Woodside to sell 40pc stake in US LNG project to Stonepeak

The deal will see infrastructure investor Stonepeak fund 75 per cent of the development expenditure over two years, tempering the concern about Woodside’s capacity to fund expansion and reward shareholders.

Woodside has agreed to sell 40 per cent of its proposed Louisiana LNG facility to US infrastructure investor Stonepeak, in a bid to temper investor concerns about the capacity of the energy giant to fund its expansion plans and reward shareholders.

Under the terms of the deal, Stonepeak will provide $US5.7bn ($9.33bn) towards the expected spend on the foundation development of Louisiana LNG, which Woodside said is worth about 75 per cent of project capital expenditure in both 2025 and 2026.

The transaction will temper concerns about the strain on Woodside’s balance sheet, which had worried some investors.

Woodside has embarked on sustained expansion as it moves to bolster LNG production to meet rising global demand.

That was a key rationale for Woodside when it announced its acquisition of Driftwood from US LNG company Tellurian in a deal worth $US1.2bn. The buyout catapulted it into one of the world’s biggest LNG players. Woodside has subsequently renamed Driftwood to Louisiana LNG.

Woodside chief executive Meg O’Neill said the deal would position Louisiana LNG Project as a major player.

“This transaction further confirms Louisiana LNG’s position as a globally attractive investment set to deliver long-term value to our shareholders. It is the result of a highly competitive process that attracted leading global counterparties and significantly reduces Woodside’s capital expenditure for this world-class project,” Ms O’Neill said.

“The accelerated capital contribution from Stonepeak further enhances Louisiana LNG returns and strengthens Woodside’s near-term capacity for shareholder distributions.

Woodside has agreed to sell 40 per cent of its proposed Louisiana LNG facility to Stonepeak.

Stonepeak’s senior managing director and head of US private equity James Wyper said the deal underscored its view of the importance of LNG in the global transition away from coal.

“With the need to bring significant additional capacity online over the coming years, we have strong conviction in the critical role Louisiana LNG will play in the US LNG export market,” Mr Wyper said.

Woodside did not reveal when it now expects to give an official green light to the project. Speaking last week, Ms O’Neill told The Australian that the company was well advanced in readying the project to be at a stage for final approval, adding that the divestment was the “critical path”.

The company said it was targeting a 50 per cent selldown in Louisiana LNG, hinting that it will seek further sales before approving the deal. Louisiana LNG is expected to cost approximately $16bn to complete.

Woodside said it was in further talks with would-be investors in the project. It did not reveal the identities of those interested, though Saudi Aramco and Japanese entities — already partners of Woodside in its Scarborough LNG development — have been cited as potential suitors.

Some investors and analysts had begun to worry about the timing of Woodside’s approval for the US project, though the deal with Stonepeak is expected to end that anxiety.

Still, with the global rout in equities, shares in Woodside were down nearly 5 per cent on Monday after the announcement.

Some investors continue to fret about Woodside’s outlay, particularly as it expands its US presence at a time when US President Donald Trump has vowed to usher in an era of North American fossil fuel dominance.

Still, Ms O’Neill insists its Louisiana project has a head start over its rivals.

Originally published as Woodside to sell 40pc stake in US LNG project to Stonepeak