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Investor Briefing – Woodside Petroleum Ltd.

Woodside Petroleum Ltd. · May 21, 2014 · 92 slides

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Slides

  1. Investor Briefing – Woodside Petroleum Ltd. – slide 1
    2014 Investor briefing
  2. Investor Briefing – Woodside Petroleum Ltd. – slide 2
    NOTES ON PETROLEUM RESOURCE ESTIMATES Unless otherwise stated, all petroleum resource estimates in this presentation are quoted as at the balance date (i.e. 31 December) of Woodsides most recent Annual Report released to ASX and…
  3. Investor Briefing – Woodside Petroleum Ltd. – slide 3
    Housekeeping Heritage level 6 Ballroom exits and Alert tone emergency corridors (beep, beep, beep) Be aware, you may need to evacuate Evacuation tone HERITAGE BALLROOM (whoop, whoop, whoop) BRIDGE & ENTRY CORRIDOR Evacuate…
  4. Investor Briefing – Woodside Petroleum Ltd. – slide 4
    Schedule Start Duration End Topic Presenters PLENARY SESSION 8:30 0:05 8:35 This is what we do 8:35 0:05 8:40 House keeping & introduction James OLoghlin 8:40 0:10 8:50 CEO overview Peter Coleman 8:50 0:20 9:10 Value growth and…
  5. Investor Briefing – Woodside Petroleum Ltd. – slide 5
    Overview Peter Coleman Chief Executive Officer & Managing Director 2014 INVESTOR BRIEFING DAY 1
  6. Investor Briefing – Woodside Petroleum Ltd. – slide 6
    Our imperatives Relentless focus on HSE and operational excellence Improve profitability; capture enduring productivity benefits Grow asset portfolio focusing on industry leading returns while balancing risk Re-build and re-balance…
  7. Investor Briefing – Woodside Petroleum Ltd. – slide 7
    2013 results Record safety performance Strong operating/financial results Production87 MMboe Earnings1.75 billion Positive free cash flow 2.27 billion Disciplined investment0.85 billion 2014 INVESTOR BRIEFING DAY Record…
  8. Investor Briefing – Woodside Petroleum Ltd. – slide 8
    Strengths Building distinctive capabilities Oil and gas value chain Exploring Developing Producing Marketing Trading World Class Re-balance portfolio LNG technology Grow marketing capabilities for scale, execution Large/remote…
  9. Investor Briefing – Woodside Petroleum Ltd. – slide 9
    What differentiates us Disciplined capital management with world class assets delivering strong cash flow ROACE Cash flow per share growth rate 3 Year average (2011-2013) 3 Year average (2011-2013) Woodside Peers % %…
  10. Investor Briefing – Woodside Petroleum Ltd. – slide 10
    Value growth Since 2012 our approach has delivered 1600 ...was worth A1,577 on 15 May Key achievements 1,000 invested in WPL on 2014 2 Jan 2012... 1500 Pluto start-up 1400 CAGR of 21.2%* 1300 Enhanced LNG margins Increased…
  11. Investor Briefing – Woodside Petroleum Ltd. – slide 11
    Priorities Focus on where we add value and have distinctive capabilities Improve profitability of existing assets; achieve world-class HSE and reliability performance Develop captured resources at lowest unit capital cost; leverage…
  12. Investor Briefing – Woodside Petroleum Ltd. – slide 12
    Summary Positive outlook with stronger pricing and increased cost focus 25 ROACE* Sustained leading financial 20 performance across the cycle WPL construction cycle Foundation of high quality, 15 profitable assets Percent…
  13. Investor Briefing – Woodside Petroleum Ltd. – slide 13
    Value growth and capital management LawrieTremaine Chief Financial Officer 2014 INVESTOR BRIEFING DAY 9
  14. Investor Briefing – Woodside Petroleum Ltd. – slide 14
    Capital performance snap shot Stronger operating cash flow ... and lower investment spend ... 4000 Operating cash flow 5000 Investment spend 3000 4000 3000 million million 2000 2000 1000 1000 0 0 2009 2010 2011 2012…
  15. Investor Briefing – Woodside Petroleum Ltd. – slide 15
    Capital performance snap shot Our mission is to deliver superior shareholder returns 20 Total Shareholder Return (TSR) Compound annual return Focus on value creation 15 Target 1st quartile TSR performance Achieved 16% TSR p.a.…
