Woodside Posts Strong Q2 Revenue Growth and Advances LNG Projects

Robust Revenue Growth Amid Production Setbacks

Woodside Energy (ASX:WDS) delivered a robust second quarter with operating revenue soaring 28% quarter-on-quarter to US$4.185 billion. This surge was driven by a 35% increase in average realised prices to US$85 per barrel of oil equivalent (boe), underscoring the resilience of its diversified portfolio amid volatile commodity markets. However, production volumes slipped 9% to 41.3 million boe, primarily due to planned maintenance at Pluto Train 1 and recovery efforts following Severe Tropical Cyclone Narelle.

Major LNG Projects Progress on Track

The Scarborough Energy Project, a cornerstone of Woodside’s growth strategy, reached 98% completion by the end of June and remains on budget. Notably, first gas from the Scarborough reservoir was achieved shortly after the reporting period, setting the stage for the first LNG cargo expected in Q4 2026. Pluto Train 1’s scheduled maintenance, completed on time and within budget, included critical tie-ins to integrate Scarborough gas, reflecting careful project execution.

Meanwhile, the Trion Project in Mexico advanced to 64% completion, maintaining its target for first oil in 2028. The Louisiana LNG Project, 28% complete with Train 1 at 35%, continues to progress toward first LNG in 2029 despite logistical challenges linked to steel deliveries amid Strait of Hormuz disruptions. Woodside has secured over US$300 million in contracts for tug boat construction, pushing local supplier commitments beyond US$1 billion.

Strategic Moves Bolster Portfolio and Market Presence

Woodside exercised its pre-emption rights to acquire PetroChina’s 10.67% participating interest in the Browse Joint Venture, increasing its stake to 41.27%. This move reinforces Woodside’s commitment to advancing the Browse to North West Shelf development concept, which the company believes holds significant long-term value for shareholders and the Australian economy. The acquisition terms include an upfront payment of US$225 million plus contingent payments linked to future investment decisions.

Further strengthening its domestic gas supply footprint, Woodside entered a sale and purchase agreement with Alcoa to supply 31.1 petajoules of gas from 2027 to 2030. Additionally, Woodside assumed operatorship of the Gippsland Basin assets from ExxonMobil on 1 July 2026, enhancing its role as a reliable gas supplier to Australia’s east coast. The planned asset swap with Chevron remains on track for completion in Q4 2026, expected to streamline operations and consolidate focus on core LNG assets.

Operational Reliability and Production Details

Operational reliability remained exceptional across Woodside’s key assets, with Sangomar and Shenzi achieving over 99% uptime, and North West Shelf Project LNG and Pluto LNG exceeding 97%. Sangomar continues to outperform expectations, sustaining near nameplate capacity at an average daily production of 99,000 barrels (100% basis). Beaumont New Ammonia production increased but remains constrained by third-party feedstock availability, with lower-carbon ammonia production targeted for 2027 pending commissioning of hydrogen and carbon capture facilities.

Production volumes were impacted by maintenance and cyclone-related outages, with North West Shelf LNG output down and Wheatstone LNG affected by Tropical Cyclone Narelle. Bass Strait pipeline gas production rose due to seasonal demand and completed maintenance. The company’s marketing activities saw increased sales volumes and revenue, supported by higher third-party cargo purchases and portfolio optimisation.

Financial Management and Hedging

Woodside’s capital expenditure for the quarter was US$784 million, down 8% from Q1 2026, reflecting progress in project delivery and cost discipline. The company repaid a US$600 million syndicated term loan six months ahead of schedule, maintaining liquidity at approximately US$8.2 billion and gearing at a conservative 21%. Hedge settlements resulted in a net cash outflow of around US$400 million, with an estimated pre-tax loss of US$70 million recognised, primarily relating to LNG and foreign exchange hedges. These losses are expected to be offset by higher revenues as price lags from Q2 are realised in Q3.

Corporate Governance and Sustainability Initiatives

Woodside is progressing a structured review aimed at streamlining decision-making and reducing organisational complexity, with an update expected alongside the half-year results. The Board is also undertaking a formal process to appoint a new Chair to succeed Richard Goyder AO by 2027, led by independent director Swee Chen Goh.

On the sustainability front, Woodside launched a US$5 million multi-year biodiversity program in Louisiana and advanced similar initiatives in Western Australia. The company submitted its second annual Oil and Gas Methane Partnership 2.0 implementation plan to the United Nations Environment Programme and recently held a Sustainability Focus Session with investors, signalling ongoing commitment to environmental stewardship.