Woodside Faces December Strike Vote at Pluto LNG 2: Is This 7% Yielder Still Worth Buying?

Woodside Energy (ASX: WDS) shares slipped this week as investors balanced mixed headlines: Australia’s Fair Work Commission has approved a union request to hold a strike ballot by 4 December at the company’s Pluto LNG 2 expansion project in a pay dispute, while at the same time Woodside signed a cooperation deal with Timor-Leste to push forward the long-delayed Greater Sunrise gas fields. With shares trading at a P/E ratio of around 9.7x and offering a dividend yield of 6-7%, the question for income investors is whether this dip represents a buying opportunity or a warning sign.

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Strike Vote Could Delay Pluto 2 First Gas, But Project Remains on Track

The labour dispute centres on a significant pay gap. Workers at Pluto 2 are currently receiving an hourly rate that is 30% less than workers doing the same job at the Wheatstone project when factoring in changes in the consumer price index. The union wants Bechtel, the project contractor, to close this gap with a 30% pay rise.
What does this mean for investors? If the strike is approved, it would delay the start of production at Pluto LNG 2, which was scheduled for the second half of 2026. However, there’s an important silver lining: Pluto 2 is already 91% complete. This means we’re looking at a potential delay, not a project cancellation. The expansion will add 5 million tonnes of annual LNG capacity to Woodside’s portfolio once complete.
In our view, the strike risk is real but manageable. Similar disputes at Australian LNG projects have historically been resolved through negotiation, and with the project nearing completion, both sides have strong incentives to reach a deal.

Greater Sunrise Deal Unlocks Decades of Stalled Potential

While strike headlines grab attention, the Greater Sunrise agreement could prove more significant for long-term investors. Woodside has signed on the dotted line with the Ministry of Petroleum and Mineral Resources of Timor-Leste to carry out studies and activities to mature a Timor-based LNG concept.
Why does this matter? The Greater Sunrise fields, discovered in the 1970s, hold an estimated 5.3 trillion cubic feet of gas but have remained undeveloped for decades due to political negotiations, maritime boundary disputes, and disagreements over processing locations. Simply put, this is one of the region’s largest untapped gas resources that’s been stuck in limbo for 50 years.
Under the agreement, the parties will carry out commercial and technical maturation activities for a greenfield Timor-based approximately 5 million tonnes per year LNG concept with a domestic gas facility and a helium extraction plant. The target timeline is first LNG as early as 2032-2035, subject to concept selection and investment decisions. This won’t boost earnings anytime soon, but it signals Woodside is actively building its growth pipeline beyond current projects. Think of it as valuable optionality that the market isn’t fully pricing in.

Q3 Results Show the Business Remains Solid

Recent quarterly results provide reassurance that the core business is performing well. Woodside’s revenue for the September quarter fell 9% year-on-year to $3.36 billion, largely driven by an 8% drop in average realised oil prices. Lower commodity prices hurt, but that’s an industry-wide issue rather than a Woodside-specific problem.

The operational picture looks much better:

– Quarterly production of 50.8 MMboe was up 1% from Q2 2025
– Pluto LNG achieved an outstanding reliability of 100% for the quarter
– Management raised full-year 2025 production guidance to 192-197 MMboe, up from 188-195 MMboe previously

This tells us the assets are running smoothly and management has confidence in near-term output. For a company facing strike uncertainty, that operational strength provides a solid foundation.

The Investor’s Takeaway

At current levels, Woodside offers a compelling combination: a P/E ratio of 9.70 and a dividend yield of 6.46% that is well covered by earnings. For context, this is cheaper than many global energy peers and offers one of the highest yields on the ASX.

Key risks to consider:

– Strike uncertainty: A yes vote in December could push Pluto 2’s first gas beyond H2 2026
– Commodity exposure: Revenue will remain volatile with oil and LNG prices
– Capital demands: Multiple growth projects require disciplined spending

Our view: The strike risk appears largely priced into the current valuation. For income-focused investors comfortable with energy sector volatility, Woodside’s high yield, solid operations, and Greater Sunrise optionality make it worth holding at these levels. If you’re looking to start a new position, consider waiting until after the 4 December strike vote for clarity. A resolution could provide a near-term catalyst, while a prolonged dispute might offer a better entry point for patient investors.