  16. Investor Briefing – Woodside Petroleum Ltd. – slide 16
    Capital management The elements of capital management Capital structure Manage asset Capital portfolio allocation Superior shareholder returns Maximised Disciplined cash investment 2014 INVESTOR BRIEFING DAY…
  17. Investor Briefing – Woodside Petroleum Ltd. – slide 17
    Capital structure Objective Maintain access to capital, at lowest cost, to fund growth Gearing 30 Five year average gearing 21% 25 Maintain strong investment grade credit rating Percentage (%) 20 15 Target 25% gearing 10…
  18. Investor Briefing – Woodside Petroleum Ltd. – slide 18
    Debt funding Strong balance sheet, well positioned for growth Sources of debt Net debt Export credit agencies 5000 US corporate bond market 4000 Bank facilities Project financing where appropriate million 3000 2000 3.5…
  19. Investor Briefing – Woodside Petroleum Ltd. – slide 19
    Disciplined investment decisions Principles underpinning our investment decisions Focused on the creation of value TSR, EPS, NAV/share, Cash flow/share Strategic fit and rationale Investment size, ideally 1 billion to 5 billion…
  20. Investor Briefing – Woodside Petroleum Ltd. – slide 20
    Disciplined investment decisions Our methodolgy Traditional DCF approach Risk to investment NPV Conservative assumptions set independently of 0 Base NPV project decisions Reserves Target metrics IRR 12% - 15% Oil price VIR*…
  21. Investor Briefing – Woodside Petroleum Ltd. – slide 21
    Capital allocation Disciplined investment into next growth phase Priorities for cash 2000 Debt service Dividends US Millions Capex to sustain and grow 1000 Return surplus cash 0 2013 2014 Average per year Continued…
  22. Investor Briefing – Woodside Petroleum Ltd. – slide 22
    Dividends Strong record of free cash flow supports current dividend guidance Free cash flow* 4000 Forecast at 100 oil and 2013 3000 production levels Significant free cash generation expected through to 2017 2000 Consensus…
  23. Investor Briefing – Woodside Petroleum Ltd. – slide 23
    Maximise cash generation Multi year productivity program will deliver enduring benefits Value Targeting run rate of US 0.8 billion benefits by end 2016 3-5% volume uplift on existing assets 10-20% savings on external spend 10-20%…
  24. Investor Briefing – Woodside Petroleum Ltd. – slide 24
    Key messages Focus on creating shareholder value Committed to disciplined investment decisions Generating positive free cash Well positioned for growth 80% dividend payout ratio to continue for the foreseeable future* 2014…
  25. Investor Briefing – Woodside Petroleum Ltd. – slide 25
    Operations Michael Utsler Chief Operations Officer 2014 INVESTOR BRIEFING DAY 21
  26. Investor Briefing – Woodside Petroleum Ltd. – slide 26
    Operational excellence Value enhancement through Operational Excellence Total production 100 Maintenance Excellence 90 80 MMboe Reliability Improvement 70 Planning 60 Excellence 50 2009 2010 2011 2012 2013 Operational…
  27. Investor Briefing – Woodside Petroleum Ltd. – slide 27
    Increased volumes Maintenance Targeting volume uplift of 3 5% on existing assets Excellence Reliability Improvement Planning Excellence Operational Excellence Maximise Recovery Planning improvement Supply Chain World…
  28. Investor Briefing – Woodside Petroleum Ltd. – slide 28
    Increased volumes Maintenance Targeting volume uplift of 3 5% on existing assets Excellence Reliability Improvement Planning LNG reliability Excellence Operational 100 Excellence Maximise Recovery 95 Reliability (%)…
  29. Investor Briefing – Woodside Petroleum Ltd. – slide 29
    Increased volumes Maintenance Key operational drivers to greater volume Excellence Reliability Improvement Planning Excellence Operational Excellence Maximise Recovery Supply Chain Cost Management Projects 2013 2014…
  30. Investor Briefing – Woodside Petroleum Ltd. – slide 30
    Decreased cost Maintenance Cost efficiency enabled by people, processes, Excellence Reliability Improvement systems and tools Planning Excellence Operational Excellence Maximise Recovery Supply Chain Cost Management…
