Woodside Energy (US:WDS)2022-08-30 06:08Financial Data and Key Metrics Changes - The first half profit of Woodside Energy reached US$1.6 billion, a fourfold increase from the first half of 2021, with an underlying profit of US$1.8 billion after excluding one-off merger costs [7][24] - Operating cash flow was US$2.5 billion, indicating positive cash flow despite capital expenditure commitments [7][27] - Revenue generated was US$5.8 billion, with free cash flow of US$2.6 billion, up 688% from the first half of 2021 [8][20] Business Line Data and Key Metrics Changes - The average portfolio realized price was US$96.40 per barrel of oil equivalent, reflecting strong demand and effective marketing strategies [9] - Production volumes reached 54.9 million barrels of oil equivalent, benefiting from the merger and operational efficiencies [9][25] - Unit production costs increased to US$7.20 per barrel of oil equivalent, primarily due to structural changes in the portfolio rather than inflationary pressures [28][29] Market Data and Key Metrics Changes - The average realized price for LNG was US$13.80 per MMbtu in the June quarter, slightly lower than the previous quarter despite rising JCC oil and JKM prices [50] - Woodside's exposure to gas hub pricing was approximately 18% of produced LNG, with expectations to reach 20% to 25% for the full year [14][72] Company Strategy and Development Direction - The merger with BHP's Petroleum business has transformed Woodside into a significant player in the global energy sector, enhancing scale and resilience [4][6] - The company is focused on capitalizing on opportunities in lower carbon products and services, aligning with the energy transition strategy [6][22] - Woodside aims to maintain an investment-grade credit rating while balancing capital returns and growth, with a target gearing range adjusted to 10% to 20% [32][34] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of energy security in global markets, particularly in light of geopolitical events affecting commodity prices [14] - The company anticipates increasing demand for LNG, particularly from Europe, as it seeks to reduce reliance on Russian gas [19] - Management expressed confidence in the merger's benefits, citing strong financial results and the ability to invest in new energy opportunities [95] Other Important Information - The interim dividend declared was 109 U.S. cents per share, reflecting a commitment to shareholder returns and the highest interim dividend since 2014 [36][38] - Woodside has paid approximately AUD12 billion in taxes, royalties, and excise since 2011, demonstrating its significant contribution to the economy [20] Q&A Session Summary Question: How will Woodside balance capital returns with growth given the upcoming CapEx? - Management emphasized the importance of maintaining a strong balance sheet while returning value to shareholders, with a commitment to an 80% payout ratio under current market conditions [48] Question: What is the status of Scarborough gas contracting? - Management confirmed ongoing discussions with potential buyers and will communicate updates when available [52] Question: Can you provide an update on the Scarborough sell-down process? - Management reiterated the importance of finding the right partner at the right price and is not driven by a schedule [58] Question: Is there a possibility of updating the dividend policy? - Management stated that the current dividend policy based on NPAT is appropriate and has been modeled extensively [79] Question: What is the target start-up date for Sangomar? - Management confirmed the target for first oil from Sangomar is in the second half of 2023 [81]