Today, Woodside announced the final investment decision for its recently acquired Louisiana LNG Project. The HNW Portfolio holds a 3.5% weight to WDS.

Key Points:

  • Woodside will invest $11.8 billion over the next 8 years to build an LNG terminal that will produce 16.5 MT per annum of LNG, which will see Woodside process 5% of the world’s gas. The purpose of the terminal is to liquefy trapped US gas and ship them LNG into global markets for a premium.
  • The terminal will be built in a foreign trade zone, which means that no tariffs will be incurred in the building of the project (15% of the cost) until after the project is complete.
  • The location of the export terminal is conveniently located to take advantage of the abundant US gas market but also to transport LNG to opportunities across the Atlantic and Pacific basins.
  • On April 7th, Woodside sold 40% of the LNG Terminal to Stonepeak, an infrastructure investment firm, for $5.7 billion, which will be used over the three first years of initial capital expenditures. Additionally, on April 17th, WDS announced that they have signed an agreement with German utility Uniper to supply them with 1 MT of LNG  from 2029 to 2039 from the Louisiana LNG Project. These two moves dramatically de-risk the project

 Why is the stock up? By bringing on Stonepeak to the project, Woodside has dramatically derisked the project and freed up capital to continue to pay high dividends to shareholders.

WDS is up 1.5% to $20.66, since announcing the 40% sell-down of the Louisiana project to Stonepeak.