2015 Investor Briefing - Strategy Day 21 May 2015 Melbourne
Strategy Our strategy is built on three related themes, is effective and unchanged Maximising operational effectiveness; continuous improvement culture Maximise Extending life of producing assets core business Developing contingent…
Journey so far . Our strategy is transforming the business Exploring Developing Producing Marketing Trading Acquisition From June 2011 Pluto LNG Point-to-point North West behind schedule Safety Limited M&A sales strategy…
Future Triggers for near-term value growth Browse FEED1 entry expected mid 2015 Wheatstone targeting first gas in late 20162 Grow our Kitimat: appraisal of upstream - cost reductions targeted portfolio Greater Enfield:…
Summary Strong financial position Credit ratings reaffirmed, stable outlook Target dividend pay out ratio unchanged Refinanced balance sheet at improved terms in low oil price environment Continued focus on growth, and maintaining…
2014 results A year of record financial and operating performance Record production 95.1 MMboe Strong financial result Reported NPAT 2.4 billion Return on equity 15.3% Free cash flow1 4.2 billion Record full year dividend US 255…
Financial trends Strong operating cash flows and low investment spend leading into period of low oil price Operating cash flow 5000 Investment spend 5000 4000 4000 million 3000 3000 million 2000 2000 1000 1000 0 0…
Relative investment performance First quartile returns from world class asset portfolio ROACE 25 Returns well in excess of cost of capital 20 and peers WPL construction period 15 Reflects: Percent (%) 10 World class asset…
Dividends Ability to fund dividends and invest in growth Peer group: Free cash flow and cash dividends paid 5 3 Woodsides 2014 cash US billion dividends represent 43% of 1 free cash flow Anadarko Woodside…
Capital management Our capital management approach is unchanged Prioritise cash generation Capital Capital discipline structure Cost reduction 80% dividend ratio for foreseeable future1 Manage Capital asset Maintain liquidity and…
LNG revenue sensitivities Not a direct linear relationship between Brent oil price and LNG revenue Woodside contracted LNG revenue1 sensitivity to Brent price 100 (applicable 2015 only) Contract portfolio provides 90 protection in a…
Gas unit gross cash margins Gas business remains cash positive even at low oil prices Woodside gas unit gross cash margins at different Brent prices (applicable 2015 only) 60 50 2015 gross cash costs 9 to 12/boe US/sales…
Operating cash flow Significant operating cash flow generated at low oil prices (65/bbl flat nominal Brent) Operating cash flow 6000 5000 Operating cash flow expected to average approximately 2.7 billion 4000 per annum for the…
Investment expenditure Low committed expenditure provides flexibility Investment Expenditure 5000 Closing Committed2 expenditure less than adjustment 4000 0.9b 500 million per annum Flexibility to pace developments: Purchase US…
Funding Low cost access to diverse capital markets Strong ongoing debt market support Debt maturity profile 2.75 billion raised from bond and 2500 bank markets in 2015 to date 2000 Pre-tax portfolio cost of debt lower: US…
Productivity Aggressive cost and reliability management to deliver enduring value 2016 Target 2014 result On target to achieve 800 million in benefits by end 2016 +3 to 5% +5% 560 million benefits realised in 2014 -13% opex -10…
Key messages The focus remains on creating shareholder value No change to capital management approach Continuing to generate significant operating cash in a low oil price environment Maintaining dividend payout ratio Accelerating…
Aggressive cost reduction Accelerate delivery of external spend reduction with sustainable outcomes Value of initiative pipeline by stage-gate, AM Gross 2016 Target 2014 result Outstanding: A650M -13% opex -10 to 20% Great: A450M…
Value levers Addressing all value levers to reduce external spend Price (reduction in rates/contract prices) Target 10% across all spend 500 initiatives Process (simplify the way we conduct business) Consolidating vendor base from…
Cost reduction example 33% saving on the Maintain Repair Operate (MRO) category Spend & savings overview MRO category drivers Components 2014 annual spend, Am Savings Deliver sustainable cost reduction Reduce vendor base Fuels 80…
