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the Woodside Petroleum Ltd. (ASX:WPL) The stock price got off to a good start this week.
the S&P/ASX 200 Index (ASX:XJO) The energy giant closed Friday at $28.77 per share and is currently trading at $29.30, up 1.84%.
This compares to a slim gain of 0.09% for the ASX 200 at the same time.
So why is Woodside stock price outperforming?
Oil advances and BHP merger in the spotlight
As you might expect, ASX energy stocks tend to rise based on energy costs.
With Brent crude oil prices up 1% to just over US$113 a barrel, Woodside stock price is a likely beneficiary.
Then there is the ongoing merger with BHP Group Ltd.oil assets of (ASX: BHP). Shareholders approved the merger last week.
Leading broker Morgans sees a lot of upside in this merger.
According to Morgan:
We believe WPL benefited from being in the right place at the right time. With: 1) BHP/WPL having an existing relationship, 2) BHP keen to strengthen its ESG profile, and 3) WPL being a quality operator (safe hands, which is important for BHP).
From an economic perspective, we believe WPL is getting the most out of the deal, with synergies not built into the deal metrics and BHP is willing to accept a discount. The deal is transformative, making WPL one of the world’s top 10 E&Ps with +2 billion barrels of 2P reserves, with [earnings before interest, tax, depreciation and amortisation] EBITDA of $4.7 billion per year and options for growth.
Morgans has a target of $33.60 for Woodside stock price. This is about 15% higher than the current share price.
Woodside Stock Price Overview
Woodside’s share price has gained 33% so far in 2022. This compares to a year-to-date loss of around 4% posted by the ASX 200.
Woodside pays a dividend yield of 6.5%, fully franked.