Woodside Energy Group Ltd · ASX:WDS
Woodside Energy — Woodside Petroleum — Investor Day (November 2020)
70 slides from Woodside Energy's investor day presentation, Nov 11, 2020
Slide 1: ASX Announcement: Investor Briefing Day 2020
ASX Announcement Woodside Petroleum Ltd. ACN 004 898 962 Mia Yellagonga Wednesday, 11 November 2020 11 Mount Street Perth WA 6000 ASX: WPL Australia OTC: WOPEY T +61 8 9348 4000 www.woodside.com.au INVESTOR BRIEFING DAY 2020 Woodside has risen to the challenges of 2020, delivering exceptional operat
Slide 2: Webcast access and contacts
To access the live webcast of the Investor Briefing Day, please follow the link at www.woodside.com.au. The webcast will commence at 0930 AWST/1230 AEDT. A copy of Woodside’s Investor Briefing Day 2020 slide pack is attached. Contacts: INVESTORS MEDIA Damien Gare Christine Forster W: +61 8 9348 4421
Slide 3: Investor Briefing Day 2020
INVESTOR BRIEFING DAY 2020 11 November 2020 www.woodside.com.au investor@woodside.com.au
Slide 4: Welcome
INTRODUCTION Welcome Overview Peter Coleman, CEO and Managing Director Climate Dr Tom Ridsdill-Smith, Senior Vice President Climate Developments Meg O’Neill, Executive Vice President Development and Marketing Operations Fiona Hick, Senior Vice President Operations New energy Shaun Gregory, Executive
Slide 5: Disclaimer, risk and assumptions
INTRODUCTION Disclaimer, risk and assumptions Disclaimer and risks • Our investors and potential investors have requested that Woodside continues to provide further detail and information in respect of Woodside’s overall strategic approach and its potential implications for the company. This present
Slide 6: Overview
OVERVIEW Peter Coleman CEO and Managing Director 4 Investor Briefing Day 2020
Slide 7: Delivering value through unprecedented times
OVERVIEW Delivering value through unprecedented times • Delivering record production STRONG FOUNDATIONS • Preparing for major investment decisions • Strong balance sheet PROACTIVE • Energy demand destruction RESPONSE • Price volatility • Impact of pandemic to supply chain and people PROTECTING • Ong
Slide 8: Robust hydrocarbon business to drive value
OVERVIEW Robust hydrocarbon business to drive value LNG is required in a decarbonising world Cost-competitive LNG producer Targeting Operating and developing world-class assets FID H2 2021 Prudent capital management Scarborough and Pluto Train 2 Pursuing value accretive inorganic growth All dates ar
Slide 9: Providing value through the energy transition
OVERVIEW Providing value through the energy transition 1 2 3 4 Resilient Develop large scale Assess CCS Demonstrate and hydrocarbon carbon offsets opportunities develop hydrogen business opportunity Hydrocarbons New energy Investor Briefing Day 2020 7
Slide 10: A value-creating culture
OVERVIEW A value-creating culture Refreshed leadership team Sector leading diversity and inclusivity Engaged workforce Investor Briefing Day 2020 8
Slide 11: Climate
CLIMATE Dr Tom Ridsdill-Smith Senior Vice President Climate 9 Investor Briefing Day 2020
Slide 12: The world needs affordable and clean energy
CLIMATE The world needs affordable and clean energy Energy and global economic development1 APAC middle class growth2 Australia 6 • Human and economic High development requires clean Middle class population (billion) and affordable energy 2017 GDP per capita (US$) • Increased energy is required 4 as
Slide 13: Affordable energy and Paris Agreement goals
CLIMATE Affordable energy and Paris Agreement goals • The Paris Agreement requires contributing countries to aim for net zero emissions in the second half of the century • The policies to achieve this goal are nominated through Nationally Determined Contributions • Woodside considers a range of cred
Slide 14: Gas will remain a key part of the global energy mix
CLIMATE Gas will remain a key part of the global energy mix Strong APAC natural gas 2019 APAC natural gas demand demand in SDS and STEPS 1,500 28% Industrial APAC (STEPS) • Natural gas is used in a wide 1,200 range of sectors, including many APAC (SDS) hard-to-abate sectors 15% Residential 900 • Nat
Slide 15: LNG demand grows in a Paris-compliant world
CLIMATE LNG demand grows in a Paris-compliant world Global LNG demand LNG advantages 800 Relatively low carbon with CCS potential to Secure STEPS lower further 600 Million tonnes SDS Sustained demand under Delivers improved air 400 Paris-compliant scenarios quality 200 Enables stability in Destinati
Slide 16: LNG is aligned with customer decarbonisation
