Woodside Energy Group Ltd — 2023 Form 20-F Summary
Business context and reporting period
Woodside is an Australia-incorporated global energy company engaged in hydrocarbon exploration, development, production, marketing and trading, with LNG, oil and gas operations in Australia, the United States Gulf of Mexico, Trinidad and Tobago, Senegal and other jurisdictions. The filing is an annual report for the year ended December 31, 2023; it is not a standalone fourth-quarter filing. Financial statements are prepared under IFRS as issued by the IASB and presented in US dollars.
The 2022 comparison includes only seven months of the BHP Petroleum portfolio following the June 1, 2022 merger, whereas 2023 includes twelve months.
Financial and operating metrics
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Operating revenue | $13,994m | $16,817m | Down 17% |
| Gross profit | $6,475m | $10,277m | Down 37% |
| EBIT | $3,307m | $9,186m | Down 64% |
| EBITDA excluding impairment | $9,363m | $11,234m | Down 17% |
| Reported NPAT attributable to shareholders | $1,660m | $6,498m | Down 74% |
| Underlying NPAT | $3,320m | $5,230m | Down 37% |
| Net cash from operating activities | $6,145m | $8,811m | Down 30% |
| Free cash flow | $560m | $6,546m | Down 91% |
| Total production | 187.2 MMboe | 157.7 MMboe | Up 19% |
| Sales volumes | 201.5 MMboe | 168.9 MMboe | Up 19% |
| Gearing | 12.1% | 1.6% | Increased |
Reported gross margin was approximately 46.3%, EBIT margin approximately 23.6%, reported NPAT margin approximately 11.9% and underlying NPAT margin approximately 23.7%. These calculated margins are based on reported operating revenue.
- Cash and cash equivalents were $1,740m, drawn debt was $4,874m and total available liquidity was approximately $7,790m.
- Woodside maintained investment-grade ratings of BBB+ from S&P Global and Baa1 from Moody’s. There was no principal debt payable in 2024.
- Capital and exploration expenditure was $6,103m, including $5,736m of capital expenditure. Contracted capital commitments were $4,245m, predominantly related to Scarborough and Sangomar.
- The final dividend was 60 US cents per share, fully franked, payable April 4, 2024. Total 2023 dividends were 140 US cents per share, approximately 80% of underlying NPAT. The dividend reinvestment plan remains suspended.
- Proved reserves increased to 2,450.1 MMboe from 2,385.2 MMboe, including additions from Trion and Mad Dog Southwest.
Material changes versus the prior comparable period
- Revenue and earnings declined primarily because oil and gas prices fell from 2022 levels. The volume benefit from the full-year BHP Petroleum portfolio partly offset lower prices and planned turnarounds at Pluto, North West Shelf and Ngujima-Yin.
- Reported profit was reduced by $1,917m of pre-tax impairment charges relating to Shenzi, Wheatstone and Pyrenees. The 2022 comparison included a $900m impairment reversal.
- Woodside reduced the Pluto PRRT deferred tax asset by $637m, with a $446m post-tax effect, due mainly to lower forecast and realised pricing. This was partly offset by a $319m deferred tax asset recognised following the Trion final investment decision.
- Depreciation and amortisation increased, including a $416m effect from a change in depreciation methodology and asset useful lives adopted from January 1, 2023.
- Net debt increased substantially as planned project spending accelerated, while dividends distributed rose to $4,253m from $3,088m.
- Mad Dog Phase 2 achieved first production in April 2023. Woodside also took FID on Trion and advanced the Scarborough and Sangomar projects.
Guidance, outlook, commentary, risks and unusual items
- 2024 capital expenditure is expected to be $5,000m-$5,500m, primarily for Sangomar, Scarborough and Trion. Management is targeting first oil from Sangomar in mid-2024, first LNG from Scarborough in 2026 and first oil from Trion in 2028.
- 2023 production of 187.2 MMboe was within the reported guidance range of 180-190 MMboe.
- Sangomar was approximately 93% complete at year-end and Scarborough was more than 55% complete. Trion received FID in June 2023 and regulatory approval for its field development plan in August 2023.
- Woodside signed an agreement to sell a 10% Scarborough interest to LNG Japan; completion was targeted for the first quarter of 2024. After year-end, Woodside agreed to sell a further 15.1% interest to JERA for $740m, subject to conditions and targeted completion in the second half of 2024.
- Safety was a significant adverse item. A contractor employee died at the North Rankin Complex in June 2023. TRIR increased to 1.86 from 2022, with 39 recordable injuries and three high-consequence injuries. External reviews of safety and operational systems were ongoing.
- Key risks include commodity-price volatility, LNG demand and pricing, project cost and schedule execution, regulatory and environmental approvals, climate-transition and physical risks, decommissioning liabilities, joint-venture and counterparty risks, cybersecurity, and social licence to operate.
- Woodside reported $262m of contingent liabilities, including tax and government matters, and $47m of contingent assets. The filing states that no off-balance-sheet arrangements were reasonably likely to have a material effect on financial condition or liquidity.
- A Federal Court proceeding concerning environmental approvals for the Scarborough project remained scheduled for trial beginning September 2, 2024. The filing states that no other disclosed legal or governmental proceeding was expected to have a significant effect on financial position or profitability.
- Woodside’s climate strategy includes reducing net equity Scope 1 and 2 emissions, using carbon credits where applicable, investing $5bn in new energy products and lower-carbon services by 2030, and targeting 5 Mtpa of potential customer emissions-abatement capacity through FIDs by 2030. These targets are subject to commercial, regulatory, joint-venture and third-party contingencies and are not guidance.
Important facts for investors to verify
- Reconcile reported NPAT of $1,660m with underlying NPAT of $3,320m, particularly the Shenzi, Wheatstone and Pyrenees impairments and tax adjustments.
- Review commodity-price, LNG hub-price and production assumptions underlying impairment testing, reserves, deferred tax assets and project economics.
- Monitor 2024 capital spending, liquidity, gearing and dividend capacity as Sangomar, Scarborough and Trion spending continues.
- Confirm timing, consideration, approvals and retained ownership following the LNG Japan and JERA Scarborough sell-downs.
- Track Sangomar start-up, Scarborough execution and Trion cost and schedule performance against stated targets.
- Assess the implications of the North Rankin fatality, ongoing investigations and planned safety-control improvements.
- Review decommissioning provisions of $7,154m and sensitivity to cost, timing, regulatory and discount-rate assumptions.
- Consider exposure to Australian PRRT, domestic gas price controls, environmental approvals, climate regulation and the pending Scarborough legal proceeding.