Summary of this Announcement:On April 29, 2025, Woodside Energy...

Summary of this Announcement:

On April 29, 2025, Woodside Energy Group Ltd announced that it had approved the final investment decision (FID) for the Louisiana LNG Development, a major liquefied natural gas (LNG) project:

• Project Size: Three-train development with 16.5 million tonnes per annum (Mtpa) capacity; fully permitted for expansion to 27.6 Mtpa.

• Timeline: First LNG targeted for 2029.

• Strategic Importance:

  • Positions Woodside as a global LNG powerhouse with the ability to supply about 5% of global LNG by the 2030s.

  • Expands their presence from the Pacific Basin into the Atlantic Basin.

• Financials:

  • Total project cost: US$17.5 billion (includes pipeline and management reserve).

  • Woodside's share: US$11.8 billion after partnering with Stonepeak, which will fund $5.7 billion through an accelerated capital contribution.

  • Expected Internal Rate of Return (IRR): >13%.

  • Payback period: 7 years.

  • Forecast annual net operating cash from Louisiana LNG: ~$2 billion in the 2030s.

• Funding Strategy:

  • Ongoing equity sell-downs to reduce Woodside’s capital exposure and accelerate returns.

  • Maintains strong liquidity of $7.3 billion and credit ratings (BBB+/Baa1).

• Environmental Considerations:

  • Project designed to lower emissions intensity.

  • Woodside’s overall greenhouse gas targets remain unchanged.

• Market and Marketing:

  • Access to low-cost gas resources in the US.

  • LNG sales to target both Europe and Asia, leveraging Woodside’s marketing network.

  • Signed SPA with Uniper for supply of 1 Mtpa from Louisiana LNG.

• Economic Impact:

  • Largest single foreign direct investment in Louisiana.

  • Expected to create 15,000 jobs during construction and 4,000 permanent jobs during operations.

✅ Positive Aspects:

• Strong Financial Metrics: >13% IRR and a 7-year payback are very attractive returns, especially in the LNG sector.

• Cash Flow Growth: Expected net operating cash exceeds $8 billion annually in the 2030s, which can fund higher dividends, share buybacks, or future growth.

• Portfolio Diversification: Reduces Woodside’s exposure to any single market (previously heavily reliant on Asia-Pacific).

• De-risked Development: Strong partners (Stonepeak, Bechtel), cost certainty (95% lump-sum EPC pricing), and regulatory clearances make this project relatively low-risk.

• Strategic Timing: Supply gap expected from 2030 onward, meaning Woodside’s LNG will come online when global prices are likely to be favorable.

⚠️ Risks to Watch:

• Execution Risk: Mega-projects often face delays or cost overruns, though Woodside appears to have mitigated this risk somewhat.

• LNG Price Volatility: If global demand softens (due to renewables, recession, etc.), cash flow forecasts might be affected.

• Climate Regulation: Long-term risks from tighter carbon regulations could pressure LNG projects.

• Capital Intensity: $11.8 billion is still a major investment; any equity dilution or debt pressure could weigh on sentiment.

Conclusion:

Overall, this is a very positive development for Woodside’s medium- to long-term share price if they execute well.
In the short term, investors may watch closely how the funding and partner sell-downs progress, but the outlook is clearly favorable for shareholder returns post-2029.