Woodside Energy’s earnings to fall as investors eye strategic deals By Reuters

By Archishma Iyer and Rajasik Mukherjee

(Reuters) – Woodside (OTC: ) Energy, Australia’s largest independent gas producer, is on course to report a drop in interim earnings on Tuesday, as investors focus on its deal-making strategy after the collapse of a 52 of billions of dollars with Santos.

Perth-based Woodside is expected to report an underlying net profit after tax of $1.11 billion for the six months ended June, according to a Visible Alpha consensus cited by Jarden, compared with $1.90 billion reported a year ago.

“The Woodside portfolio is ex-growth and highly concentrated in the Scarborough domain, which has yet to be started. This is problematic and calls for M&A in our view,” analysts at Citi said in a research note earlier this month.

The company is scheduled to report its first-half results before markets open on August 27.

Woodside recently received primary environmental approvals for its $12.5 billion Scarborough gas project in Western Australia, which is seen as a catalyst for growth, with its first LNG cargo likely in 2026.

Despite some of Woodside’s recent multibillion-dollar deals, including the purchase of LNG developer Tellurian (NYSE: ), analysts are uncertain about the energy company’s future M&A plans to expand its LNG portfolio.

“The current share price … coupled with our cautious stance on oil in 2025 and uncertainty around dividends and future M&A, we cannot yet make a value case,” Citi analysts added.

Woodside traded on Monday at a P/E of 20.2, based on trailing 12 months of earnings, compared with the broader Australian market, which was trading at a P/E of 17.9, according to LSEG data.

Lower demand from top consumer China, along with geopolitical tensions in the Middle East, have caused prices to fall sharply from 2022 highs.

Analysts at Jarden cut their estimate for Woodside’s dividend payout ratio to 65% from 80% due to costs associated with its recent acquisitions.

Meanwhile, Santos reported a bigger-than-expected fall in half-year profit to $654 million, citing lower realized prices and higher costs.

Santos, Australia’s second-largest independent gas producer, has become a potential takeover target after it disagreed on the valuation of a merger with Woodside.

Santos chairman Kevin Gallagher has expressed a desire to sell certain projects or the entire $16.3 billion company as it outperformed the broader energy index with a falling share price.