Woodside Petroleum

Australian Equity Strategy Update provided by Australian stockmarket analyst Macquarie Research Equities.

Model Portfolio Update

Reducing Energy - Preference For Diversifieds:

We remain overweight diversified resources (where valuations appear reasonable), and have moved energy down from benchmark to underweight, as we believe valuations in the sector are looking stretched, as is the oil price in our view.

Accumulating Banks:

Here is an Australian Energy update from Australian market analyst UBS.

What do WPL, STO and OSH look like at US$100/bbl oil price parity for LNG?

Is our LT assumption of US$10/mmbtu conservative?:

We have recently upgraded the UBS our oil price forecast by a material amount, but we have left our long term Asia Pacific LNG pricing assumption of US$10/mmbtu unchanged. Is this too conservative?

Asia Pacific LNG prices are moving towards oil price parity:

Here is an update on the comparison of Australia's equity strategy Vs the world from Australian market analyst UBS.

Equity Strategy – Australia vs The World

UBS has released some of their analysts' thoughts on the Australian energy sector, especially in the area of Oil Prices. In light of the recent strength in the oil price, the analysts have reviewed two oil pricing scenarios - Futures Curve and WTI spot to determine their impact on forecast EPS, valuations and our share price targets for our Australian E&P company coverage. Scenario 1: WTI Futures curve: average WTI oil price US$75/bbl: Applying the futures curve increases 2008 EPS forecast most for Tap (+84%), Santos (+47%) and Woodside (+41%).

Woodside Petroleum Limited (WPL) has a maintained Buy 1 broker call and a $45.64 share price target from sharemarket analyst UBS. The company is having their AGM in Perth on 19th April 2007. There is a focus on LNG. With potential portfolio rationalisation: WPL is placing greater emphasis on LNG and its core asset base. Risky places are getting riskier and WPL has forwarned that it will make appropriate changes to its asset portfolio, e.g. Mauritania assets are "under review". Exploration activities will be highgraded. The company has a bullish LNG outlook: LNG demand is set to outstrip supply in the Asia Pacific region to 2015. This provides a significant opportunity for new LNG supply sources, particularly Australian LNG - favoured for portfolio diversity and supply security factors. The LNG pricing outlook is also good, with a trend towards straight line indexation to oil. They believe WPL represents one of Australia's best long term resource sector investments, largely due to its high quality asset base which has potential to support an exceptional production growth profile from a diversified portfolio of mainly WPL operated oil, gas and LNG project developments. Their NAV estimate is based on a DCF (10% nominal discount rate) of WPL forecastcash flow over the 2P reserve life of producing assets and all committed and highly probable projects. The analyst's 12-month share price target for Woodside Petroleum Limited is A$45.64 and is based on our NAV, significant contingent resources and exploration upside.

Woodside Petroleum Limited (WPL) has a maintained Buy 1 broker call and a price target of $45.64 from sharemarket analyst UBS. Mar 2007 Quarter update: Offshore Libya drilling begins with WPL sales revenue broadly in line with the analyst's forecast. Sales revenue of A$899.3m over the Mar ’07 qtr was 18% below the Dec ’06 qtr, but also broadly in line with their forecast for 16% decline. This result was adversely affected by tropical cyclone activity and asset sales (Legendre). Overall, this production report had no negative surprises. Most importantly, all new growth projects that underpin our strong Woodside 2008 production growth outlook remain on schedule. After updating their Woodside forecasts with the March ’07 qtr production data, our Woodside Petroleum EPS forecasts have increased by less than 1% per annum (2007E-2009E). The analyst believes Woodside represents one of Australia's best long term resource sector investments, largely due to its high quality asset base which has potential to support an exceptional production growth profile from a diversified portfolio of mainly Woodside operated oil, gas and LNG project developments. Their NAV estimate is based on a DCF (10% nominal discount rate) of WPL forecast cash flow over the 2P reserve life of producing assets and all committed and highly probable projects. Their 12-month share price target is A$45.64 (prior A$45.03) and is based on their NAV, significant contingent resources and potential exploration upside.