Woodside boss flags Sangomar, Scarborough to boost growth, cash flow outlook

Woodside boss Meg O'Neill says the energy major is positioning to become a highly cash generative business as investments in its Sangomar and Scarborough growth projects translate into more cash generation for investors. 

For the six months to December 31, Woodside's adjusted net profit slipped 13%, to US$2.88 billion, on operating revenue down 6%, to US$13.2 billion. Total dividends in 2024 were US$1.22 on an FX-adjusted yield of 7.8% before the benefit of franking credits, at a share price of $24.85 on Thursday.

It has guided for total production between 186 million and 196 million barrels of oil equivalent in 2025, versus the 194 million produced in 2024. 

The group's pioneering Sangomar offshore oil and gas project off the west coast of Senegal proved a 2024 highlight, as it produced US$950 million in revenue since first oil production last June. 

"It's a nation building project for Senegal," says O'Neill. "And we're super happy with how it's performing. We're getting really good results from the reservoir. The wells are performing well. We've had great uptime. We had 94% uptime in the fourth quarter."

Woodside expects Sangomar to produce on plateau until the second quarter of 2025, with future development decisions expected within 18 to 24 months, according to O'Neill. Woodside owns 82% of the project, with the Senegal government at 18% of the joint venture 

Woodside's Scarborough liquefied natural gas (LNG) development project in offshore Western Australia is tipped to ship its first LNG cargo to Asia in 2026, in another boost to the group's production outlook and cash flow generation in the years ahead. 

"Scarborough is a transformational asset for Woodside," says O'Neill. "It's a reasonably large gas field in deep water and the project itself is going well."

North West Shelf's political future

Elsewhere, the energy major is still awaiting Federal government approval to extend the licensing permits for its core offshore North West Shelf gas venture and Karratha operating plant in WA. 

Chief executive O'Neill warned investors and Federal politicians that failure to approve a 40-year extension for the project from 2030 on environmental grounds would damage Western Australia's economy.

"So, without North West Shelf, we're affecting jobs, we're affecting government revenue, and we're affecting emissions," she tells Livewire. So, if gas isn't in the energy mix in WA, the outcome is going to be coal stays in the mix longer. I think approving the extension, it's good for jobs, it's good for the economy, it's good for WA, and it's good for the environment."

Other ventures and outlook

Woodside also acquired two significant energy projects in the US in 2024, with its Louisiana LNG plant and Beaumont New Ammonia production facility. 

O'Neill tells Livewire the Louisiana LNG business is a "great opportunity" for shareholders and the Beaumont Ammonia business will be the energy group's first low-carbon business and offer attractive returns when it comes online in 2025. 

To hear more about O'Neill's view on how the sprawling energy group can drive production and cashflow growth to meet the demands of dividend-hungry investors ahead dive into the online interview. 

Edited transcript

Tom Richardson: Hello and welcome to Livewire Markets. Today, I'm sitting down with Meg O'Neill, the chief executive of Woodside Energy, who will talk to us a little bit about its financial results for 2024. Meg, it's great to have you here today.

Meg O'Neill: Thanks for hosting me. 

Tom Richardson: Do you want to talk a little bit about some of the financial highlights from your results in 2024?

Meg O'Neill: Sure. So, it was a very strong year for us. We finished the year with earnings before income tax depreciation and amortisation of over $9 billion, which led to a net profit after tax of $3.6 billion. Pleasingly, the board elected to pay a dividend at 80% payout ratio of underlying net profit after tax, $1.22 for the full year fully franked. So, for our Australian shareholders, that equates to about $2.68 Aussie with the franking credit benefit. So, really a fantastic result. It was underpinned byoutstanding production performance, both from our operated LNG assets here in Australia, as well as outstanding performance from our Sangomar development in Senegal, which is a new deep water oil development we've been working on for many years. Chief first production last year generated $950 million of revenue for the business. So, a very strong contribution, and a proof point that our investment in future assets is delivering value for shareholders today.

Tom Richardson: I think you produced 194 million barrels of oil equivalent in 2024. So, do you think you can perhaps top that in 2025, and what factors may impact that outcome?

Meg O'Neil: We were very pleased with the 194 mmboe. That's a new record for Woodside, so pleased to have the record both on the production side and sales. Sales was over 200 million barrels oil equivalent for the full year as well. We've put out a guidance range for 2025, gives us a bit of flexibility. As you know in resources, there's things that we can control and things that we can't control. Natural field decline is something we always have to manage. So, we've got a range, but the team is working hard to deliver things at the high end of the range. 

Tom Richardson: A lot of investors are focused on the balance sheet, capital allocation, I think net debt over the year grew to $7.7 billion on leverage of about 17.9%. I guess that's near the top end of your targeted range of 10% to 20%. So, could you just talk to us a little bit about how you see using debt, capital allocation, the balance sheet?

Meg O'Neill: Sure. So, our capital management framework has been well-defined and we've been following it quite rigorously for the last few years. At the one end, we are committed to protecting our investment grade credit rating. We need to make sure that we've got the strength of that strong balance sheet so that we can raise money if and when we need to so that we can access the debt markets, all those sorts of things. We've got a very significant investment programme underway, so we need to make sure that we've got sufficient capacity to fund that investment programme, and we're committed to returning value to shareholders through the cycle via the dividend.

