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Highlights
- Share Price Decline: Woodside’s shares are down 5% to AU$22.89 amid a challenging trading session.
- Oil Price Impact: Global oil prices, with WTI at US$66.24 and Brent at US$69.26, have dropped due to concerns over OPEC production increases and US tariffs.
- Ex-Dividend Impact: The shares are trading ex-dividend for FY2024’s final dividend, affecting short-term trading dynamics.
- Financial Performance: Recent annual results showed a 6% fall in operating revenue and a 13% drop in underlying net profit.
- Dividend Cuts: The final dividend was reduced by 12% to 53 US cents per share, lowering the annual dividend by 13% to 122 US cents per share.
Woodside Energy Group Ltd (ASX:WDS) is grappling with a challenging trading session this Thursday as its share price dips by 5% to settle at AU$22.89 early in the morning. The downturn reflects mounting pressures from multiple fronts that are testing investor confidence in the energy giant.
Declining Oil Prices Fuel Investor Caution
A significant factor behind the decline is the recent pullback in global oil prices. Overnight trading saw a notable drop, with West Texas Intermediate (WTI) crude falling by 3% to US$66.24 per barrel, while Brent crude dropped 2.5% to US$69.26 per barrel. This downturn is largely attributed to concerns that OPEC might ramp up production in April, a move that could further saturate the market. Additionally, geopolitical tensions and the impact of US President Donald Trump’s tariffs on Canada, China, and Mexico have compounded the uncertainty in the oil markets, further weighing on the sector.
Ex-Dividend Trading and Dividend Adjustments
Adding to the downward pressure on the share price, Woodside is trading ex-dividend this morning ahead of its final dividend for the fiscal year 2024. When a stock trades ex-dividend, new buyers are not entitled to receive the upcoming dividend, which can lead to an immediate adjustment in the share price. In this case, the effect is clearly visible as the share price reflects the absence of the dividend entitlement for new investors.
Last month, Woodside’s annual performance report revealed a 6% drop in operating revenue, which fell to US$13.2 billion. The report also noted a 13% reduction in underlying net profit after tax, which contracted to US$2.9 billion. In response to these figures, the company’s board decided to cut the fully franked final dividend by 12%, reducing it to 53 US cents per share. Consequently, the full-year dividend has been lowered by 13% to 122 US cents per share. When translated at current exchange rates, the final dividend stands at approximately 84 Australian cents per share—a yield of about 3.5% based on yesterday’s closing price. Eligible shareholders can expect to receive this dividend payment on April 2.
Future Outlook and Analyst Optimism
Looking ahead, optimism remains among some market analysts despite the current setbacks. A recent note from Morgans indicates that Woodside is anticipated to distribute dividends of roughly AU$1.33 per share in fiscal year 2025 and AU$1.45 per share in fiscal year 2026. These projections suggest that future dividend yields could rise to approximately 5.8% and 6.3%, respectively. Alongside these promising dividend forecasts, Morgans has upgraded its rating on Woodside, setting a price target of AU$30.25 per share. This target implies a potential upside of about 32% from the present trading levels, highlighting a significant recovery opportunity for long-term investors.
