The Woodside Energy Group Ltd (ASX: WDS) share price is down around 2% amid its Browse investment decision.
Woodside is one of the largest oil and gas companies in the Asia Pacific region, though it has projects in Africa and North America.
Browse investment decision
Woodside announced it has given notice exercising its right to pre-empt the sale of PetroChina International Investment’s (CNPC) 10.67% participating interest in the Browse Joint Venture (BJV) to a subsidiary Inpex Corporation (CNPC/Inpex transaction).
In other words, Woodside has decided to buy a 10.67% interest in Browse.
The terms of the deal mean Woodside will pay US$225 million to CNPC plus reimbursement of CNPC’s BJV cash call contributions made between 30 June 2025 and the completion date.
There will also be a US$175 million contingent payment to CNPC from Woodside after the BJV takes a final investment decision for the development of all the Brecknock, Calliance and Torosa fields on or before 30 June 2032.
This acquisition remains conditional based on customary conditions, including regulatory approvals.
Assuming the deal goes ahead, Woodside’s stake will increase to 41.27%, assuming no other joint venture participant pre-empts.
What is Browse?
Woodside noted that the Browse resource is Australia’s undeveloped conventional gas resource with potential production of 11.4 million tonnes per annum of LNG, LPG and domestic gas.
Its location off the west coast of Australia creates the opportunity for a major development for supply energy to contribute towards expected LNG demand in the Asia Pacific region and provide a significant new source of domestic gas for Western Australia, according to Woodside.
The ASX oil and gas share’s combined interest in the upstream Browse resource and the North West Shelf onshore infrastructure could lead to an integrated development that the business thinks could deliver strong returns to shareholders across the value chain and deliver long-term “economic benefits for Western Australia and the nation”.
Management comments
The Woodside CEO Liz Westcott said:
Woodside’s decision to pre-empt reflects our commitment to continue progressing the proposed Browse to North West Shelf development. We see this as a pathway to maximise long-term shareholder value.
Browse to the North West Shelf remains an important growth option for Woodside. This acquisition is a disciplined and capital efficient way to align integrated value in these assets for a development with long-term cash flow potential.
We will continue working with the Browse Joint Venture to fully evaluate development opportunities. This includes advancing technical definition, commercial arrangements and regulatory approvals. Any investment decision will be made in accordance with Woodside’s capital allocation framework.
Final thoughts on the Woodside share price
The decline today may be more to do with the fact that US President Trump said the Iran war has been settled, subject to finalisation and a signing is expected in the “next few days”.
If energy prices decline, then that’s a headwind for Woodside’s profitability.
Woodside shares are still 25% higher over the last six months, so I wouldn’t say this is a great time to invest considering a return of normal energy flows through the Middle East could change market dynamics.
For me, there are other ASX dividend shares I’d rather buy first.
