Given its sheer size, it’s no surprise that the Woodside (ASX:WDS) chart is virtually indistinguishable from the ASX200 Energy sector – where it goes, the sector largely follows. WDS delivered a strong 1H26 result just before the war broke out. At the time, it was trading below $28, while Sept’ Brent Crude was ~25% lower, illustrating how the two move in tandem. Profit softened on lower realised prices, though record production helped offset the impact. Key projects on track, with Scarborough nearing completion, Trion targeting 2028, and Louisiana LNG progressing toward 2029 first cargo. A stronger-than-expected final dividend highlighted balance sheet strength despite peak capex, and continued production growth should support cash flow and ease concerns around dividend sustainability.
- WDS is well-positioned to benefit if higher energy prices persist, as it continues to execute well.
With cash margins averaging 80% and costs well below $10/boe, Woodside’s earnings are massively leveraged to the oil price , which is exactly why the Middle East conflict and its impact on crude prices matters so acutely for WDS shareholders – every $1 move in the oil price puts roughly $120 million in Woodside’s pocket, or takes it away. However, we continue to believe that the oil price will retreat over the coming months, which is likely to drag the WDS share price along for the ride, though we think value will reemerge ~8% lower with the world still set to be short of energy over the coming years.
Forecasting oil is a hard game, and while we see no reason to buy WDS today, further weakness will improve the picture, with oil unlikely to retreat too far, too fast.
- We like the risk/reward towards WDS below $31 – very achievable if we see another ceasefire sell-off.
MM is neutral towards WDS around $33
Add To Hit List