CLIMATE LNG is aligned with customer decarbonisation “Combine renewable energies with clean Active in industry natural gas to achieve a stable and inexpensive supply of energy” Net zero CO2 emissions ~2050 Working with our customers to meet their “Strengthen the resilience of the natural lower-carbo
Slide 17: Leading LNG portfolio mix
CLIMATE Leading LNG portfolio mix LNG proportion of total hydrocarbon production (2019) 100% 75% 50% 25% 0% Woodside Shell ExxonMobil Chevron¹ ConocoPhillips² Total³ Marathon Oil BP 4 Eni Equinor Source: IHS Markit 1. Does not include Noble acquisition. 2. Prior to Concho acquisition. 3. Proposing t
Slide 18: Clear targets for decarbonising our production
CLIMATE Clear targets for decarbonising our production Near- Medium- Long- Delivered term term term Over 2.7Mt CO2-e offset 15% below 30% below Net zero or avoided baseline by baseline by aspiration for to date1 20252,3 20303 2050 or sooner Decarbonising production Avoid in design • Reduce through e
Slide 19: Decarbonisation strategy is working
CLIMATE Decarbonisation strategy is working Avoid emissions Case study: Goodwyn-A battery saves over Over 2.7Mt Offset emissions 3,000 tonnes of fuel gas and CO2-e offset Case study: 44 million 7,000 tonnes of CO2-e or avoided to trees planted since 2008, emissions each year date1 sequestering appro
Slide 20: Investor Briefing Day 2020
INVESTOR BRIEFING DAY 2020 11 November 2020 www.woodside.com.au investor@woodside.com.au
Slide 21: Developments
DEVELOPMENTS Meg O’Neill Executive Vice President Development and Marketing 19 Investor Briefing Day 2020
Slide 22: Unlocking significant value
SCARBOROUGH AND PLUTO TRAIN 2 Unlocking significant value Large, world-class • 11.1 Tcf of dry gas1 resource • Well appraised reservoir • Leveraging existing infrastructure Capital efficient • Increasing capacity concept • Low unit development and operating costs Advantaged • Contractor market timin
Slide 23: Journey to FID
SCARBOROUGH AND PLUTO TRAIN 2 Journey to FID Initial acquisition Woodside FID deferred to H2 2021 Production of 25% commenced FEED Licence Scarborough activities interest 2016 2018 2019 2019 2020 2020 2020 2021 Sep Mar Jan Nov Mar Apr Nov H2 Increased Scarborough Resource Offshore Project Target FID
Slide 24: Transformative impact
SCARBOROUGH AND PLUTO TRAIN 2 Transformative impact Reserves and resources1 1,433 35 billion MMboe 1,212 1,213 ~$ 903 expected net cash flow2 Production to date Remaining > 12% internal rate of return3 production North West Shelf Pluto Total 2P reserves Scarborough 1. Woodside equity. Includes Pluto
Slide 25: Competitive and value accretive
SCARBOROUGH AND PLUTO TRAIN 2 Competitive and value accretive Pre-FID LNG cost of supply1 6.7 per boe 9 Wood Mackenzie competitive band LNG price DES North Asia ($/MMBtu) ~$ 6 unit development cost2 6.8 per MMBtu 3 <$ cost of supply3 0 Obskiy Qatar PNG LNG Papua LNG Scarborough/ Rovuma LNG US @ $2 U
Slide 26: Scarborough LNG supports decarbonisation
SCARBOROUGH AND PLUTO TRAIN 2 Scarborough LNG supports decarbonisation Pluto Train 2 greenhouse gas intensity1 0.5 Negligible CO2 in reservoir Adopting best available proven technology tCO2-e/t LNG 0.25 Low emissions intensity from Pluto Train 2 Aligned with decarbonisation strategy 0 Australian Int
Slide 27: Maximising value
SCARBOROUGH AND PLUTO TRAIN 2 Maximising value Offshore Pluto LNG Reservoir Floating production unit • 11.1 Tcf dry gas (2C, 100%) • Increasing capacity from 6.5 Mtpa Pluto Train 1 • 1.4 billion boe (2C, Woodside to 8 Mtpa + domestic gas • Initially 1.5 Mtpa of Scarborough gas share) • Topside weigh
Slide 28: Robust contracting strategy
SCARBOROUGH AND PLUTO TRAIN 2 Robust contracting strategy Strong contractor relationships Subsea, umbilicals, risers and flowlines High confidence contracting model Floating production De-risking cost and schedule unit Total project contractor scope targeted breakdown1 Export trunkline installation
Slide 29: Pluto Train 2 increases value
SCARBOROUGH AND PLUTO TRAIN 2 Pluto Train 2 increases value • NWS is not designed for large volumes of Scarborough gas Pluto Train 2 has • A new train is more cost efficient than modifications to NWS lower overall cost • Extends economic life of Pluto LNG at minimal cost Shortest • • Scarborough to
Slide 30: Readying for FID
SCARBOROUGH AND PLUTO TRAIN 2 Readying for FID Stronger approvals position Advantageous contractor market Targeting Targeting Unchanged LNG market fundamentals FID first cargo 2026 H2 2021 Aligned joint venture Increased value proposition All dates are Woodside targets (unless otherwise indicated).
