Woodside (ASX:WPL) share price slides 3% following FY21 half-year results

The company’s shares are in the red despite a return to profitability after COVID ravaged 2020.

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The Woodside Petroleum Limited (ASX: WPL) share price is in the red this morning. This comes after the oil and gas giant released its financial results for the 6 months ending 30 June 2021 and also confirmed a merger with BHP Group Ltd (ASX: BHP)’s oil and gas business.

At the time of writing, the Woodside share price is trading 3.09% lower at $20.09. The S&P/ASX 200 Index (ASX: XJO) is currently down by 0.38%.

Let’s take a closer look at Woodside’s results.

Woodside share price struggles despite $317 million return to profit

The Woodside share price is not having a great start to the day after the company reported the following results:

  • Net profit after tax of $317 million. In the prior corresponding period (pcp) Woodside made a $4 billion loss.
  • Operating revenue rose 31.3% on the pcp to $2.5 billion.
  • Earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $621 million. The pcp saw an EBITDA loss of $5.2 billion.
  • Positive free cash flow of $311 million.
  • An interim dividend of US 30 cents per share. In Australian dollars this is a rise of 14.1% on the pcp and equates to a dividend yield of 1.99% at the current Woodside share price.

What happened in the first half of FY21 for Woodside?

Fluctuating oil prices have had a significant effect on the Woodside share price during this reporting period. When oil prices were rising, Woodside shares were rising. When Texas tea was on the downward slope, so was the Woodside share price. The Santos Ltd (ASX: STO) share price experienced a similar phenomenon.

Another event of note during the period was the blockage in the Suez canal. Internet comedians had a field day with memes, but Woodside’s shareholders were enjoying it too. As the majority of the world’s oil supply goes through the strait that bisects Egypt, it sent oil prices higher. This in turn had the effect of boosting the Woodside share price.

Much like other ASX energy shares, Woodside has come under increasing pressure over concerns about man-made climate change. The company all but admitted as much to the Australian Parliament.

Finally, Woodside’s CEO announced his retirement in April, to be effective come June. A new CEO was appointed yesterday.

What did management say?

Newly confirmed Woodside CEO Meg O’Neil said the results reflected the strong rebound in market conditions following the challenges and uncertainty brought on by COVID-19 in 2020.

Our revenue was buoyed by higher realised prices driven by the recovery in demand for LNG and oil. Sales volumes increased by 6% to 53.9 million barrels of oil equivalent for the half, as we increased trading activity in response to favourable market conditions.

Woodside achieved significant progress towards the targeted final investment decision this year for the Scarborough and Pluto Train 2 developments while executing the Sangomar oil project and achieving solid increases in revenue and profit from its low-cost operations.

What’s next for Woodside?

After much speculation Woodside was looking to acquire all of BHP’s oil and gas assets, the energy giant confirmed after market close yesterday this merger is to proceed. The mining behemoth wants to exit the fossil fuel industry and Woodside has now been confirmed as the buyer. This news is likely also impacting the Woodside share price in early trade today.

Woodside share price snapshot

Over the past 12 months, the Woodside share price has fallen by almost 2%. Year to date, Woodside shares have also fallen by more than 12%.

The company has a current market capitalisation of about $20.4 billion.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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