The Woodside Petroleum Limited (ASX: WPL) share price has been a positive performer on Tuesday.
In morning trade, the energy producer’s shares are up over 1% to $22.77.
Why is the Woodside share price rising?
Investors have been buying Woodside’s shares following the release of an announcement this morning.
According to the release, Woodside has decided to exit its 50% non-operated participating interest in the proposed Kitimat LNG (KLNG) development in British Columbia, Canada.
Management notes that the exit will include the divestment or wind-up and restoration of assets, leases and agreements covering the 480 km Pacific Trail Pipeline route and the site for the proposed LNG facility at Bish Cove.
However, Woodside will retain a position in the Liard Basin upstream gas resource.
What now?
Woodside will work with Kitimat Joint Venture participant and operator Chevron Canada (Chevron) to protect value during the exit. Chevron also announced its plan to divest its 50% interest in KLNG in December 2019.
The exit will come at a cost. Management estimates that its decision to exit KLNG will impact FY 2021 net profit after tax by approximately US$40 million to US$60 million. Positively for shareholders, these costs will be excluded from underlying net profit for the purpose of calculating its dividend.
Management commentary
Woodside’s Acting CEO, Meg O’Neill, explained that exiting KLNG will allow the company to focus on successfully delivering higher value opportunities in Australia and Senegal.
She said: “Following Chevron’s decision to exit KLNG and subsequent decision in March 2021 to cease funding further feasibility work, Woodside undertook a comprehensive review of our options for the project and our wider development portfolio.”
“The Kitimat LNG proposal was designed to develop a new source of LNG to supply Asian markets in the latter part of this decade. However, we have decided to prioritise the allocation of capital to opportunities that will deliver nearer-term shareholder value.”
“Woodside is focused on working towards the targeted final investment decision for the Scarborough LNG development in Western Australia in the second half of 2021 and the continued successful execution of our Sangomar oil project offshore Senegal.”
“Retaining an upstream position in the prolific Liard Basin provides Woodside a low-cost option to investigate potential future natural gas, ammonia and hydrogen opportunities in British Columbia,” she concluded.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
More reading
- 5 things to watch on the ASX 200 on Tuesday
- ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
- 5 things to watch on the ASX 200 on Monday
- 5 things to watch on the ASX 200 on Friday
- 5 things to watch on the ASX 200 on Thursday
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
The post Why the Woodside (ASX:WPL) share price is rising today appeared first on The Motley Fool Australia.
from The Motley Fool Australia https://ift.tt/3eT5ytO
Leave a Reply