Foot of the mountain

31 Aug 2022

Sector: Energy

1H22 RESULT

Need To Know

Interim dividend US109cps fully franked, payment date 6 October
Free cash flow US$2.57bn from which US$2.07bn will be the dividend
Gearing target lowered to 10-20%
Huge capex ahead, US$9bn alone for Scarborough, Pluto2 and Sangomar

Investment implications

1H22 underlying net profit US$1,819 million (+414% on pcp) ahead of consensus US$1,770 million. Result includes transaction costs from BHP merger which contributed one month (completed 1 June 2022).

Gearing: Target gearing range lowered to 10-20%. After the interim dividend is paid, gearing will be ~13%. Lower gearing a sensible decision given the large capex program ahead in next few years. The lower gearing target suggests buybacks now off the table.

Capex: WDS estimated capex for Scarborough, Pluto Train2 and Sangomar projects from July 2022 to December 2024 estimated (company) at US$9bn at current equity levels. WDS said the sell-down of Scarborough is ‘progressing’ as it has been for the last 13 months.

FY22 capex guidance US$4.3-4.8bn (~45% Scarborough, 25% Sangomar).

Figure 1: WDS underlying net profit 1H22

View the latest Research Report

Stock overview

Share Price

Company overview

Woodside Energy is now Australia’s largest oil and gas producer after its merger with BHP Petroleum on 1 June 2021. WDS producing assets include the North West Shelf, Pluto, Wheatstone, Australian oil and Gulf of Mexico oil and gas.

Disclaimers and Disclosures

Issuer

The information and opinions contained within Sandstone Insights Research were prepared by MST Financial Services Pty Ltd (ABN 54 617 475 180, AFSL 500557) ("MST").

Reliance

Whilst MST make every effort to use reliable, comprehensive information in the construction of its reports, MST make no representation, warranty or undertaking of the accuracy, timeliness or completeness of information in this report. Save for any statutory liability that cannot be excluded, MST and MST employees, representative and agents shall not be liable (whether in negligence or otherwise) for any error or inaccuracy in, or omission from, this advice or any resulting loss suffered by the recipient or any other person.

General Advice

Any advice contained within Sandstone Insights Research is general advice only and has been prepared without taking into account any person’s objectives, financial situation or needs. Any person, before acting on any advice contained within Sandstone Insights Research, should first consider consulting with a financial adviser to assess whether that advice is appropriate for their objectives, financial situation and needs.

General Disclosures

This report should be read in conjunction with MST Disclaimers and Disclosures and is published in accordance with MST Conflict Management Policy which are available on the MST website: https://www.sandstoneinsights.com.au.

Currency of Research

The recommendations made in a Sandstone Insights Research report are current as of the publication date. If you are reading a report materially after publication, it is likely that circumstances will have changed and at least some aspects of the analysis may no longer hold.

Access and Use

Any access to or use of Sandstone Insights Research is subject to the Terms of Use. By accessing or using Sandstone Insights Research you hereby agree to be bound by our Terms and Conditions and hereby liable for any monies due in payment of accessing this service. In addition you consent to us collecting and using your personal data (including cookies) in accordance with MST Privacy Policy, including for the purpose of a) setting your preferences and b) collecting readership data so MST may deliver an improved and personalised service to you. If you do not agree to MST Terms of Use and/or if you do not wish to consent to MST use of your personal data, please do not access this service.

Equities Research Methodology

Please click here for information about MST equities research methodology.