Company Interview / Woodside confident of strong dividend payouts

Bullet Points:

Strategic partnership and project development at Driftwood.Strong operational and financial performance, with lower production costs.Progress on the Scarborough Gas Project and its environmental impact.

Meg O'Neill, Woodside CEO (ASX: WDS), states that the company has had a strong operational performance, producing 89 million barrels of oil equivalent in the first half of the year. Thanks to efficient management, production costs dropped by 6%, and profit was $1.9 billion, enabling a healthy dividend payout.

Meg highlights the potential sale of a stake in the Driftwood project, noting the strategic location and technical design bolster confidence in the project's execution. Partnerships with US onshore players and infrastructure investors are expected to enhance the project's development.

Regarding the Scarborough Gas Project in WA, Meg notes it is two-thirds complete and on track for first LNG production in 2026. Despite environmental challenges, the project aims to contribute to a decarbonising future by displacing coal with LNG, reducing emissions.

Full unedited transcript below:

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Going to start with operational performance. So really strong operational business. We produced 89 million barrels of oil equivalent in the first half of the year, underpinned by incredible performance at our LNG assets with 98% reliability. Team did a wonderful job of managing unit production costs. So that was down 6% versus the previous half year. And all of that underpinned strong financials. So profit of $1.9 billion, which allowed us to pay a very healthy dividend, a fully franked dividend of US $0.69 per share. Yeah. And the market definitely liked that dividend. It is down 14% on last year though. What is the likelihood you can continue to pay strong dividends. So we pay a dividend based on profit. Recognizing that the commodities we produce oil and natural gas track global prices. So part of why we're down year on year is because of changes in the global pricing environment. Last year, you know, still very strong prices following the war in Europe. So this year it's it's a little bit softer.

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But again we're paying out at the top end of our range. We pay a dividend of 50 to 80% of net profit after tax. And again, very pleased to have an 80% payout ratio once again. And so on track for a good full year dividend too. We feel well positioned. Obviously every dividend period we have to assess on the merits, but we feel like we're in a very strong position, very healthy balance sheet, low gearing and strong production performance. So we've got all the ingredients in place for for a strong payout at the end of the year. Now you've talked as well about confidence that you can sell the stake in driftwood. Just tell us about the interest here and how that's going after that Tellurian deal. Yeah. So we're really excited about the opportunity we've secured with the Tellurian acquisition. Driftwood is a is a fantastic opportunity. It's a great site. It's well situated. We've got a technical design and a contractor that gives us high confidence in our ability to execute the project. And many in the industry have looked at

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driftwood at various points in time. So the project is well known, and we're looking to put together a partnership that would likely include a US onshore player who want to have access to international prices for their gas, and potentially someone who's interested in an infrastructure investment, as well as likely some of our traditional off takers and LNG buyers. So we've got the opportunity, with full control of the site and the project, to put together the dream team that we want to develop the asset. Tell us where you're at with the Scarborough Gas Project in WA, because this is also obviously been subject to environmental concerns. Yeah. So Scarborough project, I'm really pleased with how execution is going. We were two thirds complete as as of the end of the half year. The construction activities are all going well both onshore and offshore. Um, the the execution again, really on track for first LNG in 2026. I'm pleased that we've navigated some of the environmental challenges that

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we faced. And look, we recognise that climate change is an incredibly important topic globally and a topic that energy companies have a role to play in, And we think one of the important positives we bring is the ability of gas to displace coal for power generation. Half the emissions intensity for the same power output. So we've got a lot of conviction around the role of LNG in a decarbonizing future. And pleased that Scarborough is moving ahead at pace. And you've also looking at the browse project as well. This may potentially not. Go ahead. Where are you at with that? We've been working on environmental approvals for browse for about six years. That is critical path for us. And we're not going to start any intense engineering or technical work until we have confidence that we will get the approvals we need. And look, it's the biggest discovered undeveloped gas field in in Australia's offshore. It could play a very important role in helping meet

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Western Australia's energy needs in the 2030s, as well as providing LNG to our customers. Um, but it needs to be investable for us and it needs to be something that's supported by the state and federal governments. And so we'll work through those processes. So obviously always talking with state and federal governments. Where are you at though in terms of spending on cleaner fuel?

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Well, look, we announced in August the acquisition of a blue ammonia project in Texas. It's called the OCI Clean Ammonia Project. It's a really novel concept. It's a CapEx light ammonia facility. And as we think about how the world moves to lower carbon fuels, we think ammonia is going to be a really important molecule. So it's a it's a molecule that can be burned in coal fired power stations. There's a lot of work being done looking at ammonia for marine transportation. We see the potential for the global ammonia market to double between now and 2030. And two thirds of that demand is for lower carbon ammonia, exactly like we've acquired in this OCI opportunity in Texas. Right. We're about to go into northern hemisphere winter. How are you sort of placed in terms of what we might see with gas prices? Yeah, we're we're well positioned. One of the things we've been doing deliberately is making sure that we have a certain amount of our LNG portfolio available to sell at spot prices, and to be

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able to take advantage of the seasonality that we see in gas markets. It's not rocket science. I'm gas. One of the primary users is heat. So when places get cold and we see it in Melbourne, just like we see it in Japan, uh, customers need more gas. So our portfolio is well positioned to be able to supply customers that need gas in the winter. And for Woodside to be able to get the price uplift associated with that. And where are you working, I guess more broadly on some of these sustainability goals, particularly as we look to net zero. We've got two themes that we're pursuing. First off is taking care of emissions from our own assets. So we have a target to reduce our net equity scope one and two emissions. So that's from our facilities that we have an equity ownership stake in by 30% by 2030. Uh, we're well on that pathway. We've got a number of initiatives that the teams are pursuing day in, day out to run our business more efficiently and with fewer emissions. So that's one of our key pillars, The second pillar for

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us is investment in low carbon molecules and the carbon abatement potential that those offer. And this OCI acquisition in Texas gets us a significant pathway or takes a significant step on that journey. More broadly, when we look at the macro environment, how challenging is things for Woodside at, say, a staffing level? Are you looking to cut back or are you growing? Um, look, we're always adjusting the size of the business and the makeup of our workforce to account for business changes. Um, for example, we recently started up a project in Senegal, a very large deepwater development. We had a fairly significant project team associated with that. Um, so again, as our project activity shifts, we'll be looking to make some adjustments in our operating business. We're always looking to make sure we're lean and efficient. But then again, we have growth opportunities like driftwood and OCI. So we're always focused on trying to make sure we have the right workforce

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for the tasks and opportunities in front of us. Is there further potential for M&A? I mean, obviously toluene was a very big deal. Well, we've just done these two acquisitions. And so our focus in the near term, first off, is closing those transactions and bringing the employees who come with those two businesses into the Woodside family and making sure that we're ready to start operating the ammonia plants next year and to start the driftwood project as early as next year. So we've got a lot of work to do with the two acquisitions we've announced. We're not looking for anything more at this point in time. And Meg, how do you think you're faring against your peers? We mentioned the market very much liked your result. Um, look, we feel like we're a unique investment thesis. We have high quality tier one assets both here and in North America. We've got a steady pipeline of growth opportunities that will ensure the business is thriving into the for the rest of this decade and into the 2030s. And we've got incredibly strong balance sheet triple B plus credit

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rated 13% gearing. And we've got a demonstrated track record on returning value to shareholders with healthy dividends.