Driving Value Growth 2016 Investor Briefing Day 20 May 2016 Sydney, Australia
Sheraton on the Park floor plan Evacuate: Alert: Beep Beep Evacuate: Whoop Whoop Grand Ballroom 1 Grand Ballroom 2 Muster point: Exit hotel and turn right along ELIZABETH Street Exits to Grand Staircase Muster point is on the…
CEO Overview Peter Coleman Chief Executive Officer and Managing Director Creating value across the business cycle
Elements for success A strong foundation for growth Our competitive position strong balance sheet and robust free cash flow world-class, low-cost assets track record of operational excellence and proven development expertise…
Oil and LNG markets Taking advantage of market conditions across the cycle Brent Price Oil market 150 expect price to firm over the next 18 months; volatility likely in the short term growing investment gap and base field decline…
Our competitive position Our low cost business continues to generate cash supporting a strong balance sheet Our low cost business continues to generate Free cash flow breakeven 2016 cash supporting a strong balance sheet 2,500 Base…
Value creation in a changing market Decisive action over the next two years Focus areas Wheatstone: safe and earliest start up Browse: phased, highest value development first Myanmar: early development of both discoveries and…
How we will create value Productivity gains, project development and exploration Projects and opportunities Myanmar Exploration1 Significant value creation from: Kitimat Discovered resources Browse Leveraging infrastructure…
Our growth trajectory Well developed project pipeline increasing resource base Resource (MMboe) Resource Browse Phase 2 500-6202 (2C) (MMboe) Sunrise 370 (2C) NWS ORO 30+ Tcf to capture1 Myanmar, Atlantic rim and Resource…
Capital allocation Service debt, grow our business and return funds to shareholders Maintain robust balance sheet and service debt Value accretive growth Earliest phased development of captured resources High graded exploration…
Key messages Strategy is delivering on commitments Differentiated position through our operational excellence, track record and disciplined decision-making Demonstrated competitive advantage through our capabilities across the oil…
Financial Management Lawrie Tremaine Chief Financial Officer Anthea McKinnell Vice President Treasury and Taxation Differentiated business performance and balance sheet to fund growth
Financial performance Strong financial performance in 2015 in a challenging environment Operating Annual production 92.2 MMboe performance Operating cash flow 2.4bn Financial NPAT excluding one-off non-cash items1 1.1bn…
Profitability Peer leading performance Reported profit margin1 40% 20% 0% -20% 2012 2013 2014 2015 Source: Bloomberg Peer group range Woodside Peer group average Return on capital employed2 20% 10% 0% -10% -20%…
Differentiated LNG revenue Contract portfolio provides support in a low oil price environment LNG realised pricing1 vs JCC2 110 Q1 2016 realised price of 8/mmbtu 100 Index (Q2-15 = 100) 90 80 70 Q2 2015 Q3 2015 Q4…
Cost of sales Well established cost reduction trend Weighted average unit cash cost of sales Unit production costs2 18 18 16 -35% Targeting 16 10% 14 further 14 reduction 12 12 (US/boe) US/boe 10 10 8 8 6 6 4 4 2…
Planned investment spend Investing in identified growth opportunities Investment expenditure 2500 Base business1 spend trending down 2000 Continuing to invest in growth Browse and Kitimat investment through US million 1500…
Upstream cash flow break even Low cash flow break even 2016 Cash flow breakeven analysis1 180 160 Level of exploration investment 140 consistent with peers 120 Low cash flow break even reflects US/bbl (Brent) 100 asset…
Gearing Operating cash flow and balance sheet supports dividends and growth Woodside vs peer group1 80% 70% 60% Gearing 23% at 31 December 2015 Gearing (year-end 2015) 50% Well positioned to fund growth within target…
Credit rating Resilience of base business recognised Moody's Credit ratings affirmed (Ratings changes since 2014) Standard & Poors BBB+ (negative outlook) 1 Peer Group1 Moodys Baa1 (negative outlook) 0 Majority of peers…
Liquidity Flexibility and capacity to fund growth Current maturity profile1 2000 1500 1.8bn1 in liquidity, targeting 2bn by end US millions 2016 1000 Negligible near term maturities 500 Access to funding is maintained…
Productivity Program is delivering on promise Benefits1 Annual run rate end 2016 (m) Target Expected Structured program since late 2013 Volume 300 4002 Cumulative benefits 1.9 billion expected by end 2016 Operating cost 250 250…
Volume benefits Reliability and capacity improvements exceeding expectations Volume benefits Targeted 3-5% increase on 2010-2013 reliability & capacity 8 Now expect 8% sustainable increase 7 6 5 Drivers of result: MMboe 4…
