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Woodside (ASX:WPL) share price lifts amid US$835 million Pluto deal

LNG is being touted for its low emissions potential.
The post Woodside (ASX:WPL) share price lifts amid US$835 million Pluto deal appeared first on The Motley Fool Australia. –

The Woodside Petroleum Limited (ASX: WPL) share price is well into the green in early afternoon trade, up 1.6% to $22.60 per share.

Below we take a look at the ASX energy giant’s divestment announcement that appears to be driving investor interest.

What asset sale was announced?

Woodside’s share price is moving higher today after the company reported it has entered into a sale and purchase agreement with Global Infrastructure Partners (GIP).

The agreement will see Woodside sell a 49% non-operating participating interest in the Pluto Train 2 Joint Venture.

Located in northwest Western Australia, Pluto Train 2 is part of the planned Scarborough development. That development will include a new LNG train and domestic gas facilities, which will be built at the existing Pluto LNG onshore facility.

Atop funding its 49% share of capital expenditure, the new JV agreement will see GIP fund approximately US$835 million of additional construction capex.

The transaction, and payment that Woodside will receive, is still subject to a number of conditions.

The payment side remains dependent on the actual cost to develop Pluto Train 2, currently estimated at US$5.6 billion to completion.

Should the capex spend come in at less than US$5.6 billion, Woodside will receive 49% of that underspend from GIP. On the flip side, if capital expenditures overrun the estimate, Woodside will foot the bill for 49% of that overspend (up to US$835 million).

Commenting on the agreement, Woodside’s CEO Meg O’Neill said:

We are very pleased to have GIP joining us in the development of Pluto Train 2, given their impressive credentials and extensive global capability… GIP’s investment will help fund the expansion of the world-class Pluto LNG facility. The LNG supplied from the expanded Pluto facility will assist our customers to achieve their decarbonisation goals through the energy transition…

Pluto Train 2 will be one of Australia’s most efficient LNG trains and with Scarborough gas containing virtually no carbon dioxide, this is an attractive investment in a decarbonising world.

Woodside anticipates the deal to be complete in January 2022. It will retain a 51% participating interest in the Pluto Train 2 JV and remain as operator.

The effective date of the transaction is 1 October.

Woodside share price snapshot

The Woodside share price is down 2% in 2021, trailing the 12% year-to-date gains delivered by the All Ordinaries Index (ASX: XAO).

Over the past month, Woodside shares are down 10%.

The post Woodside (ASX:WPL) share price lifts amid US$835 million Pluto deal appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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