Good morning everyone. Welcome to Woodside's 2012 ... - HotCopper

Good morning everyone. Welcome to Woodside’s 2012 Investor Briefing. My name is Mike Lynn. As VP of Investor Relations it is my pleasure to welcome you all and to thank you for taking the time to meet with us today. As we get underway I have a number of things to cover off. Firstly, to avoid interruptions and embarrassment, would you please switch off your mobile phones as they can interfere with the sound equipment and webcast. Yes – this session in the auditorium is being recorded live and will also be available as an archive on the W d id website. Woodside b it Thank you for your co-operation.

Woodside 2012 Investor Briefing | 28 May 2012

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Secondly, I need to acknowledge our disclaimer slide that will cover all our presentations today.


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Thirdly, as part of our commitment to health and safety, I ask that you take a moment to familiarise yourselves with the evacuation procedures as shown on the slide. In the unlikely event the evacuation tone is sounded we will need to leave the auditorium (highlighted in green) by either of two exits shown in orange. There is one exit at the back and one exit on my left at the front of the auditorium.


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If you leave by the back exit it will take you out to Hay Street. Simply follow the path highlighted in orange to the muster area at Mount Newman House. If you go out through the front exit to St Georges Terrace, go east along the path highlighted in orange to the Cloisters muster area. Woodside staff will be on hand to assist with directions.


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Now today's presentations are given in two sessions. Session one’s topics and presenters are shown on the slide. Shortly before 9am we will make time for a question and answer session so please hold your questions until then. Following that, Rob Cole will wrap-up session one and we then will break for coffee in the auditorium foyer at around 9.30am.


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For those who have tuned in via webcast, our live webcast will finish just before the coffee break at 9.30am. After the coffee break, those attendees who have been given a red, blue, green or orange lanyard will break into four groups and, at different times, rotate through the structured workshops. The workshops are being led by the various presenters as shown on this slide. For those that can’t physically be present, the information that relates to these workshops is available on our website. The workshops orkshops of session 2 will ill be held in designated rooms on this a auditorium ditori m le level. el I will ill give further directions regarding the workshops after the coffee break. After our final workshop rotation, we will regroup in the auditorium foyer at around 11.55am for lunch and further instructions. Having set the scene for today’s activity its now my pleasure to invite Woodside’s CEO and Managing Director, Peter Coleman, to come to the podium and provide an overview.


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Thank you Mike. Hello and welcome to our investor briefing this morning. We realise that for many of you it is a substantial commitment of your time, and we appreciate the interest you have shown in our company. We’ve asked you here today so you get to know more about Woodside, have a greater understanding of our strategy and know the leadership of our company. For those of you undertaking the site visit tomorrow, we also look forward to showing you around some of our facilities. I’ll talk a bit about our capabilities this morning, but nothing matches being g able to take yyou to our p plants and show yyou what we’ve done. Woodside is clearly best known for building and operating the North West Shelf Project, but I think the downside of being associated with such an iconic development is that it can overshadow the many other things we do. And that list is pretty impressive. We operate six LNG trains. That’s six of the seven trains we have in Australia. Some of these trains we have operated for more than 20 years and they are still going strong. We operate four gas platforms, one of which began producing 28 years ago and is undergoing a A$5 billion redevelopment. And we operate four floating production, storage and offtake facilities, which between them are producing more than 100,000 barrels of oil a day. Our facilities have established a track record of proven performance in delivering value to Woodside shareholders. Over the course of many years we have delivered a superior level off returns t to t our shareholders. h h ld All off our ffocus is i on maintaining i t i i th thatt performance. f


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And that’s where I would like to start today. At Woodside we recently reviewed our mission, vision and values to ensure they remained relevant. Our mission is unchanged, although we’ve amended the wording slightly to make it even simpler. Our mission is to deliver superior shareholder returns. Every decision we take as a company is intended to support this mission. We will apply this test relentlessly to all our actions. We recently reminded all our staff of this mission, so our people fully understand our company’s company s purpose. We believe we can achieve this mission by being a global leader in upstream oil and gas. This encompasses a whole range of world-class capabilities, but the goal remains the same. We want to be a global leader in order to deliver superior shareholder returns. For us this is demonstrated by flawless project execution and operations, and a reputation which cements Woodside as a genuine partner of choice throughout our industry. So what do I mean when I talk of superior shareholder returns? We, like most companies, have a peer group of similar organisations against which we like to benchmark our own performance. Woodside has historically been in the top quartile of our peer group in the level of returns we deliver to our shareholders. We want to maintain or exceed this performance.

