1 00:00:05,720 --> 00:00:08,719 Speaker 1: Welcome to the Fear and Greed Business Interview Michael Thompson. 2 00:00:09,000 --> 00:00:12,240 Speaker 1: This week, oil and gas producer Woodside Energy announced an 3 00:00:12,360 --> 00:00:15,400 Speaker 1: underlying profit of one point six billion US dollars for 4 00:00:15,440 --> 00:00:18,080 Speaker 1: the six months to the end of June. Today's interview 5 00:00:18,200 --> 00:00:21,440 Speaker 1: with Woodside CEO Meg O'Neil is a terrific look at 6 00:00:21,440 --> 00:00:23,760 Speaker 1: the many projects that they've got underway and they are 7 00:00:23,880 --> 00:00:27,120 Speaker 1: all huge projects, from the twelve and a half billion 8 00:00:27,200 --> 00:00:31,000 Speaker 1: US dollar Scarborough LLNG project that one's in wa to 9 00:00:31,040 --> 00:00:34,760 Speaker 1: the purchase of the US LNG company Tulurian. Meg O'Neil 10 00:00:34,760 --> 00:00:37,480 Speaker 1: also talks about the outlook for the thirty billion dollar 11 00:00:37,520 --> 00:00:40,760 Speaker 1: Brows development north of Broom, which was knocked back earlier 12 00:00:40,800 --> 00:00:44,479 Speaker 1: this month on environmental grounds including the threat to pygmy 13 00:00:44,479 --> 00:00:47,200 Speaker 1: blue whales and turtle nesting sites. It is a wide 14 00:00:47,280 --> 00:00:49,680 Speaker 1: ranging interview. It comes to us as part of a 15 00:00:49,760 --> 00:00:53,239 Speaker 1: series put together with the team at Osby's during reporting season. Osby's, 16 00:00:53,320 --> 00:00:56,320 Speaker 1: of course, is Australia's leading provider of live and on 17 00:00:56,440 --> 00:01:00,000 Speaker 1: demand video of the latest news in Australian business market's economy. 18 00:01:00,240 --> 00:01:03,440 Speaker 1: Startups sign up at Osby's dot com at dot au. 19 00:01:03,560 --> 00:01:07,120 Speaker 1: It is free Juliet Sally spoke with Meg O'Neil about 20 00:01:07,120 --> 00:01:10,759 Speaker 1: everything I mentioned before, plus climate change, sustainability and how 21 00:01:10,760 --> 00:01:13,479 Speaker 1: the company prepares for the northern Hemisphere winter. 22 00:01:18,319 --> 00:01:20,919 Speaker 2: Meg, thanks so much for joining Ozviiz. Obviously the market 23 00:01:20,959 --> 00:01:22,920 Speaker 2: really liked your results. In your words, what were some 24 00:01:22,920 --> 00:01:24,120 Speaker 2: of the highlights of the half year. 25 00:01:24,720 --> 00:01:27,440 Speaker 3: Look, I'm going to start with operational performance, So really 26 00:01:27,480 --> 00:01:30,679 Speaker 3: strong operational business. We produced eighty nine million barrels oil 27 00:01:30,680 --> 00:01:34,600 Speaker 3: equivalent in the first half of the year, underpinned by 28 00:01:34,600 --> 00:01:38,360 Speaker 3: incredible performance at our LNG assets with ninety eight percent reliability. 29 00:01:39,160 --> 00:01:41,920 Speaker 3: Team did a wonderful job of managing unit production costs, 30 00:01:41,920 --> 00:01:44,720 Speaker 3: so that was down six percent versus the previous half year, 31 00:01:45,400 --> 00:01:48,320 Speaker 3: and all of that underpin strong financials. So profit of 32 00:01:48,360 --> 00:01:51,680 Speaker 3: one point nine billion dollars, which allowed us to pay 33 00:01:51,760 --> 00:01:55,960 Speaker 3: a very healthy dividend, a fully franked dividend of US 34 00:01:56,000 --> 00:01:57,160 Speaker 3: sixty nine cents per sure. 35 00:01:57,400 --> 00:02:00,640 Speaker 2: Yeah, and the market definitely liked that dividend. It is 36 00:02:00,800 --> 00:02:03,080 Speaker 2: down fourteen percent on last year, though, what is the 37 00:02:03,200 --> 00:02:05,400 Speaker 2: likelihood you can continue to pay strong dividends? 