Woodside’s sugar hit over, time to face reality

The Australasian Centre for Corporate Responsibility​ (ACCR) is commenting on Woodside Energy Group’s 1H 2023 results announced today.

Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“With the merger with BHP Petroleum’s assets, production has increased by 66%; but net profit after tax has only increased by 6% and free cash flow has dropped by 88%.

“These figures demonstrate that the sugar rush of the Ukraine war is wearing off.

“Woodside has been making multi-decade decisions in the rush of a sugar hit. Its decision making process is flawed and is overly focused on pursuing growth projects that simply don’t make sense.

“The marginal-value and high-risk Trion deepwater oil development in the Gulf of Mexico is one such development.

“Despite a decade of underwhelming outcomes, Woodside continues to expand its exploration portfolio, more than tripling exploration spend compared to the year prior and acquiring five new leases in the US Gulf of Mexico.

“Yesterday, ACCR published a risk-adjust financial analysis of Woodside’s growth portfolio that shows the company’s portfolio of unsanctioned oil and gas projects does not appear to be a material source of value for shareholders, with even minor slips in project execution potentially resulting in value destruction.

“Our analysis shows that reallocating the capital earmarked for these projects towards a share buyback offers more value, less risk and fewer emissions than delivering them.

“Small investments in new energy, while needed for the energy transition, are not a counterbalance to the massive emissions coming from Woodside’s hydrocarbon business. Woodside has a higher value, lower emissions option available and this should be on the table.

“The board’s continued pursuit of low-value, high-risk fossil fuel growth is putting Woodside’s strong balance sheet in jeopardy. Investors should ask the Board to do better.”