Love your show. I just started investing again and was hoping someone can help me with this question?
I have been watching the oil price tank, thinking this would be a great time to enter the market and go long on an Oil company. Looking over the financials I find Woodside financially sound and a market leader in Australia.
I buy into Woodside when oil is priced around $53 per barrel, hearing that the US (world’s largest oil producer), is made up of Oil Fracking which cannot operate at a profit under $50 per barrel.
I look deeper into Woodside and find out I’m the proud owner of a LNG (Natural Gas) company not an Oil company. Woodside produce 78% Natural Gas and only 15% Liquids in the first half 2018.
Okay the WTI has dropped from $76 October High to $50 November Lows that’s 35% drop which will effect 15% of Woodside’s liquid output.
But here is the kicker, at the same time Natural gas prices has gone up from $2.80 September to $4.25 November. That’s 52% increase to 78% of Woodside’s production. Natural gas has be sitting around $3 for some time so I don’t believe the $1.25 increase has been priced in to Woodside’s market price.
So I don’t understand why Woodside’s price has dropped so much from $39 highs in September to $31 lows in November (21% drop) on good news (Natural Gas) that out weights bad news (WTI).
Have I missed something?