Another snippet re WPL June qtr results
""JBWere view
Woodside continue to target a FID on Pluto Train 2 by end-CY10 and has 2 rigs currently drilling in key areas of the Carnarvon Basin to fulfil this ambition. The next 6 months will be a key period for Woodside investors with its share price largely driven (ex macro factors) by the success or otherwise of delivering Pluto 2 either through the drill-bit and/or 3rd party supply agreements. Unfortunately exploration outcomes and WPLs ability to secure 3rd party agreements given its track record are difficult to predict. WPL reports it 2Q on Friday 23 July.
Key Take-outs:
Some success to date: Woodside has had 3 successes from its Pluto exploration campaign, however total volumes are not yet known - Eris-1 nearby Pluto which has not yet been quantified publicly by Woodside (and may even be an extension of the Wheatstone field itself), and Martell-1 & Noblige-1 which are both another ~100km from the Pluto field - in WA-404P shared with Hess (WA-404P will likely be critical to whether WPL can deliver FID on Pluto 2 this year).
At least 4 well results anticipated in 2Q report: We expect at least one result from WA-434P (WPL 100%, deepwater and remote), 2 from WA-404P (WPL 50%, Larsen Deep and Camus) and Dalia South in WA-348P (WPL 100%). Each result will be important in determining Woodside's positioning to sanction Pluto Train 2 by end-CY10.
Negotiations with Hess are critical: If the resource in WA-404P proves to be material (Woodside comments to date indicate that it thinks it will), Woodside will need to reach alignment with Hess on a development option (eg. commercial terms for Pluto Train 2 access, ownership, tolling, sunk cost recovery etc.). The remaining 6 commitment wells in WA-404P are scheduled to be drilled by 4Q CY10 (at which point Woodside will also have drilled first wells in 100% blocks WA-434P & WA-348P), and hence we expect negotiations with Hess to become more intensive and detailed as this year progresses.
Train 2 the Prize: We include $6.57/share of Pluto expansion value in our $53.23/share WPL valuation; and value Train 2 at between $5.67 and $10.25/share depending on gas volumes and WPLs equity level.
For any of these scenarios to crystallise, WPL must demonstrate further favourable exploration results (and/or complete a deal with Hess if it fails to discover sufficient volumes in their 90-100% owned blocks).
Investment View:
We continue to believe that at $42/share or below WPL is attractive longer-term value. However, key share-price catalysts within 12-months are likely to be driven by exploration outcomes and successful commercial negotiations - the former is impossible to predict and the latter something Woodside has historically found challenging (eg. failed Apache negotiations).""
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