From: The Wall Street Journal
March 15, 20131:55PM
AS a hole opens in Woodside Petroleum's oil and gas production outlook, the case is building for management to pull off a big acquisition or return some of its cash pile to shareholders.
Or it could do both.
That's the view of Citigroup analyst Mark Greenwood, who says Australia's second-biggest oil company after BHP Billiton could afford to launch a $US1 billion ($960m) buyback of its own shares - even if it spends another $US1bn buying a new asset.
"Based on our outlook for the timing of Woodside's growth, we think that a buyback of $US1bn could be implemented comfortably," Mr Greenwood says in a detailed 21-page analysis of Woodside's options.
Calls for either a buyback or raised dividend are growing louder amid increasing doubts about three Australian liquefied natural gas, or LNG, growth projects that Woodside Chief Executive Peter Coleman inherited from predecessor Don Voelte last year.
Mr Greenwood says a final investment decision on the Browse LNG project in Western Australia state, due in mid-2013, is expected to be pushed back until 2015 at the earliest, partly due to a "prohibitively high" construction cost of over $US45bn.
Another growth project, Sunrise LNG, is mired in a political dispute with the tiny nation of East Timor over where the gas should be processed, while an expansion of the Pluto LNG project is stymied by a shortage of gas.
Already aware of a looming revenue crunch, Mr Coleman last year agreed to buy a stake in the massive Leviathan natural gas discovery offshore Israel for more than $US1.2bn. However, while a final investment decision on a smaller domestic gas project could happen this calendar year, Mr Greenwood doesn't expect a decision on a larger LNG project until at least 2015..
Mr Greenwood says his $US1bn buyback and $US1bn acquisition scenario is feasible even if final investment decisions are taken on Browse and Leviathan LNG in 2015 and oil prices fall
Sentiment: Strong Buy
Rumor Mitsui flew to Perth last week to talk to Woodside after being told they must get an LNG operator. What better operator than Woodside. IOC knows Woodside. Woodside knows PNG. CEO of Woodside came from Exxon
Here's what does not make sense about these "rumors". We have been told for what..6 months? that all bidders were pre-approved by PNG. Are you really manitaining that PNG just forgot to mention that they were pre-approved, but forgot to mention the LNG operator requirement? We have all known about this since Duma made the requirement clear over one year ago. And JPM just found out about it now? Really?
You 2 crims still trying to evangelize "hope" to the muppets? Shame on you! I think your time would be better spent over at the SEC Website reading the top enforcement news about JOHN THOMAS FINANCIAL and THOMAS BELESIS.
Sentiment: Strong Sell