Woodside Energy (WDS) - 2025 Q4 - Annual Report

Financial Performance - Woodside achieved a net profit after tax (NPAT) of $2.7 billion and underlying NPAT of $2.6 billion, resulting in a full-year dividend of 112 US cents per share[1134]. - Operating expenditure was $2,417 million, which was better than target, while EBITDA excluding impairment was $9,277 million[1134]. - Woodside's gross equity Scope 1 and 2 emissions were 6.616 Mt CO2-e, slightly above the target of 6.590 Mt CO2-e, reflecting ongoing efforts to reduce emissions[1207]. - The consolidated operating revenue for 2025 was $12,984 million, a decrease of 1.5% from $13,179 million in 2024[1271]. - Gross profit for 2025 was $4,536 million, down 20.1% from $5,678 million in 2024[1271]. - Profit after tax for 2025 was $2,737 million, a decline of 25% compared to $3,646 million in 2024[1271]. - The total assets of the Group increased to $66,501 million in 2025, up from $61,264 million in 2024[1273]. - Net cash from operating activities for 2025 was $7,192 million, significantly higher than $2,847 million in 2024[1274]. - The profit for the period ended 31 December 2025 was $2,737 million, an increase from the previous period[1276]. - Total comprehensive income for the period was $2,883 million, reflecting a significant increase in retained earnings[1276]. Production and Projects - Woodside's record production reached 198.8 MMboe in 2025, driven by strong performance from Sangomar and LNG reliability[1135]. - The Scarborough Energy Project advanced to 94% completion, with first LNG cargo on track for Q4 2026[1136]. - A final investment decision (FID) was made to develop Louisiana LNG, with the foundational phase 22% complete, targeting first LNG in 2029[1136]. - Woodside achieved a record production of 198.8 MMboe, exceeding the target by 11.8 MMboe due to strong performance at Sangomar and other assets[1207]. - The Scarborough Energy Project was 94% complete, with first LNG cargo expected in Q4 2026, and the Louisiana LNG project was 22% complete at year-end[1207]. Executive Remuneration and Incentives - The Corporate Scorecard performance outcome was 7.0 out of 10, with no discretionary adjustments applied[1137]. - The 2025 Executive Incentive Scheme (EIS) award was 130.3% of the target opportunity for each Executive KMP[1140]. - The Board approved a new Variable Annual Reward (VAR) scheme for 2026, separating short-term and long-term incentives[1145]. - Woodside's Executive KMP remuneration structure for 2025 includes a Fixed Annual Reward (FAR) and a Variable Annual Reward (VAR) delivered through the Executive Incentive Scheme (EIS) with a 70% corporate and 30% individual performance assessment[1172]. - The EIS award is subject to performance in each 12-month period, with corporate performance rated on a scale from 0 to 10, where a score of 5 indicates target achievement[1175]. - The minimum EIS award for an Executive can be zero if performance conditions are not met, while exceeding targets can lead to increased awards[1175]. - The performance period for the 2025 EIS award is from March 2026 to March 2031, with vesting occurring shortly after if performance hurdles are met[1175]. - The vesting schedule for Performance Rights is based on Woodside's relative total shareholder return (RTSR) percentile position, with no vesting below the 50th percentile[1176]. - Restricted Shares are divided into three tranches with deferral periods of five, four, and three years, creating a strong retention proposition for Executives[1176]. - The cash component of the remuneration is payable following the end of the 12-month performance year, specifically in the March 2026 pay cycle[1176]. - The Board has not exercised any discretion regarding the 2025 EIS award outcomes, ensuring alignment with shareholder interests[1175]. - The former CEO, Meg O'Neill, resigned on December 18, 2025, and is not eligible for any EIS award related to the 2025 performance[1161]. - Woodside's Acting CEO, Ms. Westcott, had her fixed annual remuneration (FAR) increased to A$1,803,000, which includes a higher duties allowance of A$600,000 per annum[1191]. - The FAR for Executive KMPs was adjusted, with Mr. Tiver's FAR increased to A$1,238,000, Mr. Kalms' to US$701,000, and Mr. Abbotsford's to A$998,000, effective January 1, 2025[1194]. - The 2019 Performance Rights under the EIS lapsed due to Woodside's relative total shareholder return (RTSR) performance being below the 50th percentile, resulting in a loss of A$710,012 in value for the former CEO and Executive KMPs[1199]. - The Board engaged KPMG