Woodside Petroleum 2005 Analysis
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SCHOOL OF ACCOUNTING
Subject:
22754 Corporate Accounting
Assignment on Woodside Petroleum Limited
Lecturer:
Daniel David
Class:
Tuesday 6pm
Due Date:
16th May 2005
Full Name
Student ID
Table of Contents
Introduction
Background
Financial Press Journal
Share price movements
Company annual results
Profitability
Liquidity
Gearing
Impact of International Financial Reporting Standards (IFRS)
Reference
Introduction
This report will try to analyse an ASX listed company, Woodside Petroleum Limited, through the recent articles from financial press and the companys 2005 annual report. The report will first briefly introduce the companys history and the companys main activities. Following is a journal comprising of summaries of articles from financial press on Woodside Petroleum Limited between 1st January 2006 and 13th May 2006. The situation in the articles are analysed and their impacts for the company, its investors and other stakeholders are discussed. The third section contains a chart of the recent share prices and shows the relationship between the companys share price and what is found in the financial press. The fourth section engages in an assessment of the companys annual results and a comparison of what is in the directors report and the analytical financial press at the time of the reports announcement. The final section documents any important changes in the accounts that have occurred as a result of the adoption of IFRS.
Background
Woodside Petroleum Limited (WPL) is an Australian gas and oil company which established in 1953. Its name came from a small town in Australias southern-most mainland state, Victoria. The company began exploration drilling and major gas and condensate discoveries were made in 1971 at Scott Reef. WPL has a portfolio of assets, projects, development opportunities and exploration interests in eleven countries spanning four continents. It sells liquefied natural gas, natural gas, crude oil, condensate and liquid petroleum gas around the world.
WPLs major business is based on the North West Shelf Venture, Australias largest resource project, and the countrys first and largest liquefied natural gas plant. WPL has a market capitalisation of $31.5 billions and estimated to have 1.3 billion barrel of oil reserves as at December 2004.
The companys main activities include:
Exploration – seismic acquisition and drilling for oil and gas discoveries
Development opportunities – pre-project development planning
Developing projects – development of oil and gas projects
Producing assets – platforms, floating production systems, and gas plants for liquefied natural gas, crude oil, condensate, natural gas and liquid petroleum gas
Marketing – products for Australian and international customers
Research – new technology and alternative energy
Financial Press Journal
Article 1 – “Woodside Petroleum Heats Up — Demand for Natural Gas Fuels Jump in Australian Firms Shares”, The Wall Street Journal, 3 January 2006, By Stephen Bell Dow Jones Newswires
Summary: Woodside is progressing on its multibillion-dollar Pluto and Sunrise projects. Also, it is increasing exploration expenses by 50% to around $500 million. The number of exploration wells will double to around 40 and production will lift by a third in 2006.
Assessment: Woodside is trying to increase its profit with aggressive expansion plans. Investors and gas customers will need to watch the results of the projects closely, where sufficient gas reserves at the sites will strengthen the sales contracts.
Article 2 – “Resource stocks take a breather”, Australian Financial Review, 6 January 2006, Tim Findlay
Summary: After crude oil prices dropped US10 cents in Asian trading to $63.32 a barrel, Woodsides shares dropped 47 cents.
Assessment: Oil price plays a big part in Woodsides revenue. Decreasing in revenue has a negative effect on Woodsides share value.
Article 3 – “Investors cheer as share prices soar to record on back of gold”, The West Australian, 10 January 2006, JULIE-ANNE SPRAGUE
Summary: The big jump in commodity prices set major resource stocks to record peaks and brought most other sectors up along. Woodside got to a record $41.17 before closing $1.08 higher at $40.73.
Assessment: Any issues regarding oil affect Woodsides share price. The share prices, the growth of the resource sector and the rise in world oil prices are interrelated.
Article 4 – “Risk-hungry Woodside looks offshore for growth”, Australian Financial Review, 16 January 2006, Robert Guy and Yvonne Ball
Summary: Woodside chief executive Don Voelte has targeted to generate up to half the companys revenue overseas within 10 years by searching new oil and gas reserves in the United States and Africa. Long term strategy is to get more sales from the energy starving US and other riskier countries such as Mauritania, Libya, Kenya and Sierra Leone.
Assessment: The focus has been on the potential rewards from exploring these highly potential areas. There are still a lot