Slide 31: Sangomar schedule on track; COVID-19 impacts mitigated
SANGOMAR FIELD DEVELOPMENT PHASE 1 Sangomar schedule on track; COVID-19 impacts mitigated • VLCC tanker delivered • Tank cleaning nearing completion • Tanker due to arrive at shipyard in November Execution progressing • Detailed design of the FPSO well advanced Targeting • Subsea fabrication on sche
Slide 32: Significantly increased seismic quality
SANGOMAR FIELD DEVELOPMENT PHASE 1 Significantly increased seismic quality Legacy 2007 3D single azimuth reflectivity Value added • Completed processing of high definition seismic data 25m W E • Supports simplification and de-risking of 500m Phase 1 drilling program New 2019 3DHD multi-azimuth refle
Slide 33: Browse: Preparing for FEED
BROWSE Preparing for FEED • Browse Joint Venture aligned on development through the North West Shelf Browse North • Production Licence and Retention Lease Rankin applications under assessment by regulators Complex • Environmental approval processes well advanced • Assessing feasibility of potential
Slide 34: Operations
OPERATIONS Fiona Hick Senior Vice President Operations 32 Investor Briefing Day 2020
Slide 35: Outstanding operational performance
OPERATIONS Outstanding operational performance Strong safety performance High LNG reliability 1.64 • 18% increase in year-on-year 100% 98.6% production year to date1 1.32 Annual total recordable injury rate 1.29 • Uncompromising safety performance 75% • Immediate and proactive response 0.90 0.83 to
Slide 36: Learning from COVID-19
OPERATIONS Learning from COVID-19 Proactive response Embedded actions • Immediate workforce reorganisation • Digital capability enhancement • Temporary rosters in front-line locations • Remote subsea and pipeline inspection • Segregation of onsite and offsite staff • Resilient staffing philosophy fo
Slide 37: Delivering our climate commitments
OPERATIONS Delivering our climate commitments Current commitments Enablers Targets On track to deliver 5% improvement against energy efficiency baseline in 20201 • Increased governance and Near- 15% below baseline 2016 2017 2018 2019 Sep 2020 YTD communication of emissions term by 20253 0.0% perform
Slide 38: Continual focus on cost
OPERATIONS Continual focus on cost Low gas unit production cost 2021 priorities 6.0 • Low-cost and high reliability is a key driver of value 4.0 In 2020: $/boe • Targeting ~15% reduction in • Maintenance efficiency 2.0 NWS cash operating cost2 • Safely modifying 0.0 turnaround schedule 2016 2017 201
Slide 39: Transforming operations to maintain low cost
OPERATIONS Transforming operations to maintain low cost Targeting 30% efficiency improvement for operated assets over 3 years People • Enabled workforce • Organisational redesign Process • Automated workflows • Agile, adaptive and scalable operating model • Transition from producer to tolling busine
Slide 40: New energy
NEW ENERGY Shaun Gregory Executive Vice President Sustainability 38 Investor Briefing Day 2020
Slide 41: A future business in new energy
NEW ENERGY A future business in new energy Synergies Strong Strategic fit with existing reputation with net zero capabilities and aspiration and assets relationships Technology Market driven enabled Scalable to match the pace of the energy transition Investor Briefing Day 2020 39
Slide 42: Rebalanced expenditure is creating new opportunities
NEW ENERGY Rebalanced expenditure is creating new opportunities Increased investment in new energy 100% • Green H2 projects shortlisted for ARENA funding Hydrogen Partnering with Hyundai and KOGAS to develop refuelling Hydrogen • stations in South Korea Carbon • H2 value chain feasibility with JERA
Slide 43: Competitive CCS is a scale play
