Woodside Energy Shares Make Big Red/Green YTD Move On Oil Price Gains

Woodside Energy shares (ASX:WDS) ended the week trading at A$25.21, as a gain of 7.41% on the day moved the price back into positive territory year-to-date (+1%). With the Israeli strike on Iran increasing tensions in the region, crude oil prices have soared more than 7% today. While the stock has shown strength today as a key beneficiary of the significant oil price rally, a look back over recent months tells somewhat of a mixed story for the firm.

A look back at the first half of 2025 reveals a rollercoaster ride for WDS shareholders. From the start of 2025 into early April, the WDS share price had fallen 23%, bringing with it new multi year lows. This volatility was largely triggered by external events, most notably the announcement of new U.S. tariffs by President Trump, which sparked fears of falling oil prices and led to a significant sell-off in Australian energy stocks. The energy sub-index experienced its worst daily performance in over five years, with Woodside’s shares falling nearly 9%. Simultaneously, an agreement among OPEC+ countries to increase oil output further exacerbated concerns of oversupply, adding downward pressure on prices.

Despite these challenges, Woodside has demonstrated resilience and a proactive approach to mitigating risks and capitalizing on opportunities. The company’s strategic focus on LNG projects, particularly the Louisiana LNG project (formerly Driftwood) acquired from Tellurian, underscores its commitment to strengthening its global LNG position. While the project faces potential challenges from U.S. tariffs on imported equipment and materials, Woodside has taken steps to enhance its economics, including selling a 40% stake in the export terminal to Stonepeak, which will fund a significant portion of project spending in the near term. Securing its first offtake agreement with Germany’s Uniper is another positive sign, signaling strong demand for its LNG.

The company’s first-quarter revenue of $3.32 billion, a 13% year-over-year increase, beating analyst expectations also provided a boost to investor confidence, leading to a 3.9% rise in share price following the announcement. However, Woodside’s full-year results for 2024 revealed a more mixed picture. The company reported its lowest annual underlying profit in three years, primarily attributed to decreased oil and gas prices, with the average realized price falling 7% to $63.60 per barrel of oil equivalent. While the underlying net profit after tax of $2.88 billion surpassed consensus estimates, it was still down from $3.32 billion the previous year. The company declared a final dividend of 53 cents per share, exceeding the consensus but falling short of the previous year’s 60 cents.

Looking ahead, Woodside faces competitive challenges from evolving U.S. energy policies. CEO Meg O’Neill has publicly highlighted the difficulties in maintaining Australia’s position as a leading global energy supplier due to higher taxes, labor costs, and stringent environmental regulations. She pointed out that deregulation and increased fossil fuel output in the U.S. have attracted new energy investments, giving the U.S. a competitive edge.

Despite these challenges, Woodside’s deepwater oil projects offer a degree of resilience amid fluctuating oil prices. These projects, characterized by long development cycles and significant investments, are less sensitive to short-term market changes, making them attractive to investors seeking long-term stability. Deepwater fields, with break-even prices around $43 per barrel, are better positioned than North American shale producers, whose average break-even is approximately $45 per barrel. With prices today up above $73, up more than $5 on the day, the earlier downtrend in WDS has been erased in one foul swoop.

An event such as that today is thought to be unlikely to occur in isolation, with tensions in the region likely to be amplified in the near term.

While Woodside has faced challenges from fluctuating oil prices, geopolitical uncertainties, and evolving energy policies, its strategic investments in LNG, resilient deepwater projects, and proactive approach to risk management position the company well for the long-term.

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