Woodside Energy (WDS) – Louisiana sell-down in train

Woodside Energy produces and sells liquefied natural gas(LNG), pipeline gas, crude oil and condensate, and natural gas liquids acrossthe Asia Pacific, Africa, the Americas, and Europe. Woodside was founded in1954 and is headquartered in Perth.

Woodside Energy declared a larger-than-expected final dividend and posted CY24 earnings a touch above market forecasts. The oil and gas producer also reiterated guidance for all key metrics bar depreciation forCY25. The key positive for Ord Minnett from the release is that Woodside is in advanced talks with several parties to sell down its stake in the Louisiana LNG project to 50%, which would provide substantial relief to the oil and gas producer’s balance sheet as it invests to replenish its production base. Nevertheless, gearing is likely to remain above the company’s 10–20% target range for CY25 if the company wants to maintain its 80%dividend payout policy.

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Woodside is making strong progress in replenishing its production base to compensate for expected output falls by CY30 from existing projects. The capital expenditure and cash flow required to do this, however, will keep the balance sheet tied up for some time, thus limiting the prospects for shareholder returns until the new projects come on-line. We raise our price target on Woodside to $26.00 from $25.50,but maintain our Hold recommendation.

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