Woodside Energy Australia’s top gas producer, said on Monday it agreed to sell a 40% stake in its Louisiana liquefied natural gas plant to U.S. infrastructure investor Stonepeak for $5.7 billion.
The deal reduces Woodside's capital spending needs and marks a “material step” towards a final investment decision on the Louisiana LNG plant, the company said, adding it was in talks with other potential partners to further sell down its holding.
“The addition of an infrastructure partner unlocks value and paves the way for other strategic equity partners,” CEO Meg O’Neill said in a statement.
Woodside bought Tellurian for $1.2 billion last year to develop the 27.6 million metric tons a year Louisiana LNG project, formerly called Driftwood, in four phases to meet growing demand for gas. The first phase is expected to cost about $16 billion.
Since then, investor concerns over the capital intensity of its U.S. expansion strategy have weighed on its shares, which have sharply underperformed peers.
Stonepeak’s investment is set to fund 75% of capital expenditure in 2025 and 2026, which Woodside said enhanced the project’s economics and its cash flow.
“The market had put basically a discount on Woodside because of the balance sheet pressure that would happen without a selldown, and now this selldown has addressed that,” said MST Marquee senior energy analyst Saul Kavonic.
The deal also allows Woodside to make a final investment decision without locking in equity and offtake partners. “This project's now as good as FID," Kavonic said.
Stonepeak senior managing director James Wyper said Louisiana LNG offered a good opportunity to invest in an LNG export plant nearing a final go-ahead.
“With the need to bring significant additional capacity online over the coming years, we have strong conviction in the critical role Louisiana LNG will play in the U.S. LNG export market,” he said in a statement.
Kavonic estimates Woodside will need to sell a further 20%-30% of its holding company stake, which includes a gas supply and LNG offtake business, to achieve its 50% selldown target.
“The market's still going to be looking for further selldowns of the overall project to validate that this is a good project," he said.
Woodside has held talks with potential buyers including Tokyo Gas 9531.T, Japan's JERA and Saudi Aramco-backed MidOcean Energy.
Amid a global market rout on trade war fears, Woodside's shares fell 5.8% on Monday, holding up slightly better than the Australian market's energy index.
($1 = 1.6642 Australian dollars)
(Reuters - Reporting by Christine Chen in Sydney and John Biju in Bengaluru; Editing by Sherry Jacob-Phillips and Sonali Paul)
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