Woodside CEO Meg O'Neill talks record earnings, the dividend outlook and union tensions

Livewire sat down with the Woodside Energy Group CEO for an interview on everything from the company's latest result to the energy outlook.
Ally Selby

Livewire Markets

Despite oil and gas prices sliding significantly since hitting highs last year, locally listed energy giants continue to generate record profits, delivering income-hungry investors with hefty dividends when they need it most. 

Woodside Energy Group (ASX: WDS) is one such company, having just reported its biggest first half ever, netting US$1.7 billion in profit on the back of its merger with BHP's petroleum business. 

On Tuesday, the oil and gas giant announced it would be paying out a fully franked interim dividend of US 80 cents per share, up around 5% from this time last year. This is an 80% payout ratio at the value of US$1.5 billion. 

It comes as tensions between the energy giant and a union alliance representing workers at Woodside's offshore platform of its North West Shelf facility reach a head. 

Today, the two parties announced they have reached an in-principle agreement on pay and working conditions, potentially thwarting what would have been a major disruption to supply, particularly in Europe. 

For more on Woodside's latest half-yearly result, as well as the outlook for energy from here, I sat down with Woodside chief executive Meg O'Neill as part of Livewire's C-Suite reporting season coverage. 

We discussed the energy giant's latest deal with LNG Japan, its growth projects in the Gulf of Mexico, as well as its foray into the world of hydrogen in the US state of Oklahoma. 

O'Neill also shares her outlook on the future of oil and gas, why she believes both will continue to play a major role in our lives for decades to come, as well as what has kept her captivated by the industry for the past three decades and counting. 


  • 0:31 - Record results from Woodside's first half 
  • 1:41 - The outlook for dividends and whether an 80% payout ratio is sustainable 
  • 2:33 - What Woodside's deal with LNG Japan means for shareholders 
  • 3:36 - Other avenues of growth for the future 
  • 4:41 - Why Woodside is better placed than others to explore hydrogen production 
  • 5:59 - Oil and gas prices are still high 
  • 7:50 - Union tensions: Hopes of a fair deal and plans for disruption 
  • 9:10 - On keeping gas supply fair for Australians, while exporting to global peers
  • 10:42 - The role of gas in a decarbonising world 
  • 11:39 - The future of oil and the risk of stranded assets
  • 12:39 - Broker views (and what the two negative analysts are getting wrong) 
  • 13:41 - Meg O'Neill's career journey 
  • 15:20 - What companies need to do to improve diversity at the C-suite level 

Note: This interview was recorded on Wednesday 23 August 2023. You can watch the video or read a transcript below. 


Ally Selby: Hello, and welcome to Livewire's C-Suite Reporting Season coverage. I'm Ally Selby, and today we're very lucky to be joined by Woodside Chief Executive Meg O'Neill for a look-in at her company's latest results as well as the outlook for oil and gas in Australia. Thank you so much for joining us today Meg, I'm really excited for this chat.

You just released your latest half-yearly results. What numbers do investors need to be aware of?

Meg O'Neill: There are a couple to highlight. From an operational perspective, it was our biggest first half ever and that's the benefit of the full impact of our merger with BHP's Petroleum business. 
We produced 91.3 million barrels of oil equivalent in the period. And you might say, 'Well, what does that mean?' The world uses 100 million barrels of oil every single day, so it was almost the world's consumption in a day for the half-year. 

For a company of our size, that's really fantastic, and I am really proud of what we did operationally. Profit-wise, [we generated] US$1.7 billion in net profit after tax, which is our highest first-half profit and again a reflection of the strength of the new business following the merger as well as the strength of the commodity markets.

Ally Selby: Investors have come to expect quite hefty dividends from mining and energy companies over the last few years. Woodside just announced a dividend of 80 US cents per share for the first half - that's up 5% from this time last year. Woodside also has an 80% payout ratio, which is extremely high. Is that sustainable?

