Large-cap oil and gas stocks, Woodside Energy Group Ltd (ASX:WDS) and Santos Ltd (ASX:STO) are often spoken about in the same conversation. Both have a reasonably solid dividend track record, and are more heavily exposed to global energy prices rather than the local economy.
But there are differences in investor value, today and over the longer term. So, which one stacks up best for you?
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Woodside Energy
A steady operator with a solid track record, but upside at current prices is in question for me.
Woodside is Australia's largest independent energy company, and it would be the clear winner if you were deciding based on business size and asset base alone. With over 30 locations across five continents, its scale and diversification are impressive.
It's full year 2025 reporting showcased an uplift in production of 3% to 198.8 million barrels of oil equivalent (MMBOE) but a 24% decline in net profit after tax (NPAT) to $2.7 billion, driven by declining oil prices last year. The uplift in production should yield better results in the short term with the current inflated oil prices.
Given its wide exposure and today's rising gas and oil prices, Woodside should deliver a strong return in the first half of 2026, and continue its track record of reliable (if cyclical), fully franked dividends.
Of course, current oil prices are being driven by conflict in Middle Eastern oil producing regions, the duration of which is highly unpredictable. And the energy sector is always open to volatility, particularly as governments push toward renewable energy alternatives. In response, Woodside has positioned itself as a long-term supplier of LPG, leaning into gas as a transition fuel.
As it stands, when oil prices stabilise, Woodside's strong balance sheet and diversified cash flows should keep the ship steady. Amongst energy stocks, its risk profile sits at the lower end.
Where things get less exciting for me is share price growth. It's up 24% over the last month to the $33 mark on Thursday, largely driven by investor optimism with rising commodity prices. But I'm not sure this leaves a lot of room for growth in a sector that can be volatile.
For me, right now, it's one for the watchlist. If prices fall back to the mid $20s, then it could become a worthwhile buy based on its robust operating model, solid dividends and relatively reliable cash flows.
Santos
A higher risk play with a more attractive share price
Santos is a smaller, more concentrated oil and gas supplier. Its asset base is far more concentrated than Woodside's, with producing assets in Australia, Papua New Guinea and Timor-Leste.
This gives it less diversification, but also means fewer moving parts, so it can be the more agile of the two when it comes to growth opportunities. While this comes with some additional execution risk, it can also create pathway to share price growth for investors.
It has invested heavily in some new projects of late, included its joint venture Barossa LNG project, that saw its first shipment of gas in late January. In addition, it is expecting production to begin at its first US site, the Alaska-based Pikka Project, in the coming months.
All of that said, its dividends tend to be lower and not or only partially franked, so this may be a downside for some investors.
Santos' full year 2025 results reported production of 87.7 MMBOE (0.7% increase year-on-year) but a 25.2% year-on-year decline in underlying NPAT to $898 million due to declining commodity prices.
Its response to the push for renewables has been to invest in carbon capture and storage, a move to ensure its continued relevance in a decarbonising world. Its Moomba Carbon Capture and Storage project is Australia's first large-scale onshore facility and one of the lowest cost projects of its type globally.
For me, Santos is the stronger buy right now. Its share price has also jumped in the last month (15%) reaching $8 on Thursday with rising commodity prices. But I think there is still upside for investors in this energy stock, particularly given the growth potential of some of its newer projects.
The bottom line
In my opinion, Woodside remains a relatively reliable dividend vehicle in the energy sector, albeit with limited potential upside right now. It may still be a buy if you want a relatively predictable income stream to add to your portfolio.
Santos, on the other hand, is an energy stock that could see significant growth in coming years. It might be a slightly higher risk play, but in my opinion, patient investors are likely to be rewarded.
