In a piece published on Friday titled 6 things only Woodside Petroleum Limited investors will understand, analyst Regan Pearson said the Perth-headquartered major's massive 9% dividend was fuelled by record production and rising LNG pricing and "set alight" by the falling Aussie dollar.
"Alas, Woodside investors also understand that the dividend yield probably won't last," Pearson said.
"Lower energy prices pushed Woodside's first quarter sales revenue down 15.9% over the same period in 2014, despite a 3% increase in sales.
"And as capital expenditure rises going forward and exchange rates remain volatile, the super yield may not be sustainable."
Woodside announced a 40% increase to its final dividend in February of US144c per share, pushing its full-year dividend to 255cps, which at current exchange rates lavishes investors with a huge annual yield of 9.1%, plus franking credits.
Reagan said at the time that while such a yield was rare for an S&P/ASX 200-listed company, it was "almost unheard of" for an energy producer.
Woodside's share price was insulated from the falling oil price by contracted LNG pricing and record production.
LNG made up 84% of Woodside's sales revenue in 2014 compared to just 53.5% for fellow LNG player Santos, which was also hit hard due to increasing reliance on oil-linked LNG pricing.
Despite all this Pearson believes Woodside could be a long-term winner as, unlike oil, demand for LNG is forecast to exceed production from 2022, which will naturally push LNG prices up.
"If Woodside's Browse floating LNG project is approved in 2016, the project would likely be completed at a perfect time to meet this demand," he said.
"With an estimated production life of 40 years, Woodside investors understand the company's long-term potential."
In February, Pearson noted a hidden warning buried in Woodside's 2014 annual report which said that, based on current industry forecasts, the oil price crisis could result in a short-fall in LNG production from 2022 as new projects were delayed, putting upward pressure on long-term LNG prices.
"Due to a lag in oil-linked LNG pricing, the current phase of lower oil prices will continue to push down revenues for LNG producers in the coming six months," Pearson said at the time.
"Lower revenues mean less money available to reinvest in new, capital intensive LNG projects and less enthusiasm from company shareholders to support the ventures.
"The delay in new projects will push out new supply options required to meet growing LNG demand."
Woodside itself has postponed the final investment decision on its Browse floating LNG production vessel until mid-2016, a project with an estimated life of 40-50 years.
"While 2022 might seem far away, it's only seven years and given the time required to bring new LNG production online seven years is not long," Pearson said in February.
Woodside's Pluto LNG took five years from approval to production, while Santos' GLNG joint venture was approved by shareholders in January 2011, with first production expected in the second half of 2015 - around four-and-a-half-years on.
The conclusion for investors, he said, was that despite the current fall in oil prices, LNG focused companies like Woodside, Santos, Drillsearch Energy and Senex Energy could be set to profit from a short-fall in LNG supply in the long term.