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Speaker 1: Welcome to the Fear and Greed Business Interview. I'm Sean Ailman.

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Speaker 1: Today's interview is a terrific insight into Ossie oil and

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Speaker 1: gas giant Woodside Energy. This week, Woodside reported an underlying

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Speaker 1: profit of four point five billion dollars for the twelve

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Speaker 1: months to the end of twenty twenty four, hit by

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Speaker 1: lower oil and gas prices. This interview with CEO Mego

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Speaker 1: Neil looks to the future of its massive LNG project

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Speaker 1: in Louisiana and the impact that Trump administration is having

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Speaker 1: not just on Woodside but the whole energy sector. This

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Speaker 1: reporting season, we're partnering with the team at Osby's to

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Speaker 1: bring you interviews with some of Australia's top business leaders.

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Speaker 1: Osby's is the country's leading provider of live and on

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Speaker 1: demand video of the latest news in Australian business markets,

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Speaker 1: economy and startups. Sign up for free at Osby's dot

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Speaker 1: com dot au. Mego Nello Woodside Energy spoke with Dean

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Speaker 1: Blaney and started by answering the question of what provided

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Speaker 1: the confidence to pay out a better than expected dividend.

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Speaker 2: Look a couple of things. The result really reflects the

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Speaker 2: strength of the underlying business. We have a really strong,

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Speaker 2: outstanding based business. Our LGY assets in Australia were performing

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Speaker 2: at a very high level. We started up a new

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Speaker 2: project offshore Senegal that has performed extremely well. When you

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Speaker 2: look at the numbers, earnings before income tax and appreciation

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Speaker 2: of over nine billion US dollars, that translates to a

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Speaker 2: net profit after tax of three point six billion US dollars.

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Speaker 2: That gives us confidence that we've got a strong based

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Speaker 2: business that allows us to pay out at the upper

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Speaker 2: end of our payout range eighty percent dividend to shareholders

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Speaker 2: fully franked. So for our Australian retail shareholders at the

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Speaker 2: end of the day, it comes down to about two

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Speaker 2: dollars sixty eight inclusive of the franking credit benefits. Really

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Speaker 2: a phenomenal result.

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Speaker 3: There was some concern that would cite us under provision

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Speaker 3: and for future restoration spend after twenty twenty five MISS.

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Speaker 3: So there's also the potential I suppose for tougher future

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Speaker 3: regulation when it comes to restoration. So you don't feel

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Speaker 3: that you're sailing too close to the wind when it

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Speaker 3: comes to you know, the potential restoration risks in the future.

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Speaker 2: No, we're very rigorous in our process for estimating restoration costs.

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Speaker 2: I mean, it's a critical element of our financial statements

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Speaker 2: and we've got an obligation to ensure that that's fairly

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Speaker 2: and transparently reflected in the statements. We have indicated to

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Speaker 2: the market that twenty twenty five is going to be

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Speaker 2: a big year for restoration activities, largely as we deal

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Speaker 2: with some legacy assets. So there's a number of fields

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Speaker 2: that haven't produced oil or gas for five plus years

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Speaker 2: and we're cleaning those up. So we do have a

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Speaker 2: big spend this year. Next year it'll drop down again

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Speaker 2: and twenty seven is going to be another big year

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Speaker 2: as we remove platforms in the bas Strait. But this

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Speaker 2: is a normal part of the business. The spend is

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Speaker 2: not going to be flat every single year. We will

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Speaker 2: have ups and downs based on activity. But again we're

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Speaker 2: doing the right thing, you know, we're tackling the decommissioning

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Speaker 2: obligations that we have and making sure that we return

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Speaker 2: the locations to the condition in which they started.

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Speaker 3: What I mean, this is a big question, but what's

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Speaker 3: the status of the equity sell down in Louisiana.

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Speaker 2: It's going very well. So our objective is to retain

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Speaker 2: about fifty percent of equity in the opportunity. We want

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Speaker 2: to put together a dream team of investors. And one

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Speaker 2: of the things that was really attractive to us about

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Speaker 2: the opportunity when we started looking at it was the

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Speaker 2: opportunity to get one hundred percent get control of the site.

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Speaker 2: We've got the permits we need, we have the contractor

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Speaker 2: we want, so in many ways, it's already an advantaged project,

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Speaker 2: but with us having one hundred percent, we can bring

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Speaker 2: in the partners we want, and we're in very detailed

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Speaker 2: discussions with a number of potential dream Team members about

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Speaker 2: coming into the project.