Meg O'Neill: One of the things that our shareholders value is the reliable dividend. So our dividend policy is to pay out 50% of the underlying net profit after tax, but we have a range that we target between 50% and 80% and we've been really pleased to be able to pay 80% of net profit after tax for the last few reporting periods and the feedback I get from most of our investors is they really value that. A lot of our investors are retail shareholders, moms and dads who count on this for their retirement livelihood. 

We're very focused on trying to ensure that we keep our shareholders happy with these reliable dividends. Now, it means we've got to spend a lot of time making sure that our balance sheet has the strength to be able to return that value, particularly while we're also investing in growth. 

But again, the finance team and the whole business have done a fantastic job of making sure we've got the cash flow coming in and the operational and financial strength to allow us to pay these strong dividends.

Ally Selby: Woodside just announced it would be selling a 10% interest in its Scarborough project to LNG Japan. What does that actually mean for investors?

Meg O'Neill: It's really exciting. So Scarborough in many ways is one of Woodside's crown jewels. 

It's a field that's in development now, and we expect first liquified natural gas or first production in 2026. It's going to be an important asset to generate cash flow for 20 years after it starts up. So it's an important part of our financial future. 

We've been very selective about who we brought in. LNG Japan is a fantastic company, they're very selective about the LNG projects they invest in. They have looked very carefully at Scarborough and they share our view of the value of the asset, and they've paid a price that we think is really fair for Woodside shareholders. 

So we're delighted to have them in the joint venture, and we're delighted about the strategic collaboration that it offers both with LNG Japan and their two parent companies Sumitomo and Sojitz for investing in future projects and things like hydrogen or carbon business for example.

Ally Selby: Let's stay on that. What other projects are you pursuing for growth in the future?

Meg O'Neill: So we've got a couple of other projects that are underway. We've got a project called Sangomar which is a deep-water oil field off the coast of Senegal. That project is 88% complete and we expect to start producing next year. 

A couple of months ago, in June of this year, we took our final investment decision on a field called Trion which is a deep-water oil field in the Mexican sector of the Gulf of Mexico. Really excited [about that]. It's a high-quality asset, it's a very strong resource, fantastic financials, and it pays back in four years. So again, both of these investments are investments that are going to deliver value to our shareholders for the long term. 

Now, I'm sure you're going to get to other opportunities and new energy is front of mind. We've got a hydrogen project in the United States in the state of Oklahoma called H2OK. We're complete with our front-end engineering design and we are working towards a final investment decision later this year. That would be our first big investment into hydrogen, so super excited about that opportunity.

Ally Selby: There are a lot of risks involved with hydrogen. Can you take us through them or how Woodside is hoping to navigate those?

Meg O'Neill: Sure. So from an operational perspective, a hydrogen production facility actually has a lot in common with an LNG production facility. [You need a] reasonably large, complex industrial facility, you have to manage safety and process safety to make sure that you can run them safely. Those are skills that we have today and skills that we've had for many years. The market is a bit different, and that's where hydrogen gets interesting. So traditional markets in LNG largely are utilities and gas customers. Well, for hydrogen it's going to be a different set of customers. 

For the Oklahoma Project, we're targeting the ground transportation market. That market in the US is growing rapidly, particularly led by California, which is very focused on managing their emissions and reducing their emissions. 

So we're very much focused on the ground transportation sector, which without a fuel like hydrogen, it's really hard to abate. EVs can only go so far, and when you think about the load on the electric grid as you start to turn off coal and put other things onto the grid, we think hydrogen's going to be very competitive with EVs, particularly for the heavy vehicle fleets. So that's what we're targeting.

Ally Selby: Okay. Let's return to oil and gas, prices have obviously decreased quite significantly since their highs last year. What does that mean for Woodside?

Meg O'Neill: I'd say last year was anomalous. So Russia's invasion of Ukraine caused disruption in all energy commodities. There were sanctions on Russian oil that caused oil trade flows to reroute, Russian gas largely reduced or significantly reduced flows to Europe and that required Europe to scramble for other energy sources and they imported LNG in record quantities. They restarted coal-fired power stations. So last year was a really disrupted year. 

