Highlights

• Woodside reported net equity Scope 1 and 2 emissions of 5,334 kt CO2-e for 2025, achieving its target of reducing emissions by 15% from its baseline period.

• The company retired 1,283 kt CO2-e of carbon credits to support delivery of its emissions target while continuing to invest heavily in LNG expansion projects.

• Scarborough reached 96% completion at the end of the March 2026 quarter, with first LNG cargo targeted for the December 2026 quarter.

• FY25 revenue reached US$12.98 billion, while reported net profit was US$2.72 billion, supported by record production of 198.8 MMboe.

• Woodside Energy shares traded at A$32.29, rising 2.77% (+A$0.87) during the session as investors continued assessing LNG growth plans and capital commitments.

Woodside Energy Group Ltd (ASX:WDS) is navigating a period where two major themes are shaping its investment outlook: reducing emissions intensity while delivering one of the largest capital expansion programs in its history.

The company has achieved its 2025 emissions reduction milestone while progressing major LNG developments including Scarborough and Louisiana LNG. For investors, the challenge is determining whether future production growth can generate sufficient returns while maintaining balance sheet discipline and addressing environmental expectations.

Woodside Achieves 2025 Emissions Reduction Target

Woodside reported that it achieved its 2025 target of reducing net equity Scope 1 and 2 emissions by 15% from its established baseline.

The company reported 2025 net equity Scope 1 and 2 emissions of 5,334 kt CO2-e compared with its baseline of 6.22 Mt CO2-e, which represents the average annual emissions level between 2016 and 2020 adjusted for portfolio changes.

However, achieving the target included the retirement of 1,283 kt CO2-e of carbon credits. This means part of the reduction was achieved through purchased abatement rather than solely through operational emissions reductions.

Woodside also reported that its 2025 emissions intensity was 27% better than its global benchmark comparator, highlighting improvements in operational efficiency.

The company’s broader climate strategy includes a target of reducing net equity Scope 1 and 2 emissions by 30% by 2030 and achieving net zero emissions by 2050.

LNG Expansion Remains the Core Growth Driver

While emissions performance remains a major focus, Woodside’s investment case continues to centre around LNG growth.

The Scarborough Energy Project reached 96% completion at the end of the March 2026 quarter, moving closer to first LNG cargo targeted for the December 2026 quarter.

The US$12.5 billion project involves developing offshore gas resources that will supply additional LNG volumes through an expanded Pluto LNG facility.

Louisiana LNG is another major growth project, with the development reaching 24% completion.

The project represents Woodside’s entry into US-based LNG infrastructure and is planned as a three-train, 16.5 million tonnes per annum foundation development.

Together, Scarborough and Louisiana LNG represent a significant increase in future LNG capacity but also require substantial capital investment during the construction phase.

Financial Performance Reflects Commodity Cycle Pressure

Woodside delivered strong operational performance in FY25, although earnings declined due to softer commodity prices.

Revenue for the year ended 31 December 2025 reached US$12.98 billion, while reported net profit was US$2.72 billion, down 24% from the previous year.

Underlying net profit was US$2.65 billion, while operating cash flow reached US$7.19 billion.

Production reached a record 198.8 MMboe, supported by contributions from international assets including the Sangomar project in Senegal.

The company generated sufficient cash flow to fund capital expenditure of US$4.70 billion while maintaining shareholder distributions.

Dividends totalled 112 US cents per share during FY25, comprising fully franked interim and final payments.

Balance Sheet Supports Growth Investments

Woodside ended FY25 with a gearing ratio of 18.2%, within its target range of 10% to 20%.

The company maintained liquidity of US$9.26 billion, providing flexibility to support major development projects.

Capital expenditure guidance for 2026 remains between US$4.0 billion and US$4.5 billion, with investment concentrated on Scarborough, Trion and Louisiana LNG.

The company has also continued exploring opportunities to optimise funding structures, including potential future sell-downs in Louisiana LNG.

Maintaining balance sheet flexibility will remain important as multiple large projects progress simultaneously.

Portfolio Expansion Continues Beyond LNG

Beyond LNG developments, Woodside continues expanding its broader energy portfolio.

The company increased its interest in the Browse joint venture after exercising pre-emption rights over PetroChina International’s stake.

Woodside is also progressing Trion, a deepwater oil development in Mexico where it holds a 60% interest and operatorship.

In lower-carbon energy, the company is developing Beaumont New Ammonia in Texas, which produced first ammonia in December 2025.

Woodside has committed US$5 billion towards new energy products and lower-carbon services by 2030, although the company has clarified this represents an investment target rather than earnings guidance.

Why the Development Matters

Woodside’s emissions milestone highlights the company’s ability to improve environmental performance while continuing to expand LNG production.

However, the transition between reducing emissions and increasing hydrocarbon output remains central to investor debate.

The company argues that LNG can support energy security and reduce emissions intensity compared with higher-emission fuels, while critics continue to focus on the long-term impact of expanding fossil fuel production.

From an investment perspective, the key question is whether Woodside can deliver strong returns from its growth projects while keeping capital costs, debt levels and shareholder returns balanced.

Growth Catalysts to Watch

Potential catalysts for Woodside include:

• First LNG cargo from Scarborough, targeted for the December 2026 quarter.

• Further progress at Louisiana LNG and potential future equity sell-downs.

• First lower-carbon ammonia production from Beaumont.

• Progress towards first oil from Trion, targeted for 2028.

• Confirmation of production growth and capital discipline through upcoming operational updates.

Risks and Challenges

Execution risk remains the largest near-term challenge for Woodside.

Scarborough and Pluto Train 2 are approaching completion, but any delays could affect expected production timing and cash flow generation.

Louisiana LNG introduces additional construction and cost management risks as Woodside undertakes a major overseas development.

Commodity prices remain another important factor. The decline in FY25 profit despite strong production highlights the sensitivity of earnings to LNG and oil pricing.

The company also faces ongoing regulatory and legal challenges linked to major developments, including North West Shelf extension approvals and environmental considerations.

With capital expenditure expected to remain elevated, weaker commodity prices could create pressure between maintaining dividends, funding growth projects and protecting the balance sheet.

What Investors Should Watch Next

Key indicators for investors include:

• Scarborough completion progress and confirmation of first LNG timing.

• Louisiana LNG construction milestones and funding updates.

• Gearing levels following additional project spending.

• Progress on North West Shelf legal matters.

• Commodity price trends and their impact on earnings.

Conclusion

Woodside has achieved its 2025 emissions reduction target while continuing to advance major LNG growth projects that will shape the company’s future.

The company’s ability to balance climate commitments, capital investment and shareholder returns will remain central to its investment case.

With shares trading at A$32.29, up 2.77% (+A$0.87), investors are watching whether Scarborough and Louisiana LNG can deliver the growth needed to justify the scale of capital committed.