Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER
Woodside Energy cash flow outlook sparks concern about future payouts vs growth
© Reuters. FILE PHOTO: Australia's Woodside Energy Group's exhibition booth is seen at the World Gas Conference 2022 in Daegu, South Korea May 23, 2022. REUTERS/Florence Tan
By Sonali Paul
MELBOURNE (Reuters) -Woodside Energy Group Ltd, Australia's top independent gas producer, flagged on Thursday a drop in free cash flow over the next few years, which raised alarm among analysts about future dividend payouts.
Woodside (OTC:WOPEY)'s shares fell 1.8% after its annual investor briefing in a broader market that was up 0.9%, even after Chief Executive Officer Meg O'Neill said the company was committed to paying out at least 50% of net profit after tax.
Analysts are forecasting a payout of around $4 billion a year over the next few years, which Barrenjoey analyst Dale Koenders said would use up free cash flow and potentially leave no room for growth projects like the Trion oil project off Mexico, estimated to cost between $6 billion and $8 billion.
The company, which completed a merger with the petroleum arm of BHP Group (NYSE:BHP) in June, indicated in a graph that free cash flow would slump from more than $6 billion in 2022 to well below $2 billion in 2023 and exceed the 2022 level only after 2026.
Woodside, 60% owner and operator of Trion, aims to make a final investment decision on the project in 2023. Trion is 40% owned by Mexican state owned oil company Pemex.
"Our current assessment is that we can afford to take FID on Trion and we can afford to take FID on Oklahoma," O'Neill told analysts at the briefing, referring also to a Oklahoma-based hydrogen project.
Woodside's biggest growth project, the $12 billion Scarborough gas development and Pluto LNG expansion in Western Australia is on track to start producing liquefied natural gas (LNG) in 2026.
However, O'Neill said the company has faced a slowdown in securing approvals for environmental plans for drilling, seismic programs, subsea installations, and its pipeline, after a court overturned a drilling permit for rival Santos Ltd's $3.6 billion Barossa project.
"We are certainly concerned and processes are slowing down to be really frank," O'Neill said.
Australia's Federal Court is set to rule on Friday on Santos' appeal seeking to reinstate the environmental approval for drilling on Barossa.
Related Articles
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.