If you look at the pricing that we're seeing today it's still actually high relative to what I would call the last steady-state year we had, which was actually probably 2019 before the COVID pandemic. 

It's been quite volatile the past few years. So for me, that's a signal that firstly, the global economy is still continuing to be pretty resilient despite all the concerns around slowdowns and recession risk the economy continues to demand energy. 

The second thing that is an important signal is the importance of energy security and we're seeing this in Europe, and we're seeing this in Asia. We're seeing a lot of Asian buyers actually sign up for long-term LNG deals as they're thinking about protecting their energy needs, not just today but 20 years into the future.

Ally Selby: Do you feel like oil and gas prices are still too high then?

Meg O'Neill: Look, we're happy with prices where they are. It's an industry where we've had a couple of significant downturns, 2020 was a really difficult year for the sector. So a few strong years actually help us to return value to shareholders and be able to make these very significant investments that will keep us resilient for the future.

Ally Selby: Woodside is obviously facing some union issues right now, it's been well-documented by the press. How do you see that impacting Woodside's production volumes from here?

Meg O'Neill: Well, let me start by saying that we've been engaged in enterprise bargaining for several months now. I think the discussions are going pretty well, and are pretty constructive. We're spending a lot of time really listening and wanting to understand exactly what are the issues that are most important to our workforce. [There is] a long list of claims, so we're trying to figure out what's most important and over the course of the negotiations I think we've addressed some of the areas that were of greatest concern. 

Now the teams are meeting again today, and the employees have voted for protected action. So that's a right that they have under the Australian labour framework. What that looks like, there's a range of possible outcomes. And it ranges from things that are frustrating - work slowdowns, for example, to potentially more significant work stoppages. Look, we've got plans in place to be able to work through those and navigate the challenges.

But I'd say the key thing for us is to ensure that we continue to engage in respectful and constructive discussions at the bargaining table and we look forward to concluding an agreement at a point in time where both sides think it's a fair deal.

Ally Selby: Okay, I want to move to the bigger picture now. Australia is one of the world's largest exporters of LNG, what is Woodside doing to ensure Australian supply?

Meg O'Neill: A few things. So certainly within the international market, we spend a lot of time with current and prospective future customers, talking about the opportunities that we have and the LNG sales opportunities that we can offer them. I think we've got a very strong track record and reputation in the industry as a reliable supplier. 

You look at the reliability numbers on our facilities and it's top-notch. It was +97% for the first half, and our Pluto plant was at 99.9% for the first five months before a turnaround. So we're known as a reliable supplier, and we have a lot of trust in the marketplace. 

There are concerns around some of the regulatory interventions and so domestically, a lot of the discussions we're having are around the importance of Australian LNG to our international customers, the connection between our LNG exports and our domestic market, the role of gas and helping meet Australia's energy needs into the future particularly as coal-fired power comes offline.

So those are some of the discussions that we're having internally to really make sure we've got a common understanding of the role of gas in a decarbonising world and the role of gas in underpinning a thriving economy both here and abroad.

Ally Selby: Can we stick with that? What do you see as the role of gas in the shift to a greener future?

Meg O'Neill: We see gas as the natural partner to renewables and we certainly support Australia's ambition to reduce carbon emissions. We think that's an important part. Every nation needs to play a role in addressing climate change. Australia, particularly in the East, is still highly dependent on coal-fired power. 

As those coal-fired power stations start coming out of the mix - fantastic that more wind and solar are coming online - but you've got to have something to firm it and you've got to have something that is there on the cold winter nights in Melbourne when the sun's not shining and the wind's not blowing. Gas really ought to be the natural firming mechanism.

There is undeveloped gas in Australia and we think that should be part of the mix. Bringing LNG into the East Coast is another possible solution, and that's something that we're talking to the government and working with potential partners here on.

Ally Selby: There may be a long-term future for gas, but maybe not so much for oil. Is there a risk that those assets become stranded as the world moves to decarbonise?

