Woodside Energy Group Ltd

ACN 004 898 962

Mia Yellagonga

11 Mount Street

Perth WA 6000

Australia

T +61 8 9348 4000

www.woodside.com

 

ASX: WDS

NYSE: WDS

LSE: WDS

 

Announcement

 

Tuesday, 22 August 2023

 

 

HALF-YEAR REPORT FOR PERIOD ENDED 30 JUNE 2023

 

Safety performance ·      There was a fatality in June 2023 at the North Rankin Complex. Woodside's investigation is ongoing. Immediate actions have been implemented and preliminary lessons shared with industry   Financial highlights for H1 2023 ·      Record H1 net profit after tax of US$1,740 million ·      Underlying net profit after tax of US$1,896 million ·      Positive free cash flow of US$294 million ·      Record Australian tax and royalty payments of A$3,654 million ·      Liquidity of US$7,509 million ·      Declared an interim dividend of 80 US cents per share, representing a half-year annualised dividend yield of 6.9%[1]   Operational highlights ·      Delivered record H1 production of 91.3 MMboe ·      Achieved first production at the Mad Dog Phase 2 Argos platform in April 2023 ·      Completed major turnaround at Pluto LNG on schedule   Business highlights ·      The Scarborough development was 38% complete; the floating production unit (FPU) topsides and pipeline fabrication and Pluto Train 2 module fabrication and foundation site works progressed ·      Agreed to sell a 10% interest in the Scarborough Joint Venture to LJ Scarborough Pty Ltd (LNG Japan) and established a broader strategic relationship which includes potential LNG offtake and collaboration on global opportunities in new energy[2] ·      The Sangomar project was 88% complete; 12 of 23 wells were drilled and completed and the floating production storage and offloading (FPSO) topsides integration and pre-commissioning works continued in Singapore ·      Approved a final investment decision (FID) on the Trion project. The development remains subject to regulatory approval of the field development plan (FDP) ·      Approved a FID on the Julimar-Brunello Phase 3 project New energy & carbon highlights ·      Progressed key project activities for H2OK to support targeted FID readiness in 2023 ·      Progressed development of the solar generation, battery energy storage and transmission infrastructure required for the Woodside Solar project in support of targeted FID readiness in 2023 ·      Awarded contract for the engineering and fabrication of the hydrogen production equipment for Hydrogen Refueller @H2Perth ·      Progressed front-end engineering design (FEED) work on Phase 1 of the South East Australia Carbon Capture and Storage (SEA CCS) project

Summary

Woodside recorded a half-year net profit after tax (NPAT) of US$1,740 million. Underlying NPAT was US$1,896 million, up 4% on the corresponding period in 2022, reflecting a full period of results with Woodside's expanded operations portfolio. Operating revenue rose 27% period-on-period to US$7,400 million.

The Directors have declared an interim dividend of 80 US cents per share (cps), representing an approximately 80% payout of underlying NPAT.

Woodside CEO Meg O'Neill said the tragic death of a contractor employee at the North Rankin Complex in early June overshadowed a strong financial and underlying operational performance in the first half of the year.

"The loss of our colleague was a tragedy for his family and friends and has had an emotional impact on everyone at Woodside. Investigations into the incident by Western Australian Police and the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) are ongoing, as are Woodside's internal investigations.

"We have implemented changes to our operational practices based on the preliminary findings of those investigations and shared our learnings with the broader industry via the Safer Together collaboration hub.

"Woodside's safety performance over the past two years has been below the standard we set for ourselves. We know we must do better and are resolved to strive for a return to leading safety performance.

"Our strong financial performance and our focus on disciplined capital management has enabled us to maintain our interim dividend payout ratio through the cycle.

"Woodside's gearing remained low at 8.2% at the end of the first half. Our active management of the debt portfolio positions Woodside's balance sheet well as we invest in future production.

"Woodside also continues to make a significant contribution to the economic prosperity of the communities where we operate. Woodside's total tax and royalty payments to state and federal governments in Australia in the first half was A$3,654 million.

"Production for the first half was a record at 91.3 million barrels of oil equivalent. The Pluto LNG facility delivered an outstanding 99.9% reliability rate in the five months prior to the planned maintenance turnaround, which was completed on schedule.

"First production was achieved at the Argos platform at Mad Dog Phase 2 in the Gulf of Mexico and we expect output from the facility to ramp up over the remainder of the year.

"During the half a successful appraisal well was drilled in the southwest portion of the Mad Dog field in the Gulf of Mexico and a multi well tie back to Argos is being evaluated.

"In June, Woodside took a FID on the Trion oil development offshore Mexico. The development leverages our proven expertise in deepwater project execution and is expected to deliver strong returns to Woodside shareholders as well as economic and social benefits to Mexico.

"Following FID, Woodside executed a contract with South Korea's Hyundai Heavy Industries for the construction of the Trion floating production unit. We are looking forward to the approval of the Trion field development plan, expected to be announced by the Mexican regulator in the second half of the year.

"We also took FID during the period at Julimar-Brunello Phase 3, a new source of gas for the non-operated Wheatstone facility in Western Australia.

"Work on the Scarborough and Pluto Train 2 project progressed well during the first half. Following acceptance of the Scarborough Trunkline Installation (State Waters) Environmental Plan in April, shore crossing preparations at Pluto commenced and are now nearing completion.

