STO Well positioned, page-639

WDS announced late 5.8.24 it has purchased, for US $2.3b OCI, a Texas green ammonia development project. WDS states this investment will add over 10% IRR (not a great! IRR). Also, this will force it to borrow above its usual gearing range.

Morningstar/Dow Jones reported 6.8.24

"Energy was the biggest loser, retreating 2.0 per cent on a big loss from its largest component, Woodside.

The energy giant fell 5.1 per cent to a more than two-year low of $25.12 after announcing after Monday's close that it would acquire a green carbon ammonia project in Texas for $US2.3 billion.

S&P Global Ratings said while the acquisition would help Woodside achieve its emission targets, it would also push its financial envelope and materially reduce its rating headroom".

The WDS SP has collapsed over the last 12 months, from c. $38.50, to $25.40 today (c.34% drop- a very poor SP performance, cf STO's SP now $7.70 , cf 12 months ago $$7.92- a drop of only 3%).
I suspect STO may soon start to attract much more investing from Funds etc, because of the huge SP depreciation in WDS; & many disgruntled WDS retail investors etc. switching, also due to the clear SP outperformance by STO

On the HC WDS threads since 6.8, many WDS posters are bitter about the OCI purchase &/or SP decline- & WDS predilection for expensive green ambitions, & general wokeness.
This is a post, on 7.8, from a WDS holder, @hilly_sandman

"Maybe you could elaborate on why you think a project with a 10% IRR investment, contingent on governments CBAM (carbon cost) and requiring 3rd party feed stock is a good investment?

Also perhaps you could elaborate on how you see this investment delivering returns in excess of current or increased dividend or buyback?

There is no doubt the value proposition of an investment in WDS has changed. It is fact that WDS have stated they will be at top range, if not above, the gearing ratio... The SP is down 32% in 1yr and vs peers not great, it is clear that others in the investment community (and ones with deeper pockets) maybe feel the same...
My opinion is this investment has been done purely for the glossy picture in the annual report, it stacks up in no other ways IMO".

Post #:75102975