Morningstar

Morningstar, Inc.

Equity Bottom-Up

We make no change to our AUD 46.50 fair value estimate for no-moat Woodside despite downgrading our 2019 EPS forecast by 7% to AUD 2.41. We lower our 2019 production target to 88 million barrels of oil equivalent, or mmboe, from 89 mmboe, at the bottom end of recent 88 to 94 mmboe guidance. But we don’t see longer-term consequence in the surprisingly soft second-quarter operational figures contributing
Group second-quarter production fell 20% to 17.2 mmboe. We expected a large decline given…

Following planned maintenance, Woodside has found it necessary to extend the targeted restart for its Pluto LNG plant to the end of June due to issues with a compressor. Group 2019 production is now expected to be at the lower end of the 88 to 94 million barrels of oil equivalent, or mmboe, guidance range. We lower our 2019 production target to 89mmboe from 92mmboe, and reduce our 2019 EPS forecast to AUD 2.51 from AUD 2.59. We see the impact as limited in nature only, and our AUD 46.50 fair…

What are we pricing into our unchanged AUD 46.50 fair value for no-moat Woodside? It equates to a 2028 EV/EBITDA of 7.9, if the USD 6.1 billion lump sum we credit for contingent resources in Kitimat Canada, Senegal and elsewhere is excluded. We credit 10-year revenue and EBITDA CAGRs of 4.3% and 4.8% to USD 8.0 billion and USD 6.1 billion, respectively. This presumes a 44% increase in production to 130 million barrels of oil equivalent, or mmboe, by 2025, at a midcycle Brent crude price of USD…

Our AUD 46.50 Woodside fair value estimate stands. We up our 2019 and 2020 Brent forecasts by 9.1% and 9.6% to USD 68.15 per barrel and USD 67.65 per barrel, respectively, in line with futures. Higher prices drive our 2019 and 2020 EPS forecasts 33% and 29% higher to AUD 2.60 and AUD 2.56, respectively. But a material proportion of Woodside’s fair value is captured in long-dated growth projects, including the Pluto/Scarborough expansion/development, muting the impact near-term Brent price has on…

<p>We make no change to our AUD 46.50 fair value estimate for no-moat Woodside. The company reported a strong 50% increase in underlying NPAT to USD 1.42 billion, 6% below our more bullish USD 1.50 billion expectation. Net operating cashflow of USD 2.74 billion, however, was in line with expectations. The modest NPAT miss was due to slightly higher than expected unit operating costs, which on our measure came in at USD 12.75 per barrel of oil equivalent, versus the USD 12.25 per boe we anticipated…</p>

Australia

Woodside Petroleum Limited explores for and produces oil and gas from offshore and onshore facilities located in Western Australia and Northern Territory. The Company operates numerous oil and gas fields and pipelines throughout Australia, United States and Mauritania and its products include liquefied natural gas, domestic gas, condensate, crude oil and liquefied petroleum gas.

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