Woodside Energy Group Ltd (ASX: WDS) shares are edging lower today.
Shares in the S&P/ASX 200 Index (ASX: XJO) energy stock closed yesterday trading for $26.13. During the Tuesday lunch hour, shares are swapping hands for $25.99 apiece, down 0.5%.
Amid a broadly difficult year for energy stocks, Woodside shares are down 5.8% over the past 12 months.
Although that's not including the $1.66 in fully franked dividends Woodside has paid (or shortly will pay) eligible stockholders over the year. If we add those back in, then shares are essentially flat over the 12 months.
Looking ahead, however, shareholders could be eyeing a much more profitable year into 2026.
That's according to Family Financial Solutions' Jabin Hallihan (courtesy of The Bull).
Image source: getty Images
Woodside shares poised to surge
"Woodside is a leading Australian energy producer," said Hallihan, who has a buy recommendation on Woodside shares.
Citing the first reason he's bullish on the outlook for the Aussie oil and gas company, Hallihan said, "The company reported strong operating cash flow in its first half results in fiscal year 2025 and confirmed progress on its Scarborough and Beaumont New Ammonia projects."
Woodside reported its half year results (H1 2025) on 19 August. And the company delivered operating cash flow of US$3.34 billion.
On the major project front, the ASX 200 energy stock's Scarborough project was reported to be 86% complete while the Beaumont New Ammonia project is now 95% complete.
Hallihan also sounded a positive note on Woodside shares due to the company's strong and growing exposure to gas.
"LNG demand remains firm, particularly in Asia, supporting price stability," he said.
Then there's the attractive passive income on offer, supported by the company's strong balance sheet.
"Woodside maintains a robust balance sheet and was recently trading on a dividend yield above 6%," Hallihan said.
Indeed, Woodside ended FY 2025 with cash and cash equivalents of US$4.88 billion.
Commenting on the dividend payout on the day, Woodside CEO Meg O'Neill said:
Strong underlying performance of our assets, our robust financial performance, and a focus on disciplined capital management have enabled us to maintain our interim dividend payout ratio at the top end of the payout range.
As for the fourth reason Woodside shares are a buy, Hallihan said, "The company is also investing in lower carbon opportunities, including hydrogen and carbon capture. Woodside is well placed to deliver stable returns and long-term growth."
Noting that investors remain focused on the company's execution and capital discipline, he concluded, "Our 12-month analyst valuation is $34.38."
That's 32.3% above the current Woodside share price. And it doesn't include those two upcoming FY 2026 dividends.
