Stock of the day: Woodside Energy Group
Woodside Energy reports increased costs for its Scarborough project and lowered production due to maintenance and weather issues. Analysts suggest holding the stock given its current undervaluation and strong dividend yield.
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This video was created on 23 July for IG audiences by ausbiz.
Stock of the day: Woodside Energy (ASX:WDS)
Scarborough project costs and revenue update
Woodside Energy has announced a 4% increase in the estimated cost of its Scarborough project, now totaling $12.5 billion. Alongside this, the company reported a 2% rise in second-quarter revenue. However, quarterly production dipped to between 44.4 and 44.9 million barrels of oil equivalent, due to planned maintenance and weather-related disruptions at its Northwest Shelf project. Despite these challenges, Woodside confirmed it remains on track to meet its full-year production targets.
Strategic acquisition and financial performance
In a strategic move, Woodside Energy has agreed to acquire US liquefied natural gas developer Tellurian for approximately $1.3 billion, including debt. This acquisition is part of Woodside's strategy to expand its portfolio and reinforce its position in the LNG market.
Analysts highlight that Woodside's operations are capital-intensive and heavily influenced by fluctuating energy prices, adding complexity to its business model. Despite these challenges, the company has shown strong performance across most financial metrics, except for return on equity. Notably, Woodside's earnings per share growth rate has been impressive in recent years, although its overall stability has been somewhat inconsistent.
Considering Woodside Energy's current undervaluation and robust dividend yield, analysts suggest holding the stock.
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