In 2024, Woodside’s capex is expected to come in between $5 billion-$5.5 billion, with the bulk slated for Scarborough (40%) and new energies (35%), Trion (15%) and Sangomar (10%). (Source: Shutterstock)
As Woodside Energy focuses on building future value in 2024, CEO Meg O’Neill is pleased with the company’s portfolio as three massive projects come online over the short-term in offshore Senegal, Australia and the Gulf of Mexico (GoM).
“We will do this by operating our base business reliably and efficiently, while progressing our next wave of growth through value-creating major projects,” O’Neill said Feb. 27 as part of her opening remarks during the company’s fourth quarter 2023 webcast with analysts. “We will maintain a disciplined approach to capital management … [and] we will only pursue growth opportunities that are value accretive.”
Most recently, Perth-based Woodside—which completed its transformational merger with BHP in 2022—revealed in February it wouldn’t move forward with potential plans to acquire Australian domestic gas producer Santos Ltd., which also supplies LNG to Asia. But, Woodside plans to continue to assess organic and growth opportunities.
O’Neill reiterated that Woodside’s investment case is clear and that the company has a geographically spread-out portfolio well positioned to meet growing demand for energy and LNG.
The Woodside executive said the company continues to highlight three major growth projects slated to come online by 2028.
The first is the initial phase of the Sangomar development offshore Senegal where first oil is slated to flow in mid-2024. The Sangomar floating production storage and offloading facility sailed away from Singapore in December and is already offshore Senegal. The project was 94% complete at the end of the quarter, with 17 of 23 wells drilled and completed.
The second is the Scarborough energy project in Australia where the Pluto Train 2 development will produce around 8 million tonnes per annum (mtpa) of LNG. Approximately 5 mtpa of Scarborough gas will be processed through Pluto Train 2 with up to 3 mtpa processed through the existing Pluto Train 1.
The Scarborough project was 55% complete at the end of the quarter, and first LNG cargoes are slated to flow in 2026.
The third is the Trion development offshore Mexico in the Perdido Fold Belt of the GoM where first oil is slated for 2028. The project continues to award contracts including for the wellheads and subsea line pipe. Procurement activities also commenced for floating production unit materials and subsea equipment.
“So, we are focused on profitably investing in assets that will deliver shareholder value over the long term. Our existing slate of projects I think is a great example of that,” O’Neill told analysts during the webcast.
In terms of any competitive advantage in the LNG space in Australia, O’Neill said Woodside’s competitive cost of supply sets it apart.
“I’ve said this before, but the Qataris, obviously, are incredibly cost competitive. They have a giant resource that they develop at a very low unit cost. On a delivered cost of supply to our North Asian customers, we beat the U.S. projects,” O’Neill said. “Continuing to have that sharp focus on cost efficiency will ensure that we are better positioned than many others to compete for the attractive customers and those attractive contracts over the long-term.”
Other promising projects in Woodside’s portfolio are located in Australia’s North West Shelf, in the U.S. GoM at the Shenzi, Mad Dog and Atlantis projects as well as offshore Trinidad and Tobago at the Calypso project.
“We’ve got opportunities and options to grow the business in our portfolio today. That includes things like Calypso, Browse [in Australia), Sunrise [in Timor-Leste]. It includes our new energy opportunities. Then in the inorganic space, our focus is on LNG, deep water oil and new energy,” O’Neill said during the webcast responding to analyst questions. “The opportunities that we’re pursuing are really consistent with that strategic framework around thriving through the energy transition, ensuring we’re meeting customers’ energy needs today and into the future, creating and delivering value to our shareholders.”
Strategy focused on three priorities
O’Neill said Woodside’s strategy is focused on three priorities: providing energy from its high-quality portfolio now and in the future, creating and returning value through disciplined capital management and conducting its business in a sustainable manner.
In 2024, Woodside’s capex is expected to come in between $5 billion-$5.5 billion, with the bulk slated for Scarborough (40%) and new energies (35%), Trion (15%) and Sangomar (10%).
Woodside’s production is expected between 505,000 boe/d-533,000 boe/d in 2024 compared to 513,000 boe/d in 2023. In 2024, LNG will dominate production, accounting for 45%, followed by crude and condensate (30%), piped-gas (20%) and natural gas liquids (5%).
On LNG demand, O’Neill said long-term fundamentals remain strong. A 53% increase in forecasted growth in the coming decade until 2033 would be from China and South East Asia, regions Woodside’s “assets are geographically advantaged to supply,” she said in her opening remarks.
Woodside ended 2023 with net debt of $4.7 billion. The company’s gearing ratio at 12.1% is at the lower end of its target range, while the company has $7.8 billion in available liquidity to support major capital investments, CFO Graham Tiver said in his opening remarks during the webcast. Tiver said Woodside also had sustained credit ratings of BBB+ or equivalent.
“Looking at our sources of cash in the period 2024 to 2028, we expect a significant increase in our cash generation as each of our three major projects—Sangomar, Scarborough and Trion—come online,” Tiver said. “Assuming an oil price of $70 per barrel, we expect to generate cash flow from operations that more than covers our current budgeted capital expenditure and dividends, creating a projected surplus of cash through the period of 2024 to 2028.”
On emissions reduction efforts, Woodside reduced its net equity Scope 1 and 2 emissions 12.5% below its starting base and has an eye on achieving a 30% reduction by 2030. Longer term, Woodside is aiming to achieve net zero Scope 1 and 2 emissions by 2050.
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