Global LNG Expansion Will Falter Under Renewables Pressure

Analysts have modestly raised their price target on Woodside Energy Group from $27.06 to $27.19 per share. They cite updated forecasts that reflect slight adjustments in revenue growth expectations and profit margins.

Analyst Commentary

Analysts have weighed in on Woodside Energy Group's latest outlook, highlighting a mix of opportunities and challenges that could shape the company's performance in the coming quarters.

Bullish Takeaways

• Bullish analysts point to Woodside's stable revenue streams and disciplined cost management as factors supporting the recent price target increase.
• They note that improved forecasts for global energy demand could bolster long-term growth, particularly if commodity prices remain favorable.
• Potential for increased operational efficiencies is expected to aid profit margin expansion and overall earnings growth.
• Woodside's strong balance sheet and liquidity are viewed as assets that provide flexibility for future projects and shareholder returns.

Bearish Takeaways

• Bearish analysts express caution over volatile energy markets, which could impact near-term revenue predictability and profit margins.
• Some continue to highlight uncertainties in regulatory and geopolitical environments that may delay or challenge large-scale project execution.
• There is ongoing concern that elevated capital expenditure requirements could put pressure on free cash flow and limit potential returns.

What's in the News

• Woodside Energy Group signed an LNG Heads of Agreement with Turkiye's BOTAS to supply approximately 5.8 billion cubic meters of LNG over up to nine years starting from 2030, primarily from the Louisiana LNG project, subject to final sales and purchase agreement.
• The company will assume operatorship of the Bass Strait assets following an agreement with ExxonMobil Australia, aiming to unlock further gas development and realize over USD 60 million in synergies.
• Woodside directors determined a fully franked interim dividend of 53 US cents per share for the first half ended June 30, 2025, representing an 80% payout ratio of underlying NPAT and a 6.9% annualized yield. Key dates include record date on August 29, 2025, and payment date on September 24, 2025.
• Production results for the second quarter and year-to-date ended June 30, 2025, showed total production of 50.1 MMboe for the quarter and 99.2 MMboe year-to-date, both up compared to the previous year.
• Woodside updated its 2025 full-year production guidance to 188 to 195 MMboe, compared to the prior range of 186 to 196 MMboe.

Valuation Changes

• Fair Value per share has risen slightly, from A$27.06 to A$27.19.
• Discount Rate has increased marginally, from 6.96% to 6.99%.
• Revenue Growth expectations have declined modestly, moving from -3.35% to -3.55%.
• Net Profit Margin has edged lower, from 16.39% to 16.27%.
• Future P/E has decreased slightly, from 18.39x to 18.27x.