Meg O'Neill: So I said earlier that the world uses 100 million barrels of oil every single day. It's a lot, and it's not just used for power generation. It's used for transportation, it's used for jet fuel, it's used as a feedstock to petrochemicals. You can look around the room, even the clothes that we're wearing are made from oil. 

The uses for oil are much more than just pure energy, and it's going to take a bit of time for the world to move away from oil. As we look at investments, things like the Trion field, we test [whether it is] going to be resilient in a decarbonising world. And we firmly believe that it will be. 

Now the world does need to take action, and we're taking action as well to address emissions. But oil's going to be around for a long time because it underpins the way of life that we're all accustomed to.

Ally Selby: Of the brokers who cover Woodside, 12 actually have the stock as a buy, eight have it as a hold, one has it as an underweight, that's JP Morgan, and one broker says the stock is a sell, which is Morningstar. For those two negative ones, what are they getting wrong?

Meg O'Neill: First off, I think 20 out of 22 is a pretty good record to have buys and holds. So that suggests that the bulk of the analyst community is really positive about the opportunity that Woodside offers. I think those who have a more negative view think that the market valuation is pretty strong already. 

One of the things that we're really proud of is the fact that following the merger with BHP Petroleum, the market has responded really positively. We're a bigger company, we're more geographically diverse, and we have a bigger investor base, particularly in the US than we've had historically. So there are a lot of people around the world who are quite interested in Woodside. So I'd say vote with the 20 who are supporters because I think they're getting it right.

Ally Selby: I want to learn a little bit more about you now. You've had a really interesting career spanning an ocean and chemical engineering degree at MIT, senior positions at ExxonMobil before nabbing a role with Woodside. Is there anything that you would change about that journey knowing what you know now?

Meg O'Neill: It's a great question actually and as I've gotten a little bit more seasoned in my career, I've had chances to look back and reflect. 

I certainly didn't go into engineering with the anticipation of being an oil company CEO. I probably thought I would work as a boat designer for a period and then maybe go off and go to business school or law school or do something different. But the industry has been fascinating and it really has captivated me. 

Over the course of my 28 or so years in the industry, I've had the chance to do a wide range of different jobs. I've been able to travel the world, I've lived in places as diverse as Indonesia, Norway, Canada, the US and now Australia. I've visited, I don't know, how many countries, and I've seen the impact that our industry makes on people's lives. That's both in the countries where we produce oil and gas as well as the countries that depend on a reliable supply of energy - countries like Japan and Korea that are important customers for Woodside today.

The work we do matters, we literally keep society running and that's captivating to me. We work with fantastic people, we make a difference in the places where we work. We make a difference for our customers and that's what's kept me in the industry as long as I've been here and kept me excited about the job.

Ally Selby: I want to talk about female representation at the CEO level. Obviously, things have improved in recent years but it is still far from equitable. What do you think needs to change here?

Meg O'Neill: The key thing for us when we think about diversity is we need to make sure we're thinking about it through the career lifespan. So it starts with hiring practices and making sure that we're hiring diverse people into the business, both at the graduate level as well as the seasoned professional level. 

We need to make sure we've got talent progression that supports all of our employees through, but particularly keeps an eye on women as they go through their mid-career stage where they might be having to juggle family obligations in addition to career responsibilities. We need to make sure that we're getting women and people of colour roles that really do develop their leadership capability, and in our sector that often means line leadership roles where you're involved with the workforce and understanding exactly how our business is conducted. 

We've got to invest time and effort throughout the talent pipeline, and we've got to make sure our HR policies are supportive of our employees. The reality is that those supportive policies that help women are also good for men.

So a lot of the policy work that we've done has enabled us to have a more constructive, effective, and respectful workplace. That's good for all of our employees. I think we'll continue to see more women coming through the talent pipeline as a result of the investment that we've made for many years.

Catch all of our August 2023 Reporting Season coverage

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Ally Selby
Deputy Managing Editor
Livewire Markets

Ally Selby is the deputy managing editor at Livewire Markets, joining the team at the end of 2020. She loves all things investing, financial literacy and content creation, having previously worked for the likes of Financial Standard, Pedestrian...

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