38 00:02:05,520 --> 00:02:08,840 Speaker 3: So we pay a dividend based on profit, recognizing that 39 00:02:08,880 --> 00:02:13,480 Speaker 3: the commodities we produce oil and natural gas track global prices, 40 00:02:13,560 --> 00:02:15,960 Speaker 3: so part of why we're down year on years because 41 00:02:16,000 --> 00:02:19,680 Speaker 3: of changes in the global pricing environment. Last year, you know, 42 00:02:19,760 --> 00:02:23,400 Speaker 3: still very strong prices following the war in Europe. So 43 00:02:23,400 --> 00:02:25,520 Speaker 3: this year it's a little bit softer, but again we're 44 00:02:25,520 --> 00:02:27,400 Speaker 3: paying out at the top end of our range. We 45 00:02:27,440 --> 00:02:29,800 Speaker 3: pay a dividend of fifty to eighty percent of net 46 00:02:29,840 --> 00:02:33,120 Speaker 3: profit after tax, and again very pleased to have an 47 00:02:33,120 --> 00:02:35,200 Speaker 3: eighty percent payout ratio once again. 48 00:02:34,960 --> 00:02:37,720 Speaker 2: And so on track for a good full year dividend. Two. 49 00:02:38,200 --> 00:02:42,120 Speaker 3: We feel well positioned. Obviously every dividend period we have 50 00:02:42,240 --> 00:02:44,359 Speaker 3: to assess on the merits, but we feel like we're 51 00:02:44,400 --> 00:02:48,520 Speaker 3: in a very strong position, very healthy balance sheet, low gearing, 52 00:02:49,960 --> 00:02:52,760 Speaker 3: strong production performance. So we've got all the ingredients in 53 00:02:52,760 --> 00:02:55,359 Speaker 3: place for a strong payout at the end of the year. 54 00:02:55,560 --> 00:02:58,840 Speaker 2: Now you've talked as well about confidence that you can 55 00:02:58,919 --> 00:03:01,080 Speaker 2: sell the stake in drift To just tell us about 56 00:03:01,120 --> 00:03:03,960 Speaker 2: the interest here and how that's going after that Tillaryan deal. 57 00:03:04,960 --> 00:03:08,040 Speaker 3: So we're really excited about the opportunity we've secured with 58 00:03:08,120 --> 00:03:14,360 Speaker 3: the Tillurian acquisition. Driftwood is a fantastic opportunity. It's a 59 00:03:14,400 --> 00:03:18,200 Speaker 3: great site, it's well situated. We've got a technical design 60 00:03:18,280 --> 00:03:20,480 Speaker 3: and a contractor that gives us high confidence in our 61 00:03:20,520 --> 00:03:24,120 Speaker 3: ability to execute the project. Many in the industry have 62 00:03:24,240 --> 00:03:26,680 Speaker 3: looked at Driftwood at various points in time, so the 63 00:03:26,720 --> 00:03:29,440 Speaker 3: project is well known and we're looking to put together 64 00:03:29,480 --> 00:03:33,360 Speaker 3: a partnership that would likely include a US onshore player 65 00:03:33,639 --> 00:03:36,640 Speaker 3: who want to have access to international prices for their gas, 66 00:03:37,360 --> 00:03:41,960 Speaker 3: potentially someone who's interested in an infrastructure investment, as well 67 00:03:41,960 --> 00:03:46,480 Speaker 3: as likely some of our traditional offtakers and LNG buyers. 68 00:03:46,800 --> 00:03:49,080 Speaker 3: So we've got the opportunity, with full control of the 69 00:03:49,120 --> 00:03:51,480 Speaker 3: site in the project, to put together the dream team 70 00:03:51,880 --> 00:03:53,640 Speaker 3: that we want to develop the asset. 71 00:03:54,080 --> 00:03:56,600 Speaker 2: Tell us where you're at with this Scarborough gas project 72 00:03:56,640 --> 00:03:58,880 Speaker 2: in wa because this is also obviously been subject to 73 00:03:58,960 --> 00:03:59,960 Speaker 2: environmental concerns. 74 00:04:00,360 --> 00:04:04,160 Speaker 3: Yeah, so Scarborough Project. Really pleased with how execution is going. 