In a strategic move to enhance its presence in the US energy market, Woodside Energy, Australia’s largest energy company, has formalized a significant investment agreement with Stonepeak, a New York-based private equity firm. This partnership involves Stonepeak providing a substantial $5.7 billion in funding for the development of a crucial liquefied natural gas (LNG) project located in Louisiana. This deal marks a milestone in Woodside's efforts to expand its operations and capitalize on the growing demand for natural gas.

Under this agreement, Stonepeak will acquire a 40 percent ownership stake in the Louisiana LNG project, which was previously known as Driftwood. The development entails the construction of an extensive network of pipelines, measuring 150 kilometers in total, and is projected to have an impressive production capacity of 27.6 million tonnes of natural gas each year. This ambitious project is designed to meet the increasing global demand for LNG, particularly in regions seeking cleaner energy alternatives.

While Woodside is keen on exploring additional equity partners to join the initiative, the company intends to maintain at least a 50 percent stake in the project for the foreseeable future. This strategic decision comes at a crucial time as Australian markets opened sharply lower due to ongoing concerns surrounding tariffs imposed by the Trump administration, raising fears of a possible global economic downturn.

In the wake of this economic uncertainty, mining and oil and gas sectors experienced the most significant declines on the Australian Securities Exchange (ASX), with Woodside’s shares plummeting by 7 percent despite the positive news regarding the US partnership. This decline indicates the prevailing market anxieties, even as the investment from Stonepeak alleviates some concerns regarding Woodside’s ability to secure necessary partners for the Louisiana development.

The sale of this stake is emblematic of a growing trend wherein companies are collaborating with private equity firms to finance large-scale infrastructure projects. This trend is increasingly critical as these firms possess the capability to raise substantial amounts of debt capital. Notably, in a similar strategic move last year, Apollo Global Management invested $5 billion for a 49 percent stake in a new Intel manufacturing facility located in Ireland. Furthermore, Stonepeak had previously partnered with Dominion Energy to finance an offshore wind project off the coast of Virginia, highlighting their active role in the energy infrastructure sector.

Meg O’Neill, CEO of Woodside, expressed optimism about the deal, stating, “This transaction further confirms Louisiana LNG’s position as a globally attractive investment set to deliver long-term value to our shareholders.” This positive affirmation underscores Woodside's commitment to leveraging strategic partnerships to boost its global gas market presence.

The Perth-based company, which expanded its portfolio of US assets following its merger with BHP’s oil and gas division in 2022, also acquired Tellurian, a struggling US LNG developer, for $1.2 billion last year. This acquisition is part of Woodside’s broader strategy to transform itself into a formidable player in the global gas market while reducing its reliance on Australian exports.

Saul Kavonic, an analyst at MST Marquee, commented on the significance of the Stonepeak deal, noting that it serves to mitigate concerns regarding Woodside's balance sheet. However, he emphasized the need for the company to pursue additional stake sales and off-take agreements for future gas supplies to justify the considerable investment being made. “The Stonepeak sell-down is effectively an off-balance-sheet finance package. It does not provide a valuation read-through,” Kavonic explained.

Interestingly, this deal was announced prior to the election of Donald Trump, who has indicated support for increased US oil and gas development. In a statement made earlier this year, O’Neill remarked that Australia “loses on every front” concerning investments in new energy projects, particularly when compared to the expedited project approvals seen in the US.

Stonepeak, which manages a robust $72 billion in assets, is recognized for its specialization in infrastructure investments. In relation to this transaction, Mizuho and Santander, along with law firms Simpson Thacher & Bartlett and Paul Weiss, acted as advisers to Stonepeak. Meanwhile, Woodside received advisory support from RBC Capital Markets, Evercore, and Norton Rose Fulbright, ensuring that both parties were well-prepared for this significant investment collaboration.