Shares of Woodside Energy (ASX:WDS) experienced a significant drop on Tuesday, falling as much as 4.7% to AU$25.22. The sharp drop follows Woodside's announcement that it will acquire OCI Global’s clean ammonia project in Texas for AU$2.35 billion. OCI Global, a Dutch fertiliser company, is selling the project as part of its strategic shift towards other areas of growth. The move is intended to enhance Woodside's capabilities in green energy, aligning with its broader sustainability goals.
However, this acquisition has raised concerns among analysts. Citi analysts have expressed skepticism regarding the timing of the deal. They argue that the market anticipates Woodside to invest heavily in its green energy transition closer to 2030, suggesting that the timing of the purchase might not align with these expectations. “Who’s to say another good asset won’t come along over the next half-decade, potentially during a bear market too?” Citi analysts noted, highlighting their concerns about the strategic fit and timing of the acquisition.
Trading activity in Woodside shares surged, with approximately 6.1 million shares changing hands compared to the 30-day average volume of about 4.7 million. This heightened trading volume reflects the heightened market reaction to the news and the subsequent drop in share value.
As Woodside Energy navigates this period of uncertainty, the focus will likely remain on how the company integrates the new asset and whether it can effectively balance its immediate investment decisions with long-term strategic goals. Investors will be watching closely to see how the acquisition impacts Woodside’s financial performance and its trajectory in the green energy sector.