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Speaker 3: So is that a fifty percent state that you're looking

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Speaker 3: to offload, correct? Yeah, And so what would you need

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Speaker 3: to happen before you would greenlight that final investment decision

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Speaker 3: and when do you expect to do so?

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Speaker 2: Yeah, we want to be ready to take the decision

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Speaker 2: in this quarter, but we will take the decision when

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Speaker 2: we've either got signed and sealed agreement from potential partners

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Speaker 2: or we have high confidence that we're going to get there.

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Speaker 2: But the team's working very hard. The team would really

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Speaker 2: love to land those commercial agreements and bring the partners

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Speaker 2: in by the first quarter so that we can take

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Speaker 2: that decision. You know at pace time is ticking.

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Speaker 3: Did the discussions have the discussions and the nature of

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Speaker 3: the discussions with potential dream Team partners changed in the

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Speaker 3: wake of the new administration.

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Speaker 2: Look, I think it's probably been a little helpful in

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Speaker 2: terms of providing an opportunity for investors to get into

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Speaker 2: the US oil and gas sector. Now, a number of

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Speaker 2: the folks that we're talking to are you players. They're

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Speaker 2: interested in getting their molecules exposed to international markets. The

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Speaker 2: international players we're talking to see this as an opportunity

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Speaker 2: to signal their country's support for things like adjusting the

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Speaker 2: balance of trade. You know, it's very clear with the

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Speaker 2: new US administration that he's very concerned about trade deficits.

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Speaker 2: And one way for a nation to quickly adjust a

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Speaker 2: trade deficit is to buy more energy from the US.

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Speaker 2: So we are seeing a bit of pull from some

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Speaker 2: of our perspective partners and from prospective energy buyers that's

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Speaker 2: probably been sparked by the new administration.

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Speaker 3: So is the new administration a Donald Trump presidency of

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Speaker 3: boon for withside end your investors.

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Speaker 2: Look, the interesting thing about the US is the free

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Speaker 2: markets work very effectively in the US. Oil and gas

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Speaker 2: production grew under Trump in his first administration, it grew

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Speaker 2: more under Biden. Solar and wind renewables investment grew under Trump,

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Speaker 2: it grew under Biden. It's continued to grow. So the

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Speaker 2: free markets work very well in the US. What I

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Speaker 2: think Trump does is with his statements like Drill, Baby, Drill,

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Speaker 2: he makes it really clear that affordable energy is important

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Speaker 2: to the American consumer and the American economy. So that

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Speaker 2: really strong support for the oil and gas industry. That

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Speaker 2: direct messaging. I do take as a positive for us

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Speaker 2: that it's a place where our industry is well supported.

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Speaker 3: Any concern around tariffs, I'm thinking aluminium, and that could

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Speaker 3: be for the potential US operations in Louisiana or here

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Speaker 3: in Australia.

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Speaker 2: Not particularly. Look when we look at our business, when

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Speaker 2: we look at where we spend money, where we look

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Speaker 2: at we have trade, we don't feel like we've got

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Speaker 2: a lot of exposure to tariffs at this point in time.

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Speaker 2: For Louisiana Energy, which is a project where we would

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Speaker 2: be in a heavy construction phase, we have a free

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Speaker 2: trade zone at our plant site, so again we would

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Speaker 2: be able to import materials to that site free from tariffs,

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Speaker 2: so we've got a lot of confidence that we'll be

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Speaker 2: able to deliver the project at the indicated price, even

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Speaker 2: with potential tariffs.

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Speaker 3: So let's talk politics here in Australia, and you've been

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Speaker 3: vocal already about the delayed approval for the Northwest Shelf extension.

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Speaker 3: But the reality is we've got a federal election looming here.

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Speaker 3: How do you think that the energy policy debate will

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Speaker 3: unfold over the coming months.

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Speaker 2: Australia has been really fascinating because climate change and energy

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Speaker 2: policy has been at the heart of federal elections for

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Speaker 2: twenty plus years. Here, I think what we're seeing from

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Speaker 2: the major parties is a greater recognition that gas needs

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Speaker 2: to be part of the mix. The Coalition has been

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Speaker 2: very supportive for many years with labor. The Future Gas

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Speaker 2: Strategy that was released last year affirmed gas needs to

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Speaker 2: be part of Australia's energy mix to twenty fifty and beyond,

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Speaker 2: and Australian Gas has a role to play in helping

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Speaker 2: decarbonize our region to five and beyond. So we've got

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Speaker 2: that headline level of support as you start drilling down

