Woodside ‘in no rush’ for acquisitions after failed Santos talks

Woodside Energy chief executive Meg O’Neill doesn’t believe the group is under pressure to quickly capture another deal after its failed merger talks with Santos. Handing down a lower full-year profit on Tuesday, Ms O’Neill said that while Woodside was “always going to be looking at ways to profitably grow the business ... we are very comfortable with the portfolio the way it stands”. Having discussed a $80 billion merger with Santos for several months, Woodside walked away from the talks two weeks ago after the two camps could not agree on terms. Ms O’Neill told analysts on Tuesday that Woodside was leaning on WA’s Scarborough gas development, now 55 per cent complete, and its upcoming Sangomar and Trion oil projects, in West Africa and the Gulf of Mexico respectively, together with a handful of “new energy” projects it sees aiding its transition into cleaner energy. “Now, as we look further down the track, we are always going to be looking for ways to profitably grow the business,” Ms O’Neill said. “But there’s no urgency for us to do anything. “We have assets that are in our portfolio today and teams working on the best way to unlock value from those assets. “And we’ve been really clear that our strategic priorities are LNG, deepwater oil and new energy, and we will look at a range of other ways to grow in those spaces.” Lower energy prices and $US1.53 billion ($1.9b) of previously disclosed writedowns on the Shenzi oil and gas field in the Gulf of Mexico and its stake in Chevron’s Wheatstone gas project in WA sent Woodside’s 2023 net profit 74 per cent lower to $US1.66b. Excluding the impairments, underlying profit was 37 per cent off at $US3.32b. Directors declared a lower final dividend of US60¢ a share. Woodside shares were one cent higher at $33.31 as at 11.40am. The group used the financial results to announce a new target to approve clean energy projects capable of reducing carbon emissions by five million tonnes by 2030. It has already committed to spend $US5b on “new energy” and lower carbon services by the end of the decade. However, its latest climate plan progress report, released with Tuesday’s financial results, underscored the challenges it faces in balancing shareholder and public expectations as it argues that gas is a required bridging fuel in the energy transition. The report showed gross Scope 1 and Scope 2 carbon emissions across its portfolio rose 15 per cent last year, though emissions at the projects it operates were 4 per cent lower. Woodside’s annual production, swelled by the purchase of BHP’s petroleum business nearly two years ago, came in at record 187.2m barrels of oil equivalent. However, a 30 per cent fall in its average realised sale price to $US68.60 a barrel outweighed the production boost, sending revenue 17 per cent lower to $US13.9b. Ms O’Neill also disputed the preliminary findings of WA’s domestic gas inquiry that suggested the State’s big LNG exporters were not complying with the spirit of legislation that preserves gas for the local market. With WA anxious to avoid the energy shortages that have periodically hurt eastern Australia, the reservation policy formalised in 2006 by the State’s Carpenter Labor Government requires LNG exporters to set aside 15 per cent of their gas for the local market. However, the inquiry found “on average” just 8 per cent had been delivered. Ms O’Neill on Tuesday said “the facts” showed that since starting production in WA nearly 40 years ago, Woodside had provided domestic gas equivalent to more than one-third of its LNG exports. “We’ve been in a constructive partner in the domestic gas market and we will continue to work with customers in this market,” she said. Big industrial customers in mainly WA’s south west claim they cannot get competitively priced gas on long-term contracts. However, that is disputed by Ms O’Neill, who said the priority should be on ensuring new gas projects are brought on line to fill a forecast supply gap in WA next decade after the State’s coal-fired power generation is wound down. Woodside, along with other WA energy companies, is frustrated at what it sees the slow pace of State and federal approvals for new gas developments, citing deliberations for its next potential major project, Browse, off northern WA, that are now in their fifth year. “I wouldn’t be worried about the short-term (gas market), that will solve itself, but the 2030s could be a real challenge if we don’t get any projects approved,” Ms O’Neill said. Just last week, Woodside struck a deal to sell another 15.1 per cent of the $US12b Scarborough project to Japanese power consortium JERA, cutting its stake to 74.9 per cent and further reducing its commercial risk on the huge development. Ms O’Neill suggested on Tuesday that further equity sales in Scarborough were unlikely, saying Woodside was “not actively pursuing further selldowns”.