November 2024

Since posting the half-year results, Woodside Energy’s price has fallen another 10% to around $24.50 (as of Friday, November 29). I’ll admit—this hurts. It’s unclear why the price keeps dropping. Am I overestimating my conviction, or is the market overlooking something? The only plausible reason I see is the perception of WDS as a “fossil fuels company” rather than an “energy company.” If anyone has more insight, I’d love to hear it.

The numbers look strong, yet this year has been shocking for the stock. From an oil perspective, I don’t see demand declining quickly. Working in Queensland’s power industry, I see first hand the volume of oil used for maintenance and installations, even in grid power systems. (Just topping up an earthing transformer takes 40 litres.)

Meanwhile, the Lytton Oil Refinery produces 60% of Queensland’s fuel, refining 109,000 barrels of crude oil daily into 18 million litres of fuel. The government has even allocated $300 million toward its Future Fuels Desulfurisation Project to enhance sustainability, signalling ongoing demand.

I believed $27 was a buy, so surely $24 is a bargain. What am I missing?

August 2024

Financial highlights (Taken from todays results announcement)

“• Net profit after tax of $1,937 million.

• Underlying net profit after tax of $1,632 million.

• Operating cash flow of $2,393 million and positive free cash flow of $740 million.

• Australian tax and royalty payments of A$2,682 million.

• Liquidity of $8,479 million.

• Determined a fully franked interim dividend of 69 US cents per share (cps)”

Based off yesterday’s share price of $26.33, this results in roughly a 5.53% half year dividend yield (fully franked inc., with today’s exchange rate equaling $1.02 for 69 US cents). I think this is the main reason the share price jumped 5.26%, currently trading at $27.60, as most investors were worried they may not received a meaty payout due to recent acquisitions.

Very glad to be holding in my SM and IRL portfolios (largest positions). I would have bought more last week if not for the 20% rule ha. I still think this is a strong buy at current levels.