Natural gas buyout bulldozes investors: Analysts

Woodside disregards historic investor rejection of its climate plan; the energy giant's US$1.2bn natural gas takeover negates its US$2.35bn carbon capture buy "more than 21 times over".

Woodside's US$1.2bn bid for Tellurian and its Driftwood LNG project would raise Scope 1 and 2 emissions by 154% on 2023 levels, finds Market Forces analysis.

This comes after a recent US$2.35bn takeover of Texas' OCI Clean Ammonia Holding BV, producing ammonia relying on carbon capture.

The LNG purchase would nearly double Scope 3 emissions, negating carbon capture from its ammonia investment more than 21 times over, assuming full ownership and all four phases developed.

A number say they will vote to oust chair Richard Goyder in the next meeting, including Aware Super, Vision Super, Allianz Global Investors, Anima, CalPERS, Florida State Board of Administration, KLP and LGIM.

At this year's AGM 58% of shareholders voted down Woodside's Climate Transition Action Plan.

Market Forces analyst Brett Morgan said Woodside "disregarded the world-record vote" and urged investors to exert influence on the resources house to curb climate risk.

Potential abatement from Woodside's ammonia purchase is "a drop in the ocean" compared to Driftwood LNG's expected emissions, said Market Forces research head Axel Dalman.

"Emissions from Driftwood's first phase are equivalent to Woodside's 2030 target... the company is disinterested in genuine decarbonisation."

Woodside's major investors did not comment.

Alison George, impact and ethics head at Australian Ethical, which excludes Woodside due to its fossil fuel policies, reiterated that the energy company is ignoring investor demands.

"The only way to drive change is to withdraw capital, and allocate it to future focused, sustainable companies who can support the long-term needs of investors and the environment."

Woodside paid a "massive" 75% control premium for Tellurian versus the prevailing 2024 share price, Climate Energy Finance founder Tim Buckley said.

Leadership is disconnected from climate science forbidding new greenfield fossil fuel project developments or infrastructure, he said.

Over 90% of Woodside's capex this decade will go to fossil fuel expansion, despite the investor vote for a stronger transition plan.

This conflicts with the company's Paris Agreement commitments, said Erica Hall, author of 'Top Stocks Special Edition - Ethical, Sustainable, Responsible'.

"The company's decarbonisation strategy relies on carbon capture and storage... genuine carbon reduction should be the priority to effectively lower greenhouse gas emissions."

While Woodside scores better on overall ESG risk than its S&P/ ASX 300 energy sector peers, according to Hall, the purchase worsens future risk.

In Woodside's half-year results briefing last week, analysts barely raised an eyebrow.

Morgan Stanley's Rob Koh was the sole enquirer on Woodside's transition plan.

CEO Meg expressed disappointment on the vote outcome, but acknowledged investor concern on emissions, offsets, demand resilience for LNG and new technologies like clean ammonia.

However, the ammonia project is a "material step" for carbon abatement, she said.

Commenting on Canberra's Future Made in Australia, O'Neill said Woodside is "thinking about a Future Made in Australia just as if we think about a today made in Australia: We need gas."

Buckley argues Woodside is "parroting the convenient spin that methane gas is lower emissions than coal, ignoring that methane are almost 100% more emissions intensive as wind, solar, hydro and nuclear energy.

"LNG is far more emissions intensive than methane gas... given the massively energy intensive nature of liquification and international transportation."

Renewables are accelerating "way faster" than forecasted and fossil fuel prices are experiencing hyperinflation.

"Woodside shares are down a third in the last decade, in a market up 50%, a massive sustained underperformance in both absolute and relative terms.

"Even in the last year Woodside shares have underperformed the All Ords by 35%, a telling assessment by the market of their failing strategies."

Woodside's market cap is A$48bn.

NOTE: A previous version of this article stated that CalSTRS had pre-announced their vote. This article has since been updated.