Woodside petroleum is expanding worldwide for lng production and energy trading – woodside petroleum ltd. (otcmkts wopef) seeking alpha electricity magnetism and electromagnetic theory pdf


Three other major projects are in planning stage, one of which is the huge Browse project. Development costs have become a big issue with Browse, particularly for constructing an onshore LNG train facility in a rather remote of Western Australia.

Project planning was delayed due to the rejection of building an onshore facility near James Price Point in WA. A floating LNG plant concept is now being considered, but oil production would still be years away. A final investment decision is expected to be made in 2015.

Woodside was in negotiations with potential partners for the Leviathan project located offshore from Israel. Woodside’s investment was to be about US$2.5 billion. This would have been significant because of the location since this would be the company’s first project outside the region around Australia.

Unfortunately, it was not to be. The negotiations never got to a point where Woodside considered the business model matched its conservative investing criteria. After more than a year of negotiations, Woodside passed on the deal. This caused some concern among analysts and investors because if Leviathan wasn’t going to start, then where would the next round of development and eventual production come from?

One advantage for these projects is relatively cheaper development costs, which was a sticking point for other projects like Browse. With much more LNG supply coming onto the market over the next five years, Woodside has to consider how that could reduce spot prices and make long-term contracts more difficult to secure if buyers have many sellers to choose from.

In addition to oil development and production, Woodside is wanting to play the role of energy marketer. It sees the great amount of LNG that will hit the overseas market over the next 5 – 10 years, and it has decided the LNG marketing business could be big.

Through its Singapore based subsidiary Woodside Energy Trading Singapore, it has entered into a 20-year agreement with Cheniere Energy (NYSEMKT: LNG) to purchase 850,000 tons of LNG annually once the LNG train facility near Corpus Christi is constructed and operational.

On the other side of the globe, Woodside Energy Trading Singapore inked an agreement in March to sell 2.2 million tons of LNG to Korea Gas Corporation over a 3-year period. The energy trading subsidiary was originally set up to create short-term LNG sales contracts to cover parts of its LNG production, but the next stage will be to buy and sell LNG contracts of other producers and users.

Woodside has several billions in available funds after turning down investing in the Leviathan project. Also, its currently producing LNG projects are providing the company more than sufficient cash flow to fund exploration and development projects like the three sites around Africa. In addition, becoming involved in the energy trading market will help cover non-long-term contracted production as well as position itself to profit from the upcoming flood of LNG exports to come out of Australia and the US potentially.

Based on these recent developments and business strategies, I believe the next 3 – 5 years will be a good time period for investors to build positions before the results of this next big growth phase begin moving earnings and the company’s share price upward.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.