Woodside Petroleum shares have rebounded as much as 3.3 per cent today after falling 3.4 per cent yesterday after Australia’s biggest liquid natural gas exporter cut its 2013 production estimate by as much as 9.6 per cent.
At 1554 AEST Woodside shares were up $1.08, or 3.1 per cent, to $35.70, just off an intra day high minutes earlier of $35.76. Yesterday Perth-based Woodside cut its production estimate this year to 85 million barrels of oil equivalent (MMboe) to 89 MMboe from 88 MMboe to 94 MMboe.
Morgan Stanley analyst Stuart Baker expects Woodside to produce 87.9 MMboe this year. He has cut his estimate for the company’s earnings per share, as a result of the production downgrade, by 11 per cent to $US2.29. Woodside may need to buy LNG on the spot market to meet customer needs, says Baker.
Lower earnings means a lower dividend given Woodside’s commitment to a 80 per cent pay out ratio on profits. But, says Baker, the decline in the Australian dollar against the US currency is a “positive offset”. He expects a dividend yield of the stock of 7.8 per cent and has maintained his share price target of $41.