Woodside Energy Group Ltd · ASX:WDS
Woodside Energy — Woodside Petroleum — H1 2016 Earnings Presentation
34 slides from Woodside Energy's earnings presentation, Aug 19, 2016
Slide 1: 2016 half-year results briefing
2016 half-year results briefing Peter Coleman | Chief Executive Officer and Managing Director | 19 August 2016
Slide 2: Disclaimer and important notice
Disclaimer and important notice This presentation contains forward looking statements that are subject to risk factors associated with oil and gas businesses. It is believed that the expectations reflected in these statements are reasonable as at the date of this presentation but they may be affecte
Slide 3: Achievements
Achievements Strong performance across the business Operational excellence Increased production guidance to 90–95 MMboe Production up 9% on 1H 2015 Unit production costs down 38% on 1H 2015 Managing risk and volatility Targeting to commit 85–90% of expected 2017–18 production to term contrac
Slide 4: Financial headlines
Financial headlines Strong operations and cash flow Profit: US$m1 Net profit after tax (NPAT) 340 Interim dividend 34 cps2 Cashflow: Operating cash flow 1,124 Break-even cash cost of sales ~$9/boe Unit production costs $5.2/boe Balance Sheet (30 June 2016): Available funds (cash and undrawn faciliti
Slide 5: Peer comparison
Peer comparison Peer-leading margins across the business cycle EBITDA margin1 Return on capital employed2 100 80 20 60 Percent 10 Percent 40 0 20 -10 0 -20 3 2012 2013 2014 2015 1H16 2012 2013 2014 2015 1H16 4 4 Peer Range Woodside Peer Range Woodside Source: IHS Source: IHS 1. EBITDA margin is the
Slide 6: Oil market dynamics
Oil market dynamics Market conditions creating opportunities 100 Oil supply and demand 5 98 4 Re-balancing underway 96 3 Continued price volatility in the short-term MMbbl/d 94 2 Competitors retreating from international 92 1 acreage to onshore US Exploration and development costs down 90 0
Slide 7: LNG market dynamics
LNG market dynamics New supply sanction required from 2018 to meet market demand LNG supply and demand Demand 600 Traditional markets well supplied 500 Growth from emerging buyers enabled by: 400 Lower prices New technologies and business models mtpa 300 Supply 200 Sanction of additional ~
Slide 8: Near-term value growth
Near-term value growth Committed to earliest commercialisation of growth opportunities Developing ~400 MMboe1 commencing production 2016 to 2020 Wheatstone LNG: First LNG from Train 1 expected mid-2017; Train 2 expected 6-8 months thereafter2 NWS extension projects (GWF-2, Persephone): Progressi
Slide 9: Financial management
Financial management Lawrie Tremaine | Chief Financial Officer
Slide 10: Reported profit
Reported profit Operational performance partially offsetting oil price impacts Net profit reconciliation 679 656 Realised prices 26% lower Lagged JCC2 price 46% lower US$m 104 340 112 101 1H 2015 NPAT Realised Price Volume Production Costs Other1 1H 2016 NPAT 1. Includes net trading margin, net
Slide 11: Production
Production Improving capacity and reliability Production reconciliation 2016 production guidance increased to 90–95 MMboe 50 Pluto annualised loaded LNG production 2.5 0.6 0.3 45.9 rate of 4.9 mtpa, 14% above original 3.0 1.3 design capacity 42.0 Pluto LNG reliability MMBoe 100 99.2 95.3 94.7 Pe
Slide 12: Pluto production costs
Pluto production costs Delivering on productivity and efficiency improvements at Pluto Total and unit production costs Pluto Turnaround 112 99 Sustained structural cost reductions US$/boe US$m 82 55% improvement in unit costs from 1H 2013 8.2 to 1H 2016 6.7 63 5.1 3.0 1H 2013 1H 2014 1H 2015 1H
Slide 13: Peer-leading margins
Peer-leading margins Low costs, high realisations Cost and price 16 14 Strong realised pricing achieved through Production costs (US$/boe) 12 LNG contract portfolio Quality assets and operational excellence 10 delivering low unit cost outcomes 8 6 4 2 25 30 35 40 45 50 Realised price1(US$/boe) S
Slide 14: Sources and uses of cash
Sources and uses of cash Generating surplus free cash while continuing to invest in growth 1H 2016 1200 Net cash build 1000 Other 1 $162 million of Free Cash Flow generated2 800 First half capital expenditure mainly Wheatstone and NWS plateau extension US$m 600 Cash from Capital and operations e
Slide 15: Financial advantages
Financial advantages Well positioned to fund growth Gearing1 80 Financial flexibility to invest through cycle 60 Strong financial position reflects quality 40 of assets and performance of base business Percent 20 Maintained gearing within 10–30% target range 0 -20 -40 2012 2013 2014 2015 HY16
Slide 16: Liquidity
Liquidity Managing our debt obligations 2000 Maturity profile: 1 Jan 2016 1500 Secured over $600 million in funding at US$m 1000 competitive rates 500 Liquidity of $2 billion at HY16 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Diversifying funding sources Drawn Undrawn Negligibl
Slide 17: LNG contracts
