Woodside Announces Louisiana LNG Partnership With Stonepeak

Rhea-AI Summary

Woodside (WDS) has entered into a binding agreement with Stonepeak to sell a 40% interest in Louisiana LNG Infrastructure Stonepeak will contribute $5.7 billion towards the development of the three-train 16.5 million tonnes per annum foundation project, with accelerated capital expenditure representing 75% of total expected costs in 2025 and 2026.

The partnership significantly reduces Woodside's capital expenditure profile and marks a important step towards final investment decision. The estimated forward cost for the foundation development remains at $900-960/tonne. The transaction's effective date is January 1, 2025, with closing targeted in Q2 2025, subject to conditions including FID and regulatory approvals.

Woodside maintains 60% ownership through Louisiana LNG (HoldCo) and will continue discussions with additional potential partners, targeting a total equity sell-down of around 50% in the integrated project.

Positive

• Significant reduction in Woodside's capital expenditure through $5.7B partnership
• Accelerated capital contribution enhances project returns and strengthens near-term shareholder distribution capacity
• Strategic partnership validates project quality and increases attractiveness to other potential partners
• Woodside maintains operational control with 60% ownership through HoldCo

Negative

• Woodside responsible for any cost overruns beyond agreed capital expenditure
• Transaction completion dependent on multiple conditions including FID and regulatory approvals

Insights

Energy Infrastructure Analyst

Woodside's binding agreement with Stonepeak represents a significant strategic win that substantially de-risks their Louisiana LNG project while validating its commercial viability. The deal structure is particularly favorable with Stonepeak contributing $5.7 billion toward capital expenditure on an accelerated timeline - covering 75% of project capex in both 2025 and 2026.

This transaction achieves multiple strategic objectives simultaneously: it reduces Woodside's near-term capital burden during a critical period before Scarborough revenues materialize, provides project validation from a sophisticated infrastructure investor, and creates a framework for further equity sell-downs to reach their ~50% target ownership.

The accelerated funding mechanism is financially elegant - Stonepeak gets a 40% equity stake while contributing capital faster than their proportional share, benefiting Woodside's cash flow profile and creating headroom for potential shareholder returns. Meanwhile, the deal maintains Woodside's operational control of the facility.

The transaction's structure also provides capex certainty for Stonepeak while incentivizing Woodside to manage costs effectively, as HoldCo will bear any overruns but benefit from efficiencies. With the foundation development's forward cost estimate holding steady at $900-960/tonne, this partnership significantly improves the project's risk-adjusted economics.

This represents the culmination of a competitive selection process for a partner and follows Woodside's proven infrastructure partnership model successfully deployed at their Scarborough and Pluto Train 2 projects in Australia.

LNG Market Strategist

This partnership establishes a compelling framework for Louisiana LNG's advancement in an increasingly competitive global LNG landscape. The injection of $5.7 billion from Stonepeak - a firm with extensive LNG infrastructure experience - provides crucial financial backing while validating the project's fundamental economics.

The deal's structure reflects sophisticated financial engineering: Woodside receives accelerated capital contributions (front-loaded at 75% in 2025-2026) while retaining 60% ownership through their holding company. This preserves Woodside's operational control and marketing rights while substantially reducing their capital commitment.

Particularly noteworthy is how this transaction positions Louisiana LNG competitively: the lump sum turnkey EPC agreement with Bechtel locks in costs, existing regulatory permits reduce execution risk, and the infrastructure partnership model enhances financial flexibility. The foundation development's three-train 16.5 MTPA capacity represents significant scale in an industry where economics improve with size.

The tolling structure further optimizes the arrangement - InfraCo (partly owned by Stonepeak) provides liquefaction services to HoldCo (Woodside-controlled) at competitive rates, with HoldCo managing gas supply and LNG marketing. This creates clear division of responsibilities while allowing each partner to focus on their core competencies.

With Woodside targeting further equity sell-downs to around 50%, this transaction serves as a strong foundation for bringing additional strategic partners aboard, potentially including LNG buyers seeking supply security or financial institutions seeking stable infrastructure returns.