"Two significant milestones were achieved for Scarborough subsequent to the end of the half, with NOPSEMA approving the Environmental Plan for the marine seismic survey and the announcement of the sale of a 10% interest in the offshore joint venture to LNG Japan. The new strategic relationship with LNG Japan also includes the potential for LNG offtake and collaboration on opportunities in new energy.

"While identification of the need for remedial work on the Sangomar floating production and offloading facility was disappointing, we are confident that undertaking the rectifications in the shipyard in Singapore will facilitate a safe and efficient start-up to allow first oil in mid-2024.

"Progress has also been made on our proposed new energy projects. Woodside is actively marketing hydrogen offtake from our proposed H2OK liquid hydrogen project in Oklahoma, in support of our target of being ready to take a FID before year-end.

"In Australia we are aiming to be ready to take FID in the second half of 2023 on the Woodside Solar project, which is expected to supply around 50 MW of energy to Pluto LNG.

"During the half Woodside demonstrated its commitment to providing energy security to Australia's domestic gas markets, executing several agreements for the total supply of around 120 petajoules of pipeline gas to retailers and industrial users in both the eastern states and Western Australia. Delivery of this gas is expected to take place over the period from end-2023 to 2026," she said.

Financial summary

Key metrics

		H1 2023	H1 2022[3]	Change %
Operating revenue	$ million	7,400	5,810	27%
EBITDA excluding impairment[4]	$ million	4,888	3,971	23%
EBIT4	$ million	2,791	2,982	(6%)
Net profit after tax (NPAT)[5],[6]	$ million	1,740	1,640	6%
Underlying NPAT4	$ million	1,896	1,819	4%
Net cash from operating activities[7]	$ million	2,931	2,506	17%
Investment expenditure4,[8],[9]	$ million	2,818	1,550	82%
Capital expenditure4,8,[10]	$ million	2,631	1,509	74%
Exploration expenditure4,9	$ million	187	41	356%
Free cash flow4,7,[11]	$ million	294	2,551	(88%)
Dividends distributed	$ million	1,519	1,018	49%
Interim dividend declared	US cps	80	109	(27%)
Key ratios
Earnings	US cps	91.7	145.5	(37%)
Gearing4	%	8.2	6.8	21%
Production[12]
Gas	MMboe	63.5	41.9	52%
Liquids	MMboe	27.8	13.0	114%
Total	MMboe	91.3	54.9	66%
Gas	MMboe	72.0	47.8	51%
Liquids	MMboe	26.8	11.8	127%
Total	MMboe	98.8	59.6	66%

Appendix 4D

Results for announcement to the market

More information is available on page 45

				US$ million
Revenue from ordinary activities	Increased	27%[13]	to	7,400
Profit from ordinary activities after tax attributable to members	Increased	6%13	to	1,740
Net profit for the period attributable to members	Increased	6%13	to	1,740
Interim dividend - fully franked	80 US cps H1 2023
Record date for determining entitlements to the dividend	1 September 2023

Net profit after tax reconciliation

The following table summarises the variance between the H1 2022 and H1 2023 results for the contribution of each line item to NPAT.

 

2022 H1 reported NPAT	$1,640 million
Sales revenue - volume from former BHPP assets	+$2,532 million	Additional five months of contribution from former BHPP assets
Sales revenue - price	-$878 million	Lower realised prices across various price markers
Sales revenue - volume other	-$64 million	Reduction primarily due to the planned major turnarounds
Cost of production	-$500 million	Increase primarily driven by additional five months of contribution from former BHPP assets
Oil and gas properties depreciation and amortisation	-$1,020 million	Increase primarily driven by additional five months of contribution from former BHPP assets
Other cost of sales	-$114 million	Increase driven by the derecognition and unwind of the Corpus Christi onerous contract provision in H1 2022
Other income	-$364 million	Decrease driven by the gain on Pluto Train 2 sell-down recognised in H1 2022
General, administrative and other costs	+$305 million	Decrease primarily driven by merger transaction costs recognised in H1 2022
Impairment losses	-$68 million	Recognition of impairment loss due to the reduction in future Pyrenees production volumes
Income tax and PRRT expense	+$186 million	Decrease primarily driven by recognition of the Trion deferred tax asset (DTA) offset by the derecognition of the Pluto PRRT DTA
Other expenses	+85 million
2023 H1 reported NPAT	$1,740 million
2023 H1 NPAT adjustments	+$156 million	Adjustment for derecognition of Pluto PRRT DTA, the recognition of the Pyrenees impairment loss and the recognition of the Trion DTA
2023 H1 underlying NPAT	$1,896 million

Capital management

Interim dividend and dividend reinvestment plan

A 2023 interim fully franked dividend of 80 US cents per share (cps) has been declared. The total amount of the interim dividend payment is $1,519 million which represents approximately 80% of underlying NPAT for the first half of 2023, reflecting Woodside's strong operational performance.[14]

The dividend reinvestment plan (DRP) was suspended on 27 February 2023.

Liquidity and debt service

During the half, Woodside generated $2,931 million of cash flow from operating activities and delivered positive free cash flow of $294 million.14,[15]

Woodside maintained its standby debt facilities at $4,050 million. Liquidity at the end of the period was    $7,509 million and Woodside's drawn debt at the end of the period was $5,109 million. Net debt at the end of the period increased 35% to $3,220 million, in line with planned capital expenditure.14

Woodside will continue to actively manage its debt portfolio throughout 2023.

