Is WDS a good stock to buy? We came across a bullish thesis on Woodside Energy Group Ltd on The Dividend Auditor’s Substack. In this article, we will summarize the bulls’ thesis on WDS. Woodside Energy Group Ltd’s share was trading at $22.51 as of June 2nd. WDS’s trailing and forward P/E were 15.63 and 12.14 respectively according to Yahoo Finance.
Photo from Sasol Ltd website
Woodside Energy Group is presented as one of the world’s premier LNG operators, combining an irreplaceable asset base, industry-leading profitability, and a transformational growth pipeline that could significantly enhance production and cash flow over the coming years. Following the BHP Petroleum merger, Woodside has returned approximately $11 billion to shareholders while maintaining EBITDA margins above 70%, supported by world-class LNG assets including Pluto LNG, North West Shelf, Sangomar, and Gulf of Mexico operations.
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While lower commodity prices reduced FY2025 underlying NPAT by 8% to $2.65 billion, the company delivered record production of 198.8 MMboe and maintained its policy of distributing 80% of underlying earnings through a $1.12 per share dividend. The central investment thesis revolves around Scarborough, a major LNG development that is 94% complete and expected to deliver first LNG cargo in the fourth quarter of 2026.
Once operational, Scarborough is projected to increase production from roughly 179 MMboe in FY2026 to more than 230 MMboe in FY2027 while nearly tripling free cash flow as the company transitions from a period of peak capital expenditure into a harvest phase. Additional upside is expected from Louisiana LNG, where partner sell-downs have reduced Woodside’s capital burden while validating project quality ahead of targeted production in 2029.
The market remains focused on near-term concerns including weaker commodity prices, elevated capex, and a temporary production dip in 2026, but these challenges are viewed as transitory. As Scarborough comes online, leverage declines and free cash flow expands, creating a pathway for stronger dividend sustainability and valuation improvement. With a $26 price target, the thesis implies attractive upside, with further potential from higher oil prices, successful project execution, and additional Louisiana LNG monetization.
Previously, we covered a bullish thesis on Occidental Petroleum Corporation (OXY) by Magnus Ofstad in May 2025, which highlighted its low-cost Permian Basin assets, diversified business model, carbon capture initiatives, and rerating potential from improved operational execution. OXY’s stock price has appreciated by approximately 37.29% since our coverage. The Dividend Auditor shares a similar view but emphasizes Woodside’s LNG leadership, transformational growth projects, and free cash flow expansion driven by Scarborough and Louisiana LNG.
Woodside Energy Group Ltd is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 10 hedge fund portfolios held WDS at the end of the first quarter which was 7 in the previous quarter. While we acknowledge the risk and potential of WDS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than WDS and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
