Woodside Energy (US:WDS)2019-08-15 08:16Financial Data and Key Metrics Changes - The net profit for the first half of 2019 was $419 million, with an interim dividend of $0.36 per share [7][8] - Operating cash flow reached almost $1.5 billion, and free cash flow was $869 million, more than double the free cash flow from the first half of 2018 [8][22] - The company achieved production of 39 million barrels of oil equivalent despite planned turnarounds and disruptions from Tropical Cyclone Veronica [8][21] - The financial position remains robust, with a gearing increase to 18% primarily due to a new leasing standard [29][30] Business Line Data and Key Metrics Changes - Production from the North West Shelf and Wheatstone projects was strong, while Pluto production was down due to a planned turnaround [20][21] - The company expects 2019 production to be at the lower end of the 88 million to 94 million barrel range [21] - The unit production cost for North West Shelf remained competitive at under $4 per barrel of oil equivalent, while Wheatstone's production cost was reduced to $4.40 per barrel [26][27] Market Data and Key Metrics Changes - The demand forecast for LNG continues to grow, with projected demand by 2030 rising by 88 million tons per annum [17] - The company expects around 20% of LNG sales volumes to be exposed to spot pricing in the second half of the year [24][62] - The LNG realized price was higher than in the corresponding period, although partially offset by increased exposure to a soft spot market [24] Company Strategy and Development Direction - The growth strategy is aligned with the expected supply gap in the 2020s, with a strong appetite for LNG from China and Southeast Asia [17][18] - The company is focused on advancing approvals and technical work for key projects, including Scarborough and Pluto Train 2 [19][37] - The company aims to contract more than 50% of LNG volumes from Scarborough before FID, with a focus on maintaining price reopens in contracts [81][84] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth projects and the ability to deliver on schedule and budget [36][40] - The company is prepared for the next steps in project development, with a focus on securing commercial agreements [39][40] - Management acknowledged the challenges in financing projects, particularly in Senegal, but remains optimistic about project execution [88][90] Other Important Information - The company raised $1.5 billion from a senior unsecured bond, the largest in its history, to strengthen its balance sheet [28] - The anticipated investment expenditure for 2019 is in the range of $1.45 billion to $1.55 billion, with a greater capital intensity expected in the second half [32] Q&A Session Summary Question: Regarding the Burrup Hub and project sanctioning - Management clarified that projects are sanctioned based on a $65 flat real pricing deck, ensuring robustness without assuming rising prices [45][46] Question: On balance sheet preparation ahead of CapEx - The decision to activate the dividend reinvestment plan was to prepare the balance sheet for growth projects, with liquidity in good shape [49][51] Question: On the Pluto and North West Shelf interconnect startup - The startup has been slightly delayed to early 2022, driven by the approvals process [57][58] Question: On uncontracted LNG sales portfolio - Management aims to keep uncontracted LNG sales below 15% to 20%, adjusting strategies based on market conditions [62] Question: On Scarborough asset sales - The process has slowed due to unresolved tolling agreements, with a target to finalize negotiations by year-end [72][74] Question: On financing issues for the SNE project - The main issue is project financing, with ongoing arbitration causing uncertainty [90]