S&P Downgrades Woodside Outlook to Negative After Louisiana LNG Go-Ahead

S&P Global Ratings has revised down its credit outlook on Woodside Energy after the Australian firm took the final investment decision on the $17.5 billion Louisiana LNG export project.

The rating agency cut the outlook to ‘negative’ from ‘stable’ as the go-ahead to the project has limited Woodside’s rating upside in the absence of a material sell-down of its offtake exposure.

Earlier this week, Woodside Energy announced the final investment decision for the Louisiana LNG project and plans to start production in 2029.

The facility is designed to have three liquefaction trains with a total capacity of 16.5 million tons annually. This would boost Woodside’s total LNG capacity to 24 million tons annually by the next decade, the company said. Woodside also has permits to expand the Louisiana LNG facility by another two trains, which would boost its capacity to a total of 27.6 million tons annually.

Woodside bought the former Driftwood LNG project as part of its acquisition of Tellurian for $1.2 billion last year. The deal “adds a scalable US LNG development opportunity to our existing approximately 10 Mtpa of equity LNG in Australia,” Woodside chief executive Meg O’Neill said at the time. Then, this year, reports emerged that Woodside was looking for partners in the projects, seeking to sell up to 50% of the ownership.

Last month, Woodside sold 40% in Louisiana LNG to infrastructure investment firm Stonepeak. Under the terms of their deal, Stonepeak will provide $5.7 billion of the total capital expenditure for the project, accounting for 75% of total capex for the project this year and next.

“We are continuing to progress discussions with additional partners at the integrated project level,” O’Neill said at this week’s call announcing the FID.

“This will further reduce Woodside’s capital and accelerate the value of the project.”

On Thursday, Woodside said it signed an agreement with BP for the integrated energy major to supply natural gas to the Louisiana LNG project.

By Tsvetana Paraskova for Oilprice.com