So, with all of those things, we've set ourselves a target gearing range of 10% to
20%. But, it's not a hard ceiling. We may be above the top end of the range at
points in time as we make those investments in future value. So, we are at the
upper end of the range now with 17.9% gearing. 

We may go above the 20%, but again, that would be for shortish periods of time with the expectation we'll be back in the target range in a couple of years' time.

Tom Richardson: If we talk about some of the growth assets, you've got the Sangomar asset off the west coast of Senegal. I think that got into production last year. You recently
upgraded reserves guidance for that asset. You must be quite excited about it.

Meg O'Neill: Yeah, I'm very pleased with how that asset is performing. We entered the Sangomar joint venture back in 2016 or '17, because we saw great potential to develop this
oil resource in Senegal. It's a country that's never had oil and gas production.

Tom Richardson: Another growth asset for Woodside Scarborough, offshore WA LNG believe
it's about 80% complete. And you're planning on shipping the first cargo of LNG, I think, the target is 2026. Do you want to just talk about how that might uplift Woodside going forward?

Meg O'Neill: Scarborough is a transformational asset for Woodside. And if you think about our company's history, we started life as an LNG developer with the North West

Shelf. In the 2020s, we then moved into developing the Pluto Reservoir. But, both
of those assets now are getting into the second half of their lives. North West Shelf
in particular is already well into maturity. 

So, Scarborough is the new LNG asset in our portfolio. It's a reasonably large gas field in deep water. The project itself is going well, so all of the components, the modules that we use to construct the LNG processing facility are on site at the Pluto site.

We're hooking everything up and moving into the commissioning phase. We've got
some very big offshore assets that are in construction. The pipeline was installed
last year, so a 433 kilometre pipeline is in place. And the next big milestone for us is
to bring the floating offshore production platform together. So, it's constructed in
pieces, so we need to couple those up to make one platform. And then by the end
of this year, it'll be leaving China where it's being built for Australian waters. And
then next year we'll be heading towards first gas.

Tom Richardson: Okay, great. Sticking to WA, the North West Shelf Project, the operating plant at Karratha. I think you're still seeking a 40-year extension for the licence or operating permit from the federal government. What would it mean for Australia, yourself, the Australian economy, if that licence isn't granted by the federal government?

Meg O'Neill: For a bit of context, North West Shelf has been producing domestic gas in Western Australia for just over 40 years. And we've been exporting LNG for just over 35. It's been an incredibly important part of the WA economy. We sell gas to a number of mines, we sell gas to industrial users, we sell gas for power generation. The current environmental approval we have expires in early 2030. So, if the approval's not granted, we've got hundreds of people who live in Karratha whose livelihoods depend on this facility, whose lives will be impacted.

We've got people at those downstream customer sites who are going to wonder how are they going to keep their mines running or their factories running without gas as a feedstock. We pay a royalty to the state government as well as to the Commonwealth government. So, without North West Shelf, we're affecting jobs, we're affecting government revenue, and we're affecting emissions. So, if gas isn't in the energy mix in WA, the outcome is going to be coal stays in the mix longer. I think approving the extension, it's good for jobs, it's good for the economy, it's
good for WA, and it's good for the environment.

Tom Richardson: I think you touched on the Louisiana LNG asset. Plans for that? 

Meg O'Neill: Yeah, very excited about Louisiana LNG. So, it's a fully permitted LNG opportunity in the U.S. The capacity 27.6 million tonnes per annum of LNG. And just to calibrate, that's as much as we've developed in 40 years in Australia with North West Shelf and the Pluto 2 trains. So very, very large capacity site. As I said, fully permitted. We have Bechtel as a contractor, a fully priced, fully termed contract in place and signed with them. We're looking to bring partners in, and so we're in the midst of the negotiations with prospective partners who share our view of the role of LNG and helping meet the world's energy needs now and into the future. So, if all goes according to plan, we'll be ready to take an FID decision from the first quarter of this year. Again, we need to get those partners lined up, which is critical path for us, but really an opportunity to replicate what we've done here in Australia in the U.S, which is one of the world's biggest gas markets. So, great opportunity for the company and a great opportunity for our shareholders.

Tom Richardson: And the other large acquisition you've made in the U.S. is Beaumont. Do you want to give us a bit of a detail about that?

Meg O'Neill: So, Beaumont New Ammonia is a low-carbon ammonia production facility in the U.S. Beaumont is in the state of Texas, so stones throw away from the Louisiana LNG project that we just spoke to. The Beaumont New Ammonia projectis scheduled to start producing ammonia in the second half of this year. And what we are excited about and the reason we acquired it is there's a CCS component to the project that will start up in 2026. So, when that carbon sequestration project starts up, we will have the world's first low-carbon emissions ammonia available on the market. And one of the things that we're hearing from buyers in places like Europe and places like Asia is as they start to decarbonize, they see ammonia as an alternative energy source to traditional fuels like coal particularly. So, we're very excited about the role that low-carbon ammonia can play in the world's future energy mix. We know there's premium customers who are interested in off take from this project, so we look forward to bringing the project online this year, starting up our first low-carbon energy business, as I said, when the CCS comes online next year.

Tom Richardson: Sure. Great. That was really terrific, Meg. Hopefully everybody got some great insights about Woodside today. Thanks very much.

Meg O'Neill: Thank you.