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Woodside Petroleum

Thursday 18th August 2011

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Bell Potter has downgraded Woodside Petroleum (WPL.AU) to Accumulate from Buy, while lowering its price target to A$40.10 from A$41.90 because of recent share price gains.

Bell Potter says "We continue to believe fundamental value exists in WPL's growth projects but the company needs to demonstrate its ability to execute its plans to realize their underlying value," says the broker. "We believe further delays and challenges are possible for WPL's LNG projects but in the medium term, the company's oil business should not be forgotten as about 90% of its revenue is linked to oil price movements."

WPL reported its first half profit yesterday which showed that first-half net profit fell 8.1% amid higher energy prices that helped drive revenue. The decline in profit for the six months to June 30 to US$828 million from US$901 million a year earlier was blamed on higher tax expenses and the absence of a one-off gain from an asset divestment realized in the previous corresponding period.

Underlying profit, a measure that excludes one-off gains and losses, rose 3.6% to US$842 million, easily beating analysts' expectations of around US$760 million.

Investment bank Macquarie, said Woodside's operating earnings came in 1% below its forecast.

Woodside's major liquefied natural gas, or LNG, projects in Australia are well placed to tap into rising demand for the fuel across Asia and especially China where demand is out pacing supply.

Contact IRG on 0800 437 8489

**A disclosure statement is available, on request and free of charge by calling 0800 437 8489.

Recommendation sourced from the IRESS software trading platform


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