* Based upon a historical review of TSR performance of over 90 companies in a broad industry peer group, Woodside found that a TSR in the order of 14% was required to perform above the median for that peer group.


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We have deliberately taken the focus away from specific assets or projects in today’s briefing. Apart from the Pluto start-up, our activities remain on track with what we told you at our full-year briefing in February. We continue to enhance many of our existing assets, pursue Pluto expansion, re-engage on Sunrise and be ready for final investment decision on Browse in 2013. Browse will be covered in one of our workshops later this morning. We wanted to shift the emphasis today onto our capabilities, because we believe these capabilities p are a key y feature of Woodside,, and are at the core of our strategic g direction. I have listed just a small number of our capabilities on this slide here. I could certainly list many more. In each of these capabilities, we are amongst the world’s best. In a local context, I feel confident very few Australian E&P companies could match our experience and know-how in these fields. Our capabilities are what stands Woodside apart, and they will play a central role in shaping the direction in which we see our company heading. Quite simply we want to capitalise on what we do best.


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Which brings me to our strategy. Greg Roder has a presentation on our strategy for you in just a few minutes, but I wanted to give you the broad overview. It’s no surprise that our Australian business is at the core of our strategy. It is a world-class business, but we still believe we can get more out of it. We will continue to work hard at maximising this business. You’ve already heard me talk about our capabilities, and you will hear much more about these capabilities this morning morning. When I came into Woodside a year ear ago I was as str struck ck b by the level of capability we had across our business. We have a real competitive edge here and we intend to use it. We also want to grow our portfolio. That does not mean we have a strategy of simply growing our business, although that could be the outcome. Initially we want to consider a broader portfolio of opportunities which might support our mission to deliver superior shareholder returns. We will be disciplined in choosing those to pursue, and those not to pursue. pursue


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We have already begun putting some elements of our strategy to work. As you all know, we have conducted an extensive review of our organisational effectiveness, parts of which we have already acted on. We’ve created some synergies in the operations side of our business and built up our M&A capability to examine opportunities within and outside Australia. That team did great work in generating early value from our Browse development through the $2 billion equity deal with MIMI. This deal had a number of exciting elements, including purchase agreement g for LNG from the Browse development. p the sales and p But one element which especially excites me is the agreement on potential collaboration with Mitsui and Mitsubishi on global opportunities. These are the partnerships I am especially keen on, and through which we will seek to deliver superior shareholder returns.


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Before I had over to Greg I wanted to spend a moment celebrating our achievements at Pluto. Amidst all the activity in the Australian LNG sector at the moment, I think we have lost sight of the significance of this project and the size of its impact on Woodside. Producing LNG just seven years from the discovery of the field is an incredible effort, and when I talk about Woodside being a global leader in upstream oil and gas, this is a shining example. Furthermore, Pluto remains a robust and profitable project. We are extremely happy with it. The great risk with ith these enormo enormouss capital projects is al always a s the e execution ec tion cost cost. I want ant to remind you that this risk is fully quantified and behind us. Construction of the train is complete. We’ve done it. We’re producing LNG and we’re producing it in line with the expectations we have already shared with you. To get to this stage is a great accomplishment. We now have the confidence to secure a fourth ship for Pluto, and that vessel will be entering our fleet next year. Having reached this stage, we can turn our attention to securing further upside. Expanding Pluto through equity gas, other resource owner gas, or a combination of the two remains something we continue to actively work towards. Thank you for your time this morning. I’d now like to hand over to Greg, who joined Woodside last year after more than ten years with financial institutions including AMP Capital Investors and Macquarie Equities. In addition to his extensive financial and infrastructure experience, Greg has also held senior management roles with a number of oil and d gas companies. i


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Thank you Peter.