HOUSTON--(BUSINESS WIRE)-- Woodside has entered into a binding agreement with Stonepeak, a leading global investment firm specialising in infrastructure and real assets, for the sale of a 40% interest in Louisiana LNG Infrastructure LLC, providing validation of project quality and increasing attractiveness of the project to other potential equity partners.

The transaction significantly reduces Woodside’s capital expenditure profile and is a material step towards readiness for a final investment decision.

Under the transaction, Stonepeak will provide $5.7 billion towards the expected capital expenditure for the foundation development of Louisiana LNG on an accelerated basis, contributing 75% of project capital expenditure in both 2025 and 2026. This enhances the project economics and Woodside’s cash flow profile ahead of revenues from Woodside’s Scarborough Energy Project in Australia, strengthening the capacity for shareholder returns. The remainder of Stonepeak’s committed capital will be funded in subsequent years.

Woodside CEO Meg O’Neill welcomed Stonepeak to the Louisiana LNG Project.

“We are very pleased to have Stonepeak join us in Louisiana LNG, given their demonstrated track record investing in US gas and LNG infrastructure across LNG facilities, LNG carriers, and floating storage and regasification units.

“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.

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

“Our partnership with Stonepeak, together with our lump sum turnkey EPC agreement with Bechtel, and existing regulatory permits, give us confidence to progress at pace towards a final investment decision on Louisiana LNG.

“We are pleased with the strong level of interest from counterparties and customers in Louisiana LNG. We will continue advancing discussions with additional potential partners targeting an equity sell-down of around 50% in the integrated project. As we have demonstrated with our Scarborough and Pluto Train 2 Project in Australia, the addition of an infrastructure partner unlocks value and paves the way for other strategic equity partners,” she said.

Stonepeak Senior Managing Director and Head of US Private Equity James Wyper commented:

“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. The project represents a compelling opportunity to invest in a newbuild LNG export facility nearing FID approval with an attractive risk-reward profile and best-in-class partners in both Bechtel and Woodside to construct and operate the asset.”

Transaction details

Stonepeak will hold 40% equity in Louisiana LNG Infrastructure LLC (InfraCo), with the remaining 60% of InfraCo owned by Louisiana LNG LLC (HoldCo), the holding company operated by Woodside.

InfraCo holds the Bechtel engineering, procurement and construction (EPC) agreement and, subject to final investment decision, will own and construct the liquefaction infrastructure and the common user facilities. InfraCo is operated by Woodside.

This investment in InfraCo is supported by a long-term liquefaction tolling agreement between InfraCo and HoldCo with competitive tolling fee terms. HoldCo will be responsible for gas supply and LNG offtake.

Stonepeak will provide $5.7 billion towards the expected capital expenditure for the development of the three train 16.5 million tonnes per annum foundation development of Louisiana LNG from the effective date of 1 January 2025.

Stonepeak’s contribution to the project capital expenditure will be accelerated in both 2025 and 2026, representing 75% of the total expected capital expenditure in those years. As a result, their total capital contribution of $5.7 billion will be lower than their nominal 40% equity interest in InfraCo, given the time value of money adjustment associated with the acceleration. In the event of a cost overrun, HoldCo will contribute the incremental capital. This provides capex certainty for Stonepeak and the ability for Holdco to benefit from capex efficiencies.

The estimated forward cost for the foundation development of Louisiana LNG from December 2024 remains $900-960/tonne. This includes EPC costs, contractor completion incentive payments, owner’s costs, allowances, and contingency. It excludes pipeline cost and HoldCo costs and contingency.

Completion of the transaction is subject to conditions precedent including final investment decision for the Louisiana LNG development, requisite regulatory, legal and other customary approvals. The effective date of the transaction is 1 January 2025, and closing is targeted in the second quarter of 2025. On completion, a payment of approximately $2 billion is anticipated for Stonepeak’s share of capex funding incurred since the effective date.

Woodside’s financial advisers are RBC Capital Markets and Evercore and its legal adviser is Norton Rose Fulbright.

About Woodside

Woodside is a global energy company providing reliable and affordable energy to help people lead better lives. We leverage our track record of world-class project execution and operational excellence as we build a diverse global portfolio to meet the world’s growing energy needs.

