Amidst better crude oil prices, Woodside (ASX:WPL) & Santos (ASX:STO) revenue rises for the quarter

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Summary

  • Woodside Petroleum and Santos released their quarterly earnings figures for the period ending on 31 March 2021.
  • Both the companies recorded a dip in production due to weather conditions and lower domestic demand but achieved higher revenue.
  • Increased revenue and free cash flow have failed to reflect in the share prices.

As the earnings season begins, two of the largest oil and gas players of Australia have declared their quarterly earnings reports. Santos Limited (ASX:STO) and Woodside Petroleum Limited (ASX:WPL) have reported an uptick in their quarterly revenue for the period ended on 31 March 2021.

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Both the companies realised higher revenues than the previous quarter despite lower production volumes. This was apparently due to the relatively higher price of hydrocarbons in the international market.

Also read: Why Santos’s (ASX:STO) largest shareholder sold nearly 11 million shares

Let us discuss the quarterly performances of these two major ASX-listed oil and gas players:

Santos Limited reported another strong quarter of cash flow and revenue growth. The total production of hydrocarbon witnessed a dip of 2% with respect to the December 2020 quarter. The production for the reporting period was 24.8 MMboe. The sales volume was down by 12% due to lower demand in the domestic market. Despite the lower production and sales volume, revenue soared by 5% as Santos realised relatively higher prices of hydrocarbon during the quarter.

Quarterly performance of Santos (Data source: Company update, 22 April 2021)

Good Read: Worsening COVID-19 situation in India hitting oil prices, ASX Energy stocks feel the heat

The gas sales volume was significantly lower in the domestic gas market of WA. The Company realised an average price of US$6.12 per MMbtu for LNG, and for crude oil, the average price was US$62.19 per barrel during the quarter. In the prior quarter, the average realised prices were US$5.34 MMbtu for LNG and US$46.76 per barrel for crude oil.

Total free cash flow generation was reported to be US$302 million, and the Company is forecasting a free cash flow of US$1 billion for the entire year at the current crude oil price.

Read here: A look at Crude oil’s sensational journey from Black April to April 2021

Mr Kevin Gallagher, MD and CEO of Santos, shared his views on the quarterly performance of the Company:

Copyright © 2021 Kalkine Media Pty Ltd. (Data source: Company update 22 April 2021)

Woodside Petroleum recorded a gain of 22% in March quarter sales figure when compared with the prior quarter. The Company achieved a revenue of US$1,121 million from a sales volume of 25.7 MMboe of hydrocarbons.

The production during the period was reported at 23.7 MMboe, lower than the prior quarter as heavy weather conditions impacted the crude oil production.

The average realised prices of LNG and crude oil during the quarter were US$ 40/boe and US$72/ boe, respectively. The realised prices were nearly ~40% higher than the previous quarter. During the quarter, WPL signed a sale and purchase agreement with European energy and resources trading firm RWE Supply and Trading GmbH for a supply of 0.8 Mt annually.

Read here: What’s the Buzz About Woodside’s (ASX:WPL) SPA with RWE?   

Quarterly performance of Santos (Data source: Company update, 22 April 2021)

Ms Meg O’ Neill, the acting CEO of WPL, commented on the result:-

Copyright © 2021 Kalkine Media Pty Ltd. (Data source: Company update 22 April 2021)

Also Read: Woodside’s (ASX:WPL) Inks Major Deal to Supply LNG Amid Estimated Strong Demand

Share Price Movement

The release of quarterly reports has failed to cause any significant changes in the share prices of both companies. Despite an increase in revenue and free cash flow, share prices have not reflected any gains as it seems that investors were already expecting better sales and profit figures. STO closed the day’s trade at A$6.98 with a market cap of A$14.41 billion on 23 April 2021, while WPL was trading at A$22.8 during the closing bells with a market cap of A$22.02 billion.

Some other ASX-listed major energy and resource players which can display swift movements in their share prices are BHP Group (ASX:BHP), Origin Energy (ASX:ORG), Caltex Australia limited (ASX:CLX) and Oil Search Limited (ASX:OSH).


 


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