Woodside Energy Group Ltd

Thank you for standing by and welcome to the Woodside Energy Group Limited full year 2023 results. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Ms. Meg O'Neill, Chief Executive Officer and Managing Director. Please go ahead.

Good morning, everyone, and welcome to Woodside's 2023 full-year results presentation. We are presenting from Sydney, and I would like to begin by acknowledging the traditional custodians of this land, the Gadigal people of the Eora Nation, and pay my respects to their elders past, present, and emerging. Today, I am joined on the call by our Chief Financial Officer, Graham Tibbert. Together, we will provide an overview of our 2023 performance before opening up to Q&A. Please take the time to read the disclaimers, assumptions, and other important information. I'd like to remind you that all dollar figures in today's presentation are in U.S. dollars, unless otherwise indicated. At Woodside, our strategy is to thrive through the energy transition. This is underpinned by three strategic priorities. And in 2023, we delivered on all three. The first is providing energy through a high-quality portfolio now and into the future. I'm pleased to report that in 2023 we delivered record full-year production with excellent LNG reliability. We also made significant progress on our major growth projects. Our second strategic priority is creating and returning value through disciplined capital management. In 2023, our underlying net profit after tax was $3.3 billion. Based on this, our board has determined a fully franked dividend of 60 US cents per share. This represents a payout ratio of 80% of underlying NPAT, which is at the top end of our range. We also generated $0.6 billion of free cash flow. This is a significant achievement in a period of major capital expenditure and normalized prices. And our third strategic priority is to conduct our business sustainably. I'm pleased to report we have further reduced our net equity scope one and two emissions in 2023, and we are now 12.5% below our starting base. I'd like to highlight that we are launching our climate transition action plan today, and we will be hosting a special investor briefing about our climate plan on the 12th of March. Please take this as a sign of our continued commitment to action and transparency. Conducting our business sustainably means more than reducing emissions. It includes ensuring everyone who works here goes home safely, and we did not achieve that in 2023. So I'd like to reflect on that. We are steadfast in our commitment to learning from the tragic death of a colleague at the North Rankin complex last year. We commissioned an external review of our safety systems, and we will work relentlessly to improve our processes, tools, and training programs. There is nothing more important to us in 2024 than improving safety. I'd like to look now at the macroeconomic backdrop. As you can see on the charts, we saw extraordinary volatility in 2022, resulting from Russia's invasion of Ukraine and subsequent impacts on global oil and gas trade. These periods of volatility underline the importance of LNG in ensuring global energy security. During this time, we were able to provide our customers with reliable, affordable, and secure energy. At the same time, the fundamentals of long-term LNG demands remain strong. Global demand for LNG is forecast to grow 53% in the coming decade between now and 2033. If this demand is expected to emerge from China and Southeast Asia, markets our assets are geographically advantaged to supply. Looking at the second graph, In 2023, the majority of contracts signed in the global LNG market were for durations of 20 or more years. This long-term demand for LNG supports our conviction that gas will be a key part of the global energy mix for decades to come. The sell-down of Scarborough to LNG Japan and JIRA at full value provides further evidence of Asian players looking to secure access to long-term LNG as they navigate the energy transition. With strong fundamentals, our high-quality portfolio is positioned to provide energy now and into the future. Focusing now on our portfolio, we see clear benefits of our merger with BHP's petroleum business. Looking at the green line on slide eight, you can see our production has more than doubled compared to pre-merger levels. Our outstanding LNG reliability contributed to this record overall production, which we achieved while also successfully delivering planned turnarounds. We also took steps to further increase our capacity to supply our customers with LNG in the future. For example, we signed an off-take deal with Mexico Pacific LNG and expect first cargo in 2029. This strengthens our position as a portfolio player supplying our own LNG as well as third-party volumes to our customers. At the same time, we have made significant progress on our major projects. Going to slide nine, the Sangamore project was 93% complete at the end of 2023. Since then, the FPSO has arrived safely in Senegal, and as you can see, the mooring chains have been connected to the FPSO. 17 wells have been drilled and completed. We are targeting first oil in mid 2024 and expect production to ramp up through the year. Moving to Australia. At year end, Scarborough was 55% complete and is targeting first LNG cargo in 2026. A key achievement was four offshore environment plans were accepted by the regulator in December 2023. The seismic work is now done and the pipe lay and drilling are underway. We've also made progress across the other work streams we have for our Scarborough energy project. We have recently completed the initial dry dock of the FPU hull. And as you can see, site works are well advanced at the Pluto Train 2 site where we will process the gas. Let's now have a look at our financial performance. Overall, commodity prices were lower compared to the highs we saw in 2022. And this is reflected in our financial performance. But thanks to our strong underlying business, we have demonstrated resilience across our financial metrics. Our unit production cost of $8.30 per barrel of oil equivalent has remained steady despite the inflationary environment and planned turnarounds demonstrating our focused on cost efficiency. Now, what makes us tremendously proud is that in this inflationary environment, we continue to return strong dividends to our shareholders. We target paying between 50% and 80% of our underlying net profit and dividends. And over the last decade, we have consistently paid at the top end of the range. I'll now hand over to Graham to take you through our capital management.

Thanks, Meg. And hello, everyone. Our cash flow generation in 2023 was strong. Looking at the chart on the left, you can see we have delivered a cash margin of 80%. Importantly, we've achieved positive free cash flow of $0.6 billion in a heavy capital investment year with record tax payments. Turning to the balance sheet, our gearing of 12% is at the lower end of the target range and we closed the year with liquidity of $7.8 billion. We've also sustained credit ratings of BBB plus or equivalent. Our strong balance sheet supports major capital investments, which provides our near-term growth. It also allows us to continue providing strong returns to our shareholders. Our financial performance and balance sheet have remained resilient because of our strong underlying business and our consistent approach to capital management. The main point I'd like to highlight is that our capital management framework remains unchanged, as do our priorities for cash. As we seek to create value, we will continue to be disciplined to ensure the business remains resilient. Looking at our sources of cash in the period of 2024 to 2028, we expect a significant increase in our cash generation as each of our three major projects, Sangamah, Scarborough and Treon, come online. 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. Decisions on surplus of cash allocation will be guided by our capital management framework, continuously balancing investing for growth, managing our balance sheet and strong returns to our shareholders. Those decisions will be influenced by a number of factors including macroeconomic conditions and growth pipeline at a particular point in time. In addition, There is further optionality within our gearing range, so we are currently sitting towards the lower end of our target range of 10 to 20% gearing. We expect that after 2026, our operating cash flow will increase significantly, creating even more capacity in our balance sheet. These graphs on the slide do not include the impact of our recent Scarborough sell-down to Jira, which is subject to completion. We are pleased with this transaction and the value it creates for Woodside. In addition to the sale of 15.1% interest in Scarborough, we are also partnering with Jira for an off-take agreement and collaboration in New Energy. This deal is further evidence of market confidence in the quality of Scarborough and, as Meg said, underlines the long-term value our partners see in the assets. And this positive cash story has been bolstered by a merger with BHP's petroleum business in 2022. Trion is an example of how we unlocked value as part of the merger. It was an asset which came into Woodside's portfolio and we progressed it to a positive final investment decision. Adding cash generative and debt-free assets, the merger transformed our balance sheet. It has also enabled us to bring together global capabilities and bolster our marketing and trading expertise. We implemented initiatives to deliver over 400 million in synergies within the first seven months of operating as a merged company. This is how we have created and returned value in 2023. I'll now hand back to Meg. Thanks, Graeme.