  31. Investor Briefing – Woodside Petroleum Ltd. – slide 31
  32. Investor Briefing – Woodside Petroleum Ltd. – slide 32
    Key messages Deliver world-class operational performance Achieve world class HSE performance Value enhancement through operational excellence Targeting top quartile performance through productivity improvement Volume focus (key…
  33. Investor Briefing – Woodside Petroleum Ltd. – slide 33
    2014 Investor Briefing 10 MINUTE REFRESH James OLoghlin
  34. Investor Briefing – Woodside Petroleum Ltd. – slide 34
    Global exploration Phil Loader EVP Global Exploration 2014 INVESTOR BRIEFING DAY 30
  35. Investor Briefing – Woodside Petroleum Ltd. – slide 35
    Global exploration philosophy, culture and focus Organised and driven to deliver top quartile exploration performance Top quartile Creative GEOSCIENCE and EXPLORERS ENGINEERING STRATEGIC OBJECTIVES Build portfolio of Find commercial…
  36. Investor Briefing – Woodside Petroleum Ltd. – slide 36
    Exploration road map to value creation Path correction excellence through a focus on value GROWTH SCENARIOS Resources Challenging norms to reserves Value Portfolio Business development Commercial Realisation Development exploration…
  37. Investor Briefing – Woodside Petroleum Ltd. – slide 37
    Exploration strategic focus Building a long term foundation for growth Mature Cumulative Discovered Resources Infrastructure led Proven Quantifiable risk, usually shorter term Current captured portfolio Exploration strategic…
  38. Investor Briefing – Woodside Petroleum Ltd. – slide 38
    Exploration portfolio development Re-balancing growth portfolio for scale and execution Build portfolio with increased emphasis towards emerging 2018 petroleum provinces Provinces with materiality, repeatability and ability to…
  39. Investor Briefing – Woodside Petroleum Ltd. – slide 39
  40. Investor Briefing – Woodside Petroleum Ltd. – slide 40
    Global exploration growth focus Building from Australian core to a balanced global footprint Emerging provinces of materiality and quality Basins high graded via play based global basin studies Growth underway via opportunities in…
  41. Investor Briefing – Woodside Petroleum Ltd. – slide 41
    Global exploration activity 2014/15 Building inventory and testing plays Execution: Significant commitment to seismic (2D and 3D) to build inventory prior to making drilling commitments Growth: Focus areas defined, grounded on regional…
  42. Investor Briefing – Woodside Petroleum Ltd. – slide 42
    Australia significant component to global portfolio Building inventory and testing plays Value optimisation in proven plays Leveraging technology to identify and unlock additional value Exploring new frontiers in 2014/15 2014…
  43. Investor Briefing – Woodside Petroleum Ltd. – slide 43
    Ireland Porcupine Basin Underexplored and overlooked Proven underexplored petroleum system with play diversity Woodside strategically positioned as an early mover with material equities 3D seismic in 2015 prior to drilling…
  44. Investor Briefing – Woodside Petroleum Ltd. – slide 44
    New Zealand Taranaki and Great South Leveraging core competencies in emerging and frontier basins Deepwater Taranaki Basin Great South Basin Emerging province, Significant acreage footprint underexplored oil basin Frontier province,…
  45. Investor Briefing – Woodside Petroleum Ltd. – slide 45
    Myanmar Rakhine Basin Early mover in a new exploration era Early mover Q1/2013, basin master potential, regional studies First licence round success amongst significant Industry interest Strategically positioned deepwater, gas,…
  46. Investor Briefing – Woodside Petroleum Ltd. – slide 46
    Key messages Building momentum to reposition Woodside for success Portfolio Regional petroleum systems th ow Opt Gr imis atio Exploration organisation enhanced Captured acreage Km2 n Portfolio remodelled Growth…
  47. Investor Briefing – Woodside Petroleum Ltd. – slide 47
