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Woodside Energy Group Limited (NYSE:WDS) disclosed a deal to acquire 100% of OCI Global’s equity interests in the Clean Ammonia project under construction in Beaumont, Texas, for $2.35 billion on a cash-free and debt-free basis.
The purchase price will be split, with 80% paid at closing and the remaining 20% settled upon project completion, defined as when the plant meets the agreed-upon terms and conditions.
Situated in Beaumont, Texas on the U.S. Gulf Coast, the project will cater to both domestic and international markets.
Phase 1, under construction, has a design capacity of 1.1 Mtpa, with initial ammonia production from natural gas expected in 2025.
Lower-carbon ammonia, produced using natural gas and carbon sequestration, is planned for 2026 after CCS operations begin.
The facility is designed to support a second 1.1 Mtpa production train (Phase 2), which is still in the pre-final investment decision (FID) stage.
Woodside aims to achieve FID readiness for Phase 2 by 2026, with anticipated capital expenditures between $1.2 and $1.4 billion.
Returns & Synergies: Phase 1 is projected to surpass Woodside’s 10% internal rate of return (IRR) target for new energy projects, including acquisition and construction costs, and to achieve payback in under 10 years.
Phase 2 is expected to deliver even better returns by utilizing shared infrastructure. The deal is projected to be accretive to free cash flow starting in 2026 and to earnings per share from 2027.
The transaction is anticipated to close in the second half of 2024, pending the fulfillment of standard closing conditions and OCI shareholder approval.
Woodside CEO Meg O’Neill said, “This transaction positions Woodside in the growing lower carbon ammonia market. The potential applications for lower carbon ammonia are in power generation, marine fuels and as an industrial feedstock, as it displaces higher-emitting fuels.”
“Global ammonia demand is forecast to double by 2050, with lower caWoodside Expands Clean Energy Footprint with $2.35B Ammonia Acquisitionrbon ammonia making up nearly two-thirds of total demand.”
“This acquisition is a material step towards delivering our Scope 3 investment and abatement targets. Phase 1 has the capacity to abate 1.6 Mtpa of CO2 -e and with the addition of Phase 2 the project has the capacity to abate 3.2 Mtpa CO2 -e, or over 60 percent of our Scope 3 abatement target.”
Also Read: Tellurian Shares Soar on $1.2B Woodside Deal: Details
Price Action: WDS shares are down 3.90% at $16.74 premarket at the last check Monday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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