The WPL emotional rollercoaster

Well we’ve sure had the full rollercoaster experience in the past few weeks.

A month or two ago the Dogside brigade were all over this thread as the stock languished below $20.

Then a few weeks ago we had some serious FOMO happening around the stock - the ‘energy crisis’ and surging price of oil brought in a new wave of investors as well as existing investors topping up. Some clown even kicked off a ‘WPL@$60’ thread. The sp raced to $25 amidst positive media stories and sudden ‘energy crisis optimism’ around the stock.

WTF happened ?

WPL has always been a difficult stock to read on a day day or week to week basis. This week things have gone a bit pear shaped and the Dogside/Woofside brigade are back. What looked a sure bet a few weeks ago now looks a bit iffy again. Posters now spitting venom as recent investments (whether they be first time or top ups) are suddenly turning into losses.

The same old stuff appears on the thread - the moaning about how the WPL sp doesn’t respond on a daily basis to gains in the oil price, how it’s been a dog for 10 years, how Australian O &G stocks never move up with the US ones ....blah blah blah.

We all recognise that unless WPL pivots to renewables in some meaningful way it probably does has a shelf life. Putting that to one side the view on WPL appears to be divided into two camps as far as it’s more immediate future.

1. The Dogside camp that think no matter what the oil price and irrespective of the benefits of the BHP deal or any other tailwinds the stock is working against the ESG tide and will probably trade in the $15-$25 range for the next 5 years and beyond that will be in terminal decline.

2. The Sweet Crude camp that believe the ESG crowd are kidding themselves and that oil and gas will be crucial to any transition to renewables. This will keep oil and gas prices high and WPL has at least 5 years of rude profits and dividends ahead of it (which should drive the share price to $30 at least)

Personally I’m in the Sweet Crude camp and intend to hold my overweight position in WPL for the foreseeable future. I believe the current weakness is mostly ESG related - after the energy crisis news temporarily drowned out any noise from the ESG crusaders they are back having an influence due to the Glasgow summit giving them a platform again. I believe post summit the northern winter fears will resurface and support another rally into Christmas.

Anyway all that is medium term stuff. The only scenario that would see me holding WPL long term would be if it pivoted to renewables. I think a smart move on Megs part would be to get into bed with government and the ESG crowd and commit to using the next 5 years of extraordinary cashflow to seriously transitioning Woodside to a renewable energy company. Announcements along those lines could really put a rocket under the share price.

I think it’s the only course to take to be honest......because an oil and gas company making rude profits would be highly offensive to the ESG warriors and they would demand new taxes and levies.....taxes and levies that would be then redirected as grants and subsidies to companies in the renewables game.....and governments would totally buy into that and make it happen. This could potentially crush WPLs profits....no point locking horns with the ESG warriors and the government - that’s just a recipe for a long slow death for WPL.

Anyway - back to the current. A disappointing week on the rollercoaster but I’m keeping the faith in WPL - better times ahead.