The Woodside Petroleum Ltd (ASX: WPL) share price has fallen more than 3.6% in early trade despite a positive operational update from the oil and gas giant.
What did Woodside announce this morning?
Woodside said its joint venture (JV) Greater Enfield Project produced its first oil through the Ngujima-Yin floating production storage and offloading vessel (FPSO).
Woodside CEO Peter Coleman said this latest development was delivered on schedule and on-budget in a boost for the Aussie oil and gas company.
Woodside owns a 60% stake in the JV partnership with Mitsui E&P Australia to explore potential resources off the coast of Western Australia.
The Greater Enfield Project was intended to develop the Laverda Canyon, Norton over Laverda and Cimatti oil reserves with a total investment of around US$1.9 billion.
The project remains a key part of Woodside’s target annual production level of 100 million barrels of oil equivalent (mmboe) and this morning’s announcement is a big positive for Woodside investors.
So why is the Woodside share price falling?
Given the broadly positive production announcement, it’s surprising that the Woodside share price has fallen more than 3.6% lower in early trade.
However, an escalation in the US–China trade war on Friday has sent global markets spiralling as investors have flocked to the relative safety of ASX gold mining shares instead.
Indeed, it’s the Energy sector that has been hit hard again this morning with the S&P/ASX 200 Energy Index (INDEXASX: XEJ) falling 3% to 10,173 points at the time of writing.
I’d expect to see the Woodside share price recover slightly throughout the rest of the day’s trade as the ASX settles following the weekend shock.
The company didn’t have its strongest reporting season, as it announced a steep drop in revenue and profit, as well as further costs associated with its Pluto LNG operations.
While I’m not bullish on LNG and oil companies in the long-term, I do think there’s potential for the likes of Infigen Energy Ltd (ASX: IFN) to emerge as a serious ASX blue chip in the next 2–5 years.
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