Woodside Energy pays out record half-year dividend on soaring gas prices

Woodside Energy Group Ltd (WDS.AX) more than tripled its interim dividend payout on Tuesday after the Australian gas producer posted a five-fold increase in first-half profit on booming oil and gas prices and its takeover of BHP Group’s petroleum arm.

Woodside has benefited from soaring liquefied natural gas (LNG) prices as sanctions on Russia after its invasion of Ukraine have forced gas buyers from Asia and Europe to seek alternative suppliers in what was already a tight market.

“We’re in uncharted waters,” Chief Executive Meg O’Neill said, pointing to the Platts JKM benchmark price assessment rocketing to $71 per million British thermal units and the Dutch TTF gas hub price last week hitting roughly the equivalent of an oil price of $600 a barrel.

Now among the world’s top 10 independent oil and gas producers, Woodside announced an interim dividend of $1.09 per share, handing shareholders $2.1 billion, more than triple last year’s payout and topping analysts’ forecasts.

“The dividend was definitely bigger than expected. Most investors will be satisfied that they’ve delivered on their dividend promise,” said Jamie Hannah, deputy head of investments at fund manager VanEck.

Woodside’s shares jumped as much as 3.8% after the result, outpacing gains in the broader market (.AXJO).

Woodside posted an underlying net profit after tax of $1.82 billion for the six months to June 30, up from $354 million a year earlier. The result beat analysts’ estimates of around $1.49 billion, according to Visible Alpha.

Following the merger with BHP’s petroleum arm, Woodside now owns 100% of the $5.6 billion Scarborough gas project, its biggest growth project, where it has been looking to sell a stake on and off for more than 18 months.

O’Neill said the company was in talks with “high quality” prospective partners, but in light of the strength of the LNG market it would only sell if it gets fair value for what is “an extraordinarily important asset for the future of Woodside”, due to start producing in 2026.

“But again, we’re not going to fire sale this critical asset,” O’Neill told analysts on a conference call.

She did not say exactly how much equity the company wants to sell, but said it wanted to hold a majority stake.

Woodside has begun a strategic review of all the assets in the enlarged business to map out its next growth project, which could include new energy, and Browse and Greater Sunrise gas off northwest Australia, she said.