Woodside Energy Group Ltd (ASX: WDS) shares have been grabbing plenty of investor interest this week.
That follows Friday's news that the Federal government granted environmental approval for Woodside's mammoth North West Shelf Project Extension through to 2070. The offshore asset counts as Australia's largest gas project.
While environmentalists have broadly opposed the extension, the news was welcomed by Woodside stockholders.
The S&P/ASX 200 Index (ASX: XJO) energy stock has struggled over the past year amid slumping global oil prices.
Woodside shares closed down 0.04% on Monday, trading for $24.21 apiece. That sees the stock up a slender 0.46% since this time last year.
Though that's not including the (rounded) $1.67 in fully franked dividends Woodside paid eligible stockholders over the year. At Monday's closing price, the ASX 200 energy stock trades on a fully franked trailing dividend yield of 6.9%.
With the long-awaited North West Shelf Project Extension finally given the green light, should you buy shares today?
Here's what Macquarie Group Ltd (ASX: MQG) recommends.
Woodside shares: Buy, hold, or sell?
In a new research report, released on Friday, Macquarie noted:
WDS obtains certainty with the NWS life extension, however this comes with more onerous conditions than it expected (ultimately driven by efforts to preserve world heritage listed indigenous rock art in the area).
Indeed, Environment Minister Murray Watt imposed 48 conditions on the project to help prevent significant impacts to the Murujuga rock art, some of which Macquarie expects will throw up future headwinds for Woodside shares.
"The additional conditions I have imposed add to those already set by the Western Australian government," Watt said.
"Specifically, I have imposed conditions that will require a reduction in certain gas emissions below their current levels, in some cases by 60% by 2030 with ongoing reductions beyond that," he added.
Still, Woodside chief operating officer Australia, Liz Westcott, was clearly pleased the government had reached a decision.
Wescott said:
This final approval provides certainty for the ongoing operation of the North West Shelf Project, so it can continue to provide reliable energy supplies as it has for more than 40 years.
Over this time, the North West Shelf Project has paid more than $40 billion in royalties and excise, supported thousands of Australian jobs and contributed well over $300 million to communities in the Pilbara through social investment initiatives and infrastructure support.
But the approval wasn't enough for Macquarie to upgrade its outlook for Woodside shares.
"Difficult to become more positive given the weakening oil & LNG macro, gearing level and work program ahead," Macquarie said.
The broker maintained its neutral rating and 12-month price target of $25.00 a share. That's more than 3% above Monday's closing price, and it doesn't include those two upcoming dividends.