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As Peter mentioned, this is the value growth strategy we have in place to fulfil our mission to deliver superior shareholder returns. Extensive work has been undertaken over the past few months to ensure we have a well thought through and focused strategy which continues to commercialise our core assets and leverages our strengths to be a world-class upstream oil and gas company – building on and adding to our world-class asset base. This chart illustrates the three themes in Woodside’s value growth strategy, shown here as progressive “tiers” of value over time. In brief, the three themes are: • Maximising Woodside’s core business; • Leveraging Woodside’s proven capabilities; and • Growing Woodside’s portfolio through exploration. Even though these themes are shown here for illustration as sequential, we are, of course, working ki each h stream t simultaneously. i lt l Wh Whatt we are ill illustrating t ti iis th the conceptt th thatt maximising our currently producing core assets will deliver near-term growth, leveraging our capabilities – and growing these – will deliver value in the near to medium term, and exploration will deliver long-term value growth opportunities. But before I speak in more detail about each of these themes, it is important to spend a moment looking again at our own capabilities through which we will implement this gy as well as defining g those areas in which we need to deliver at world best p practice strategy, standards.


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Peter showed 12 core capabilities, which are fundamental to our strategic growth. We b li believe th thatt th the distinctive di ti ti capabilities biliti which hi h W Woodside d id h has tto offer ff can add dd value l tto our current and future partnerships. In particular, I would highlight our excellent track record in safe and reliable LNG plant operations, deepwater drilling capability, high reliability FPSO operations, our excellent customer relations in Asia and strength in geosciences as key capabilities that we can bring to our partners. Members of our leadership p team will refer to these strengths g in their p presentations today. y In addition to these distinct capabilities, we recognise that Woodside needs to perform at a world best practice level in: • Safety, integrity and reliability of producing assets; • Execution of project delivery, including drilling and subsea engineering; and • People and organisation – effective decision making linked to responsibility, authority and accountability.


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I want to introduce a further related concept p of adjacencies. j When we look at successful companies and we consider capabilities, we can utilise what we refer to in-house as a spider-diagram. This diagram is just one example of the work we have done in this area. It shows the elements we need to be cognisant of and expert in the technical arena – such as the physical environment, the geology and so on. Now, we use this adjacency diagram in two ways. Firstly, we look at our distinctive capabilities and determine whether a new opportunity or project falls within our core expertise so that we can leverage what we are good at, or whether we really need to grow that area of capability. Secondly, we think about risks in stepping outside of our core capability field – the chances of success are enhanced if we only take one step along a particular leg (of the spider) – taking several steps away from the core capability areas along multiple legs has an g and mitigate g these. increased risk – and we need to think about how we will manage


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I would now like to step through each of the three strategic themes Peter raised and I referred to on my first slide. We will maximise our core business by: Maximising the value of our producing assets and flawlessly executing brownfield growth projects related to the existing core business. Optimise our equity position, field extension and near field exploration and tiebacks. Examples of this include: • North Rankin Redevelopment – 5 Tcf of previously undeveloped low pressure gas; • Greater Western Flank Phase 1 – commercialise exploration success; • Cimatti and Laverda oil developments; and • NWS LNG train refurbishment to maintain reliability. Commercialising our existing undeveloped resources such as Browse and Sunrise. • A clear example is the commercialisation of 14.7% of the Browse project for $2 billion. Capture other resource owner gas as an enhancement to existing business. • An A example l iis options ti ffor Pl Pluto t expansion. i


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I have spoken about our proven capabilities in Woodside – now I want to expand on how we will leverage and develop these capabilities, particularly in three areas: Technology – expand on technological capability to include a broader range of upstream development solutions (these are discussed in detail in a later presentation by Feisal Ahmed). Resource development and commercialisation led opportunities – looking at discovered/undeveloped oil and gas (LNG) opportunity capture – both conventional and non-conventional. Customer, market and product led activities – connect gas/products with market opportunities through infrastructure (LNG plants, regas, shipping, chemicals). Taken together, we believe proactively leveraging and building on our existing capabilities will deliver a broader opportunity set than we have seen in the past.