    Applying technology to maximise the core Fortuna 3D IsoMetrixTM targeting NWS plateau extension Looking at the subsurface through a new lens Unlocking new prospectivity in the NWS First IsoMetrix survey in Australia Five minute…
  48. Investor Briefing – Woodside Petroleum Ltd. – slide 48
    Building capability Rob Cole Executive Director and EVP Corporate and Commercial 2014 INVESTOR BRIEFING DAY 44
  49. Investor Briefing – Woodside Petroleum Ltd. – slide 49
    Building capability Actions now for our long-term success Strengthening our culture Building our leadership capability Growing our talent pipeline Retaining and reshaping our workforce Building international capability 2014…
  50. Investor Briefing – Woodside Petroleum Ltd. – slide 50
    Our culture Transforming our culture to align with our strategy Reviewed organisational effectiveness and strategy in 2011 Launched new company values together with our new strategic direction (The Woodside Compass) Compass is…
  51. Investor Briefing – Woodside Petroleum Ltd. – slide 51
    Our leadership capability Building leadership capability to deliver on our strategy Senior Leadership (Top 100) Changes New executive leadership team with 2011 - 2013 globally outstanding depth of experience (5 out of 7 new key…
  52. Investor Briefing – Woodside Petroleum Ltd. – slide 52
    Our workforce Retaining and growing our workforce in line with our strategy 10 4500 Organisation wide focus on engagement 9 4000 and high performance 8 3500 7 3000 Managing our workforce to meet our 6 2500 operational and growth…
  53. Investor Briefing – Woodside Petroleum Ltd. – slide 53
    Our workforce Reshaping our workforce for long-term success Graduate intake numbers Strong commitment to develop and 140 120 promote from within 100 Proper, benchmarked spans of control at all 80 levels of the organisation 60 40…
  54. Investor Briefing – Woodside Petroleum Ltd. – slide 54
    Readiness for Global Growth Building international capability people and processes Recruiting global talent International assignments and secondments TALENT STRATEGIC Developing an international cohort through the RECRUITMENT…
  55. Investor Briefing – Woodside Petroleum Ltd. – slide 55
    Key messages Actions now for our long-term success Cultural change embedded and delivering value Leadership capability rebuilt at the top and progressing well at all other levels Strong progress on growing our talent pipeline…
  56. Investor Briefing – Woodside Petroleum Ltd. – slide 56
    2014 Investor Briefing Q&A AND BREAK
  57. Investor Briefing – Woodside Petroleum Ltd. – slide 57
    LNG Marketing Reinhardt Matisons SVP Commercial and President Marketing 2014 INVESTOR BRIEFING DAY 53
  58. Investor Briefing – Woodside Petroleum Ltd. – slide 58
    Global LNG demand Global LNG demand expected to double by 2030 with Asia to remain about 70% of the market 180 Global LNG demand Source Wood Mackenzie Traditional buyers remain an 160 important foundation 140 Significant new…
  59. Investor Briefing – Woodside Petroleum Ltd. – slide 59
    Global LNG supply 15 mtpa per year of project FIDs needed per year 550 Global LNG supply and demand Future supply mix includes new 500 Woodside supply outlook - March 2014 regions (e.g. North America, East 450 Africa) and new…
  60. Investor Briefing – Woodside Petroleum Ltd. – slide 60
    Nuclear uncertainty The role of nuclear remains a key uncertainty Hokkaido Electric Power Co. Japan: Tokyo Electric Power Co. (TEPCO) Tomari 48 reactors currently idle Hokuriku Electric Power Co. The Kansai Electric Power Co.…
  61. Investor Briefing – Woodside Petroleum Ltd. – slide 61
    LNG pricing Differentiated pricing and Asia premium to continue LNG Supplied to Asia by Contract Category and Uncontracted Demand to 2025 US volumes expected to supply 350 Wood Mackenzie, Oxford Energy Institute, Woodside 10 20%…
  62. Investor Briefing – Woodside Petroleum Ltd. – slide 62
