Broker Watch

Woodside guidance boost already baked into share price: UBS

Fri 21 Oct 22, 11:34am (AEST)
A cargo ship idles alongside an offshore rig as the sun sets in the background
Source: iStock

Key Points

  • UBS posted a big jump in September quarter production and upgraded its FY23 guidance on Thursday
  • UBS said the production lift and LNG tailwinds are already reflected in the current share price
  • A Neutral rating was maintained with a $34.40 target price

Woodside (ASX: WDS) shares rallied an outsized 6.2% on Thursday thanks to higher oil prices and a solid September quarter update.

Production for the quarter jumped 52% to a record 51.2m barrels mostly due to the company's first full three months of contribution from the former BHP petroleum assets and the completion of planned turnarounds for several assets.

The strong operational performance for the quarter gave management the confidence to upgrade its full year production guidance from 145-153 million barrels of oil equivalent (MMboe) to 153-157MMboe.

UBS: Strong reliability should see strong finish to the year

UBS said the September quarter update was 'slightly ahead' of its forecasts but materially beat consensus revenue estimates by 18% due to "strong production and higher realised LNG prices, up 42% quarter-on-quarter.

"The improved production outlook was derived from better reliability of Australian LNG assets (NWS, Pluto and Wheatstone) and the stronger ramp up of Atlantis in the Gulf of Mexico following scheduled maintenance in the September quarter 2022," the analysts said.

"With the Xena gas field on track to start-up in the December quarter 2022, we see further upside to Pluto production."

"Higher LNG production, coupled with stronger gas hub exposure in the December quarter 2022 should provide Woodside further upside to the tight global LNG market."

UBS lifted its 2022 earnings per share forecasts by 6% to reflect higher production from the Wheatstone and Pluto LNG projects.

Still, a neutral rating was maintained with a $34.40 target price on the basis that the above is "already reflected in the current share price."

Woodside shares opened at $34.40 on Friday. The stock is up 12.3% in the last three months and up 52% year-to-date.

Woodside share price chart
Woodside share price chart


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Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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