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Finally, growing our portfolio through exploration. Peter Moore we will cover this in detail later, I just want to provide you the headline strategic objectives here. Woodside aims to grow its exploration portfolio. This work is to be underpinned by global play studies to identify emerging basin plays as well as positioning Woodside to pursue plays associated with discovered undeveloped resources. Woodside has international experience and has brought that experience forward to guide future opportunity analysis and venture execution. We have learned from the past and know how to apply pp y the lessons to future ventures. Woodside aims to deliver a balanced portfolio – balanced globally and balanced in terms of hydrocarbon type (essentially liquids versus gas). It is important to note that the key driver of decisions in this arena of new opportunities to add to the portfolio is value – the value of the molecules to be captured – rather than the geographic location (country) or the type of hydrocarbon. The ultimate aim of growth through exploration is to establish new “core areas” – by pursuing opportunities which play to our strengths and which ultimately offer the potential to grow shareholder value through developing frontier and emerging play opportunities into mature core producing areas for Woodside. An example in our participation in the recent Cyprus offshore bid. A final note on our strategy is that as we execute on this element of portfolio growth, just as we recognise our own capabilities, we acknowledge that well chosen partners, especially those with local knowledge as we look globally, can add value to the joint venture/partnership equation. equation And now I would like to hand over to Lawrie Tremaine, our Chief Financial Officer.


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Thanks Greg and good morning everyone. This morning I will discuss; • Our capital management over the period of the Pluto development; • Our recent financial performance; and • Our positioning for the next phase of growth.


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I will start by reflecting on our capital management track record. Over the past five years, Woodside successfully f d d 90% off the funded th A$15 billion billi Pluto Pl t project, j t with ith much h off this thi achieved hi d att the th height h i ht off the th global l b l financial fi i l crisis. In the five years from 2007 to 2011 we have: •

Issued $2.4 billion in corporate bonds;

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Raised over $4 billion in bank debt;

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We also raised some A$6 billion in equity via an accelerated rights issue and also via the Dividend Reinvestment Plan; and

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Most importantly importantly, we generated cash from operations of $11 $11.1 1 billion over the same period period.

Our success was due in part to the continued support of the financial markets. We have worked hard to improve the financial markets understanding of Woodside and the LNG market in Asia. This has resulted in continued support for Woodside bond issuance, culminating in our ten year bond issuance in May 2011 at a credit margin of 135 basis points. We have built strong relationships with our banking group. The highlight of which was the $1.1 billion Asia syndicated loan. We have also been successful in securing funding from the Japan Bank of International Cooperation. This was the cornerstone of the Pluto funding program. We have maintained our cost of debt down currently at around 3.3%, on a portfolio basis. We have maintained a strong investment grade credit rating. Two weeks ago, Moody’s reinstated our Baa1 rating with a stable outlook. This means we have completed the Pluto development at the same Moody’s rating as we started. Furthermore, we have demonstrated capital management discipline through the Pluto development period: •

We have conserved capital by eliminating non-critical expenditures.

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We have divested a number of non-core assets including Mauritania and the Otway gas plant.

These actions have enabled us to maintain a book gearing of around 30%. Unlike many other companies, facing a step change in growth, Woodside has grown dividends over this period. Thi reflects This fl t the th B Boards d bi bias ttowards d di dividends id d and d our desire d i to t maximise i i th the di distribution t ib ti off ffranking ki credits dit tto shareholders, within the constraints of our capital commitments. This is a track record we have worked hard to achieve and one we are very proud of.


