Any value in Woodside?

http://www.switzer.com.au/the-experts/michael-mccarthy/any-value-in-woodside/

This is an opinion I share.

There may be two major problems with these numbers. The first is the oil price projections. The EIA forecasts for the daily market imbalance in the second half of this year are already moving from deficit towards balance. A balance in the daily supply and consumption by the end of this year would be a surprise to current oil estimates.

The second problem has to do with the long term supply contracts that underpin Woodside’s major gas projects. Just as these contracts dragged on earnings as energy prices rose, they are supportive as spot gas prices fall. This may lead to the Woodside outperforming on its next earnings release.

It’s hard to see purchases of Woodside at current share prices hurting the long term performance of a portfolio. Given the sharp response to any positive news in the market, it appears oil and energy shares are still shorted and/or under-owned. A single hurricane, contract, or pipeline explosion could change the outlook very sharply, and remove the first chance in eleven years to buy Woodside Petroleum shares close to $25.