The hydrocarbon giant has faced headwinds over the last few months.
The post Here’s why the Woodside (ASX:WPL) share price is down 11% in the last 2 months appeared first on The Motley Fool Australia. –
The Woodside Petroleum Limited (ASX: WPL) share price has faced headwinds over the year to date. Over the last 2 months, Woodside shares have slipped around 10% into the red.
Whereas the S&P/ASX 200 Index (ASX: XJO) for instance, has spent the entire year in the green.
Here we uncover some of the pressures Woodside shares have faced over the last few months.
Conservation report findings
Back in early June, the Conservation Council of Western Australia (CCWA) released its report on Woodside’s Scarborough project.
In it, the CCWA said the project will have significant adverse impacts on WA’s environment and World Heritage sites.
For instance, it projects that Scarborough will produce as much greenhouse gas as 15 coal fired power stations, and will expand WA’s emissions by approximately 5%.
As a result, the CWWA has commenced court proceedings through the WA Supreme Court, in order to overturn the approvals granted at Scarborough.
The Woodside Petroleum share price has slipped around 10% into the red following this announcement.
Corrections and volatility in the price of oil
Woodside’s share price seemed to make a small recovery on the charts in the short time after the CWWA report was released.
However, in mid-June, the price of US Brent oil made a price correction back down from its soaring 2-year highs.
Recent strength in the US dollar has led to a cooling effect in the oil markets, as US monetary policy continues to remain in the spotlight.
The entire ASX-listed oil basket slipped into the red on the back of oil’s price correction. Given Woodside’s exposure to three offshore oil assets in Australia, it was a major under-performer during the back end of June.
Following the volatility of oil spot prices, Woodside shares sunk 8.5% into the red, reaching a low of $22.21.
In contrast, when the price of oil made its run back up to 3-year highs towards the beginning of July, the Woodside share price had climbed back up a further 8.5%, signifying the correlation between the two securities.
Exhibit 1. Woodside share price: Observe the Volatility From 4 June 2021 – Today
Source: Google Finance
As the saying goes, history doesn’t repeat, but it does rhyme. Alas, as we walked through the final stages of the second quarter, the price of black gold tumbled again, and Woodside shares tanked once more.
From their last peak in early July, Woodside shares have since fallen a further 9.5% to today’s trading.
Production updates didn’t go down well
Woodside also reported a 4% sequential decline from the quarter prior in its activities report back in July.
The decrease was put down to scheduled maintenance and the impact of adverse weather events.
On the contrary, Woodside realised a 15% quarter on quarter rise in its sales revenue to $1.285 billion. This boiled down to a 9% increase in delivered sales volume.
Despite hot oil markets and above-market realised oil prices, this wasn’t enough to sway investor sentiment. Woodside shares have edged around 6% lower since the announcement.
The Woodside share price has been on the back end of several headwinds over the past few months.
These headwinds have undoubtedly carried through until today, where the company’s shares have lagged the broad index’s return.
Despite the volatility this year, Woodside shares are still up 6.5% over the past year.
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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.