Balance Sheet

Woodside's commitment to an investment grade credit rating remains unchanged and supports Woodside's aim of providing sustainable returns to shareholders and investing in future growth opportunities, in accordance with the capital allocation framework.

Woodside's gearing at the end of 2022 was 1.6%, which is below our target range of 10% to 20%. The reduced cashflows driven by lower realised price, payments for capital and exploration expenditure, tax payments as well as the 2022 final dividend payment resulted in Woodside's gearing increasing to 8.2% at the end of H1 2023.

A low level of net debt positions Woodside's balance sheet for its expected future capital expenditure. As a result, Woodside's gearing may at times fall outside the target range of 10% to 20% as the balance sheet is managed through the investment cycle.¹⁴

Commodity price risk management

Woodside hedges to protect the balance sheet against downside commodity price risk, particularly during periods of high capital expenditure.

As at 30 June 2023, Woodside has placed oil price hedges for:

·      approximately 21.8 MMboe of 2023 production at an average price of $74.5 per barrel of which approximately 11.2 MMboe has been delivered

·      a further 6.2 MMboe of 2024 production at an average price of approximately $75.2 per barrel.

Subsequent to the period, Woodside placed oil price hedges on a further 23.1 MMboe of 2024 production and has now hedged approximately 29.3 MMboe of 2024 production at an average price of approximately       $75.7 per barrel.

Woodside has also placed a number of hedges for Corpus Christi LNG volumes to protect against downside pricing risk. These hedges are Henry Hub and Title Transfer Facility (TTF) commodity swaps. Approximately 81% of Corpus Christi volumes for the remainder of 2023 and approximately 29% of 2024 volumes have reduced pricing risk as a result of hedging activities.

Operations

Pluto LNG

Pluto LNG is a gas processing facility in the Pilbara region of Western Australia, comprising an offshore platform and one onshore LNG processing train.

Woodside's share of Pluto production in the first half of 2023 was 23.5 MMboe. This was a 3% decrease compared to the first half of 2022 due to planned turnaround activities. Sustained high reliability of 99.9% in the five months prior to the planned turnaround and the delivery of Pluto gas through the Pluto-Karratha Gas Plant (KGP) Interconnector (Interconnector) contributed to the strong overall production performance.

Woodside successfully completed a major turnaround on the onshore and offshore facilities, executing essential maintenance scopes to support continued safe, reliable and efficient production. The major turnaround included the installation of infrastructure to enable processing of Scarborough gas and tie-ins for Pluto Train 2.

Woodside is pursuing the opportunity to reduce Scope 1 greenhouse gas emissions at Pluto LNG by utilising solar energy from the proposed Woodside Solar project. The major turnaround included installation of additional electrical tie-in points for potential carbon-to-products value streams and for the importation of solar energy from Woodside Solar.

The Pluto Remote Operations Centre in Perth became fully operational in June 2023 with day-to-day operations of Pluto LNG now being undertaken remotely by our Perth-based team.

Woodside is operator and holds a 90% participating interest.

North West Shelf Project

The North West Shelf Project (NWS) consists of three offshore platforms and the onshore Karratha Gas Plant, which includes five onshore LNG processing trains. It produces LNG, condensate, pipeline gas and natural gas liquids (NGLs).

Woodside's share of production in the first half of 2023 was 22.7 MMboe. This was a 73% increase compared to the first half of 2022 due to the increase of Woodside's equity share following completion of the merger in June 2022. Gas processing operations through the Interconnector continued with 5.4 MMboe of Pluto gas processed in H1 2023.

KGP is expected to have increased ullage in 2024 due to a combination of natural field decline and limited third-party gas processing demand. To reduce operating costs, NWS is assessing taking one LNG train offline. Discussions continue between NWS and other resources owners for the processing of third-party gas and NWS continues to evaluate infill and nearfield opportunities to utilise ullage at KGP.

NWS is on track to receive Waitsia gas for processing.

The Browse and NWS joint ventures are progressing negotiation of key commercial terms in support of the Browse to NWS development concept. Browse is a large backfill opportunity to fill long-term NWS ullage due to the quantity and the compatibility of the gas resource with the KGP facilities.

The NWS Project Extension proposal remains subject to an ongoing WA statutory appeals process. The proposal supports the long-term operations and future processing of third-party gas resources. The Commonwealth Environment Protection and Biodiversity Conservation Act (EPBC) assessment remains paused until the appeals process is completed. Engagement with the Commonwealth regulator continues.

Woodside is operator and holds a 33.33% participating interest.[16]

Wheatstone and Julimar-Brunello

Wheatstone is an LNG processing facility near Onslow, Western Australia, comprising an offshore production platform and two onshore LNG production trains. It processes gas from several offshore gas fields including Julimar and Brunello.

Woodside's share of Wheatstone production in the first half of 2023 was 6.6 MMboe. This was a 27% increase compared to the first half of 2022, which was impacted by a major facility turnaround.

The FID on Julimar-Brunello Phase 3 was approved in April 2023. The project involves the drilling of up to four development wells tied-back from the Julimar field to the existing Julimar field production system.

