S&P stabilizes Woodside Energy view

S&P said it revised its outlook for Woodside Energy Group Ltd. to stable from negative and affirmed the BBB+ ratings on the issuer and its senior unsecured notes.

“Over the next few years, we expect Woodside's solid free cash flow generation, improved balance sheet position, and elevated oil prices to help the company fund upcoming growth opportunities. The merger with BHP Petroleum in June 2022 will deliver a material boost to cash flow from an increased production capacity of around 190 million barrels of oil equivalent (MMboe). Robust oil prices, given our Brent oil price assumptions of US$100/bbl and US$85/bbl for 2022 and 2023, respectively, will lead to strong operating cash flows,” S&P said in a press release.

S&P said it forecasts Woodside's FFO-to-debt ratio will beat 60% for the next two years and free operating cash flow (FOCF) of about $3 billion in 2022.

“This demonstrates the capacity to substantially fund the company's extensive capex of about $4.3 billion-$4.8 billion for 2022,” the agency said.

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