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Speaker 2: to Northwest Shelf. This is an asset that has provided

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Speaker 2: domestic gas to businesses, manufacturers and household in Western Australia

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Speaker 2: for more than forty years. Our current approval expires in

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Speaker 2: early twenty thirty. If we don't get an extension, that's

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Speaker 2: going to affect jobs in twenty thirty, it's going to

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Speaker 2: affect our domestic gas customers in twenty thirty, it's going

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Speaker 2: to affect every household in the state who are going

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Speaker 2: to see the risk of uncertain power supply. And at

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Speaker 2: the end of the day, from an environmental perspective, the

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Speaker 2: outcome will be our coal fired power stations will stay

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Speaker 2: online longer. So it's a bad outcome from an environmental perspective.

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Speaker 2: So I really don't understand why anybody is opposing this.

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Speaker 2: It's good for the economy, it's good for jobs, it's

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Speaker 2: good for the environment.

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Speaker 3: Okay, So that's the worst case scenario if the Northwest

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Speaker 3: Shelf extension and the debate around it continues in a

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Speaker 3: negative light.

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Speaker 2: The good news is.

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Speaker 3: That we'll have potentially, you know, domestic supply and everything else.

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Speaker 3: I know, nobody has a crystal ball when it comes

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Speaker 3: to pricing, but you've reaffirmed your production guidance and when

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Speaker 3: it comes to pricing, I mean, what can investors sort

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Speaker 3: of expect because at the end of the day, oftentimes

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Speaker 3: you know, it's the production, it's the sales volumes, and

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Speaker 3: it's the price you're achieving for it.

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Speaker 2: Yeah, absolutely right. We produce a commodity we sell into

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Speaker 2: the open market. We don't set the price. The things

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Speaker 2: that we can do, though, is make sure that we're

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Speaker 2: running a highly reliable and cost efficient business. So if

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Speaker 2: you look at some of the numbers we reported our

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Speaker 2: LNG plants, ninety eight percent reliability. That's world classed by

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Speaker 2: any measure. Our unit production cost of eight dollars ten

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Speaker 2: cents a barrel of oil equivalent was down in twenty

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Speaker 2: twenty four versus twenty twenty three. So we're very much

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Speaker 2: focused on controlling the things we can control, maintaining high

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Speaker 2: margins in our business. Earnings margin is industry leading, so

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Speaker 2: we feel like we've got a very strong base business.

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Speaker 2: We're well positioned. We sell our products on a variety

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Speaker 2: of commodity indices, so we sell some of our production

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Speaker 2: with price links to Brent, which is the oil marker.

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Speaker 2: We sell some in the gas spot market. We do

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Speaker 2: have a bit of domestic gas production in Australia. That's

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Speaker 2: you know, I would describe it as fixed price or

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Speaker 2: almost fixed price. So those are the sorts of things

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Speaker 2: that we do to ensure that we pay the bills.

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Speaker 2: We do a little bit of hedging as well, again

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Speaker 2: just to make sure that we've got enough revenue certainty

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Speaker 2: in the year to cover our base operating expenses. When

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Speaker 2: we look at the conditions of the market, look at

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Speaker 2: the crystal ball gets pretty muddy. There's a lot of

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Speaker 2: different factors at play. We look at the help of

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Speaker 2: the Chinese economy, which is probably a little bit soft,

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Speaker 2: but you look at things like sanctions. You know, again

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Speaker 2: Russian crude is still in the market, but Europe's talking

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Speaker 2: about tougher sanctions, is talking about tougher sanctions on Iran.

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Speaker 2: So there's a lot of variables that make it very

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Speaker 2: difficult to predict pricing again, and that takes us back

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Speaker 2: to we focus on the things that we can control

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Speaker 2: and the value we can deliver for our.

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Speaker 3: Shareholders wonderful and so you know, once the Grand Tours,

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Speaker 3: you know, coming to an end around this set of results,

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Speaker 3: so it's that final investment decision in this first quarter

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Speaker 3: that's really yeah, that's really looming large.

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Speaker 2: Yes, that's the nearest upcoming decision. You know, very much

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Speaker 2: focused on sell down, getting the right partners in making

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Speaker 2: sure that we're ready to take that decision, you know,

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Speaker 2: from from as early as the end of the first quarter.

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Speaker 1: That was Mego Nell's CEO of Woodside Energy, talking to

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Speaker 1: Nadine Blainey on Osby's, Australia's leading provider of live and

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Speaker 1: own decisions. I'm Sean Elma. Enjoy your day.