    Delivered cost of US LNG to North Asia Risk adjusted price gap between US supply and traditional Asia LNG supply is minimal Comparison of US LNG risk adjusted supply cost to traditional North Asia Pricing Typical US LNG supply…
  63. Investor Briefing – Woodside Petroleum Ltd. – slide 63
    Woodsides LNG portfolio Our portfolio of exisiting LNG contracts provides significant price certainty indexed to oil price Existing Woodside Equity LNG from Operating Projects NWS uncommitted capacity 100% of the mid and long-term…
  64. Investor Briefing – Woodside Petroleum Ltd. – slide 64
    Available LNG volumes Growing our portfolio of attractive volumes Indicative supply Indicative Volume Source Commencing period (Mtpa) Existing Opportunities Woodsides share of anticipated NWSV Short / Mid / long term 2015 up to 1.0…
  65. Investor Briefing – Woodside Petroleum Ltd. – slide 65
  66. Investor Briefing – Woodside Petroleum Ltd. – slide 66
  67. Investor Briefing – Woodside Petroleum Ltd. – slide 67
    Key messages Woodside has a strong suite of contracted volumes and existing relationships with the premium Asian customer base Woodside portfolio has strong LNG prices with significant certainty to 2017 - 2019 Increasing diversity of…
  68. Investor Briefing – Woodside Petroleum Ltd. – slide 68
    Browse Development Robert Edwardes EVP Development Steve Rogers SVP Browse 2014 INVESTOR BRIEFING DAY 64
  69. Investor Briefing – Woodside Petroleum Ltd. – slide 69
    Browse unlocked by FLNG FLNG technology offers the best solution to develop the Browse resources Design-one-build-many philosophy (D1BM) Simplified upstream design Increased reliability Low FEED* cost Phased capital expenditure…
  70. Investor Briefing – Woodside Petroleum Ltd. – slide 70
    Leveraging our onshore LNG capability FLNG draws on our vast LNG experience FLNG components with onshore analogues include: LNG loading arms MEG* Plant Gas and condensate processing systems Liquefaction technology 2014…
  71. Investor Briefing – Woodside Petroleum Ltd. – slide 71
    Leveraging our offshore experience FLNG builds on our extensive floating and subsea operations experience FLNG improves on FPSO analogues: Hull shape design Turret technology Riser system Utility systems Logistics Tandem…
  72. Investor Briefing – Woodside Petroleum Ltd. – slide 72
    FLNG is a globally significant trend Woodside is building FLNG capability: appropriately managing technology risk FACILITIES ON ORDER: LNG Projected FID Fabrication Operator Field capacity date of first Date yard (mtpa) production…
  73. Investor Briefing – Woodside Petroleum Ltd. – slide 73
    FLNG is a reality Significant progress being made Significant milestones already achieved on Shells Prelude Project: Construction of hull complete Topsides modules progressing First FLNG turret module delivered PRELUDE FLNG…
  74. Investor Briefing – Woodside Petroleum Ltd. – slide 74
    Development concept The reference case optimises resource recovery over field life Three FLNG facilities (identical) Subsea infrastructure includes manifolds, flowlines, umbilicals and moorings Each FLNG facility will have a…
  75. Investor Briefing – Woodside Petroleum Ltd. – slide 75
    Basis Of Design (BOD) activities BOD progressing to plan Maturing design parameters to enable optimal development of Browse resources Australian Industry Participation Plan approved Public consultation on draft Environmental Impact…
  76. Investor Briefing – Woodside Petroleum Ltd. – slide 76
    Development timeline Browse is anticipated to be operational for 40 50 years 2014 INVESTOR BRIEFING DAY Two years post FID Q3 2013 2H 2014 2015 2H 2015 Commencement of drilling Approximately Post 50 years 2014 FEED FID Year two to…
  77. Investor Briefing – Woodside Petroleum Ltd. – slide 77
    Investment model FLNG provides a phased capital expenditure opportunity Life of field capital costs are phased and materially lower than estimated REVENUE capital costs for an onshore development Earlier revenue generation from…
  78. Investor Briefing – Woodside Petroleum Ltd. – slide 78
