WDS woodside

 WDS

04/07/26

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Over the last decade, ASX:WDS (Woodside Energy Group Ltd) has transformed significantly, shifting from a standalone Australian oil and gas producer to a global top-10 energy player via its 2022 merger with BHP's petroleum arm. Its financials have been highly cyclical, driven by fluctuating global commodity prices. [1, 2, 3, 4]

Financial Snapshot

• Profit: Profits peaked in 2022–2023 (post-merger and during the energy crisis) with net profits exceeding US $ 5.7 billion. However, softer oil and liquefied natural gas (LNG) prices have subsequently cooled profits, with recent net income settling to US $ 2.72 billion. [1, 2, 3]

• Debt: Long-term debt grew significantly due to the massive capital expenditure for major projects like Scarborough. Long-term debt reached roughly US $ 19 billion, but the company's debt-to-capital and gearing ratios have stabilized within the disciplined target range of 25-30%. [1, 2, 3, 4, 5]
• Return on Equity (ROE): Due to the heavy capital requirements of major megaprojects and the digestion of the BHP asset base, WDS’s ROE has historically averaged around 4% to 8%. It has recently hovered close to the 7.2% to 8% mark. [1, 2, 3]

The drop in Woodside Energy's (ASX: WDS, formerly WPL) Return on Equity (ROE) to roughly -33% in 2020 was primarily caused by severe multi-billion dollar asset write-downs and a collapse in global profitability triggered by the COVID-19 pandemic

The primary factors driving this decline include:

• Massive Asset Impairments: As the COVID-19 pandemic caused global demand for oil and gas to plummet, Woodside was forced to book massive non-cash write-downs and impairments on the carrying value of its oil and gas assets (including the Scarborough and Browse projects). This resulted in a statutory net loss after tax of over US$4 billion for the year. [1, 2, 3, 4]
• Collapse in Oil and Gas Prices: Global lockdowns and restricted travel brought manufacturing and transportation to a grinding halt. The resulting supply-demand imbalance caused crude oil and liquefied natural gas (LNG) prices to plummet, destroying the company's operating margins. [1]
• Negative Shareholders' Equity Impact: Because ROE is calculated by dividing net income by shareholders' equity, the massive net loss wiped out a significant portion of the company's equity base, further exaggerating the negative percentage return. [1]

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