Key messages Committed to deliver a structural cost change Utilising all value levers assures a sustainable reduction Meaningful impact in the short term 2015 Investor Briefing - Strategy Day 28
Global Exploration Phil Loader Executive Vice President Global Exploration
Portfolio 2012 build Focused onglobal Expanded Australian mature footprint basins petroleum systems in emerging Ireland Morocco Canada Spain Republic of Korea USA Cameroon Myanmar Gabon Tanzania New country entries…
Balancing the portfolio Exploration growth focused on emerging basins, with enhanced oil and gas balance Mature Cumulative resource discovered infrastructure led Proven / Maturing high value if you own infrastructure lower…
Focus areas 2015: Develop existing acreage, core area aggregation and portfolio growth Australia and Atlantic Margins and Asia-Pacific Latin America Sub-Saharan Africa Ireland Republic of Canada Cameroon Korea Morocco Oil prone…
Focus area 1: Australia and Asia-Pacific Maximising Australian acreage and extending the core in material gas prone regions Pyxis-1 Gas discovery in Q2/2015 2015 - drill three play-opening wells in Republic of Korea Australia,…
Republic of Korea Advanced 3D acquisition leads to 2015 drilling Hongge prospect High specification 3D acquisition and processing Top reservoir Hongge prospect identified with Direct Hydrocarbon Indicators Nakji 2D Muneo 3D Line…
Myanmar The largest acreage holder in the Rakhine Basin AD-7 well (2016) Scale of opportunity AD-7 6 permits, 46,000km2 (20% of Woodsides global exploration acreage) AD-2 A-4 Strategic basin position early mover advantage Saung…
Focus area 2: Atlantic Margins and Latin America Building a strategic footprint in oil prone under-explored plays Ireland Conjugate margins, under-explored plays 3D (2016) Canada Strong evidence of working petroleum systems (Nova…
Focus area 3: Sub-Saharan Africa Building inventory in oil prone unexplored and under-explored emerging petroleum systems Cameroon Oil prone Atlantic margin synergies Gabon Tanzania Under-explored plays in mature provinces 3D 2D…
Measures of success Objective: Global Leader in Exploration by 2018 Measures Objective Portfolio Scale and optionality to underpin year-on-year exploration success Value Discipline to deliver consistent top-quartile value Success…
Key messages Rebalancing the portfolio, in terms of maturity, geographic focus, and oil / gas mix Aggregating and high-grading targets in our three focus areas Drilling an additional four wells in 2015 to test plays with material…
Development progress Delivering value growth through the opportunity pipeline PRE-ASSESS ASSESS SELECT DEVELOP EXECUTE OPERATE Exploration Vincent fuel gas Browse GWF Phase 2 GWF Phase 1 North West Shelf GWF Phase 3 Cossack North…
Browse FLNG Development Preparing for front-end engineering and design (FEED) entry Design-one-build-many philosophy Excellent technical definition Well defined execution strategy Value proposition has improved: Smart engineering…
Greater Enfield Accelerating FEED to capture market conditions Oil development via Ngujima-Yin FPSO Laverda and Cimatti reservoirs: 70MMboe recoverable volume (gross) Previously marginal Well and subsea costs comprise 90% of…
Karratha Gas Plant life extension Implementing efficient, cost conscious approach, no pre-investment KLE activity timeline 100 LNG train life Portfolio of refurbishment projects extension complete Targeting external corrosion,…
Wheatstone LNG Project Supporting Chevron in delivery of Wheatstone through our experience in LNG projects Wheatstone LNG Project 60% complete1 Topside float over completed 12 April 2015 Targeting first gas in late 20161 Woodside…
Kitimat LNG (50% equity) World-class resource 2 LNG trains, initial capacity 10 mtpa (5 mtpa net) Liard and Horn River Basins An advanced opportunity in Canada: First Nations: Benefits agreement for Pacific Trail Pipeline in place…
Liard and Horn River appraisal Focus on appraising the Liard resource Liard and Horn River resources 10-40 Tcf net Appraisal well data suggests recoveries of 40 Bcf/well in the Liard Basin 20 Bcf/well in the Horn River Basin The…
Development enablers Taking advantage of low oil price environment to achieve capital cost reductions 2016 Target 2014 result Up to 40% lower rig and vessel rates -13% opex Reduced cost through subsea tieback -10 to 20% -10% capex…