75 00:04:04,200 --> 00:04:07,040 Speaker 3: We were two thirds complete as of the end of 76 00:04:07,080 --> 00:04:11,040 Speaker 3: the half year. The construction activities are all going well, 77 00:04:11,080 --> 00:04:17,000 Speaker 3: both onshore and offshore. The execution again really on track 78 00:04:17,080 --> 00:04:21,039 Speaker 3: for first leg in twenty twenty six. I'm pleased that 79 00:04:21,120 --> 00:04:25,279 Speaker 3: we've navigated some of the environmental challenges that we faced, 80 00:04:26,040 --> 00:04:29,720 Speaker 3: and look, we recognize that climate change is an incredibly 81 00:04:29,839 --> 00:04:33,560 Speaker 3: important topic globally and a topic that energy companies have 82 00:04:33,680 --> 00:04:36,440 Speaker 3: a role to play in. And we think one of 83 00:04:36,520 --> 00:04:39,600 Speaker 3: the important positives we bring is the ability of gas 84 00:04:39,640 --> 00:04:44,200 Speaker 3: to displace coal for power generation half the emission's intensity 85 00:04:44,560 --> 00:04:47,080 Speaker 3: for the same power output. So we've got a lot 86 00:04:47,080 --> 00:04:50,279 Speaker 3: of conviction around the role of energy in a decarbonizing future. 87 00:04:50,800 --> 00:04:52,720 Speaker 3: And please that Scarborough's moving ahead at pace. 88 00:04:53,120 --> 00:04:56,080 Speaker 2: And you've also looking at the Browse project as well, 89 00:04:56,120 --> 00:04:58,640 Speaker 2: this may potentially not go ahead. Where are you at 90 00:04:58,640 --> 00:04:58,880 Speaker 2: with that? 91 00:05:00,200 --> 00:05:04,240 Speaker 3: Working on environmental approvals for Browse for about six years, 92 00:05:04,760 --> 00:05:06,960 Speaker 3: that is critical path for us, and we're not going 93 00:05:07,000 --> 00:05:10,560 Speaker 3: to start any intense engineering or technical work until we 94 00:05:10,640 --> 00:05:15,040 Speaker 3: have confidence that we will get the approvals we need. Look, 95 00:05:15,080 --> 00:05:20,320 Speaker 3: it's the biggest discovered undeveloped gas field in Australia's offshore. 96 00:05:21,400 --> 00:05:24,040 Speaker 3: It could play a very important role in helping meet 97 00:05:24,080 --> 00:05:27,760 Speaker 3: Western Australia's energy needs in the twenty thirties, as well 98 00:05:27,760 --> 00:05:31,599 Speaker 3: as providing LERG to our customers. But it needs to 99 00:05:31,600 --> 00:05:34,520 Speaker 3: be investable for us, and it needs to be something 100 00:05:34,520 --> 00:05:36,920 Speaker 3: that's supported by the state and federal governments, and so 101 00:05:36,960 --> 00:05:38,320 Speaker 3: we'll work through those processes. 102 00:05:38,440 --> 00:05:41,400 Speaker 2: So obviously always talking with state and federal governments. Where 103 00:05:41,400 --> 00:05:44,320 Speaker 2: are you at though, in terms of spending on cleaner fuel. 104 00:05:45,520 --> 00:05:48,880 Speaker 3: Well, look, we announced in August the acquisition of a 105 00:05:49,040 --> 00:05:52,480 Speaker 3: blue ammonia project in Texas. It's called the OCI Clean 106 00:05:52,480 --> 00:05:55,760 Speaker 3: Ammonia Project. It's a really novel concept. It's a capex 107 00:05:55,920 --> 00:05:59,120 Speaker 3: light ammonia facility, and as we think about how the 108 00:05:59,160 --> 00:06:02,719 Speaker 3: world moves to lower carbon fuels, we think ammonia is 109 00:06:02,760 --> 00:06:06,200 Speaker 3: going to be a really important molecule. So it's a 110 00:06:06,240 --> 00:06:08,839 Speaker 3: molecule that can be burned in coal fired power stations. 