    Key messages FLNG technology offers best solution to develop Browse resources BOD is progressing to plan It deploys Woodsides vast offshore and onshore development expertise Phased capital and early revenue generation reduce risk…
  79. Investor Briefing – Woodside Petroleum Ltd. – slide 79
    Sustainability and Technology Shaun Gregory SVP Health, Safety, Environment and Technology 2014 INVESTOR BRIEFING DAY 75
  80. Investor Briefing – Woodside Petroleum Ltd. – slide 80
    Valuing Health and Safety The wellbeing of our people is critical to our success 6 Strong safety improvement but we are on a journey 5 Where are we focusing to improve 4 Simplification TRIR 3 Process safety 2 Human…
  81. Investor Briefing – Woodside Petroleum Ltd. – slide 81
    Valuing environment Our environmental reputation delivers a competitive edge and licence to grow Focus on environmental performance: Our reputation has made us a partner of choice Scott Reef study recognised internationally…
  82. Investor Briefing – Woodside Petroleum Ltd. – slide 82
    Technology delivering to the business Key enabler to creating value Increase recoverable To the business reserves (Enfield 4D) FLNG2 Reduce capital and Big Data Analytics Operational Excellence operating costs Next Gen LNG (Near…
  83. Investor Briefing – Woodside Petroleum Ltd. – slide 83
    Near shore LNG Less expensive than land based LNG developments Float-in LNG facility Suitable for areas with restricted land access Integrates process, storage and offloading facilities Shipyard construction provides cost and…
  84. Investor Briefing – Woodside Petroleum Ltd. – slide 84
    Floating LNG Maximising value and leveraging capabilities Leveraging Capability 25 years as LNG operator Operate large fleet of FPSOs Experience de-risks transition into FLNG Our FLNG Technology 2014 INVESTOR BRIEFING DAY…
  85. Investor Briefing – Woodside Petroleum Ltd. – slide 85
    Subsea Eliminates large platforms, reduces costs and monetises stranded reserves Subsea compression Lower cost to build, operate and maintain Increased hydrocarbon recovery Inherently safe Long subsea tiebacks Targeting 300km for…
  86. Investor Briefing – Woodside Petroleum Ltd. – slide 86
    Key messages Sustainable growth utilising technology Health & Safety: The wellness of our people and our assets is core to our company values Delivering environmental excellence is our licence to operate and grow Technology…
  87. Investor Briefing – Woodside Petroleum Ltd. – slide 87
    Biographies 2014 INVESTOR BRIEFING DAY 83
  88. Investor Briefing – Woodside Petroleum Ltd. – slide 88
    Peter J Coleman Robert Cole CEO and Managing Director Executive Director and BEng (Civil and Computing), MBA EVP Corporate and Commercial Industry Experience: 30 years BSc LLB (Hons) Joined Woodside: 2011 Industry Experience: 28 years…
  89. Investor Briefing – Woodside Petroleum Ltd. – slide 89
    Lawrie Tremaine Mike Utsler Chief Financial Officer Chief Operations Officer BBus, FCPA BSc (Petroleum Engineering) Industry Experience: 30 years Industry Experience: 35 years Joined Woodside: 2006 Joined Woodside: 2013 Previous…
  90. Investor Briefing – Woodside Petroleum Ltd. – slide 90
    Robert Edwardes Phil Loader Executive Vice President Development Executive Vice President Exploration BSc (Eng), PhD BSc (Geology), MBA, MSc, DIC Industry Experience: 36 years Industry Experience: 33 years Joined Woodside: 2012 Joined…
  91. Investor Briefing – Woodside Petroleum Ltd. – slide 91
    Shaun Gregory Reinhardt Matisons Senior Vice President Health, Safety, Senior Vice President Commercial and Environment and Technology President Marketing Bsc (Hons), MBT BEng, MBA, MIE Aust, CPEng, CPA Industry Experience: 21 years…
  92. Investor Briefing – Woodside Petroleum Ltd. – slide 92
    Stephen Rogers Senior Vice President Browse Industry Experience: 36 years Joined Woodside: 2012 Previous Industry Roles: Past 20 years at executive management or board level; President & CEO Nautilus Minerals Group, CEO Oil & Gas…

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