Up 30% in a year, can buying Woodside shares today still create long-term wealth?

Here's what the future might hold for the ASX 200 energy giant.

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Key points

  • The Woodside share price has risen 34% over the last 12 months to trade at $36.31 at the time of writing
  • It's been driven higher amid soaring oil and gas prices, spurred by Russia's invasion of Ukraine
  • Some experts are tipping energy commodity prices to remain high in the coming years, while Woodside aims to invest $5 billion in cleaner energy

Those invested in Woodside Energy Group Ltd (ASX: WDS) shares have had a ripper year. The stock has soared a whopping 34.89% in that time to trade at $36.46 today.

And sending it sky high has been the price of energy commodities – specifically oil and gas.

Woodside is a producer of the black liquid, which saw a spike in demand amid Russia's invasion of Ukraine.

Indeed, the S&P/ASX 200 Index (ASX: XJO) energy giant saw its realised oil price more than double in the first half to US$96 a barrel.

Its oil production also soared 19%, helped along by the company's merger with BHP Group Ltd (ASX: BHP)'s petroleum assets.

But can Woodside shares still offer long-term wealth creation following its massive year?

Do Woodside shares still offer future gains?

One factor is seemingly bolstering hope that Woodside shares could be a long-term winner. Surprise, surprise, it's oil prices.

Brent crude is currently trading at around US$84 a barrel, and that's tipped to grow.

Goldman Sachs is expecting oil to retrace its steps, returning to trade at around US$100 a barrel, as my Fool colleague Bernd reports.

Meanwhile, Allan Gray fundie Dr Suhas Nayak believes the market has undervalued Woodside shares amid expectations the black liquid's value could fall. But any falls could still be years away.

He expects years of underinvestment in the energy space could see demand for oil continue, thereby bolstering prices over the longer term. That would be good news for the ASX 200 energy giant's bottom line.

Looking even further into the future, however, demand for oil and gas could fall significantly on the back of the energy transition. Fortunately, the company is far from unaware.

Woodside is aiming to invest $5 billion in new energy products and lower-carbon services before the end of the decade.

Additionally, it has four hydrogen projects on the go – located in Western Australia, Tasmania, Oklahoma, and New Zealand. It also has plans for two solar projects in place.

Still, without a crystal ball it's hard to say what might come of Woodside shares over the coming years and decades.

Though, it's worth noting the company's earnings per share (EPS) is tipped to grow to around $3.79 in financial year 2023, according to CommSec data. It's then forecast to slip to $3.34 in financial year 2024 and to $2.82 in financial year 2025.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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