Woodside wins renewed interest from investors.

Woodside Plaza, a skyscraper in Perth, Western...

Woodside Plaza, a skyscraper in Perth, Western Australia. The small building in the foreground is Bishop’s See Tower 1. (Photo credit: Wikipedia)

Karratha location map in Western Australia

Karratha location map in Western Australia (Photo credit: Wikipedia)

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.

Background information

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.

Share price has languished since the GFC collapse

Share price has languished since the GFC collapse

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.

? Imminent break-out from trading range.

? Imminent break-out from trading range.

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.

WPL share-price in an up-trend since Nov 2012

WPL share-price in an up-trend since Nov 2012

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.

Conclusion

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.

Disclaimer

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.



Categories: Chart Analyses, Technical Analysis

Tags: , ,

1 reply

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