Woodside Energy Group Ltd (ASX: WDS) shares have been on form over the last 12 months.
Since this time last year, the energy producer's shares have risen approximately 12%.
And with the company announcing the approval of the US$7.2 billion plan to develop the large, high-quality Trion resource in Mexico earlier this week, investors may be wondering if this will be the next thing to drive its shares higher. Let's find out.
Where are Woodside shares heading from here?
One leading broker has been running the rule over the company and its Trion plan. However, it hasn't seen enough to become more positive on Woodside shares.
According to a note out of Citi, its analysts have retained their neutral rating and $33 price target on the company's shares.
This compares unfavourably to the latest Woodside share price of $35.64 and implies a potential downside of approximately 7.5% for investors.
Though, with Citi expecting ~5% dividend yields this year and next, this softens the blow a touch.
What did the broker say?
Citi sees the Trion development as a positive. However, it still thinks rival Santos Ltd (ASX: STO) is the better option for investors looking at the energy sector. It explains:
After incorporating new Trion disclosures into our model, we find that our view of NPV unrisked is largely unchanged; we retain our A$33/shr target price and Neutral rating. Perhaps Trion is a bit higher on the cost than we would like to see from our coverage, but the fast payback mitigates to some extent the risk that Equity bears, with analysis inside our note. This measure of payback should become increasingly important for Equity to consider in our view. FID is clearly a positive for WDS's production profile and financial returns later this decade as Pluto and other legacy fields roll off; however, STO continues to offer the more compelling growth in our view.
Citi has a buy rating and an $8 price target on Santos shares.