Woodside is operator and holds a 65% participating interest in the Julimar-Brunello fields. Woodside holds a 13% non-operating interest in the Wheatstone project.

Bass Strait

The Bass Strait is located in the south-east of Australia and produces oil and gas through a network of offshore platforms, pipelines and onshore processing facilities. The Bass Strait assets include the Gippsland Basin Joint Venture (GBJV) and Kipper Unit Joint Venture (KUJV). Kipper Unit production is processed by the GBJV under a processing agreement.

Woodside's share of production from the Bass Strait was 10.9 MMboe in H1 2023, an increase from 3.3 MMboe in H1 2022.[17] All gas produced by the GBJV is supplied into the eastern Australian domestic gas market, supporting Australia's energy needs.

The GBJV continued significant decommissioning activity through the period, permanently plugging 10 wells on the Flounder platform and removing conductors of 31 wells on the Fortescue platform. The GBJV also executed an agreement to charter a fourth semi-submersible vessel to support decommissioning activities from the end of 2023.

Woodside holds a 50% non-operating interest in the GBJV and a 32.5% non-operating interest in the KUJV.

Other Australian oil and gas assets

Woodside operates three floating production storage and offloading (FPSO) facilities off the north-west coast of Western Australia. These are the Okha FPSO (Woodside interest: 50%), Ngujima-Yin FPSO (Woodside interest: 60%) and Pyrenees FPSO (Woodside interest: 40% in WA-43-L and 71.4% in WA-42-L).

Woodside's share of production from the FPSO assets was 3.1 MMboe in H1 2023. This was a 35% decrease from H1 2022 primarily due to the planned five-yearly Ngujima-Yin FPSO maintenance turnaround performed in Singapore. Production on Ngujima-Yin recommenced in July 2023.

Macedon (Woodside interest: 71.4%), also operated by Woodside, is a gas project located near Onslow, Western Australia which produces pipeline gas for the Western Australian domestic gas market.

Woodside's share of production from Macedon was 4.1 MMboe, up from 0.7 MMboe in H1 2022.¹⁷ The Macedon facility delivered approximately 17% of the Western Australian domestic gas market supply in H1 2023.

Gulf of Mexico

Woodside interests in the US Gulf of Mexico includes the conventional oil and gas developments of the Shenzi tension leg platform (TLP) (operated; Woodside interest: 72%), Atlantis floating production unit (FPU) (non-operated; Woodside interest: 44%), and Mad Dog A-spar and Argos FPU (non-operated; Woodside interest: 23.9%).

Woodside's share of production from the Gulf of Mexico assets was 14.8 MMboe in H1 2023.

First production was successfully achieved in April 2023 at the Argos platform for Mad Dog Phase 2, a development on the southern flank of the Mad Dog field. Production ramp-up is expected to continue through 2023.

A successful appraisal well, SWX4, was drilled in the south-west part of the Mad Dog field. An extension of the current development through a multi-well tie-back to Argos is being evaluated.

Both wells were completed on Shenzi North, a two-well subsea tieback to the Shenzi TLP. Subsea activities are ongoing with one of three campaigns complete, installing manifolds and high-integrity pressure protection system packages. The project is ahead of the original 2024 target schedule and is now expecting first oil in 2023.

Greater Angostura

Greater Angostura includes the Angostura and Ruby conventional oil and gas fields, located offshore Trinidad and Tobago. The development includes an offshore central processing facility and five well head platforms.

Woodside continues to pursue opportunities to maximise value and safely optimise production and operating cost. Woodside's share of production from Greater Angostura was 5.6 MMboe in H1 2023.

Woodside is operator of both fields and holds a 45% participating interest in the Angostura field and a 68.5% participating interest in the Ruby field.

Decommissioning

The Enfield plug and abandonment campaign continued with eight wells permanently plugged. As at the end of the period, the plugging of 13 of 18 wells and removal of 16 of 18 xmas trees have been completed.

Preparations for the planned removal of the Nganhurra riser turret mooring (RTM) in Q4 2023 remain on track, with the Nganhurra RTM decommissioning environmental plan being accepted by the regulator in late July 2023.

Woodside has awarded several major contracts for the decommissioning of subsea infrastructure at the Enfield, Griffin (including the RTM), Stybarrow (including the Disconnectable Turret Mooring) and Echo Yodel oil and gas fields offshore Western Australia. Award of these contracts support commencement of major offshore activities in Q4 2023.

Marketing and Trading

A long-term gas sale and purchase agreement (GSPA) with Perdaman Chemicals and Fertiliser Pty Ltd became unconditional in April 2023. Supply under the GSPA is for approximately 130 terajoules per day of gas over a term of 20 years, commencing upon commissioning of the plant expected in 2026 or 2027.

Woodside executed several natural gas sale agreements for the combined supply of approximately 120 petajoules of pipeline gas, to both eastern and Western Australian domestic customers including retailers and commercial and industrial users. Delivery is expected to take place from Q4 2023 to 2026.

In July 2023, the mandatory Gas Code of Conduct (the Code) which applies to Australia's east coast gas market commenced. The Code was introduced by the Australian Government following consultation with stakeholders. Woodside is working to ensure it satisfies its compliance obligations under the code.