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Woodside ends the Pluto development phase in a strong funding position. Our remaining Pluto commitments as well as our Browse commitments through to final investment decision are fully funded. As at 30 April 2012 we have $1.8 billion in cash and undrawn debt facilities. The chart shows that approximately $800 million in debt will mature over the balance of 2012. $570 million of this maturing debt does not need to be refinanced. This leaves $250 million of debt to be refinanced, mainly with our core banking group. We expect this refinancing to be in place before the end of the third quarter quarter. The receipt of the Browse equity sale proceeds, expected late in the third quarter of this year, will further strengthen our already robust liquidity position.


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We have had a good start to the year across our business, particularly with respect to cash generation The continuing strong oil prices through 2011 and 2012 have been a major contributing generation. factor. We started the year in a stronger cash position than expected and this has been maintained into 2012. The table on the top right shows our 2012 year to date realised prices for both oil and LNG has far exceeded prices achieved in the same period last year. The realised sales price for oil reflects the strong premiums we continue to receive for our heavy greater Enfield area crudes. This is due to the strong regional demand for diesel. Our Enfield asset produces what is currently one of the highest priced crudes in the world. We have regularly achieved premiums $9 to $10 per barrel over Dated Brent. The negative production impacts from cyclone activity and also from shutdowns and constraints associated with the North Rankin Redevelopment project are now largely behind us for 2012. We are also seeing improved production from the Vincent and Okha facilities. Production at Vincent is currently averaging 36,000 barrels per day for the quarter to date, following the commissioning of the latest infill well. The recent production rate has been closer to 50,000 barrels per day. Gas compression has been commissioned on the Okha facility resulting in an increased production rate from 19,000 barrels per day in quarter 1 to 28,000 barrels per day in quarter 2. Perhaps the best news this morning is the fact that the ramp up of production at Pluto has been going very well well. We have achieved an overall system utilisation of 65% so far in May against an expectation of 20%. In the past week the train has been operating reliably at 95% of design capacity. This is great news, but I caution that it is still very early days in the ramp up at Pluto. This positive production news helps to offset the interrupted start to the year and enables us to reconfirm that we remain within production guidance for the full year. Pluto will provide a significant step up in operating cash flows. The bar chart on this slide seeks to demonstrate the magnitude of the impact of Pluto. The red bars show our historic cash from operations. The grey bar shows the incremental cash flow that Pluto may generate in a typical year following the first price review review, assuming full production and a $100 per barrel oil price price. This is indicative only, please don’t add the Pluto increment to the 2011 cash from operations and assume this is the specific forecast for any given year. The message is; the positive cash flow impact from Pluto is expected to be significant.


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Now I am aware that a number of investors and analysts are looking for more guidance on Pluto to assist with modelling. We have captured some of this information on this slide and Reinhardt Matisons will provide further insights in his sales and marketing workshop session. The final expected cost for the Pluto project, excluding cargo mitigation costs, is close to A$15 billion. The main shut-down for the Pluto liquefaction train will occur every two years and is expected to last in the order of 20 to 25 days. In the alternate year, a smaller shut-down shut down in the order of two to five days is planned. We expect depreciation in the early years of $17 to $18 per barrel of oil equivalent, increasing to $18 to $19 following the addition of compression. Lifting costs are expected to be around $6 per barrel of oil equivalent, decreasing to $5, on a real basis, following a period of stabilisation. We are currently estimating the cargo mitigation costs at $322 million. Of this amount, $282 million was already recognised in the income statement in 2011 with a further $40 million to be recognised in 2012. The final mitigation cost will depend on the ramp up performance over the balance of the year. Please also note that with the start up of Pluto, we will now be expensing most of our interest costs. We expect pre-tax interest expense to be in the order of $125 million in 2012.


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I have already made the case for the first four points on this slide: •

Woodside has reached the end of the Pluto project with a strong balance sheet;

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We have benefited from good operating performance and a sustained period of high oil prices;

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We have developed relationships and established our brand in the US and Asia bank and bond markets, giving us good reason to believe we will be well supported in the future; and

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With the start up of Pluto, a significant step up in cash from operations is imminent.

