Why is the Woodside (WPL) share price up 3.4% today?

Posted: 3 March 2022 12:52 pm
News
WPL-shares-3March22_1800x1000_Finder

Shares in the oil and gas giant have jumped 23% in the last 1 month alone, continuing its impressive run today.

Shares in Australia's largest oil and gas company Woodside (ASX: WPL) are among the best performers on the ASX boards on Thursday. At the time of writing, the stock was up 3.4% to $31.46 to add to its more than 50% gain in the last 6 months.

Rival Santos (ASX: STO) also rose 3.1% to $7.95.

Why are the Woodside and Santos stock prices higher

The recent surge in Woodside and Santos shares comes as global crude oil prices lift past US$110 a barrel following the escalating Ukraine-Russia conflict, which could boost prospects for the 2 Australia energy producers.

Russia currently supplies 30 million tonnes a year of liquefied natural gas (LNG) annually, which makes up about 8% of world supply. But markets are now worried about this supply being disrupted following severe economic sanctions imposed by Western countries such as the US, UK and Europe over Russia's invasion of Ukraine.

Global energy giants BP, Exxon Mobil, Equinor and Shell have already announced their exit from Russian oil and gas operations, and the country's LNG supply could dwindle in the next few years due to lack of investment, technology and expertise.

Credit Suisse estimates European buyers may have to look for more than 100 million tonnes a year of LNG. With planned expansions in Qatar and the US not being enough to meet this demand, Australian producers could claw market share.

Australia's 2 biggest LNG producers – Woodside and Santos – are expected to cash in from the situation in the short term because of the current spike in prices.

Selldowns, new capacity

With oil at US$100 a barrel and LNG at US$30 per million British thermal units, Macquarie analysts said that Woodside earnings could rise by 149% and Santos by 113%.

The Russia situation could also lift LNG supply and demand fundamentals in a way that allows Woodside and Santos with asset selldowns and development of new growth projects, Credit ­Suisse said.

For Woodside, prospects could improve for its Scarborough gas project off Western Australia, where it is trying to sell down a large stake and line up LNG customers. Shipments are expected to begin in 2026.

For Santos, the LNG market dynamics could boost its bargaining position as it tries to sell down part of its 42.5% stake in the PNG LNG project run by Exxon Mobil.

Higher LNG contract prices could also spur Woodside and Santos to look at projects that have been on the backburner, such as the Browse and Sunrise projects off northwestern Australia and an expansion of Darwin LNG.

Serious about investing? Here's your new unfair advantage

Ticker Nerd uses advanced software to track hundreds of signals and data points to find stocks before they blow up. Don't miss out!
Get started for free

Considering buying Woodside or Santos shares?

If you are keen to buy shares in Woodside or Santos, you can invest through an online share trading platform.

Keep in mind that not all platforms offer the same list of stocks. Some offer US stocks only, so make sure to select a platform that offers ASX-listed stocks.

Choose from the dozens available for Australian investors. Compare the features and fees from the plethora of trading platforms.

Looking for a low-cost online broker to invest in the stock market? Compare share trading platforms to start investing in stocks and ETFs.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

Get more from Finder

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Go to site