In August 2023, Woodside and LNG Japan Corporation entered into a non-binding heads of agreement for the sale and purchase of 12 LNG cargoes per year (approximately 0.9 million tonnes per annum) for ten years commencing in 2026. This agreement is part of a broader strategic relationship with LNG Japan and its parent entities which includes the sale of a 10% interest in Scarborough and collaboration on opportunities in new energy.

Projects

Scarborough

The Scarborough gas field is located in the Carnarvon Basin, approximately 375 km off the coast of Western Australia. The development includes installation of a FPU with eight wells drilled in the initial phase and 13 wells drilled over the life of the Scarborough field.

Expansion of Pluto LNG includes the construction of a second LNG train (Pluto Train 2), installation of additional domestic gas processing facilities and supporting infrastructure, and modifications to Pluto Train 1 to allow it to process Scarborough gas.

The Scarborough upstream pipeline manufacturing was completed in H1 2023, with insulation coating work continuing in Indonesia. Fabrication of the FPU topsides and hull continued to progress.

Following acceptance of the Scarborough Trunkline Installation (State Waters) Environmental Plan in April 2023, shore crossing preparations at Pluto commenced and are nearing completion. Subsea flowline fabrication also continued in preparation for reeling.

The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) accepted the Marine Seismic Survey Environment Plan in July 2023, subject to conditions. Engagement with NOPSEMA continued regarding the remaining Commonwealth Environment Plans.

Pluto Train 2 module fabrication and foundation site works progressed and the construction accommodation village was completed and is now fully available for use.

Pluto Train 1 modifications pre-execution phase activities progressed with design activities and market engagement for long-lead items procurement underway.  

In August 2023, Woodside entered into a sale and purchase agreement with LNG Japan for the sale of a 10% non-operating participating interest in the Scarborough Joint Venture (the Transaction).[18] The purchase price is US$500 million, subject to adjustments. LNG Japan will also reimburse Woodside for its share of expenditure for the Scarborough project from 1 January 2022, the effective date of the Transaction. On completion of the Transaction, expected in the first quarter of 2024, the estimated total consideration comprising the purchase price, reimbursed expenditure and escalation is approximately US$880 million. On completion, Woodside will hold a 90% interest in the Scarborough Joint Venture and remain as operator.

Woodside is targeting first LNG cargo in 2026.

Woodside is operator and has a 100% participating interest in Scarborough and a 51% participating interest in Pluto Train 2.

Sangomar Field Development Phase 1

The Sangomar Field Development Phase 1 is Senegal's first offshore oil project and includes a stand-alone FPSO and supporting subsea infrastructure. It is designed to allow the tie-in of subsequent phases.

During the first half of 2023, FPSO topside integration and pre-commissioning work progressed at the Keppel Shipyard in Singapore.

In Senegal, the subsea installation campaign progressed, with installation 76% complete and the overall subsea work scope 95% complete at the end of the period. Installation and testing of the rigid flowlines, totalling 101 km in length, were successfully and safely completed.

The drilling and completions campaign involves the drilling of 23 production, gas and water injection wells. At the end of June 2023, 12 wells were complete and 11 further wells were partially complete.

In May 2023, the Sangomar Joint Venture approved the drilling of an additional well to optimise field recovery. The drilling is expected to be completed by the Ocean BlackRhino while the drillship is offshore Senegal completing the Sangomar Field Development Phase 1 drilling.

Woodside is targeting first oil in mid-2024.

Woodside is operator and has an 82% participating interest in the project.

Trion

Trion is an oil field located approximately 180 km off the Mexican coastline and 30 km south of the US/Mexico maritime boarder. The Trion project includes a semi-submersible FPU capable of producing and transferring 100,000 barrels of oil per day to a floating storage and offloading (FSO) vessel. Oil from the FSO is expected to be exported to the market, with excess gas transferred to existing offshore gas export infrastructure. Key technical, commercial, and regulatory activities progressed in the first half of 2023 and Woodside made a FID on the development in June 2023. Woodside's net equity Scope 1 and Scope 2 emissions reduction targets remain unchanged by this decision.[19]^,[20]

 

Long-lead items were placed on order for topsides rotating equipment and key manufacturing slots. Early engineering was initiated with the nominated FPU engineering subcontractors in May 2023 and the FPU engineering, procurement and construction contract was executed with Hyundai Heavy Industries in June 2023. The FPU will be constructed in the Republic of Korea.

Subsequent to the period, the rig contract was awarded and the FPU and FSO installation contract was awarded. The remaining major contracts will continue to be executed progressively.

The field development plan (FDP) was approved by the Trion Joint Venture in June 2023 and has been submitted to the regulator. The FDP is under review by the regulator and approval is expected in the second half of 2023. 

Woodside is targeting first oil in 2028.

Woodside is operator and has a 60% participating interest in the project.

Exploration and Development   

Browse

The Browse development comprises the Calliance, Brecknock and Torosa gas and condensate fields located approximately 425 km north of Broome, Western Australia.

The CCS infrastructure to abate Browse reservoir CO₂ has been incorporated into the development concept and regulatory approval processes are ongoing.

Commercial discussions continue between the Browse and NWS joint ventures to support the processing of Browse resources through the NWS Project's Karratha Gas Plant.

We continue to engage the regulator on environmental approvals.