Woodside is now well positioned for the next phase of growth. We recognise that investment discipline is essential as we execute upon this growth potential. Part of this discipline is keeping our mission at the forefront of our minds; the delivery of superior shareholder returns. Another aspect of this discipline is having real investment choices. With limited choices a company may be forced to progress the projects it has, rather than select from a range of investment alternatives. For this reason, Woodside is looking to expand our opportunities through exploration and leveraging our relationships and capabilities into new projects in Australia and beyond. Having said this, developing our significant discovered, undeveloped resources, particularly at Browse and Sunrise, and further leveraging our infrastructure at Pluto, remains our priority. These are world class resources. The recent sell down of Browse equity demonstrates the market value of this resource. Finally, while we remain committed to our growth aspirations, to the extent that growth is delayed, or our investment criteria is not met, we will be in a position to return cash generated by the business to shareholders. It is now my pleasure to hand you over to Vince Santostefano, Woodside’s recently appointed Chief Operations Officer. Vince is responsible for our Australian operating businesses, the North West Shelf, the Australia oil business and Pluto, as well as the Production Division.


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Thanks Lawrie, and good morning to everyone. I’ll provide you with brief overview of our operating capabilities and mention how we are setting ourselves up for the future.


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Woodside’s operating capabilities are among the best in the world, and we are quite unique for a company our size. i Th The picture i t h here shows h th the di diversity it off our operations ti and dd demonstrates t t our capability bilit to t consistently i t tl expand our portfolio over time – that is a key capability in itself. This momentum will continue with the start-up of North Rankin B platform. Right now we have around 1800 operational staff and it is this team that we have progressively grown to match the portfolio expansion. We have become good at this. In the top left corner we show where our operations began in 1984 with domestic gas production from the Karratha Gas Plant. Since that time we have steadily increased our capability and expertise in upstream oil and gas production and that capability is significant for example the NWS contributed 40% of Australia’s total oil and gas production in 2011 and our assets there are world class class. Angel is the largest and most complex not notnormally manned gas processing platform in the world capable of producing in excess of 800 mmscfd. This is the envy of many larger operators. North Rankin A is the second largest capacity fixed natural gas production facility in the world, second only to Statoil’s Troll A platform. These are great physical assets but importantly over this time, we have also grown our technical expertise such that we no longer depend on external secondees and expertise. We used to have about 200 secondees in our organisation – now we have none. Its all Woodside. Most recently that has meant that all technical support for the start up of Pluto was sourced internally. As Peter mentioned we operate four FPSOs and we have interests in two others, placing us in the top ten operators of FPSOs in the world. In our FPSO operations we have successfully implemented a minimum manning philosophy reducing the number of personnel on our facilities by half relative to others. We are the only operator to do this. Our area of operations also contains some of the most environmentally diverse and sensitive areas in the world, and we are proud to say that we have not had any significant impact on these from our producing operations. This is even more significant when you consider that these areas are also a cyclone corridor - experiencing some of the harshest weather conditions in the world. But there is more - all of this has been achieved without a day lost to industrial relations in operations in over 20 years. So we manage unique assets in unique ways and manage the people issues as well with excellence.


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We have a proven track record of strong operational performance. The chart here shows our reliability performance for our LNG trains – of late this has increased from below peer average in 2009 to significantly above in 2011 placing us third amongst our peers for reliable performance. This increase in reliability equates to approximately ten days of production that we otherwise would miss out on; we have used this knowledge to great effect in the start up of Pluto as mentioned earlier by Lawrie. Now, this strong performance has allowed us to shift our focus to work more proactively on Now reducing or eliminating known vulnerabilities. Good operational performance has allowed us to actively pursue step changes in process safety. Our overall health and safety performance improved significantly in 2011. The frequency of safety incidents, as measured by total recordable case frequency has declined to 4.78 compared to 5.98 in 2010. We have implemented a class-leading permit to work system, which has been adopted by several other resources companies in Australia. It is being used as the foundation for developing an Australian Permit to Work Standard through the National Permit to Work Committee. We are leading the industry in this important area of process safety. To stay at the front of the pack we drive continuous improvement initiatives across several key focus areas – gp process safety. y including We publish these initiatives in an annual activity plan – a copy of which I have here – and this is our very visible commitment to continuous improvement.


