I acknowledge a small shareholding in Woodside Petroleum Limited, and have selected it for my weekly chart analysis, to aid in my decision making. It is perhaps worth noting that Woodside is a major sponsor for the Fremantle Dockers AFL football team.
A record profit report of $2.98 billion announced Feb 20, 2013 reminded investors that 58-year-old Woodside is still Australia’s premier oil and gas producer, and has infrastructure that would cost $80 billion to replicate today. This net profit result is a stunning 98% increase over the previous year.
It has been the new Pluto project, located in the Carnarvon Basin 190 km north-west of Karratha, in Western Australia, commencing operation in April 2012, that has resulted in the 31% increase in LNG production, and the 30% gain in sales. Woodside is fortunate to have a 15 year sales agreement with Japanese companies, Kensai Electrical and Tokyo Gas for its LNG production.
The TA big-picture seen in the monthly chart.
Between April 2003 and April 2006 the share price trended steeply to a high of $49.40.
After retracing to $34.52 in April 2007, the share-price recommenced its ascent, to reach an all-time high of $70 in May 2008,
Since then the share-price has ranged between support at $30 and resistance at $54.
In the last two years however the share-price has hovered at the lower end of the range.
A buy and hold strategy would have been extremely profitable between April 2003 and May 2008.
Since then long-term long positions in Woodside would have been mostly disappointing.
The Medium-term picture
The share-price declined from a high of $50.83 April 15 2011, to a low of $29.76 on October 3 2011.
From then the price has been confined to a trading range between support at $30 and resistance at $38 on the 38.2% Fibonacci retracement line – a period of about 18 months.
The week ending Feb 22, 2013 the share price briefly penetrated resistance at $38, but fell back when the shares went ex-dividend.
There is a rough correlation between the duration of a trading range, and the extent of trending once there is a break-out.
On this basis one might expect a target share-price of $51 over a medium term.
Since the share-price on the weekly chart has trended higher since July 2012, it would seem to be only the matter of a week or two before the price does break-out above $38.
The Short-Term Outlook for Woodside Petroleum
There has been a steep rise in the share-price from $34.80 on the 05/02/13 to a high of $39.21 on the 20/02/13, the day the favourable profit report was announced.
Buy on rumour is the dictum; sell on fact! The market clearly anticipated the favourable report. The later 61.8% retracement of this move coincided with the shares going ex-dividend.
The record profit result for Woodside is likely to trigger a trading range break-out for Woodside within the next few weeks.
If this eventuates as anticipated, target prices to look for would be $40 (50% retracement), $43 (61.8% Fibonacci retracement) and $51 (100% retracement) from the weekly chart.
These observations and opinions are those of the writer only and should not be relied upon in decision-making. They are for general information only and do not constitute investment advice. See Disclaimer above.
- Woodside on track to lift oil production (news.smh.com.au)
- Australian gas giant eyes partnerships in Canada (business.financialpost.com)
- Woodside slates $2.5b for offshore project (news.com.au)