Woodside Energy has forged a significant partnership with Stonepeak, a prominent infrastructure and real asset investment firm, through the sale of a 40% stake in its Louisiana LNG Infrastructure LLC. This agreement, valued at $5.7 billion, not only validates the quality and potential of the Louisiana LNG project but also enhances its appeal to prospective equity partners. The transaction strategically reduces Woodside's anticipated capital expenditure, marking a crucial step towards the final investment decision (FID).

Under the terms of the agreement, Stonepeak will inject $5.7 billion into the initial development phase of the Louisiana LNG project on an accelerated schedule. Notably, Stonepeak will contribute 75% of the project's capital expenditure in both 2025 and 2026. This accelerated funding significantly bolsters the project's financial viability and improves Woodside's near-term cash flow, particularly before revenues commence from its Scarborough Energy Project in Australia. This strengthened cash flow position enhances Woodside's capacity to deliver shareholder returns. The remaining committed capital from Stonepeak will be provided in subsequent years.

Woodside CEO Meg O’Neill expressed enthusiasm about the partnership, highlighting Stonepeak's extensive experience in US gas and LNG infrastructure, encompassing LNG facilities, carriers, and floating storage and regasification units. She emphasized that this transaction underscores Louisiana LNG's attractiveness as a global investment poised to generate long-term shareholder value. The deal resulted from a competitive process that drew interest from leading global entities and substantially lowers Woodside's capital outlay for this significant project. The accelerated capital contribution from Stonepeak is expected to boost Louisiana LNG's returns and strengthen Woodside's ability to provide near-term shareholder distributions.

O’Neill also noted that the partnership with Stonepeak, coupled with the lump sum turnkey engineering, procurement, and construction (EPC) agreement with Bechtel and existing regulatory approvals, provides confidence in progressing swiftly towards a final investment decision for Louisiana LNG. She further indicated ongoing discussions with potential additional partners, aiming for an overall equity sell-down of approximately 50% in the integrated project, drawing parallels to the value unlocked through infrastructure partnerships in their Scarborough and Pluto Train 2 projects in Australia.

James Wyper, Senior Managing Director and Head of US Private Equity at Stonepeak, conveyed strong confidence in the critical role Louisiana LNG will play in the US LNG export market, given the anticipated need for substantial additional capacity. He described the project as a compelling investment opportunity in a new LNG export facility nearing FID, offering an attractive risk-reward profile and best-in-class partners in Bechtel and Woodside for construction and operation.

The transaction structure involves Stonepeak holding a 40% equity stake in Louisiana LNG Infrastructure LLC (InfraCo), while Louisiana LNG LLC (HoldCo), operated by Woodside, retains the remaining 60% of InfraCo. InfraCo holds the EPC agreement with Bechtel and, subject to FID, will own and construct the liquefaction infrastructure and common user facilities, with Woodside as the operator. This investment in InfraCo is underpinned by a long-term liquefaction tolling agreement between InfraCo and HoldCo featuring competitive fee terms. HoldCo will be responsible for gas supply and LNG offtake.

Stonepeak's $5.7 billion commitment will fund the development of the three-train, 16.5 million tonnes per annum foundation development of Louisiana LNG, effective from January 1, 2025. The accelerated capital contribution in 2025 and 2026, representing 75% of the total expected capital expenditure in those years, means Stonepeak's total contribution will be lower than its nominal 40% equity interest due to the time value of money adjustment. In the event of cost overruns, HoldCo will bear the incremental capital, providing capital expenditure certainty for Stonepeak and allowing HoldCo to benefit from any cost efficiencies.

The estimated forward cost for the foundation development of Louisiana LNG as of December 2024 remains between $900 and $960 per tonne, encompassing EPC costs, contractor completion incentives, owner’s costs, allowances, and contingency, but excluding pipeline and HoldCo costs and contingency.

The completion of the transaction is contingent upon several conditions, including the final investment decision for the Louisiana LNG development and the receipt of necessary regulatory, legal, and other customary approvals. The effective date of the transaction is January 1, 2025, with closing anticipated in the second quarter of 2025. Upon completion, an estimated payment of $2 billion is expected for Stonepeak’s share of capital expenditure incurred since the effective date. Woodside’s financial advisors for this transaction were RBC Capital Markets and Evercore, and its legal advisor was Norton Rose Fulbright.