Woodside Half-Year FY24 Earnings Call Highlights

Woodside (ASX: WDS) reported a first-half result that was well-received by the market, with stronger-than-expected earnings due to effective cost management. Despite falling oil prices, Woodside maintained its 80% dividend payout ratio, which was a positive surprise.

1H24 Earnings Summary

• Production volume down 2% to 89.3MMboe

• Unit production cost down 6% to US$8.3boe

• Realised price down 15% to US$62.6boe

• Net profit after tax up 11% to $1.9bn

• Earnings per share up 11% to 102 US cents

• Interim dividend of 69 US cents per share (80% payout ratio or the top end of its payout range)

Earnings Call Highlights

The below topics have been answered by CEO Meg O'Neil and CFO Graham Tiver.

On Sangomar Project: "We achieved a major milestone in June with the start-up of our Sangomar project ... Nameplate capacity of 100,000 barrels per day has been achieved and all 24 wells have been drilled and completed."

On Scarborough Project: "Scarborough was 67% complete at the end of the period and is on track for first LNG cargo in 2026."

On Trion Project: "We remain on track for first oil in 2028. Front-end engineering design on the FSO was completed in the period."

On oil price: "Despite lower average realized prices, our base business continues to perform very well."

Energy demand growth: "As the world's population continues to grow and economies develop, the demand for energy is increasing ... demand for reliable, affordable, and increasingly lower-carbon energy will continue to grow ... We firmly believe that LNG will remain an important global energy source as countries seek to lower their emissions."

Operational excellence: "Our key operational and financial metrics in the half-year results demonstrate how well our base business is performing. World-class LNG reliability of 98% and production of more than 89 million barrels of oil equivalent put us on track to deliver our full-year production guidance."

Demand for lower carbon solutions: "We see a clear and sustained opportunity for coal to gas switching in key markets as they navigate the energy transition."

Capital management: "We know the importance of dividends to our shareholders, and when we evaluate financial scenarios, we assume a dividend payout ratio at the top end of our range."

Emissions targets: "We remain on track to achieve our Scope 1 and 2 emissions reduction targets."

Analyst Q&A Highlights

Confidence in Scarborough cost estimates after recent increases/risks: "I have very high level of confidence that we will deliver the project within that $12.5 billion."

On cash flow outlook: "I'm very comfortable in saying that our half one free cash flow is on track as per our IBD 2023, November 2023 cash flow guidance. And when we extrapolate that forward for the full year position, also very comfortable that we are tracking above that."

On gearing targets: "In our mid-price scenario, we will be above 20% and at the stress price. I'm not sure if that's what you mean by subdued. It was more around the mid-20s percent."

On Sangomar contract risks: "We have a production-sharing contract. We have a host government's agreement. These were fairly negotiated with the governments of that nation. And look, we're happy to have a conversation with the governments, but we need to make sure that we're protecting the thesis, the investment thesis on which we entered the project."

On cost reductions: "The underlying costs have decreased across Woodside. Obviously ups and downs between operations, depends what's going on, but across the business, a very broad theme of strong cost improvement."

This article was generated with the support of AI and reviewed by an editor.