15/08/2019 - 11:58

Woodside setting up balance sheet for big build

15/08/2019 - 11:58

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A move to reactivate a dividend reinvestment plan and a $US 1.5 billion debt deal should be read as a sign Woodside Petroleum is confident that its Browse and Scarborough projects are moving forward, chief executive Peter Coleman said.

Woodside setting up balance sheet for big build
Peter Coleman says Browse and NWSV partners need to put self-interest aside. Photo: Attila Csaszar

A move to reactivate a dividend reinvestment plan and a $US 1.5 billion debt deal should be read as a sign Woodside Petroleum is confident that its Browse and Scarborough projects are moving forward, chief executive Peter Coleman said.

The oil and gas producer declared an interim dividend of US36 cents per share, and announced the reinvestment plan as part of its half-yearly financial update.

“We’ve decided to turn on the dividend reinvestment plan … to start preparing the balance sheet, we've said we want to signal these things early,” Mr Coleman said at an analysts briefing today.

“It's a sign the executive and the board are confident we’ll be moving forward with our growth projects in the timeframe that we’ve outlined for you.

“There are Australia-based investors that find it advantageous to participate in DRP programs.

“Around the time we get to Browse final investment decision, depending on oil prices and so forth, would be a point we'd be looking to raise additional equity.”

The company also tapped bond markets for $US1.5 billion in unsecured debt, which chief financial officer Sherry Duhe said was the company’s largest-ever bond issue.

Ms Duhe said the company’s portfolio average maturity term had been increased to 5.3 years, while the cost of debt was competitive at 3.9 per cent across the portfolio.

“(That) is setting us up extremely well for delivery of our growth plans,” she said.

The company is still targeting a final investment decision on the $15 billion Scarbrough project in 2020 and on the $21 billion Browse project in 2021.

For Scarborough, the company will build a second LNG processing train at the existing Pluto plant near Karratha, while gas for Browse will be pumped back to the North West Shelf Venture’s existing Karratha gas plant.

Much has been made of the difficulties for Woodside getting the many joint venture partners involved in the Browse and North West Shelf Venture to agree on a development plan, with extra capacity to become available at the plant as soon as 2021.

Mr Coleman said Woodside would be working to bring parties together.

“Each house has taken their own position with respect to particular returns they need,” he said.

“We’re fast reaching a point where people are going to have to put self interest to the side to look collectively at development of the resources.

“These projects are economically sound at the pricing decks that we have and the tolls that are currently being offered and discussed.

“We’ve got to look past some of the individual wants and needs and look collectively.”

The exact time when that capacity materialises is not yet clear.

“At this point our models aren't accurate enough at this point to predict the actual decline date (at North West Shelf),” Mr Coleman said.

“But there is an expectation it'll be some time in 2021 we start to see some capacity free up in the plant.

“There are differing views among the partners as to when it will free up.”

Numbers

Profit was down 22.6 per cent to $US419 million for Woodside in the six months to June, mostly driven by a planned major maintenance shutdown at Pluto LNG plant.

The temporary closure of the facility reduced output by 7.4 million barrels of oil equivalent, which was partly compensated by higher volumes at the North West Shelf and Wheatstone.

Overall production fell from 44.3mmboe to 39mmboe across the portfolio.

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