The Woodside Energy Group Ltd (ASX: WDS) share price is under the spotlight today after making an investment decision on the Louisiana LNG project.
Woodside is one of the largest oil and gas businesses operating around Australia.
Woodside’s Louisiana LNG investment decision
The ASX energy share has made a final investment decision to develop the three-train, 16.5 million tonne per year Louisiana LNG development. It’s targeting to produce its first liquified natural gas (LNG) in 2029.
The forecast total capital expenditure for the LNG project, pipeline and management reserve is US$17.5 billion (on a 100% ownership basis). Stonepeak, as an investor in Louisiana LNG Infrastructure, will provide US$5.7 billion towards the expected capital expenditure for the LNG project, contributing 75% of capital expenditure in 2025 and 2026. Woodside’s share of forecast total capital expenditure is US$11.8 billion.
The ASX energy share said that development of this project will position Woodside as a global LNG powerhouse, enabling the company to deliver approximately 24mt per year from its global LNG portfolio in the 2030s and operating more than 5% of global LNG supply.
The project has expansion capacity for two additional LNG trains and is fully permitted for a total capacity of 27.6mt per year.
Woodside said it expects the project will deliver significant cashflow and create long-term value for Woodside shareholders. The company is expecting the return to deliver an internal rate of return above 13% and a payback period of seven years.
At full capacity, the foundation is expected to generate approximately $2 billion of annual net operating cashflow in the 2030s. It said it has the potential to generate more than US$8 billion of annual net operating cashflow in the 2030s.
The project is expected to supply the “strong and sustained demand” for LNG in both Asia and Europe.
Final thoughts on the Woodside share price
The Woodside share price has sunk around 28% in the past year. In energy prices are cyclical, then this could be a good time to invest (ignoring any environmental concerns).
It may offer a sizeable dividend, though I’m not sure what will spur a recovery of investor confidence again. But, lower prices are the best time to buy a commodity business, so this could be the right time to pounce, for interested investors.
