Woodside Energy Q1 2025 Results: Navigating Growth Amid Operational Hurdles

Woodside Energy Group (ASX: WPL) has released its first-quarter results for FY2025, revealing a mixed performance driven by the successful ramp-up of its Senegal-based Sangomar project and persistent operational challenges in Australia. The report highlights strategic progress in LNG contracts and capital discipline, but also underscores risks tied to weather-related outages and market volatility. Below is an analysis of key takeaways for investors.

Production: A Year of Upsides, A Quarter of Setbacks

Woodside’s Q1 production reached 49.1 million barrels of oil equivalent (MMboe), a 9% year-on-year increase fueled by Sangomar’s full-quarter contribution (78,000 barrels per day). Liquids production surged 44% to 223,000 barrels per day (bpd), offsetting a 5% decline in gas output due to weather disruptions at the North West Shelf (NWS) and unplanned outages at the Pluto LNG facility.

However, sequential comparisons tell a different story: production fell 4% from Q4 2024, primarily due to cyclone-related downtime at NWS and a 5% drop in LNG reliability at Pluto. CEO Meg O’Neill emphasized operational resilience, noting that maintenance and repairs had been prioritized to avoid long-term impacts.

Revenue Growth Amid Price Volatility

Revenue totaled $3.32 billion, up 13% year-on-year thanks to higher gas hub-linked prices and Sangomar’s output. However, this marked a 5% decline from Q4 2024, reflecting lower oil prices and production disruptions. The average realized price per boe rose 3% to $65, driven by strong gas pricing.

Strategic Moves and Project Progress

• Sangomar’s Impact: The field’s 97.6% reliability at plateau production (99,000 bpd) has added 7.1 million barrels to proved reserves and reduced depreciation costs by 5–10% in 2025.
• LNG Contracts: A 15-year supply agreement with China Resources Gas (0.6 million tonnes annually) and a 1.0 million tonnes deal with Uniper solidify long-term demand.
• Louisiana LNG: A $5.7 billion equity partnership with Stonepeak (40% stake) reduces Woodside’s capital burden, with the project on track for first LNG cargo by H2 2026.

Cost Management and Liquidity

• Capital Expenditure (CapEx): Q1 CapEx fell 33% sequentially to $1.8 billion, driven by lower spending on Louisiana LNG. Full-year guidance remains at $4.5–5.0 billion, excluding asset sales.
• Liquidity: Post-dividend, Woodside holds $7.3 billion in cash, after repaying a $1 billion bond and securing $800 million in credit facilities.

Risks and Challenges

1. Operational Risks: Unplanned outages at Pluto and NWS underscore the vulnerability of Australian assets to weather events.
2. Market Volatility: Lower oil prices in Q1 and potential U.S. tariffs on Louisiana LNG’s equipment (25% sourced locally) could pressure margins.
3. Reserve Declines: Trinidad & Tobago’s production dropped 50% due to reservoir decline, highlighting the need for new projects to offset depletion.

Conclusion: Positioning for Long-Term Gains

Woodside’s Q1 results reflect a company balancing near-term operational hurdles with long-term strategic wins. The 10% year-on-year sales growth, new LNG contracts, and progress on Louisiana LNG and Scarborough (82% complete) position the firm to meet its FY2025 production target of 186–196 MMboe.

Investors should note Woodside’s strong liquidity ($7.3 billion) and disciplined capital allocation, which mitigate risks from project delays or commodity price swings. While quarterly volatility persists, the company’s focus on high-margin gas hub-linked sales (25.4% of LNG, yielding a 23% premium over oil-linked pricing) and reserve additions (16.1 MMboe to 2P reserves) bolster its value proposition.

For now, Woodside remains a defensive play in the energy sector, benefiting from structural LNG demand growth and its low-carbon projects like the Beaumont New Ammonia plant (targeting H2 2025 startup). Investors should monitor execution risks at critical projects and the resolution of U.S. tariff uncertainties. Despite Q1’s operational headwinds, the fundamentals suggest Woodside is well-positioned to deliver mid-term growth to shareholders.