Woodside Energy Group Ltd (ASX: WDS) shares are in the spotlight on Tuesday.
That's because the energy giant has announced a major new investment decision that could reshape its future.
At the time of writing, the company's shares are up 1% to $20.57.
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Woodside shares rise on big news
According to the release, Woodside has made a final investment decision to move forward with the development of the three-train, 16.5 million tonne per annum Louisiana LNG project in the United States.
The Louisiana LNG development is a significant strategic move for Woodside, positioning the company as a true global LNG powerhouse in the coming decade. It is targeting first LNG production in 2029.
Once operational, the Louisiana project is expected to lift Woodside's total LNG production capacity to around 24 million tonnes per annum. This is enough to account for over 5% of global LNG supply. The project is also fully permitted for potential expansion to a total of 27.6 Mtpa with two additional trains, offering even more upside.
Strong financial metrics
Management believes the project stacks up strongly from a shareholder value perspective.
It is forecasting an internal rate of return (IRR) above 13% and a payback period of seven years.
At full capacity, the foundation project is expected to generate approximately US$2 billion of annual net operating cash through the 2030s, helping to underpin Woodside's global portfolio, which could deliver over US$8 billion per year in that decade.
The total forecast capital expenditure for the Louisiana LNG development, including associated pipeline infrastructure and reserves, is US$17.5 billion. Woodside's share of this will be around US$11.8 billion. Strategic partner Stonepeak is contributing US$5.7 billion and will be providing 75% of the capital expenditure during 2025 and 2026 to accelerate project construction.
Commenting on the decision, Woodside CEO Meg O'Neill, described it as a game-changer for the company. She said:
Louisiana LNG is a game-changer for Woodside, set to position our company as a global LNG powerhouse and enable us to deliver enduring shareholder returns. This world-class project is a compelling and de-risked investment. It leverages Woodside's proven strengths in project execution, operational excellence, marketing and customer relationships to offer significant cash generation and drive long-term shareholder value.
The project benefits from access to abundant low-cost gas resources in the United States and boasts an asset lifespan of more than 40 years. It also has access to well-established interstate and intrastate gas supply networks.
Woodside shares remain down almost 30% over the past 12 months.
