Why is the Woodside share price in the spotlight on Thursday?

Woodside shares are volatile today. What’s going on?

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Two workers at an oil rig discuss the rising crude oil price and the impact on the Woodside share price today

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Key points

  • The Woodside share price is volatile today
  • Woodside released its quarterly update this week
  • Morgans rates it as a buy, with a price target of $33.60

The Woodside Petroleum Limited (ASX: WPL) share price is currently down 0.4% to $30.78. Today, it has been as high as $31.59 and as low as $30.67. That’s a swing of almost 3% — and it occurred in the space of two hours.

Other oil and gas producers, like Santos Ltd (ASX: STO) and Beach Energy Ltd (ASX: BPT), have seen a similar pattern with their share prices – they were higher earlier today and then those gains faded.

During this week, Woodside released its quarterly update for the three months to 31 March 2022.

First-quarter update

Woodside said that its delivered production was 22.3 million barrels of oil equivalent (MMboe) for the quarter. This was down 1% from the fourth quarter of 2021.

Its sales volume was 25.5 MMboe, which included a 2% increase in the produced LNG sales volume from the 2021 fourth quarter.

The average realised price increased to $93 per barrel of oil equivalent. This was an increase of 3% from the 2021 fourth quarter.

While the price per barrel increased, the sales revenue of $2.36 billion was down 17% from the fourth quarter of 2021 due to lower trading activity.

Highlights included the commencement of processing Pluto gas at the Karratha Gas Plant. This followed the start-up of the Pluto-KGP interconnector pipeline.

Outlook for Woodside and its share price

Woodside said that it’s expecting to see the continued benefits of stronger pricing in the second quarter, reflecting the oil price lag in many of its LNG contracts.

The ASX oil share pointed to the implications of Russia’s invasion of Ukraine which exacerbated the energy markets, which were already “tight”, particularly for LNG. It has driven prices higher.

Woodside continues to make progress toward the merger with the BHP Group Ltd (ASX: BHP) petroleum business. Why are they merging? Woodside CEO Meg O’Neill explains:

We believe the case for the proposed merger with BHP Petroleum is compelling. It will bring together the best of two successful organisations and deliver the increased scale, diversity and resilience to provide value to shareholders and ensure Woodside better navigates the energy transition.

The company points to progress with a number of its other projects. This includes Scarborough where the manufacture of the pipeline has started. It has signed binding agreements for the long-term charter of three new-build LNG carriers to be delivered before the start-up of Scarborough. These new vessels “will improve the cost-competitiveness and fuel efficiency of the Woodside fleet”.

Is the Woodside share price an opportunity?

The broker Morgans thinks that Woodside is a buy, with a price target of $33.60. That implies a potential rise of around 10% over the next year.

However, UBS is only neutral with a price target of $32.20, suggesting a smaller potential rise for the Woodside share price. UBS has decreased its production expectations for the next couple of years.

Motley Fool contributor Tristan Harrison 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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