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Woodside Secures $5.7 Billion LNG Infrastructure Investment

Woodside has signed a deal with Stonepeak for a 40% stake in Louisiana LNG Infrastructure LLC, securing $5.7 billion for development. This investment accelerates capital expenditure, enhancing revenue growth potential. With a closing expected by mid-2025, future earnings appear promising.

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AI Rating:   7

Investment Analysis of Woodside’s LNG Deal

Woodside's recently announced agreement with Stonepeak for a 40% interest in Louisiana LNG Infrastructure LLC presents several implications for stock price evaluation. Firstly, the $5.7 billion investment will significantly bolster capital expenditure for the liquefaction project. This level of funding indicates strong investor confidence and an aggressive growth strategy.

The accelerated capital expenditure, where Stonepeak is set to contribute 75% in both 2025 and 2026, suggests an expectation of significant returns once the project is operational. This arrangement will enable the foundation development of the Louisiana LNG project to proceed swiftly, thereby enhancing Woodside's revenue growth prospects given the expected rising demand for LNG. This commitment aligns with the global energy transition trends, favoring cleaner fuel sources.

Another important point is that Stonepeak’s contribution of $5.7 billion is weighted by the time value of money. Although their nominal share is 40%, the acceleration in capital expenditure reduces the effective cost of equity, optimizing the project’s financial structure. This can positively influence return measures when the project goes into full operation.

The long-term liquefaction tolling agreement between InfraCo and HoldCo further strengthens the investment case. It ensures a stream of revenue for Woodside, backed by competitive tolling fee terms. This solidifies profitability and enhances the firm's operating margins when LNG demand spikes.

Considering these elements, Woodside's strategic initiative is set to contribute positively to its profitability metrics including EPS and net income in the coming years.

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