Woodside Energy (WDS) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Woodside reported a record annual production of 194 million barrels of oil equivalent in 2024, achieving the top end of its guidance range [6][35] - The net profit after tax for 2024 was $3.6 billion, a significant increase from 2023, with earnings per share at$ 1.89 [9][37] - The company reduced its unit production cost to $8.10 per barrel of oil equivalent, demonstrating efficiency in an inflationary environment [8][36] Business Line Data and Key Metrics Changes - The Sangomar project significantly contributed to production, achieving nameplate capacity of 100,000 barrels per day within nine weeks of startup [21][49] - The Scarborough Energy project is 80% complete and on track for its first LNG cargo in 2026 [50][51] - The Beaumont New Ammonia project is 83% complete, targeting first ammonia production in the second half of 2025 [53][54] Market Data and Key Metrics Changes - Emerging Asia is expected to drive LNG demand as countries seek to reduce coal reliance, with a potential requirement of 310 billion cubic meters of gas per year [15][43] - New long-term supply agreements with major Asian energy customers reflect robust LNG demand in the region [16][44] - Project delays are expected to cause a supply growth slip of almost 30 million tons per annum beyond the end of the decade, indicating a strong price environment for LNG [45][46] Company Strategy and Development Direction - Woodside aims for a 4% to 5% compound annual growth rate for portfolio sales from 2024 to 2030, positioning itself to capitalize on growing global energy demand [12][40] - The company is focused on executing its growth strategy and progressing new opportunities for long-term success, including the Louisiana LNG project [27][28] - Woodside's strategy includes streamlining its asset base to prioritize high-value projects and reducing exploration activity to enhance shareholder value [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in LNG's role in the energy transition, citing strong fundamentals driving global energy demand [14][42] - The company anticipates generating significant free cash flow as new projects come online, providing options for shareholder returns [41][65] - Management highlighted the importance of maintaining a disciplined approach to capital management and shareholder distributions [58][62] Other Important Information - Woodside's net equity Scope 1 and 2 emissions were reduced by 14% below the starting base, aligning with its climate commitments [7][69] - The company injected over$ 7.9 billion into local economies through the purchase of local goods and services in 2024 [70][71] - Woodside is the fifth largest taxpayer in Australia and the largest payer of petroleum resource rent tax [81][82] Q&A Session Summary Question: Comments on decommissioning costs - Management noted that approval delays have pushed some decommissioning work into 2024, focusing on cleaning up legacy assets [88][90] Question: Update on Beaumont New Ammonia project - The project is on track to meet a return on investment greater than 10%, with ongoing unit cash production costs expected to be between $260 to$ 300 per ton [96][98] Question: Update on Louisiana LNG sell-down process - Management confirmed that the sell-down process is well advanced, with expectations of attracting quality partners and achieving a premium price [113][115] Question: Progress on Sangomar Phase 2 - Management indicated that more data is needed over the next 12 to 24 months to inform decisions on reserves for Phase 2, with ongoing production performance being monitored [119][121]