Dr Philipp Hofflin, Portfolio Manager at the Lazard Asset Management Australian Equities Team, is excited about Woodside’s recent acquisition of an increased share of the Greater Scarborough gas fields. While the development is capital intensive initially, the ongoing capex is minimal, and it will be highly cashflow generative. 


Key points: 

  • Woodside operates a high-quality business and has a strong balance sheet
  • They recently completed the acquisition of an additional share in the Greater Scarborough gas fields
  • Upfront capex is high, but once development is complete, ongoing capex is low and cashflow generation is strong
  • The company should be able to fund the $9 billion capex expense without raising equity
  • China’s demand for gas is increasing rapidly
  • Gas contracts are currently priced based on the oil price at a rate of around 13%. If Asian gas prices de-link from oil prices, this rate could increase towards 17%. 

About Lazard Australian Equity

Our primary stock-selection screen identifies companies that are trading at a discount relative to their intrinsic value. Find out more