Woodside Petroleum Limited (ASX: WPL) is into the energy sector with a global presence with regards to its key oil and gas assets. It has been known for operating in the hydrocarbon exploration, development, production, transportation, and marketing segments. The group is also into managing the assets and has been into implementation and operation of the North West Shelf Gas Project. The group has world-class capabilities for exploration and development of gas, oil and condensate reserves.
The company has announced to have awarded a contract to Bechtel Pty Ltd on 27 December 2018. The company will undertake a front-end engineering design (FEED) for the Pluto Project through ths project. However, the company needs to finalize the costs of the project and technical definition required for the proposed second LNG train as per the contract. The share price of the company increased by 4.158% on December 27, 2018, post the announcement.
The option in the contract will allow Woodside to develop substantial engineering, improved procurement, and contract to construction and execute phase activities. However, the company can use this option depending on whether it finalizes a positive final investment decision (FID).
As stated by Woodside CEO Peter Coleman, the FEED project will allow the company to make significant progress towards the Burrup Hub. This hub is a regional LNG producer situated in north-western Australia. The company is working with Bechtel on the Pluto Train 2 Project. On completion, the project will offer globally cost-competitive development of Western Australian gas resources.
The Pluto Project will help in the development of the 7.3 Trillion cubic feet gas resource in Scarborough. The project will include a second LNG train at the Pluto site, and have a capacity of 5 metric tonnes per annum and target the installation of domestic gas infrastructure as well.
Woodside is considering the final investment decision for the Pluto Project in 2020 and plans to start it in 2024. However, these milestones will be achieved subject to several approvals related to a joint venture, regulations, and appropriate commercial arrangements.
In the recent past, the company announced that a joint venture including Rufisque and Sangomar Offshore has agreed to start front-end engineering design (FEED) activities, however targeting the contracts to be awarded in early 2019.
Let us quickly review the performance of the Woodside Petroleum’s stock and the returns it has produced over the past few months. WPL’s shares traded at $31.060 with the market capitalization of circa $29.08 bn as of December 28, 2018. It is currently trading at PE multiple of 19.610x with an EPS of AUD 1.584 per share. The stock opened at $30.990 and made a day high of $31.200 and touched a day’s low of $30.70. It has yielded a negative YTD return of 5.37% and produced a negative return of 11.38% based on the past six months. The stock has a 52-week high price of $39.380 and a 52-week low of $28.380.
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