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The performance I have outlined thus far is what has been achieved in the Production Division, which I headed up until being appointed as COO. In the COO organisation we intend that we will achieve additional performance improvements across the business units. This chart shows our unit lifting cost performance for the NWS gas assets - In a time of high cost pressures we have managed to keep this flat and I expect we will be able to continue this trend as we extract synergies across the different ventures we manage. S Some small, ll but b t albeit lb it important i t t synergies i that th t have h already l d been b achieved hi d include: i l d • An integrated tug fleet, manoeuvring over 270 LNG tankers each year; • Common state-of-the-art laboratory facilities – shared between Pluto and the NWS; • An integrated fleet of supply and standby vessels for our offshore assets – this has saved about $10 million or 15% of the total annual budget spend in this area; and • Common operating standards, procedures, and operator training. We will work on our venture relationships to present Woodside as ‘one face’ and look to identify and deliver mutually beneficial arrangements to the different ventures. This will be in respect to infrastructure, management, resource usage and development opportunities.


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We invest heavily in our people through bespoke training and development. We don’t leave thi to this t others th as this thi is i important i t t to t us in i building b ildi our unique i capability. bilit To populate our growth plans we must recruit the best, but everyone will claim to do that. We focus on development and training in our own way. This is especially important for operations personnel. By doing this we not only get very technically competent operations personnel - we also build a strong brand loyalty and we are seen as an employer of choice. Our operations staff turnover is one third of the resource industry average (5.6% vs. 17%). A recent graduate recruitment drive had over 2000 applicants for roughly 50 positions. We had a similar response for operator positions for the Vincent FPSO. Our programs include: • A three-year graduate development program; • Indigenous pathways program; and • An operator trainee and apprenticeship program. Participants in these programs gain broad exposure to all aspects of our business to equip them with the knowledge and skills they need to be a Woodsider. This is important to us. Since 2007 we have trained nearly 500 operator trainees and apprentices. And we will recruit around 50 university graduates for 2013. Our Training Academy is a dedicated training facility for new blue collar employees and it is fully staffed by experienced Woodside employees – it is not outsourced. We aspire to have 80% of our intake of operators and technicians to have graduated from the Woodside Training Academy by 2015. This contrasts to our previous history where we employed experienced hires from external sources – we believe our Training Academy to be a key competitive advantage.


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In summary: We have deep operating experience across a diverse range of upstream oil and gas operations. Our operating capabilities are among the best in the world. Consolidation of our business unit structure under me, will bring synergies to our operations across ventures. Woodside offers a highly g y attractive employee p y p proposition p through g our focus on bespoke p training and development. I will now hand over to Robert Edwardes who is the newest member of our leadership team. Thanks Robert.


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Thanks Vince ... which reminds me that we both go back to much earlier days in our careers working together in Bass Strait for Esso Australia. Whilst Vince has been with Woodside for 15 years, I can only claim three weeks. If you have had a chance to read my bio you will see that whilst I am new to Woodside I bring with me over 35 years of industry experience. My first 25 years involved a wide variety of roles with ExxonMobil. In my last five years there I led the successful execution of the Kizomba oil development offshore Angola, first as Development Manager, Manager then as Project Director Director. At the time this was ExxonMobil’s ExxonMobil s largest project ever. It involved a complex combination of a 36 well TLP producing to a 250,000 barrels per day FPSO in 1,300 metres of water. Sanctioned at $3.6 billion in 1999 it was ultimately delivered within budget and within a planned record breaking 36 month schedule from award of contracts to first oil. This was a highly acclaimed project and established standards that are still recognised today as best practise. In 2002 I “retired” from ExxonMobil and took up a new career on the contractor side with Worley initially to help them become a serious player in the floating production industry industry. I then moved on to lead the development of WorleyParsons project delivery capability over a period of four years after the Parsons acquisition. My most recent assignment with them was based in Houston where I was responsible for their operations in the USA and Latin America, where coincidentally ExxonMobil was my largest customer as we worked together to deliver several very large offshore arctic projects.