Spend reduction Sustainable cost reductions achieved Operating costs 40% Price (reduction in rates / contract prices) Target 10-20% expected 27% 40% reduction in rig rate contract 2013 Actual 920 Renegotiation of 100+ long term…
Organisational efficiency Transformation to a leaner, more agile organisation well underway 23% reduction in positions for base business Outcomes: 3,460 staff by year end 2016 Organisation streamlined Further reductions through…
Key messages Well positioned to fund growth Financial performance reflects high quality assets & disciplined management Low oil price serves to highlight our strong competitive position Preserved ability to fund growth…
Marketing, Trading and Shipping Reinhardt Matisons Executive Vice President Marketing, Trading and Shipping Preferred supplier of premium product
LNG outlook New supply sanction required from 2018 to meet forecast demand 600 LNG supply and demand FID Window 2018+ 500 Demand Window 2022+ 400 Short to medium-term oversupply, but Mtpa 300 cycle continues 200 100…
LNG pricing Improving price outlook from 2018 Historical spot vs term pricing Prices have converged 20 Physical liquidity remains strong 18 16 Regionalisation reflects lack of Atlantic/Asia 14 arbitrage 12 Limited long-term…
LNG customers Customer base increasing Established customers seeking flexibility to manage uncertainty Shorter contracts for incremental quantities, FOB1 delivery, destination flexibility Increasing use of tenders Continued…
LNG strategy Disciplined evolution from Asia Pacific point-to-point seller to a global portfolio supplier Underpin revenue with long-term take-or-pay contracts Proven reserves Market-based price reviews and downside price mitigation…
Implementation Take-or-pay security balanced with operational flexibility Woodside equity LNG1 Portfolio model supports increased commitment to 100% term sales % of expected production 90% 80% 70% Target 80-90% of expected…
Outcomes Resilient price outcomes Realised Long Term, Mid Term and Spot Premium to 7 JKM (FOB Equivalent) 70 Premium to JKM (FOB Equivalent, US/MMBtu) 6 60 2015/16 long term price review outcomes 11 reviews completed in…
Corpus Christi Provides supply diversity and supports new market opportunities Ramping up from July 2020 to one cargo a month Improves supply diversity of Woodsides portfolio Supports pursuit of new Atlantic basin opportunities…
Key messages Continued disciplined evolution from Asia Pacific point-to-point seller to global portfolio supplier Well positioned to manage uncertainty as LNG market evolves Strong realised LNG prices Portfolio continues to be…
Capability and Technology Shaun Gregory Senior Vice President and Chief Technology Officer Combining capability and technology to drive down costs across our value chain
Video - Harnessing Disruption http://youtu.be/MSCPoe9JAvI 2016 Investor Briefing Day 39
Culture, capability and innovation Innovating to improve concepts and reduce costs Innovation culture: Think Big, Prototype Small, Scale Fast Full value chain capability built on 30 years experience Business impact: Improve concepts…
Full value chain capability: LNG liquefaction costs Innovating to achieve top-decile LNG liquefaction cost 2400 LNG liquefaction costs1 Liquefaction costs account for 50% of the total cost of an LNG project 1600 All developments…
Full value chain capability: Upstream costs Reductions 20% observed in many upstream cost categories in 2015 2015 Global cost reductions1 Offshore Engineering installation Subsea Construction and project 0% Steel products…
Full value chain capability: Improved concepts Driving down costs, with line-of-sight to top-decile breakeven prices Browse Breakeven LNG Price2 Top-decile1 Achieved 40% reduction in cost of supply since the onshore Kimberley…
Key messages Innovating to improve concepts and reduce costs Leveraging our culture: our people are driving change across our business Remaining 2C 2P Innovation across the full value chain 1.5 Bboe To deliver 2.4 Bboe of growth…
Question and Answer Peter Coleman Chief Executive Officer and Managing Director
Morning Tea Return at 10:15am AEST
Schedule Start Topic Presenter Session 2 10:15 North West Australia Mike Utsler, Niall Myles 10:45 Canada Darren Flynn 11:00 Myanmar Phil Loader 11.10 Atlantic Margins and Sub-Saharan Africa Phil Loader 11.20 Exploration Strategy Phil…
North West Australia Mike Utsler Executive Vice President and Chief Operations Officer Niall Myles Senior Vice President North West Shelf Underpinning base and enabling growth
North West Australia Overview Underpinning base and enabling growth Greater North West Shelf Ichthys3 Strategy unallocated volume1 12 Tcf Prelude4 Scarborough 8 Tcf 3 Tcf Operations excellence enables aggregator options Greater…