We have over 35 years of experience in the LNG industry including pioneering Australia's LNG industry as operator of the North West Shelf Project where we shipped our first LNG cargo to Japan in 1989. We are executing major projects today, while pursuing growth opportunities that will deliver long-term value for our shareholders. We maintain a strong balance sheet and a disciplined investment approach.

About Stonepeak

Stonepeak is a leading alternative investment firm specializing in infrastructure and real assets with approximately $72 billion of assets under management. Through its investment in defensive, hard-asset businesses globally, Stonepeak aims to create value for its investors and portfolio companies, with a focus on downside protection and strong risk-adjusted returns.

Stonepeak, as sponsor of private equity and credit investment vehicles, provides capital, operational support, and committed partnership to grow investments in its target sectors, which include digital infrastructure, energy and energy transition, transport and logistics, and real estate. Stonepeak is headquartered in New York with offices in Houston, Washington, D.C., London, Hong Kong, Seoul, Singapore, Sydney, Tokyo, and Abu Dhabi.

This announcement was approved and authorised for release by Woodside’s Disclosure Committee.

Forward-looking statements

This announcement contains forward-looking statements with respect to Woodside's business and operations, market conditions, results of operations and financial condition, including, for example, but not limited to, statements regarding the transaction (including statements concerning the timing and completion of the transaction, the expected benefits of the transaction and other future arrangements between the parties), expectations regarding future expenditures and future results of projects. All forward-looking statements contained in this announcement reflect Woodside's views held as at the date of this announcement. All statements, other than statements of historical or present facts, are forward-looking statements and generally may be identified by the use of forward-looking words such as 'guidance', 'foresee', 'likely', 'potential', 'anticipate', 'believe', 'aim', 'estimate', 'expect', 'intend', 'may', 'target', 'plan', 'forecast', 'project', 'schedule', 'will', 'should', 'seek' and other similar words or expressions.

Forward-looking statements in this announcement are not guidance, forecasts, guarantees or predictions of future events or performance, but are in the nature of aspirational targets that Woodside has set for itself and its management of the business. Those statements and any assumptions on which they are based are only opinions, are subject to change without notice and are subject to inherent known and unknown risks, uncertainties, assumptions and other factors, many of which are beyond the control of Woodside, its related bodies corporate and their respective officers, directors, employees, advisers or representatives.

Details of the key risks relating to Woodside and its business can be found in the "Risk" section of Woodside's most recent Annual Report released to the Australian Securities Exchange and Woodside's most recent Annual Report on Form 20-F filed with the United States Securities and Exchange Commission and available on the Woodside website at https://www.woodside.com/investors/reports-investor-briefings. You should review and have regard to these risks when considering the information contained in this announcement.

Investors are strongly cautioned not to place undue reliance on any forward-looking statements. Actual results or performance may vary materially from those expressed in, or implied by, any forward-looking statements.

All information included in this announcement, including any forward-looking statements, speak only as of the date of this announcement and, except as required by law or regulation, Woodside does not undertake to update or revise any information or forward-looking statements contained in this announcement, whether as a result of new information, future events, or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250406464783/en/

INVESTORS

Marcela Louzada

M: +61 456 994 243

E: investor@woodside.com



MEDIA

Christine Forster

M: +61 484 112 469

E: christine.forster@woodside.com

Source: Woodside Energy Group Ltd.

FAQ

What is the value of Stonepeak's investment in Woodside's Louisiana LNG project?

Stonepeak will contribute $5.7 billion towards the Louisiana LNG project development, representing a 40% interest in Louisiana LNG Infrastructure

When will the Woodside-Stonepeak Louisiana LNG transaction close?

The transaction is targeted to close in Q2 2025, with an effective date of January 1, 2025.

What is the expected cost per tonne for Woodside's Louisiana LNG development?

The estimated forward cost is $900-960/tonne, excluding pipeline cost and HoldCo costs and contingency.

How much of Louisiana LNG's capital expenditure will Stonepeak cover in 2025-2026?

Stonepeak will cover 75% of the total expected capital expenditure in both 2025 and 2026.

What is Woodside's target for total equity sell-down in the Louisiana LNG project?

Woodside is targeting a total equity sell-down of around 50% in the integrated project.