NEW ENERGY Competitive CCS is a scale play; supports a sustainable future Identify Potential geo-sequestration basins for carbon storage1 Locating suitable reservoir sinks for carbon geographical removal Browse Basin formations 0.7 Gt North West Shelf Pluto Aggregate Potential to source carbon from
Slide 44: Building a carbon offsets portfolio
NEW ENERGY Building a carbon offsets portfolio Decreasing portfolio cost1 Increasing portfolio diversification1 • Building a diverse, cost competitive portfolio comprising origination projects and market- based offsets CCS • Established planting program with CO2 Australia <$15 Building carbon projec
Slide 45: Positioning to succeed in a growing hydrogen market
NEW ENERGY Positioning to succeed in a growing hydrogen market Woodside advantages Carbon-neutral Transport and End use hydrogen production storage • Ability to leverage existing infrastructure • Experienced in processing and storage of cryogenic gases Electrolysis Heavy vehicle transport • Establis
Slide 46: Governments are stimulating hydrogen in key markets
NEW ENERGY Governments are stimulating hydrogen in key markets Blue and green hydrogen demand2 USA China Japan ~$64 million in 2020 ~$2.5 billion by 2024 ~$736 million in 2020 75 Mt equates to 80 ~200 Mt of LNG3 Blended into gas grid Chemicals and steel 60 South Korea million tonnes ~$11 billion by
Slide 47: Technology improvements and scale will reduce hydrogen cost
NEW ENERGY Technology improvements and scale will reduce the cost of hydrogen Technology cost reduction trajectories1 Hydrogen technologies (2020)2 Comparative technologies (2010-20)2 100 • Renewable power costs have 80 reduced with scale Costs expected to decline Wind onshore • Lower renewable powe
Slide 48: Green hydrogen can be competitive with diesel
NEW ENERGY Green hydrogen can be competitive with diesel Estimated cost of supply1 Proposed H2TAS project 10 MW (4.5 tonnes H2 per day) green hydrogen production facility Diesel equivalent price range $/kg H2 Electrolyser Electrolyser Balanceof Balance Power Power Operating OPEX Government Governmen
Slide 49: Right steps to a profitable future business
NEW ENERGY Right steps to a profitable future business Learn by doing Initial H2 production Expand H2 production to Build experience and capability Target mid-2020s match the market scale Commence domestically and 2030+ transition to export Near- Medium- Long- Build capability and position Execute a
Slide 50: Capital management
CAPITAL MANAGEMENT Sherry Duhe CFO and Executive Vice President 48 Investor Briefing Day 2020
Slide 51: Demonstrating resilience
CAPITAL MANAGEMENT Demonstrating resilience Challenging external environment >50% 80 8 reduction in total expenditure >60% 60 6 Maintained reduction in dividend investment Dated Brent (LHS) expenditure Proactive $/MMBtu $/bbl 40 4 response Deferred final Organisational investment 20 2 review Monthly
Slide 52: Clear priorities
CAPITAL MANAGEMENT Clear priorities 1 Cash and value preservation in current environment 2 Sell-down Pluto Train 2 and Sangomar equity 3 Scarborough FID commercial and financial readiness 4 Identify and assess value-accretive opportunities 5 Release value from existing infrastructure 6 Protect key f
Slide 53: Revenue effectiveness
CAPITAL MANAGEMENT Revenue effectiveness Produced LNG cargo mix 100% Spot • Balanced portfolio of long-term LNG contracts and 75% spot sales • Portfolio provides flexibility to meet customer demand and to capture upside • High quality customer base 50% Contracted • Targeting approximately 15-20% spo
Slide 54: Sustained cash margin
CAPITAL MANAGEMENT Sustained cash margin Cash margin/boe (2016-2020) 79% cash margin (Sep 2020 YTD) 54 50 44 High reliability, low 40 cost base business 44 delivering cash 40 34 Annual average realised price 6% 2 $/boe Other cash costs 5 $/boe 33 31 Disciplined cost focus 15% $/boe Production costs