Sustainability Delivering world class HSE performance Safety World-class process safety performance TRIR per million hours 5.0 1 Woodside TRIR 4.0 Tier 1 Process Safety Events Personal safety performance on track for top-…
LNG capacity Optimising value from our infrastructure Pluto & KGP reliability 100% 98% Top quartile Reliability delivered +1.7MMboe in 2015 Reliability NWS1 maintenance excellence Pluto defect elimination 80% No major…
Video - Turnaround performance http://youtu.be/GlUYPQd0M9I 2016 Investor Briefing Day 52
Extending NWS production Accessing options to keep KGP full Production rates Development projects on track LNG capacity range1 Plant performance has brought capacity forward World-class lowest cost plant capacity available in…
Greater Enfield Revamped oil development delivering significant cost reductions Developing 41 MMboe Woodside share (2C)1 Revamped development concept: phased tie-back of oil to existing infrastructure; improvement from standalone gas…
Browse Phased development targets highest value and reduces development risk Ichthys3 Dry gas Condensate 1.0 Bboe Woodside share (2C) 12 Tcf Prelude4 (2C, Tcf) (2C, MMbbl) 3 Tcf Strong foundation for commercialisation Gross Gross…
Canada Darren Flynn, Vice President Canada and USA Cost competitive projects, world-class resource
Canada overview Cost competitive projects, world-class resource Strategy Drive down costs across the value chain through new Liard Horn River technology and best-in-class execution Alberta Summary Existing Pipeline 2.6 Bboe…
Kitimat Upstream Initial production results from Liard Basin are world-class Exceptional results from two Liard proof of concept horizontal wells Improving drilling performance and entering manufacture-mode has the potential to…
Kitimat integrated development Focus on driving down cost structures across the value chain Clear line-of-sight to top decile cost of supply Shipping 25% reduction in LNG unit costs targeted Breakeven LNG Price through…
Myanmar Phil Loader Executive Vice President Global Exploration Basin opening success in a key industry focus area
Video - Pathways to progress http://youtu.be/v5gHjPyG_VI 2016 Investor Briefing Day 64
Myanmar overview Strategy and execution deliver promising growth Exploration strategy: Discover material gas volumes within emerging deep water Rakhine Basin Under explored basin proximal to markets First mover position delivers…
Myanmar basin potential Competitively positioned with substantial resource potential Gas discoveries in A-6 and AD-7 Thalin-1A 2.4 Tcf, 2C gross (100%)1, at Shwe Yee Htun-1 and Thalin-1A AD-7 Growth potential through multi-Tcf…
Myanmar commercialisation Early success delivers commerciality options Indicative schematic not to scale Thalin AD-7, Thalin-1A 1.5 Tcf, 2C gross1 Subsea tieback option via Shwe Platform2 Shwe has design capacity for an additional…
Atlantic Margins and sub-Saharan Africa Phil Loader Executive Vice President Global Exploration Establishing core area portfolio in high impact plays
Atlantic Margins and sub-Saharan Africa Proven plays in underexplored basins Exploration Strategy: Targeting underexplored basins with significant potential to deliver the next core area Summary: Ireland Building portfolio to…
Atlantic Margins AGC Profond block (Senegal/Guinea-Bissau) Key emerging and underdeveloping hydrocarbon province Marsouin Ahmeyim Targeting significant resource potential Teranga with play diversity Planning for first exploration…
Exploration Strategy Phil Loader Executive Vice President Global Exploration Positioning for long term growth
Exploration overview Generating value and long term growth through exploration Exploration strategy: Building a balanced global portfolio to deliver future growth options Focused upon emerging basins, play diversity and proven…
Exploration portfolio Focus areas unchanged: Australia & Asia Pacific; Sub-Saharan Africa and Atlantic Margins Enhanced portfolio balance: oil/gas, emerging/frontier Ireland Prospective acreage acquired in 2016 - Ireland and AGC1…
Exploration strategy Drilling high impact exploration wells (2017 2018) 3D Atlantic Margin 3D z Myanmar 2 3 4 3 Drilling 4-5 wells in 2017 20181 Drilling 4-7 exploration and appraisal wells in 20171 Delivering resource volumes 3D…
Exploration strategy Key messages Portfolio on track to meet long term plan resource inventory, commercial success rates (25%), discovered resources (120% production pa), finding cost (3/boe) Early mover Myanmar success path to…
NWS domestic gas production Woodsides share of domestic gas and its associated condensate will revert to 16.67% circa Q2 2017 Woodside equity share of domestic gas/associated condensate: 50% in DGJV1 up to 414 TJ/day 16.67% in IPGJV2…
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