Woodside is operator and holds a 30.6% participating interest.

Calypso

Calypso is located approximately 220 km off the coast of Trinidad in 2,100m water depth. The resource comprises several gas discoveries in Block 23(a) and Block TTDAA 14. The development is located in a region with existing infrastructure and a favourable demand outlook.

In the half, Woodside completed conceptual studies to select an infield host as the preferred development concept. Pre-FEED engineering is expected to commence in the second half of 2023 to mature the definition of the concept.

Marketing and commercial discussions continue with key stakeholders to evaluate options to monetise the resource.

Woodside is operator and holds a 70% participating interest.

Sunrise

The Sunrise development comprises the Sunrise and Troubadour gas and condensate fields which are located approximately 450 km north-west of Darwin and 150 km south of Timor-Leste.

The Sunrise Joint Venture participants continue to engage the Australian and Timor-Leste Governments on a new Greater Sunrise Production Sharing Contract (PSC), which is required under the Maritime Boundary Treaty between Timor-Leste and Australia. The Sunrise Joint Venture also announced a commitment to undertake a concept select study program for the development of the Greater Sunrise fields in parallel with the ongoing PSC discussions.

Woodside is operator and holds a 33.44% participating interest.

Exploration

Woodside continued to build its position in the US Gulf of Mexico, acquiring five leases (four operated and one non-operated) in lease sale 259. Woodside also acquired a 44% working interest in two leases in Green Canyon and spudded the Spinel well with co-owner and operator BP in early June 2023.

Woodside is planning to spud the Gemtree exploration well in the second half of 2023. Gemtree is a potential tie back to Wheatstone via Julimar Brunello.

The Egyptian regulator approved Woodside's acquisition of a 27% interest in two non-operated blocks in the Herodotus Basin. Subsequent to the period, Woodside and the co-owners elected to enter the second exploration phase for one of the blocks.

In March, Woodside signed an option agreement to acquire at least a 56% interest in Petroleum Exploration License 87, located offshore Namibia in the Orange Basin. Seismic acquisition was completed in May 2023 and a decision on exercising the option to enter will follow evaluation of seismic data.

Woodside also continued to optimise its exploration portfolio, exiting blocks that are no longer considered prospective. This included a decision to exit Block 5 in deepwater Trinidad & Tobago and completing formal exit activities in Canada, Republic of Korea and Myanmar Block A-6.

New energy and carbon solutions

Woodside's new energy strategy is centred on building relationships across the value chain and developing profitable solutions to meet customer requirements that have the ability to scale to match the pace of the energy transition.[21]  We are working with customers to develop demand for new sources of energy, while leveraging our competitive advantage as a safe and reliable producer and supplier of energy to customers across the globe.

New energy collaboration

As part of its strategic collaboration with LNG Japan, Woodside entered into non-binding agreements to collaborate with Sumitomo Corporation and Sojitz Corporation on global opportunities in new energy which could include ammonia, hydrogen, carbon capture and storage (CCS) and carbon management technology.

H2OK

H2OK is a proposed liquid hydrogen project to be located in Ardmore, Oklahoma with an expected capacity of 60 tonnes per day (tpd) of liquid hydrogen produced through electrolysis. The project is initially targeting the supply of hydrogen to the heavy transport sector.

Woodside has progressed contracting activities for the plant construction scope and other schedule critical packages. In May 2023, Woodside purchased 94 acres of land in the Westport Industrial Park in Ardmore, Oklahoma, for the proposed H2OK facility.

Woodside is actively marketing hydrogen offtake and is advancing a number of agreements in support of FID readiness in 2023.

Woodside is operator and holds a 100% participating interest.

H2Perth

H2Perth is a proposed hydrogen and ammonia production facility to be located in Perth, Western Australia. Phase 1 of the project is targeting up to 2,700 tpd of ammonia produced through gas reforming and electrolysis. It is targeting supply to local industry and international users. Subsequent phases have the potential to expand to 8,900 tpd by increasing the electrolysis component.

Woodside submitted primary environmental approval application documents to both the Commonwealth and Western Australian regulators in May 2023.

Woodside is operator and holds a 100% participating interest.

Hydrogen Refueller @H2Perth

The Hydrogen Refueller @H2Perth is a proposed self-contained hydrogen production, storage and refuelling facility, to be built on approximately 1.5 ha of industrial land adjacent to Woodside's proposed H2Perth project. Woodside is targeting production at the Refueller of 0.2 tpd of gaseous hydrogen, with the potential to scale up to a targeted 1.0 tpd. Woodside is targeting the supply of hydrogen to Western Australian industrial and public customers.

In H1 2023, Woodside awarded a contract for the engineering and fabrication of the hydrogen production equipment and submitted primary Western Australian environmental approval documents. Woodside also executed an agreement with the State of Western Australia for funding under the Hydrogen Fuelled Transport Program for the Hydrogen Refueller @H2Perth.

Woodside is operator and holds a 100% participating interest.

H2TAS

Woodside has a proposed renewable ammonia and hydrogen production facility to be located in the Bell Bay area of Tasmania. H2TAS is planned to be a phased development, targeting an initial capacity of up to 550 tpd of ammonia. Ammonia would be produced through electrolysis, utilising a combination of wind and hydroelectric power.

Woodside continues to evaluate renewable power solutions and offtake options that would enable the project to progress.

