Overview of Woodside Energy Group in Light of Rising Oil Prices
Woodside Energy Group Ltd (ASX: WDS) sees a lift as global oil prices rise, with Brent crude oil now at US$90.65 per barrel. The company’s stock has responded positively, contrasting with the ASX 200’s loss. The dividends of Woodside, popular among investors for its robust payouts, might be at risk due to new political developments in Senegal, which could affect the future output of their Sangomar project.
Understanding the Potential Dividend Risk for Woodside
Woodside investors recently enjoyed a final dividend of 91.7 cents per share, adding to an interim dividend of $1.243, reflecting a yield of 7.1%. However, the election of Senegal’s new president, Bassirou Diomaye Faye, and his focus on the country’s resource exploitation have raised concerns. The new government’s potential audit of the mining, oil, and gas sectors poses questions about international investment contracts and future project earnings.
While Woodside holds an 82% stake in the Sangomar project, with Senegal’s national oil company Petrosen at 18%, analysts like Citigroup’s James Byrne suggest that potential changes in government ‘take’ from production could impact Woodside’s dividend payouts, especially with the Scarborough gas project not coming online until 2026.
Implications for Woodside’s Sangomar Project Amid Political Change
Strategically significant for the company, Woodside’s Sangomar project is projected to produce 100,000 barrels per day. Woodside remains on track for production in 2024, a sentiment reinforced by the arrival of its FPSO facility offshore Senegal. Despite recent reassurances from President Faye, any increase in the government’s share could lead to reduced dividends for shareholders during the earnings ‘trough’ period highlighted by Bryne.
Market Performance and Future Outlook for Woodside Shares
Considering the unfolding events in Senegal and their potential impact on Woodside’s operations, the company’s shares have seen a decline of 2% in 2024. Nonetheless, development milestones like the FPSO’s arrival offshore Senegal contribute to confidence in the project’s timely commencement. With political and operational factors at play, investors are advised to keep a close watch on the situation for any further developments.