Woodside Petroleum 2005 Analysis

SCHOOL OF ACCOUNTING

Subject: 22754 Corporate Accounting

Assignment on Woodside Petroleum Limited

Lecturer: Daniel David

Class: Tuesday 6pm

Due Date: 16th May 2005

Full Name Student ID

Table of Contents

Introduction 1

Background 1

Financial Press Journal 2

Share price movements 7

Company annual results 7

Profitability 7

Liquidity 8

Gearing 9

Impact of International Financial Reporting Standards (IFRS) 10

Reference 14

Introduction

This report will try to analyse an ASX listed company, Woodside Petroleum Limited, through the recent articles from financial press and the company's 2005 annual report. The report will first briefly introduce the company's history and the company's main activities. Following is a journal comprising of summaries of articles from financial press on Woodside Petroleum Limited between 1st January 2006 and 13th May 2006. The situation in the articles are analysed and their impacts for the company, its investors and other stakeholders are discussed. The third section contains a chart of the recent share prices and shows the relationship between the company's share price and what is found in the financial press. The fourth section engages in an assessment of the company's annual results and a comparison of what is in the directors' report and the analytical financial press at the time of the report's announcement. The final section documents any important changes in the accounts that have occurred as a result of the adoption of IFRS.

Background

Woodside Petroleum Limited (WPL) is an Australian gas and oil company which established in 1953. Its name came from a small town in Australia's southern-most mainland state, Victoria. The company began exploration drilling and major gas and condensate discoveries were made in 1971 at Scott Reef. WPL has a portfolio of assets, projects, development opportunities and exploration interests in eleven countries spanning four continents. It sells liquefied natural gas, natural gas, crude oil, condensate and liquid petroleum gas around the world.

WPL's major business is based on the North West Shelf Venture, Australia's largest resource project, and the country's first and largest liquefied natural gas plant. WPL has a market capitalisation of $31.5 billions and estimated to have 1.3 billion barrel of oil reserves as at December 2004.

The company's main activities include:

* Exploration - seismic acquisition and drilling for oil and gas discoveries

* Development opportunities - pre-project development planning

* Developing projects - development of oil and gas projects

* Producing assets - platforms, floating production systems, and gas plants for liquefied natural gas, crude oil, condensate, natural gas and liquid petroleum gas

* Marketing - products for Australian and international customers

* Research - new technology and alternative energy

Financial Press Journal

Article 1 - "Woodside Petroleum Heats Up --- Demand for Natural Gas Fuels Jump in Australian Firm's Shares", The Wall Street Journal, 3 January 2006, By Stephen Bell Dow Jones Newswires

Summary: Woodside is progressing on its multibillion-dollar Pluto and Sunrise projects. Also, it is increasing exploration expenses by 50% to around $500 million. The number of exploration wells will double to around 40 and production will lift by a third in 2006.

Assessment: Woodside is trying to increase its profit with aggressive expansion plans. Investors and gas customers will need to watch the results of the projects closely, where sufficient gas reserves at the sites will strengthen the sales contracts.

Article 2 - "Resource stocks take a breather", Australian Financial Review, 6 January 2006, Tim Findlay

Summary: After crude oil prices dropped US10 cents in Asian trading to $63.32 a barrel, Woodside's shares dropped 47 cents.

Assessment: Oil price plays a big part in Woodside's revenue. Decreasing in revenue has a negative effect on Woodside's share value.

Article 3 - "Investors cheer as share prices soar to record on back of gold", The West Australian, 10 January 2006, JULIE-ANNE SPRAGUE

Summary: The big jump in commodity prices set major resource stocks to record peaks and brought most other sectors up along. Woodside got to a record $41.17 before closing $1.08 higher at $40.73.

Assessment: Any issues regarding oil affect Woodside's share price. The share prices, the growth of the resource sector and the rise in world oil prices are interrelated.

Article 4 - "Risk-hungry Woodside looks offshore for growth", Australian Financial Review, 16 January 2006, Robert Guy and Yvonne Ball

Summary: Woodside chief executive Don Voelte has targeted to generate up to half the company's revenue overseas within 10 years by searching new oil and gas reserves in the United States and Africa. Long term strategy is to get more sales from the energy starving US and other riskier countries such as Mauritania, Libya, Kenya and Sierra Leone.

Assessment: The focus has been on the potential rewards from exploring these highly potential areas. There are still a lot