May the month for Woodside and the end of James Price Point

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Tuesday, 10 April 2012

NO ONE can accuse Peter Coleman of rushing to put his stamp on Woodside Petroleum but Slugcatcher reckons there are three days in May shaping as the invisible chief executive officer’s time to shine.

May 2 will be Coleman’s official coming out party when he fronts shareholders in Australia’s biggest pure oil and gas company at his first annual meeting of Woodside.

May 12 will be his official “birthday”, the date on which his appointment was announced last year.

May 30 will be his official “feet under the desk” day, the first anniversary of the time he slipped silently into the office previously occupied by his loud predecessor, Don Voelte.

It is possible that there will be other reasons for May to emerge as the month when a new-look Woodside finally emerges from what has been a pretty awful period for the accident-prone company.

A fourth red-letter event could be a keenly anticipated final exit from the Woodside share register by its biggest but politically unacceptable shareholder, Royal Dutch Shell.

A fifth red-letter day could be the first LNG shipment from the overdue and over-budget Pluto project which was to have been Woodside’s great “break-free” project but instead joined Rankin A, Goodwyn and Cossack Pioneer as just another engineering embarrassment.

Whichever way you analyse Woodside, May could be the start of a dramatic and overdue period of change which has been expected since Coleman was plucked out of ExxonMobil and charged with the job of changing the culture of an Australian business that had lost its way.

Speculation of a final Shell sell-down, which has been lurking in the background for months, got a kick along last week when the Anglo-Dutch oil giant filed an updated statement of its stake in Woodside which had slipped from 24.3% to 23.3%, a result of taking cash as dividends rather than shares available under the Woodside dividend reinvestment scheme.

The refusal to participate in the DRS sent a powerful signal that Shell really does want out and its exit is only a function of price.

Loading the first Pluto cargo could be the trigger for a revival in Woodside’s share price, which sagged alarmingly over the past year, despite the high oil price.

From a peak of $50.85 exactly 12 months ago Woodside sagged as low as $29.76 last September.

It is back to around $35.18 but that still means it is closer to its 12-month low than its 12-month high.

Of the other events scheduled for May, the twin birthdays for Coleman (his appointment and first day in the office) are of little consequence, except to serve as milestones on his career path and act as reminders that he is hardly a human dynamo.

There has been a cleaning of senior executive ranks but that’s what always happens when a new CEO is parachuted in over the heads of ambitious in-house staff.

The May 2 annual meeting could be more significant date and perhaps one that Coleman and his fellow directors really ought to use as an event to deliver good news via a significant announcement to placate an increasingly unhappy shareholder base.

Measuring just how gloomy Woodside shareholders have become over the past few years is not easy.

The only opinion poll of shareholders is when they get to vote at the annual meeting and even then it’s a charade because institutional investors dictate the events of the day.

But The Slug reckons it will take a major and very positive announcement to appease the angriest of Woodside shareholders who have watched their company stumble from crisis to crisis without any sense of urgency, or awareness on the part of directors that they are responsible for other people’s money.

The share price tells the story and while most other big oil and gas companies have lost ground over the past 12 months, Woodside has been the biggest loser with its 30.8% collapse standing out alongside a 21% fall by Origin, a 13% fall by Santos and a 5% fall by Oil Search.

Some shareholders, out of politeness, will say a few kind things about the first year of Coleman’s rein.

Others, annoyed at losing almost a third of the value of their investment, might ask what he’s going to do about it or why he is taking so long to do something.

Coleman, of course, can play the “Titanic card” and say it takes a long time to change the direction of a big ship.

But if he does that he risks being reminded about what happened to the Titanic, which was the White Star Line’s biggest ship until its skipper guided it into an iceberg 100 years ago.