The Woodside Energy Group Ltd (ASX: WDS) share price is slightly in the red today. Woodside shares are sliding 0.5% at last look and are currently fetching $34.05.
For perspective, the S&P/ASX 200 (ASX: XJO) is down 0.27% today. The S&P/ASX 200 Energy Index (ASX: XEJ) is also sliding 0.41%.
But could Woodside be in for some tough times ahead? Let's take a look at the outlook for the Woodside share price.
What's ahead?
Woodside is a major oil and gas producer on the ASX 200. The brent crude oil price is currently down 0.67% to US$84.42 a barrel, while the natural gas price is falling 1.39% to US$2.13 per MMBtu, according to Bloomberg.
Citi has downgraded the Woodside share price to a sell, The Australian reported this week. Santos Ltd (ASX: STO), also an oil and gas producer, has been cut to neutral.
Analysts are concerned a riskier environment for capital allocation could impact production and growth projects.
Citi head of energy James Byrne, quoted by the publication, said:
More onerous petroleum resource rent tax; a more aggressive safeguard mechanism, Australian Domestic Gas Security Mechanism; price caps and regulated pricing; collapsing contractors; labour shortages; and a meticulous offshore regulator; in isolation, these changes could be absorbed by industry, but in aggregate are likely to result in various consequences.
The ongoing allocation of capital in Australian energy markets is crucial for the sanctity of energy markets on both East and West coasts.
He said companies such as Woodside could choose to "take capital abroad" to locations like the Gulf of Mexico.
Citi has placed a $30 price target on the Woodside share price. This implies a nearly 12% downside based on the current share price.
Woodside reported a 223% boost in underlying net profit after tax in calendar year 2022 to US$5.23 billion.
Eligible Woodside shareholders received a record final dividend of US$1.44 per share yesterday.
Woodside share price snapshot
The Woodside share price has climbed 1% in the last year. In the past month, Woodside shares have declined nearly 10%.
Woodside has a market capitalisation of about $64.7 billion based on the current share price.