LNG contracts Mid-term SPAs being put in place to reduce spot exposure Woodside Equity LNG1 Target 85-90% of expected production in term 100 take-or-pay contracts HoA in place for long-term supply to Pertamina % of Expected Production Mid-term sales of 12-20 cargoes during the period 2017-2019
Slide 18: Review of Business Activities
Review of Business Activities Mike Utsler | Chief Operations Officer Source: Chevron Australia
Slide 19: Wheatstone
Wheatstone On track for mid-2017 first LNG cargo Reservoir development and Julimar Project Julimar Project1 98% complete - on track and under estimate at acquisition Drilling campaign complete Offshore facilities Wheatstone Platform hook-up and commissioning is progressing Onshore LNG and domg
Slide 20: Greater Enfield
Greater Enfield Strong cash margins, leveraging existing infrastructure Developing 41 MMbbls of 2P oil reserves1 Subsea tie-back to Ngujima-Yin FPSO (Vincent field) Low incremental cash costs through utilisation of existing infrastructure: Production costs US$30–40 million per annum1 Negli
Slide 21: Myanmar
Myanmar Rapid resource delineation Material position in emerging basin 2.4 Tcf, 2C gross (100%)1 gas discoveries at Shwe Yee Htun-1 and Thalin-1A Subsea tieback option via Shwe platform2 Significant drilling campaign in 2017 with four firm wells and two contingent wells2 31,500 sq.km of 3D
Slide 22: Senegal
Senegal World-class asset with significant future exploration upside Agreed to acquire a 35% interest in the 560 MMbbl SNE oil field with exploration upside1 Development planning underway with line of sight to near term oil production Leverages our capabilities in deep water drilling, subsea i
Slide 23: Global exploration strategy
Global exploration strategy Set to deliver future growth options Portfolio balance 1H 2016 Increased exposure to emerging basins and oil End 2012 Significant increase in net unrisked mean success volume since 2012 Growth a result of commitment to: 25% oil 47% oil Continual high grading of po
Slide 24: Key messages
Key messages Strong performance across the business Operations excellence Managing risk and volatility Building near-term value growth 2016 half-year results briefing 24
Slide 25: Annexure
WY woodside
Slide 26: Investment spend
Investment spend Investing in growth Investment spend1 6000 5000 Asset Maintain 2016 investment spend guidance acquisition of ~$2 billion1 4000 Base business spend trending down Continuing to invest in growth US$m 3000 2000 Exploration & Myanmar appraisal Other growth4 1000 Wheatstone 3 Base b
Slide 27: Product pricing
Product pricing First half realised prices 26% lower US$/boe % US$m Revenue 1H 2016 1H 2015 Variance Products impact LNG realised pricing vs JCC NWS LNG1 31 49 (37%) (183) 110 Pluto LNG 49 67 (27%) (351) 100 Index (Q2-15 = 100) Pipeline natural gas 20 23 (13%) (2) 90 Condensate 42 53 (21%) (43) 80 L
Slide 28: Operating revenue
Operating revenue Operating revenue impacted by oil price trend Operating revenue and Brent price 114 108 109 1H 2016 operating revenue 24% lower than 1H 2015 3,551 Decrease primarily due to lower realised prices, partially offset by: 59 US$m 2,857 Higher sales volume US$/bbl 2,655 2,556 41
Slide 29: Unit production costs
Unit production costs Lower production costs reflecting simplification and efficiency 250 Gas production costs 20.00 Oil production costs 210 204 210 18.00 153 200 16.00 143 139 14.00 147 150 12.00 91 US$/boe US$/boe 10.00 US$m US$m 100 8.00 5.6 5.8 5.0 6.00 3.4 33.5 50 4.00 25.2 24.6 27.5 2.00 0 0.
Slide 30: Cash costs and margins
Cash costs and margins Strong cash delivery from core assets Cash margins1 1H 2016 cash margins1 US$/boe US$/boe 13 61 60 50 43 <1 41 24 31 25 9 8 7 4 5 4 3 9 8 8 8 5 3 4 1H 2012 1H 2013 1H 2014 1H 2015 1H 2016 Pluto NWS Gas Oil Assets Production costs Other costs Cash margins Production costs Other
Slide 31: Segment performance
Segment performance NWS and Pluto margins remain substantial even in a low price environment Business Unit performance NWS1 Pluto Aus Oil2 Production volume (MMboe) 20.5 21.2 3.2 Operating revenue ($million) 651 1,116 135 EBITDA ($million) 459 938 73 EBIT ($million) 332 467 24 Unit production cost (
Slide 32: Trading operations
Trading operations Trading operations have generated significant value Trading Reconciliation US$m Trading revenue 31 Trading costs (50) Gross loss from third party trading (19) Add: Optimisation opportunities 15 Add: Exercising seller options 11 Add: Other 4 Gross profit from Trading 11 2016 half-y
Slide 33: Exploration pipeline
Exploration pipeline Shifting from portfolio growth to execution as we enter phase of high impact drilling 2016–2017 DRILLING AND SEISMIC ACTIVITIES 2016 2017 SIZE Drilling1 Q3 Q4 Q1 Q2 Q3 Q4 Volume2 Myanmar Block AD-7 Thalin appraisal G G G Large Block A-6 exploration G G Large Block AD-7 explorati
Slide 34: Notes on Petroleum Resource Estimates
Notes on Petroleum Resource 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 ASX and available at http://www.woodside.com.au/Investors-Media/Announ