111 00:06:09,480 --> 00:06:11,600 Speaker 3: There's a lot of work being done looking at ammonia 112 00:06:11,680 --> 00:06:16,839 Speaker 3: for marine transportation. We see the potential for the global 113 00:06:16,920 --> 00:06:20,640 Speaker 3: ammonia market to double between now and twenty thirty, and 114 00:06:20,680 --> 00:06:23,279 Speaker 3: two thirds of that demand is for lower carbon ammonia, 115 00:06:23,360 --> 00:06:26,960 Speaker 3: exactly like we've acquired in this OCI opportunity in Texas. 116 00:06:27,279 --> 00:06:30,279 Speaker 2: Right, we're about to go into our northern hemisphere winter. 117 00:06:30,440 --> 00:06:32,160 Speaker 2: How are you sort of placed in terms of what 118 00:06:32,160 --> 00:06:33,600 Speaker 2: we might see with gas prices. 119 00:06:34,160 --> 00:06:37,440 Speaker 3: Yeah, we're well positioned. One of the things we've been 120 00:06:37,440 --> 00:06:40,240 Speaker 3: doing deliberately is making sure that we have a certain 121 00:06:40,279 --> 00:06:43,800 Speaker 3: amount of our LNG portfolio available to sell at spot 122 00:06:43,880 --> 00:06:47,600 Speaker 3: prices to be able to take advantage of the seasonality 123 00:06:47,640 --> 00:06:50,720 Speaker 3: that we see in gas markets. It's not rocket science. 124 00:06:51,600 --> 00:06:54,640 Speaker 3: Gas one of the primary users is heat. So when 125 00:06:55,080 --> 00:06:57,200 Speaker 3: places get cold, and we see it in Melbourne just 126 00:06:57,200 --> 00:07:00,880 Speaker 3: like we see it in Japan, customers need more. So 127 00:07:00,920 --> 00:07:03,920 Speaker 3: our portfolio is well positioned to be able to supply 128 00:07:04,040 --> 00:07:07,560 Speaker 3: customers that need gas in the winter and for Woodside 129 00:07:07,560 --> 00:07:09,640 Speaker 3: to be able to get the price uplift associated with that. 130 00:07:10,400 --> 00:07:12,680 Speaker 2: And where are you working? I guess more broadly on 131 00:07:12,720 --> 00:07:15,240 Speaker 2: some of these sustainability goals, particularly as we look to 132 00:07:15,280 --> 00:07:17,080 Speaker 2: net zero, we've. 133 00:07:16,920 --> 00:07:19,520 Speaker 3: Got two themes that we're pursuing. First off is taking 134 00:07:19,560 --> 00:07:22,200 Speaker 3: care of emissions from our own assets, so we have 135 00:07:22,240 --> 00:07:26,440 Speaker 3: a target to reduce our net equity scope one into emissions, 136 00:07:26,840 --> 00:07:29,080 Speaker 3: so that's from our facilities that we have an equity 137 00:07:29,120 --> 00:07:34,240 Speaker 3: ownership stake in by thirty percent by twenty thirty. We're 138 00:07:34,240 --> 00:07:36,840 Speaker 3: well on that pathway. We've got a number of initiatives 139 00:07:36,840 --> 00:07:39,040 Speaker 3: that the teams are pursuing day and day out to 140 00:07:39,120 --> 00:07:43,080 Speaker 3: run our business more efficiently and with fewer emissions. So 141 00:07:43,120 --> 00:07:45,160 Speaker 3: that's one of our key pillars. The second pillar for 142 00:07:45,280 --> 00:07:51,000 Speaker 3: us is investment in low carbon molecules and the carbon 143 00:07:51,040 --> 00:07:55,440 Speaker 3: abatement potential that those offer. In this OCI acquisition in 144 00:07:55,520 --> 00:07:58,880 Speaker 3: Texas gets us a significant pathway or takes a significant 145 00:07:58,880 --> 00:07:59,840 Speaker 3: step on that journey. 146 00:08:00,120 --> 00:08:03,040 Speaker 2: More broadly, when we look at the macro environment, how 147 00:08:03,240 --> 00:08:06,480 Speaker 2: challenging is things for Woodside and say a staffing level. 148 00:08:06,480 --> 00:08:08,600 Speaker 2: Are you looking to cut back or are you growing? 