Slide 55: Returning value to shareholders
CAPITAL MANAGEMENT Returning value to shareholders Dividend yield, 12 months ending 30 June 20201 • Dividend policy of 50% of underlying NPAT 6.20% Woodside • Recent dividends have represented payout ratio of approximately 80% • Maintained 2020 interim dividend payout ratio through challenging marke
Slide 56: Managing participating interest to support growth
CAPITAL MANAGEMENT Managing participating interest to support growth Pluto Train 2 sell-down 2021 targeted participating interest Sangomar sell-down 100% Current • Completion of acquisition of Post-transaction additional 36.44% targeted for Q4 Target 2021 2020 • Key capital management lever • Approv
Slide 57: Depth for Scarborough FID and emerging opportunities
CAPITAL MANAGEMENT Depth for Scarborough FID and emerging opportunities Liquidity Multiple capital 8 management levers • Maintaining liquidity Liquidity • Optionality for value- 6 Undrawn debt accretive inorganic $ billion opportunities 4 Reduction in • Support for creation of Train 2 future busines
Slide 58: Comprehensive and objective evaluation of opportunities
CAPITAL MANAGEMENT Comprehensive and objective evaluation of opportunities Strategic priorities Commercial considerations Investment targets1 Asset and Balance sheet Quality, tier one geographical and key Lower oil price >12% assets resilience IRR synergies financial metrics Immediate or Fiscal and
Slide 59: Full-year 2020 guidance
CAPITAL MANAGEMENT Full-year 2020 guidance Item Full-year guidance Remarks Production range 99 – 101 MMboe Increase primarily resulting from additional Sangomar interest Investment expenditure guidance $2,100 – 2,300 million (~$600m) Total expenditure guidance1 ~$2,900 million Increase primarily res
Slide 60: Break
BREAK 58 Investor Briefing Day 2020
Slide 61: Question and answer
QUESTION AND ANSWER Peter Coleman CEO and Managing Director 59 Investor Briefing Day 2020
Slide 62: Remembrance Day
REMEMBRANCE DAY 60 Investor Briefing Day 2020
Slide 63: Question and answer
QUESTION AND ANSWER Peter Coleman CEO and Managing Director 61 Investor Briefing Day 2020
Slide 64: Summary
SUMMARY Peter Coleman CEO and Managing Director 62 Investor Briefing Day 2020
Slide 65: Clear priorities
SUMMARY Clear priorities 1 Achieve Scarborough FID in H2 2021 2 Sell-down Pluto Train 2 and Sangomar 3 Deliver Sangomar Phase 1 4 Maintain a robust and resilient hydrocarbon business 5 Deliver value through the energy transition Investor Briefing Day 2020 63
Slide 66: Investor Briefing Day 2020
INVESTOR BRIEFING DAY 2020 11 November 2020 www.woodside.com.au investor@woodside.com.au
Slide 67: Appendix
APPENDIX 65 Investor Briefing Day 2020
Slide 68: Notes to petroleum resources estimates
APPENDIX Notes to petroleum resources estimates 1. Unless otherwise stated, all petroleum resource estimates are quoted as at the balance date (i.e. 31 December) of the Reserves Statement in Woodside’s most recent Annual Report released to the Australian Securities Exchange (ASX) and available at ht
Slide 69: Glossary
APPENDIX Glossary $, $m, $B US dollar unless otherwise stated, millions of dollars, billions of dollars kt Kilotonnes (metric) LNG Liquefied natural gas A$ Australian dollar LPG Liquefied petroleum gas 2P Proved plus Probable reserves MMbbl Million barrels 2C Best Estimate of Contingent resources MM
Slide 70: Head Office contact details
Head Office: Woodside Petroleum Ltd Mia Yellagonga 11 Mount Street Perth WA 6000 Postal Address: GPO Box D188 Perth WA 6840 Australia T: +61 8 9348 4000 F: +61 8 9214 2777 E: companyinfo@woodside.com.au E: investor@woodside.com.au Woodside Petroleum Ltd ABN 55 004 898 962 woodside.com.au