and Meridian for external benchmarking of executive remuneration, focusing on ASX20 companies and 17 international oil and gas companies[1190]. - Woodside's Minimum Shareholding Requirements (MSR) Policy mandates Executive KMP to acquire shares worth at least 100% of their FAR after five years, and 200% for the CEO[1187]. - The Woodside Equity Plan (WEP) allows eligible employees to build equity in the company, with no ongoing performance conditions for the offered Equity Rights[1199]. - The Supplementary Woodside Equity Plan (SWEP) was updated in 2022 to broaden eligibility to all employees of Woodside subsidiaries[1183]. - The Board retains discretion over the treatment of EIS awards upon cessation of employment, with specific conditions for resignation or termination for cause[1191]. - The Board may adjust vesting outcomes for Performance Rights to better reflect shareholder expectations or management performance[1198]. - The new 2026 Variable Annual Reward structure increases the proportion of equity-based remuneration at risk, with Performance Rights comprising 58% of the target STI compared to 27.5% under the existing structure[1225]. - The target STI for Executive KMP is set at 150% of Fixed Annual Reward (FAR), with a maximum of 225% of FAR, while the LTI opportunity remains at 200% of FAR[1230]. - The Corporate Scorecard for the STI includes 20% for EBITDA, split into 10% adjusted EBITDA and 10% unadjusted EBITDA, enhancing transparency and fairness in performance evaluation[1230]. - The new LTI structure includes a three-year performance period followed by a two-year service condition, ensuring long-term alignment with shareholder interests[1232]. - The vesting threshold for the ROACE measure in the LTI is set at 7%, with maximum vesting achieved at 8.4%[1234]. - The weighting of financial metrics in the Corporate Scorecard has increased to 40%, strengthening alignment between executive remuneration and shareholder experience[1230]. - Any portion of the STI award above target will be delivered entirely as Restricted Shares, reinforcing alignment with shareholders[1224]. - The new LTI structure focuses on long-term value creation by delivering awards entirely as Performance Rights, ensuring over 50% of variable reward is long-term[1232]. - The Board retains discretion to determine the treatment of STI and LTI awards upon cessation of employment, ensuring flexibility in management[1237]. Sustainability and Climate Considerations - The Group has prepared a separate sustainability report in accordance with AASB S2, addressing climate considerations[1290]. - Woodside's long-term price assumptions reflect management's current best estimate scenario regarding global decarbonisation goals[1291]. - The energy transition may lead to changes in the expected useful life of oil and gas properties, potentially accelerating depreciation charges[1300]. - The Group continues to monitor climate change risks to assess if additional changes to restoration provisions should be recognized[1304]. - Climate risks may affect the assumptions used to assess forecast cash flows of long-term contracts, including pricing forecasts and discount rates[1305]. - The recoverability of deferred tax assets is dependent on the Group's future taxable income, which may be impacted by commodity and carbon pricing uncertainties[1307]. - The Group's revenue is exposed to commodity price fluctuations, and management regularly performs stress testing to assess financial position under low commodity price scenarios[1315]. Shareholder and Market Information - The Group's shares are publicly traded on both the Australian Securities Exchange (ASX) and the New York Stock Exchange (NYSE)[1277]. - The financial statements comply with International Financial Reporting Standards (IFRS) and Australian Accounting Standards[1279]. - Woodside's accounting policies remain materially consistent with those disclosed in the 2024 Financial Statements[1280]. - As of December 31, 2025, the Group recognized $274 million in carbon credits within inventory, an increase from $202 million in 2024[1302]. - 56% of the Group's non-current restoration liabilities are expected to be settled more than 10 years in the future, up from 53% in 2024[1303]. - The Group held commodity hedging financial instruments with a net asset carrying value of $176 million as of the reporting date, compared to $27 million in 2024[1317]. - An increase in relevant commodity prices of 10% would decrease the carrying value of hedging instruments by $77 million, with the same effect for a 10% decrease[1317].