatstone LNG train 2 with both train 1 and train 2 exceeding expectations.
The energy major has also started FEED activities for its Senegal-based SNE project, which should deliver growth over the longer-term.
Keeping an eye on the oil price
The recent rebound in crude oil prices will also be lifting sentiment towards the stock. Futures on the Brent crude benchmark jumped 1.9% to US$63.61 a barrel last night after major oil exporter Saudi Arabia committed to cutting production to below 10 million barrels a day in March.
Reports that oil production from the Organization of the Petroleum Exporting Countries (OPEC) fell by nearly 800,000 barrels per day (bpd) in January to 30.8 million bpd is also giving oil bulls reasons to cheer.
There was enough good news around for the market to ignore the increase in US oil stockpiles. Crude stocks in the US jumped by 3.6 million barrels in the week to February 8, according to the U.S. Energy Information Administration.
Analysts were only expecting a gain of 2.7 million barrels.
I think it's harder to read the oil market compared to other hard commodities like iron ore or copper.
Having said that, I think energy stock are likely to do well in the first half of this calendar year although I would be reluctant to go too overweight on the sector.
