Woodside Energy Group's (ASX:WDS) deal to sell its 40% stake in Louisiana LNG Infrastructure is a key factor in Jarden Research's preference for the company over Santos (ASX:STO), Jarden Research said in a Tuesday note.
On Monday, the company said it entered into a binding agreement with Stonepeak for the sale, adding that the sale is a material step towards "readiness for a final investment decision.
Stonepeak will provide $5.7 billion towards the expected capital expenditure for the foundation development of Louisiana LNG on an accelerated basis, contributing 75% of project capital expenditure in both 2025 and 2026, Jarden said.
The fixed-price nature of Stonepeak's funding and the lack of exposure to cost overruns likely played a pivotal role in Woodside's decision, Jarden noted.
The structure of Stonepeak's capital expenditure contributions aligns well with Woodside's balance sheet requirements, Jarden added.
The sale reduces Woodside's share of the project's capex from 100% to 62-64%, and Jarden expects that this will fall to less than 50%.
The firm also expects Woodside to move ahead to the final investment decision for the project in the coming weeks and for the sale to have a materially positive impact on Woodside's forecast gearing for 2025 to 2026.
Jarden maintained Woodside's overweight rating and its price target of AU$27.
Shares of the company rose past 3%, while shares of Santos rose 5%, in recent Tuesday trade.
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