Woodside Solar

Woodside is progressing the proposed Woodside Solar project, which plans to generate electricity from a solar photovoltaic farm located in an industrial estate approximately 15 km south-west of Karratha in Western Australia, complemented by a battery energy storage system. The facility is expected to initially supply approximately 50 MW of solar energy to Pluto LNG potentially reducing Woodside's Scope 1 greenhouse gas emissions with potential to expand the project in the future.

In H1 2023, Woodside progressed engineering development of the solar generation, battery energy storage and transmission infrastructure required for the power opportunity and completed heritage surveys for the proposed initial solar development site. Engagement with local, state and commonwealth authorities on key development and environmental approvals continued.

In preparation for potential solar energy import to Pluto LNG, key electrical tie-in points were installed during the 2023 Pluto turnaround.

Woodside is targeting FID readiness in 2023.

Woodside is operator and holds a 100% participating interest.

Southern Green Hydrogen

Southern Green Hydrogen is a proposed hydrogen and ammonia facility to be located in Southland, New Zealand. The proposal is targeting up to 1,400 tpd of ammonia and is expected to utilise renewable power to produce hydrogen and ammonia for export and domestic supply.

Carbon capture and storage (CCS)

Woodside, as a participant in various joint ventures, holds three greenhouse gas assessment permits. These permits enable carbon capture and storage assessments in the Browse Basin (operated), Northern Carnarvon Basin (operated) and Bonaparte Basin (non-operated).

Woodside is progressing activities to support submission of the environmental referral for the Northern Carnarvon CCS. These activities include environmental surveys and preparations for heritage surveys.

Woodside is also a participant in the SEA CCS hub, located in the Gippsland Basin off the coast of Victoria. Phase 1 of the project, which aims to utilise existing infrastructure to capture and store CO₂ in the depleted Bream reservoir located offshore Victoria, progressed to FEED in H1 2023.

Carbon origination

Woodside established a carbon business in 2018 to develop a carbon credits portfolio and our own carbon origination projects in support of our emissions reduction targets and regulatory obligations. We acquire carbon credits through market purchase and through the development of our own carbon origination projects. The carbon portfolio is dynamic and we continue to develop and seek to optimise it, to give Woodside flexibility in response to changes in regulatory requirements and corporate climate strategy as they arise.

In 2020, Woodside commenced the Native Reforestation Project, with the aim of originating our own biodiverse carbon plantings in Western Australia. During H1 2023, Woodside began planting activities on approximately 5,600 ha of land at Woodside owned properties. The full year program is forecast to plant over 2.7 million mixed biodiverse seedlings. These activities were 40% complete by the end of H1 2023. The project has a potential to sequester approximately 2,000 kt CO₂-e over 25 years.

Other new energy investments

Woodside and Heliogen have a project agreement to deploy a 5 MW module of Heliogen's artificial intelligence-enabled concentrated solar energy technology in California. The project is progressing through FEED. In addition, Heliogen and Woodside have a collaboration agreement to jointly market Heliogen's renewable energy technology in Australia.

Woodside has investments in LanzaTech and String Bio which seek to convert carbon into useful products through carbon capture and utilisation (CCU) and continues to assess opportunities to deploy their technologies in demonstration-scale pilot projects ahead of their potential deployment on a larger-scale.

Climate and Sustainability

Climate

Woodside released its Climate Report 2022 which summarises Woodside's climate-related plans, activities, progress and climate-related data for the period 1 January 2022 to 31 December 2022. The report has been structured to align with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations framework.

Asset decarbonisation plans were developed for the former BHP assets. Decarbonisation plans have now been developed for all operated Woodside assets and projects and will be reviewed annually in line with asset strategic planning processes to maintain their currency and to continue to identify opportunities as costs and technologies improve.

As a part of Woodside's ongoing focus on reducing methane emissions, H1 2023 activities included independent satellite and aerial surveys to measure onshore methane emissions, and changes to operating procedures in our LNG process.

In our Climate Report 2022, we identified six key climate-related considerations which we may factor into investment decisions for opportunities through an uncertain energy transition. They were applied to the Trion investment decision and demonstrate how Woodside assessed that Trion is expected to be resilient in a decarbonising world.[22]

We continued to engage with shareholders and other stakeholders on Woodside's climate strategy. Woodside intends to put its climate disclosures to a non-binding, advisory vote at its annual general meeting in 2024.

Health, Safety & Environment

An incident occurred on the North Rankin Complex in June 2023 which resulted in the fatality of a contractor employee. Woodside's investigations into the incident are ongoing. Immediate actions have been implemented by Woodside and preliminary lessons shared with industry.

Woodside experienced one Tier 1 loss of primary containment process safety event at Pluto LNG in the first half of 2023. The contributing factors to this event are understood with corrective actions identified.

Subsequent to the period, a loss of primary containment process safety event occurred at the Angostura field in Trinidad and Tobago. Woodside shut down offshore production operations at the facility and production was restarted following successful completion of relevant safety checks across the facility. Woodside's investigation is ongoing.

The year-to-date total recordable injury rate was 1.72 per million work hours compared to 1.80 recorded for full-year 2022. Woodside is focusing on our system of safety, learning from events and enhancing monitoring of key controls to improve our overall safety performance.

