Woodside Petroleum Limited (WPL) operates the North West Shelf (NWS) Venture, which includes five LNG trains with a combined capacity of 16.3mmtpa (WPL 16.7%).
Woodside also operates the 4.3mmtpa Pluto LNG project (WPL 90%) in Western Australia, which commenced production in 2012.
Woodside has a number of other projects under consideration, including the Browse floating LNG project (WPL 31.3% and operator) and the Sunrise floating LNG project (WPL 33.4%).
In 2013, Woodside moved to returning 80% of its underlying net profit after tax back to shareholders whilst it pursues opportunities to replenish its growth portfolio.
Woodside has doubled its dividend since 2012 year and was trading at $44 only a couple of month ago.
It has a historic yield of 6.82% fully franked which is 9.7% gross yield with a number of LNG projects also coming on line.
However, when OPEC decided not to cut production and the price of oil fell to $48 a barrel this has affected the profits on Woodside and possibly future dividends from the company.
If the price of oil remains at this low level the forecast yield for WPL will drop to 2.1% in 2015 and 1.3% in 2016.
We would need to see the price of oil around $70 a barrel in 2015 and $80 a barrel in 2016 to maintain forecast yields.
The issue here is that yield investors will look to move away from the company and search for more income.
The catch is that most will suffer a capital loss in doing so.
As such WPL is only worth looking at for those investors who want to speculate on the oil price or future cut to production.
Woodside has always been a core hold and for those who have it I would continue to hold. But only buy if you are a long-term speculator.
For more information about Woodside Petroleum Limited (WPL) please contact us on 07 4771 4577.