Woodside Energy downgraded to Neutral from Buy at Goldman Sachs

Goldman Sachs downgraded Woodside Energy to Neutral from Buy with a price target of A$35.90, down from A$38.30, on relative valuation. The firm notes Australian oil & gas producers continue to face regulatory uncertainty with recent confirmation that the 2018 Treasury review of Australia’s 40% Petroleum Resource Rent Tax gas transfer pricing was completed in April, spurring speculation that changes could be announced with the Federal Budget on May 9th. Goldman believes Woodside would be most exposed to potential PRRT reform across its coverage. The firm already forecasts PRRT payments for Woodside, however with 70% of its EBITDA over the near-term and 55% of its NAV currently subject to the tax, primarily exposed to gas transfer pricing reform risk, Goldman expects the market will increasingly price in regulatory uncertainty surrounding PRRT and thus adjusts the near-term multiple component of its Woodside valuation.