A site visit to Woodside Petroleum’s Karratha failed to inspire the broker.
While the company has moved towards a more conservative contracting strategy on its Scarborough project, bringing greater certainty for shareholders, it comes at an increased cost.
And Citi spies more struggles on the horizon. It notes Woodside Petroleum’s Burrup Hub strategy relies on the negotiation at Browse-North West Shelf (NWS), a process that has been delayed, postponing positive price catalysts by about seven months.
Then there is the LNG price review at NWS/Pluto, low spot LNG prices, widening Brent spreads, uncertainty around carbon pricing, further PPRT and potential balance sheet pressure among other risks.
Sell rating retained. Target price eases to $30.72 from $31.03
Target price is $30.72.Current Price is $36.97. Difference: ($6.25) – (brackets indicate current price is over target). If WPL meets the Citi target it will return approximately -20% (excluding dividends, fees and charges – negative figures indicate an expected loss).