Environmental performance remained strong in the first half of 2023, with zero significant environmental events.

Supporting local suppliers

Woodside increased its year-on-year value of awarded contracts to local and Indigenous suppliers, and increased visibility of commercially sustainable contracting opportunities for our local and Indigenous suppliers to our operations and projects.

Woodside continues to work with its key Sangomar contractors to provide opportunities for Senegalese people and suppliers, whilst meeting the requirements of in-country local content legislation. Woodside has also continued to grow local contracting opportunities in Trinidad and the Gulf of Mexico.

Communities

Woodside released a report on progress made in the second year of its 2021-2025 Reconciliation Action Plan. The report highlighted achievements and areas for improvement in the areas of respect for culture and heritage, economic participation and further developing capability and capacity.

Woodside's 2022 Social Contribution Impact Report was released in early 2023, further demonstrating our commitment to creating positive outcomes in the community and progress against Woodside's Sustainable Development Goals.

Social impact assessments (SIA) were completed for Karratha and Roebourne in the north-west of Australia, and for the Trion Project in Mexico.

Principal risks and uncertainties

There are several risk factors or uncertainties that could result in a material effect on the company's results over the next six months. These risks and uncertainties may occur as a result of Woodside's activities globally, including in connection with its operated (or non-operated) assets, and third parties engaged through the value chain.

Information on Woodside's risks and how they are managed can be found on pages 33-40 of the Annual Report 2022. There have been no material changes to the risk factors described in the Annual Report 2022 since the date of that report. The risks are summarised below (in no particular order).

Climate change	The global response to climate change is changing the way the world produces and consumes energy. The complex and pervasive nature of climate change means transition risks are interconnected with and may amplify other risks. Additionally, the inherent uncertainty of potential societal responses to climate change may create a systemic risk to the global economy. Climate change may also create significant physical risks, such as increased frequency and severity of storms, wildfires, floods and other climatic events, as well as chronic shifts in temperature and precipitation patterns.
Social licence to operate	Risks associated with actual or alleged deviation from social or business expectations of ethical behaviour (including breaches of laws or regulations) and social responsibility (including environmental impact and community contribution), particularly as these expectations evolve.
Growth	Risks associated with delivery of both major and complex multi-year execution project activities across multiple global locations, including a reliance on third parties for materials, products, and services as well as risks associated with integration, acquisitions and divestments.
Operations	Due to the nature of our operations, Woodside and neighbouring communities are potentially exposed to a broad range of risks. This is a result of factors such as the geographical range, operational diversity and technical complexity of our assets. These types of risks include health and safety; commercial; regulation; and reserves and resources estimates.
Finance and market	Risks associated with the ability to capture value whether markets are stable or volatile, and manage the risks associated with interest rate, commodity price and foreign exchange fluctuations and inflation.
People and culture	Risks associated with the ability to attract, retain, develop and motivate key employees to succeed and safeguard both current or future performance and growth.
Digital and cybersecurity	Risks associated with adopting and implementing new technologies, whilst safeguarding our digital information and landscape (including from cyber threats) across our value chain.

 

 

Directors' Report

The directors of Woodside Energy Group Ltd present their report (including the review of operations of Woodside Energy Group Ltd and its controlled entities (Group) set out on pages 1-16 which forms part of this report) together with the Half-Year Financial Statements of the Group.

 

Board of directors

The names of directors in office during or since the end of the 2023 half-year are as follows:

Mr Richard Goyder, AO (Chair)	Ms Meg O'Neill (CEO and Managing Director)
Mr Larry Archibald	Mr Arnaud Breuillac (appointed 8 March 2023)
Mr Frank Cooper, AO	Ms Swee Chen Goh
Ms Angela Minas (appointed 28 April 2023)	Mr Ian Macfarlane
Ms Ann Pickard	Mr Gene Tilbrook
Mr Ben Wyatt	Dr Christopher Haynes, OBE (retired 28 April 2023)
Dr Sarah Ryan (retired 28 April 2023)

 

Rounding of amounts

Woodside Energy Group Ltd is an entity to which the Australian Securities and Investments Commission (ASIC) Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 (ASIC Instrument 2016/191) applies. Amounts in this report have been rounded in accordance with ASIC Instrument 2016/191. This means that amounts contained in this report have been rounded to the nearest million dollars, unless otherwise stated.

 

Auditor's Independence Declaration

The Auditor's Independence Declaration, as required under section 307C of the Corporations Act 2001, is set out on page 18 and forms part of this report.

 

Signed in accordance with a resolution of the directors.

 

 

 

 

R J Goyder, AO

Chair

Perth, Western Australia

22 August 2023

 

 

Auditor's Independence Declaration to the Directors of Woodside Energy Group Ltd

 

 

 

 

Auditor's Independence Declaration

As lead auditor for the review of Woodside Energy Group Ltd for the half-year ended 30 June 2023, I declare that to the best of my knowledge and belief, there have been:

(a)  no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

(b)  no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Woodside Energy Group Ltd and the entities it controlled during the period.

 

 

 

 

 

 

N M Henry
Partner, PricewaterhouseCoopers Perth, Western Australia 22 August 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PricewaterhouseCoopers, ABN 52 780 433 757

Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840

T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au

 

Liability limited by a scheme approved under Professional Standards Legislation.