A lack of earnings growth and valuation comparisons made to midterm peer earnings multiples have the market questioning whether Woodside is worth the bet. We disagree. Substantial current capital programs herald rewards.

Why it matters: We expect Woodside revenue to grow by over 30% by 2030 as major new projects come online. This is higher than any international peer and well ahead of the peer group average of negative 15% revenue growth.

  • Near-term pedestrian earnings multiples should not be mistaken for the longer-term payday multiples likely to prevail. Buying now secures entry into an undervalued company that could re-rate on any number of catalysts, including Scarborough/Pluto T2 commissioning this year.
  • We forecast Woodside free cash flows greater than USD 7.0 billion after 2030, around 300% higher than in 2025. Our fair value estimate equates to a 2031 price/free cash flow multiple of 8.0 versus a midcycle peer average of 13.0.

The bottom line: Our $44 fair value estimate for no-moat Woodside is little changed. At around $31.50, the market remains overly bearish. The energy transition casts a pall over hydrocarbon demand. But significant investment is required in most demand scenarios to backfill natural decline.

  • Woodside has three major growth projects under construction after more than a decade of development stagnation. The foundation should allow favorable market trends to be reflected in improving Woodside earnings. We anticipate declining capital expenditure and improving income after 2028.

Between the lines: Our $44 per-share fair value estimate hinges on two key assumptions: (1) a nominal Brent crude price of USD 68.50 per barrel from 2028; and (2) successful 50% volume growth to 300 mmboe by 2030.

  • For more details, please refer to our October 2026 Stock Pitch ‘Woodside Energy Group: Misunderstanding the tail creates buying opportunity.’

Misunderstanding the tail creates buying opportunity

As Australia’s premier oil player, Woodside Petroleum’s operations encompass liquid natural gas, natural gas, condensate and crude oil. However, LNG interests in the North West Shelf Joint Venture, or NWS/JV, and Pluto offshore Western Australia are the mainstay, and the low-cost advantage of these assets forms the foundation for Woodside. Future LNG development, particularly relating to the Pluto project, encompasses a material percentage of this company’s hydrocarbon production volumes.

Woodside is unique among Australian energy companies in that it has successfully managed the development of LNG projects for more than 40 years—unparalleled domestic experience at a complicated and expensive task. Adding to Woodside’s competitive advantages are the long-term 20-year offtake agreements with the who’s who of Asia’s blue-chip energy utilities, such as Tokyo Electric, Kansai Electric, Chubu Electric, and Osaka Gas. These help ensure sufficient project financing during development and bring stability to Woodside’s cash flows once projects are complete. Woodside also enjoys first-mover advantages. The NWS/JV has invested more than $27 billion since the 1980s, building infrastructure at a fraction of the cost of today’s developments. With substantial growth aspirations, Woodside still has considerable expenditure ahead of it, but the existing infrastructure footprint is, regardless, a huge head start from both an expenditure and a regulatory-approval perspective.

Woodside’s development pipeline is deep, enabling it to leverage the tried and trusted project-delivery platform as a template for other world-class gas accumulations off the North-West coast of Australia. Woodside is well suited to the development challenge. With extensive experience, it remains a standout energy investment at the right price. Gas is the fastest-growing primary energy market behind coal, and the seaborne-traded LNG portion of that gas market grows faster still. China is building import terminals, and demand is picking up, helping to keep LNG pricing toward oil parity on an energy-equivalent basis.

Bulls Say

  • Woodside is a beneficiary of the continued increase in demand for energy. Behind coal, gas has been the fastest-growing primary energy segment globally. Woodside is favorably located on Asia’s doorstep.
  • Woodside’s cash flow base is comparatively diversified, with LNG making it less susceptible to the vagaries of pure oil producers. Gas is a primary component of Asian base-load power generation.
  • Gas has around half the carbon intensity of coal, and it stands to gain market share in the generation segment and elsewhere if carbon taxes are instituted, as some predict.

Bears Say

  • The global economy is cooling off, and demand for energy will follow suit, particularly if Chinese growth rates taper.
  • Technological advances in the unconventional US shale gas industry have the potential to swing the demand-supply balance increasingly in favor of the customer.
  • LNG developments are hugely expensive, and the balance sheet is at risk until such projects are successfully commissioned.

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