The Woodside Energy Group Ltd (ASX: WDS) share price has declined nearly 5% in the year to date, but could it be set to rebound?

Woodside shares have fallen 4.6% from $35.44 at market close on 30 December last year to $33.82 at the time of writing. Today, Woodside shares are up 0.24%.

Let’s check the outlook for the Woodside share price.

What’s ahead?

Citi has lifted the price target on Woodside shares to a “neutral” from “sell”.

Head of Energy James Byrne has upgraded Woodside following management briefings in Singapore, the Australian Financial Review reported.

He cited three reasons for the upgrade. Firstly, he is positive Woodside can deliver on crucial milestones for the company’s Senegal oil project. Byrne visited the shipyard constructing the production vessel, the publication noted.

Secondly, Byrne’s concerns about the impact of the federal government’s Petroleum Resources Rent Tax on Woodside have been alleviated.

In an announcement on 7 May, the federal government advised of changes to tax for LNG offshore gas projects. There will be a 90% cap on income that can be offset by deductions from 1 July 2023, in effect meaning “the offshore LNG industry pays more tax, sooner”.

However, the changes are “better than feared“, Byrne said in comments cited by The Western Australian and could leave Woodside “largely unscathed”, the publication noted.

Thirdly, Byrne noted Woodside management has new confidence it can sell down the Scarborough offshore gas project amid more regulatory certainty, the AFR reported. The project received primary approvals in 2022 but is still awaiting secondary approvals.

Citi’s price target is now $32 according to the publication, which implies a slight downside on the current share price.

Woodside’s Scarborough and Pluto Train 2 project construction is now “30% complete” and construction of key offshore and onshore infrastructure is ramping up, Woodside said in quarterly results at the end of April.

The company’s total quarterly production for the first quarter ended 31 March fell 9% compared to the previous quarter. However, sales, revenue, and production were significantly higher than in the first quarter of 2022.

The Brent crude oil price is currently up 0.79% to US$77.01 a barrel, according to Bloomberg.

Meantime, natural gas is down 0.5% to US$2.18 per MMBtu.

Share price snapshot

The Woodside share price has returned 11% in the last year.

Woodside has a market cap of about $64 billion based on the current share price

The post 3 reasons this top broker just upgraded the Woodside share price appeared first on The Motley Fool Australia.

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• Could this tax change end up burning the Woodside share price?

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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