149 00:08:09,800 --> 00:08:13,320 Speaker 3: Look, we're always adjusting the size of the business and 150 00:08:13,400 --> 00:08:17,320 Speaker 3: the makeup of our workforce to account for business changes. 151 00:08:18,160 --> 00:08:21,200 Speaker 3: For example, we recently started up a project in Senegal, 152 00:08:21,600 --> 00:08:25,000 Speaker 3: a very large deep water development. We had a fairly 153 00:08:25,040 --> 00:08:29,120 Speaker 3: significant project team associated with that. So again, as our 154 00:08:29,160 --> 00:08:32,240 Speaker 3: project activity shifts, we'll be looking to make some adjustments 155 00:08:33,040 --> 00:08:35,520 Speaker 3: in our operating business. We're always looking to make sure 156 00:08:35,559 --> 00:08:38,920 Speaker 3: we're lean and efficient. But then again we have growth 157 00:08:38,960 --> 00:08:42,840 Speaker 3: opportunities like Driftwood and o CI, so we're always focused 158 00:08:42,880 --> 00:08:44,959 Speaker 3: on trying to make sure we have the right workforce 159 00:08:45,040 --> 00:08:47,839 Speaker 3: for the tasks and opportunities in front of us. 160 00:08:48,280 --> 00:08:50,600 Speaker 2: Is there further potential for M and A. I mean, 161 00:08:50,600 --> 00:08:52,400 Speaker 2: obviously Turlier and was a very big deal. 162 00:08:53,360 --> 00:08:56,400 Speaker 3: Well, we've just done these two acquisitions, and so our 163 00:08:56,400 --> 00:08:59,920 Speaker 3: focus in the near term, first off is closing those transactions, 164 00:09:00,760 --> 00:09:03,360 Speaker 3: bringing the employees to come with those two businesses into 165 00:09:03,360 --> 00:09:06,520 Speaker 3: the Woodside family and making sure that we're ready to 166 00:09:06,559 --> 00:09:09,680 Speaker 3: start operating the ammonia plant next year and to start 167 00:09:09,720 --> 00:09:12,600 Speaker 3: the driftwood project as early as next year. So we've 168 00:09:12,600 --> 00:09:13,840 Speaker 3: got a lot of work to do with the two 169 00:09:13,880 --> 00:09:16,679 Speaker 3: acquisitions we've announced. We're not looking for anything more at 170 00:09:16,679 --> 00:09:17,440 Speaker 3: this point in time. 171 00:09:17,720 --> 00:09:20,200 Speaker 2: And Meg, how do you think you're faring against your peers? 172 00:09:20,280 --> 00:09:22,240 Speaker 2: We mentioned the market very much lied to your result. 173 00:09:23,360 --> 00:09:27,280 Speaker 3: Look, we feel like we're a unique investment thesis. We 174 00:09:27,400 --> 00:09:30,400 Speaker 3: have high quality Tier one assets both here and in 175 00:09:30,440 --> 00:09:34,160 Speaker 3: North America. We've got a steady pipeline of growth opportunities 176 00:09:34,200 --> 00:09:38,080 Speaker 3: that will ensure the business is thriving for the rest 177 00:09:38,080 --> 00:09:41,400 Speaker 3: of this decade and into the twenty thirties. We've got 178 00:09:41,720 --> 00:09:45,560 Speaker 3: incredibly strong balance sheet triple B plus credit rated, thirteen 179 00:09:45,600 --> 00:09:48,720 Speaker 3: percent gearing, and we've got a demonstrated track record on 180 00:09:48,760 --> 00:09:51,840 Speaker 3: returning value to shareholders with healthy dividends. 181 00:09:58,080 --> 00:10:01,440 Speaker 1: That was Woodside C Meg O'Neil speaking to Juliet Sally 182 00:10:01,480 --> 00:10:04,320 Speaker 1: from Osby's. Sign up at osbiz dot com dot au. 183 00:10:04,440 --> 00:10:06,880 Speaker 1: It's free. This is the Fear and Greed Business Interview. 184 00:10:06,960 --> 00:10:09,160 Speaker 1: Join us every morning for the full episode of Fear 185 00:10:09,200 --> 00:10:11,360 Speaker 1: and Greed. Daily business news for people who make their 186 00:10:11,360 --> 00:10:14,120 Speaker 1: own decisions. I'm Michael Thompson. Enjoy your day.