Woodside Energy (WDS) - 2025 H1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a net profit after tax of over $1.3 billion, with earnings of $0.69 per share, reflecting strong financial performance despite lower realized prices and inflationary pressures [5][27][34] - Unit production costs were reduced by 7%, bringing the average to $7.70 per barrel of oil equivalent, with guidance for the full year set between $8.00 and $8.50 [5][8][49] - The interim dividend was set at $0.53 per share, representing a half-year annualized yield of 6.9%, consistent with the company's policy to pay a minimum of 50% of underlying NPAT [4][34][80] Business Line Data and Key Metrics Changes - Sangomar's production reached 548,000 barrels of oil equivalent per day, contributing significantly to the overall production of 99.2 million barrels of oil equivalent [4][5] - Marketing and trading activities generated a strong contribution of $144 million, accounting for approximately 8% of total EBIT [5][27] - The Louisiana LNG project is 22% complete, with a target for first LNG cargo in 2026, and has secured long-term offtake agreements [19][20][22] Market Data and Key Metrics Changes - The global LNG demand is expected to rise by approximately 60% by 2040, driven by increasing energy consumption in non-OECD Asia Pacific countries [13][14] - Gas hub exposure on produced LNG was 24.2%, realizing a premium of approximately 3% per MMBtu compared to oil-linked sales [15] - The company is well-positioned to meet growing LNG demand with projects like Scarborough and Louisiana LNG in the pipeline [14][15] Company Strategy and Development Direction - The company aims to maximize value through its global marketing and trading business, leveraging its diverse portfolio of high-quality assets [14][15] - The strategic acquisition of operatorship of Bass Strait assets from ExxonMobil is expected to enhance operational capabilities and unlock additional gas resources [11][12] - The company is focused on sustainable operations, with no significant environmental impacts reported and a commitment to reducing greenhouse gas emissions [4][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong returns and navigate the energy transition, emphasizing the importance of safety and sustainability [41][39] - The ongoing exceptional performance of Sangomar and the strategic positioning of Louisiana LNG were highlighted as key drivers for future growth [11][19] - Management acknowledged the challenges in securing federal approvals for the North West Shelf Extension but remains optimistic about a positive outcome [10][10] Other Important Information - The company has maintained a strong liquidity position with $8.4 billion available, and gearing remains within the targeted range of 10% to 20% [36][37] - Significant contributions to the Australian economy were noted, with $1.3 billion paid in taxes, royalties, and levies during the half [40] - The company is actively managing its decommissioning operations, with lessons learned from past challenges being integrated into future planning [26][68] Q&A Session Summary Question: Update on Sangomar's performance and Phase two development - Management confirmed positive initial results from the S-four 100 sand units and indicated that further data will inform decisions around Phase two development [46][48] Question: Insights on unit production cost reductions - Management attributed the reduction in unit production costs to strong performance at Sangomar and ongoing cost control measures across the business [49][50] Question: Status of Louisiana LNG equity sell-down negotiations - Management stated that the project remains advantageous, with competitive construction costs and a disciplined approach to selecting partners [52][54] Question: Update on Beaumont Demonia's production schedule - Management clarified that delays were due to construction issues managed by OCI, with no cost impact to Woodside, and emphasized the focus on marketing efforts [56][58] Question: Development opportunities in Bass Strait - Management expressed excitement about the operatorship transition and the potential for developing long-standing gas discoveries [64][65] Question: Update on MOU with Aramco - Management confirmed ongoing constructive discussions with Aramco regarding investment opportunities in LNG and low carbon ammonia [73][74] Question: Dividend payout and balance sheet management - Management reassured that the strong performance and disciplined capital management support the decision to maintain a high payout ratio [77][80] Question: Update on LNG carrier plans - Management indicated a preference for leasing LNG carriers rather than owning them, with ongoing evaluations of balance sheet exposure [98][99]