New research: What’s next for Woodside?

The Australasian Centre for Corporate Responsibility​ (ACCR) has today published research showing Woodside Energy Group Ltd has an opportunity to enhance shareholder value and reduce its exposure to climate risk by ceasing development of its high-cost, high-emissions, pre-FID greenfields gas projects: Browse, Calypso and Sunrise.

Woodside is under significant pressure to improve its management of climate risk, following a majority (58%) of shareholders voting against its Climate Transition Action Plan (CTAP) and 17% voting against re-election of the Chair at the 2024 Annual General Meeting (AGM).

Analysis in What’s next for Woodside? shows:

• share buybacks would deliver 140% more value than executing Browse and Sunrise (Calypso has been excluded because it is deemed uncommercial by Rystad).
• Browse is neither Paris-aligned nor low cost. It is more expensive than 70% of the world’s unapproved gas projects. Sunrise and Calypso are even more expensive.
• not developing Browse, Sunrise and Calypso would move Woodside towards Paris-alignment by avoiding 80% of emissions from its pre-FID upstream portfolio.

The analysis also looks at the announced US$1 billion acquisition of Driftwood LNG, a pre-FID facility in the United States by Woodside. It finds:

• Driftwood is more expensive than 76% of other pre-FID US LNG projects.
• if all four phases are executed and operate at capacity, Driftwood will generate 68 MtCO2e p.a. of scope 3 emissions; more than 90% of Woodside’s 2023 scope 3 emissions.

Commenting on the research, Alex Hillman, Lead Analyst of the Australasian Centre for Corporate Responsibility (ACCR) said:

“If Woodside can move past its recent habit of pursuing high-capex, financially-marginal fossil fuel projects, then it has a real shot at delivering what investors want - better capital returns and reduced exposure to climate risk.

“Walking away from Browse, Sunrise and Calypso and redirecting the capital to share buybacks delivers more value to shareholders without the emissions. Given the scale of investor dissent Woodside is facing this should be a live option at the board table.

“The majority of Woodside’s investors don’t support its current climate strategy, and the only way for the company to properly address this is by reforming its flawed company strategy.

“Last week’s acquisition of Driftwood LNG is simply another example of its failing strategy: chasing marginal, high-capex and long-duration projects. Last year it was Trion.

“Just because Woodside plans to spend one billion dollars acquiring the troubled Driftwood project doesn't mean it should automatically sink another five to ten billion of shareholder funds executing it. There are lower risk options for shareholders should the board care to look.

“Woodside’s peers are adding value to shareholders by increasing returns - especially through buybacks. With Woodside’s poor pre-FID portfolio it has a strong incentive to follow this trend.

“Investors will rightly be questioning whether Woodside’s board has the right mix of high-calibre and appropriately skilled directors, with the requisite judgement to serve shareholder interests during the energy transition.”