Key messages Browse: proposing FEED entry based on robust business case in current environment KLE: implementing efficient, cost conscious approach, average annual spend 50-70m net Wheatstone: seeking opportunities to create…
HSE performance Improving, on track to deliver world class HSE performance 6 Total recordable injury rate 6 Tier 1 and 2 process safety events Per million hours worked 5 5 Number of events 4 4 4 3 2 2 2 1 0 0 0 0…
Increased volumes Delivering on our productivity promises reliability and capacity improvement 100 Reliability 2016 Target 2014 result 95 +3 to 5% +5% attributed Reliability (%) LNG to reliability 90 85 OIL Achieved top…
Reducing costs Delivering cost reductions through our operational excellence program 6 Gas unit production cost 2016 Target 2014 result 5 10 to 20% 12% reduction in unit production costs1 /boe 4 3 Maintenance excellence 2…
North West Shelf post 2025 Maximise the value of the North West Shelf through plateau extension Horizon 3 Horizon 1: Safe and reliable operations of the base business Horizon 2 Horizon 2: Disciplined project delivery to develop…
Key messages Continue our journey to outstanding operational performance Maximise value from reservoir to market Relentless focus on HSE performance Maximise volumes through reliability and capacity enhancement Continue to…
Our workforce Reshaping our workforce with discipline to deliver organisational efficiency Resourcing Levels 4,100 Productivity review identified an opportunity to improve 10 - 20% in organisational efficiency 3,500 From early 2014…
Our culture in action Creating in-house capability and embedding a high performance culture Total number of third party contractors1 Discipline and continuous improvement (2012-2015) culture delivering results 350 300 Third party…
Our talent pipeline Developing talent and leadership from within Graduate recruitment year Committed to developing talent 103 Implemented best practice graduate 71 development program 46 Expanding international graduate pool Ratio…
Key messages Achieved 20% organisational efficiency, 600 FTEs reduced since Jan 2014 Ahead of the curve with controlled re-structuring Ongoing commitment to building a values-led performance culture Developing our leadership and…
Marketing and Trading Reinhardt Matisons Executive Vice President Marketing, Trading and Shipping
Strategy Focus is competitive bulk supply of LNG into Asia and other regional markets Ability to supply any market, at any time, from any source (not single source to single buyer) A competitive supplier of LNG into Asia (price,…
Global LNG market Market continues to grow, including substantial uncontracted Asian demand 2021+ 500 Global LNG supply and demand LNG trade expected to grow 7% p.a. to 2020 Woodside supply outlook - April 2015 Asia-Pacific demand…
LNG upside opportunities Replace oil transport and overall energy growth in non OECD countries such as China 2013 Global oil demand 90.8 Global LNG trade 2013 = 6.1 MMboe/d MMboe/d Global oil demand 2013 = 90.8 MMboe/d Transport…
LNG demand profile is diversifying Woodside has opportunities both in traditional and new regions Historic Future LNG demand by region Incremental demand: 2015 - 2022 100 N America China / India 80 LNG demand countries Europe…
Woodsides LNG portfolio Strong suite of existing LNG contracts; portfolio marketing to secure robust new SPAs 10 Woodside equity and purchased LNG 9 Limited exposure to current spot market 8 2015 - 2016: up to 10% of total LNG 7…
LNG price indexation Differentiated pricing in Asia-Pacific to continue; low oil prices disruptive to new projects 400 LNG contracts into Asia Pacific 350 Low oil prices: 300 Challenges financial feasibility / ability to…
Trading strategy and evolution Support projects and optimise the trade of physical cargoes, not proprietary trade Corpus Already material value protection / Long term Christi Corpus US off-ake FOB Christi FID creation: 2014…
Trading optionality Optionality increasingly critical to maintain margin and value Asia-Pacific LNG terminal capacity Number of We may acquire equity or Current Potential terminals Country number of proposed or under Capacity by…
Key messages Market: LNG market continues to grow (size and number of participants) Customer base is broadening Substantial uncontracted demand 2021+ for our growth projects Our strategy: Supplying Asia and other regional markets…
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