Woodside's Q1 Results Highlight Resilience Amid Challenges – Here's What Investors Need to Know

Woodside Energy Group’s Q1 2025 results reveal a company navigating operational headwinds with strategic discipline. Despite a 5% quarterly revenue dip and unplanned outages, Woodside reaffirmed its full-year outlook, underscoring progress in projects like the Sangomar oil field and Louisiana LNG. The question for investors is whether these positives outweigh lingering risks tied to supply chain volatility and regulatory uncertainty.

Revenue: A Mixed Quarter, But Growth on Track

Woodside reported Q1 revenue of $3.3 billion, down from $3.5 billion in Q4 2024 but up 13% year-over-year (from $2.9 billion in Q1 2024). The sequential decline stemmed from lower production—weather disruptions at the North West Shelf (NWS) and unplanned outages at the Pluto LNG plant—alongside softer oil prices. However, the year-on-year jump was driven by the Sangomar project, which came online in mid-2024 and added 7.1 million barrels of proved reserves, boosting output.

Gas Hub Exposure: A Key Margin Driver

Woodside’s shift toward gas hub-linked pricing continues to pay off. 25.4% of LNG sales in Q1 were tied to gas hub indices, generating a 23% premium over oil-linked pricing. This segment contributed 9.4% of total equity production, and Woodside remains on track to hit its full-year target of 28–35% gas hub exposure. For context, this premium could add hundreds of millions to annual earnings if sustained.

CapEx Surge Reflects Ambition—and Risk

Capital expenditures surged to $1.8 billion in Q1, a 56% jump from the same period in 2024. The bulk of this went to the Louisiana LNG project, which received a $5.7 billion equity injection from Stonepeak, giving it a 40% stake. While this funding boost is critical to completing the project, it also exposes Woodside to trade policy risks: 25% of Louisiana LNG’s CapEx relies on equipment sourced outside the U.S., half of which comes from non-U.S. suppliers.

Operational Hurdles and Strategic Shifts

• Sangomar’s Success: The field achieved 97.6% reliability in Q1, producing 78,000 barrels per day. This stability is critical to Woodside’s goal of reducing depreciation costs by 5–10% in 2025.
• Domestic Gas Push: Projects like Turrum Phase 3 (aimed at boosting east coast gas supply) and Greater Western Flank Phase 4 signal Woodside’s focus on addressing Australia’s looming gas shortages. The latter alone could deliver four times more gas than Queensland supplied to the region in 2024.
• Asset Sales: Woodside offloaded its Trinidad and Tobago assets to Perenco for $206 million, freeing up cash and sharpening its portfolio.

Risks on the Horizon

• Operational Disruptions: Unplanned outages at Pluto cut LNG reliability to 89.9%, highlighting maintenance risks. Meanwhile, cyclones in Australia’s northwest temporarily halted NWS output.
• Hedging Volatility: While oil hedges generated a $32 million profit, losses from Corpus Christi LNG hedges ($23 million) left Q1 hedging gains at just $14 million. This inconsistency underscores the challenges of managing commodity price swings.

The Bottom Line: A Resilient, but Not Unflinching, Outlook

Woodside’s reaffirmed guidance—186–196 MMboe production, $8.5–9.2/boe unit costs, and 28–35% gas hub exposure—reflects confidence in its core assets and project execution. The Sangomar field’s proven reliability, the Beaumont New Ammonia project’s 90% completion, and Louisiana LNG’s steady progress (75% of CapEx funded) are all positive markers.

Yet investors must weigh these positives against risks like supply chain bottlenecks and regulatory uncertainty. Woodside’s liquidity ($7.3 billion post-dividend) and strategic asset sales provide a buffer, but the company’s fate remains tied to global LNG demand and geopolitical stability.

For now, the data leans bullish: year-on-year revenue growth, gas premium wins, and project milestones suggest Woodside is positioned to weather current turbulence. But with Louisiana LNG’s startup delayed until late 2025 and trade policy threats lingering, investors should monitor execution closely. The next key test comes in July, when Q2 results will reveal whether Woodside’s operational resilience can sustain its financial narrative.