Woodside's "operational excellence" delivers a dividend beat

It feels like it’s been a while since Woodside (ASX: WDS) delivered a positive outcome, as falling energy prices, higher costs, and project execution risks have dragged the share price to levels not seen since January 2022.

While Woodside's 2024 full-year result should not contain any surprises following its Q4 result last month, the company unexpectedly delivered a stronger-than-expected net profit and dividend. The guidance also surprised, with both production and capital expenditures exceeding market expectations.

This takes us to an interesting crossroad – should Woodside be praised for its operational excellence and commitment to dividends or should investors steer clear amid ongoing risks to its balance sheet and a potential selldown on its Louisiana LNG project? 

As part of Livewire’s Reporting Season coverage, I spoke to Allan Gray's Simon Mawhinney about the solid result and the path ahead. 

Full-year 2024 results summary

• Record production of 193.9 million barrels of oil equivalent
• Net profit after tax up 115% to $3.57 billion
• Underlying net profit down 13% to $2.88 billion
• Free cash flow down 82% to $100 million
• Average realised oil price down 7% to US$63.3 a barrel
• Final dividend down 12% US 53 cents per share
• Full-year dividend of US 122 cents per share, at the top end of the target range at 80%

What was the key takeaway from this result?

Were there any major surprises in this result that you think investors should be aware of?

These arrived last week as Woodside guided to various line items. At that time, the market was disappointed with increased decommissioning provisions and their impact on the dividend. Today though, the dividend was better than recently reduced expectations, the company announced a $150m cost-out and positive progress on their suite of large capital projects. There seems to have been reassuring progress on the sell down of their Louisianna LNG project. They continue to manage costs very well.

What’s your outlook on this stock and the sector over the year ahead?

Oil and gas prices are the biggest unknown, both of which are sensitive to geopolitical developments. But Woodside continues to execute well on its projects, has world class producing assets and a highly competent and engaged management team. Whilst its balance sheet is more stretched than in recent times, we can see a path to its reduction and look forward to any positive news on the sell down of its Louisianna LNG project.