This morning, Woodside (WDS) reported its first-half 2025 results, which were in line with guidance following the June quarterly upgrade. The HNW Portfolio have a 4.5% allocation to WDS.

Key Points:

  1. Profit: First-half net profits of US$1.25 billion, a slight increase over last year, excluding an impairment expense. Pleasingly, production reached a record 99 million barrels of oil, and unit costs fell to US$7.70 per barrel, down from US$8.30 per barrel last year. Falling unit costs were due to a 96% LNG plant asset reliability and the full impact of the new Sagomar field in Senegal, which is proving to be a very solid development for WDS.
  2. More Growth to Come: WDS have been very busy in the first half with new assets under construction progressing well. Scarborough LNG is 86% complete, with the first LNG targeted for early 2026, and will be processed at WDS’ existing Pluto infrastructure in Western Australia. Trion in the Gulf of Mexico is 35% complete and is targeting first oil in 2028 and Louisiana LNG is targeting first LNG in 2029, with JV partner StonePeak contributing US$5.7 billion and funding most of the near-term capex.
  3. Balance Sheet: Woodside maintains a strong balance sheet, with a 19% gearing ratio. This is very impressive and reflects the company reducing project risk and capex spend by selling down equity stakes in projects to offtake partners
  4. Dividends: The Interim dividend of US$0.53 was ahead of expectations.
  5. Guidance: WDS did not provide any change to their guidance for 2025, but reconfirmed that they expect to produce 188-195 million barrels of oil. Key news over the next six months will be an announcement of the sale of a stake in the Louisiana LNG export terminal. During the call, management stated that they had received multiple offers from equity partners. A sell-down of a stake in the US LNG export terminal will see a re-rating of WDS.

Portfolio Strategy: WDS is the Portfolio’s sole energy exposure and is the most conservative and well-managed Australian oil company. WDS has the lowest production cost and gearing, which is a crucial position for an energy company, given that market conditions can change abruptly.

WDS trades on a very undemanding PE of 12x with a 6.9% fully franked yield.

Woodside finished down -2.8% to $26.14