Woodside shares higher on 'game-changer' news

Let's see what the energy giant has announced on Tuesday.

| More on:
An oil worker in front of a pumpjack using a tablet PC.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Woodside Energy Group Ltd (ASX: WDS) shares are in the spotlight on Tuesday.

That's because the energy giant has announced a major new investment decision that could reshape its future.

At the time of writing, the company's shares are up 1% to $20.57.

Woodside shares rise on big news

According to the release, Woodside has made a final investment decision to move forward with the development of the three-train, 16.5 million tonne per annum Louisiana LNG project in the United States.

The Louisiana LNG development is a significant strategic move for Woodside, positioning the company as a true global LNG powerhouse in the coming decade. It is targeting first LNG production in 2029.

Once operational, the Louisiana project is expected to lift Woodside's total LNG production capacity to around 24 million tonnes per annum. This is enough to account for over 5% of global LNG supply. The project is also fully permitted for potential expansion to a total of 27.6 Mtpa with two additional trains, offering even more upside.

Strong financial metrics

Management believes the project stacks up strongly from a shareholder value perspective.

It is forecasting an internal rate of return (IRR) above 13% and a payback period of seven years.

At full capacity, the foundation project is expected to generate approximately US$2 billion of annual net operating cash through the 2030s, helping to underpin Woodside's global portfolio, which could deliver over US$8 billion per year in that decade.

The total forecast capital expenditure for the Louisiana LNG development, including associated pipeline infrastructure and reserves, is US$17.5 billion. Woodside's share of this will be around US$11.8 billion. Strategic partner Stonepeak is contributing US$5.7 billion and will be providing 75% of the capital expenditure during 2025 and 2026 to accelerate project construction.

Commenting on the decision, Woodside CEO Meg O'Neill, described it as a game-changer for the company. She said:

Louisiana LNG is a game-changer for Woodside, set to position our company as a global LNG powerhouse and enable us to deliver enduring shareholder returns. This world-class project is a compelling and de-risked investment. It leverages Woodside's proven strengths in project execution, operational excellence, marketing and customer relationships to offer significant cash generation and drive long-term shareholder value.

The project benefits from access to abundant low-cost gas resources in the United States and boasts an asset lifespan of more than 40 years. It also has access to well-established interstate and intrastate gas supply networks.

Woodside shares remain down almost 30% over the past 12 months.

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Energy Shares

Multiracial happy young people stacking hands outside - University students hugging in college campus - Youth community concept with guys and girls standing together supporting each other.
Energy Shares

Which ASX 200 uranium stock is surging on huge news

Let's see why investors are bidding this stock higher today.

Read more »

Oil rig worker standing with a clipboard.
Economy

What does the changing oil price mean for the ASX 200?

Oil continues to wobble with the tensions seen on the world stage.

Read more »

Australian notes and coins symbolising dividends.
Energy Shares

Tempted by the big dividend yields on ASX energy shares? Here's why you should think again

The income from these stocks might not be as good as it seems.

Read more »

A man looking at his laptop and thinking.
Energy Shares

Up 100% since April, why is this ASX 300 uranium stock plunging today?

The ASX 300 uranium miner has come under heavy selling pressure on Thursday. But why?

Read more »

Excited couple celebrating success while looking at smartphone.
Energy Shares

Paladin Energy share price races higher on big announcement

Let's see why this uranium producer's shares are charging higher today.

Read more »

Oil worker using a smartphone in front of an oil rig.
Share Market News

ASX 200 up strongly while energy shares plummet on ceasefire news

ASX 200 energy shares are tumbling with Karoon Energy and Woodside Energy the biggest fallers.

Read more »

An oil worker assesses productivity at an oil rig as ASX 200 energy shares continue to rise.
Share Market News

ASX 200 energy shares lead for the second week as world awaits US decision on Iran

ASX energy shares lifted 5.31% while the ASX 200 fell 0.49% amid the US President contemplating strikes.

Read more »

Copal miner standing in front of coal.
Energy Shares

What happened to Coronado Global Resources shares on Friday?

The ASX coal miner announced new funding this week.

Read more »