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As I mentioned, I have just completed my first three weeks with Woodside and from what I have seen I am impressed by the quality of the planning and execution taking place across the company. Why did I choose to take a job with Woodside? I have been watching this company for several years and have been impressed by its accomplishments and its opportunity pipeline. Looking from the inside, I have been particularly impressed by the thorough and disciplined planning approach for the next phase of the North West Shelf and Browse. I will talk more about Pluto and the North Rankin Redevelopment, p , but first acknowledge g the Okha FPSO commissioned last year and the Greater Western Flank Phase 1 project moving into execution. Each are mega-projects in their own right. Woodside has a comprehensive development portfolio including the Laverda and Cimatti oil developments. You will hear separately about Browse from Michael, but I wanted to mention Laverda specifically – it’s a very exciting deepwater development. Greater Laverda has potential for over 100 million barrels of oil. Development planning is underway and we’re pushing very hard towards a commercial solution. It is clear to me that Woodside successfully delivers complex, world scale projects with cutting edge technologies. In a world where all players including the majors are constrained by limited access to labour, yards and other resources, my view is that Woodside’s performance is equal to the best of them. Today I’m going to talk about Pluto and the North Rankin Redevelopment as recent examples of these successes. These projects are both recognised across the industry as extraordinary accomplishments. accomplishments


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North Rankin B is an offshore compression platform that delivers an additional 5 Tcf of low pressure gas resources from the Rankin and Perseus fields. In March 2008 the final investment decision was taken for a total investment of approximately A$5 billion and expected start up in 2013. The North Rankin B fixed jacket was installed in November 2011. The jacket is designed to support topsides which were constructed over three years by Hyundai Heavy Industries in Ulsan, South Korea. On 28 February Febr ar we e installed ttwo o 100 metre steel bridges bridges. The installation occ occurred rred flawlessly overnight. The bridges were constructed by PT McDermott in Batam, Indonesia and combined, weigh approximately 1,300 metric tonnes. The video I’m about to show you has some impressive footage. At over 24,000 tonnes, the North Rankin B topsides set an installation world record, both for height and weight in open water. The achievements on the project have been widely acknowledged as world-class. The project is travelling very well and is currently in the hook up and commissioning phase.


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Float-over is a very efficient method for large topsides installation. One significant advantage is that heavy topsides can be brought direct from a fabrication yard then placed onto a jacket in a single operation, allowing most of the commissioning work to be performed beforehand at lower cost. What you see here is the Hereema H-851 barge getting ready to place the topsides over the jacket. At this stage the barge had run all of its eight anchors. It is being held in place by mooring wires. Mooring is crucial because it ensures we retain absolute control over the operation. These operations are supported by teams of surveyors and technicians who ensure we don’t d ’t d damage any off th the subsea b iinfrastructure. f t t The barge slowly winches itself horizontally into position. Once in place the sea-fastening is removed, the barge ballast compartments are carefully filled with water and the topsides are slowly lowered into place. It’s a major accomplishment and you can see the smiles on the project manager’s faces. When finished, the barge is winched away and retrieves its anchors. The whole operation took just over six hours to complete. And we continued simultaneous production at NRA! Hook up and commissioning is expected to take around 12 months with start up on schedule for 2013.


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Pluto LNG is a standalone deep water gas field development feeding a new LNG plant onshore adjacent to the Karratha Gas Plant. Gas is produced via five subsea big bore wells each completed with 7” expandable sand screens. Pluto’s reservoir is very productive and the wells are designed for reliability. The wells are connected to a riser platform via 27 kilometres of dual 20” pipelines. From the riser platform, a single 36” 180 kilometre trunkline then transports the gas to shore. On shore we have installed an initial 4.3 million tonnes per annum LNG train and associated onshore infrastructure and utilities utilities. We have completed hook up and commissioning and are currently producing LNG. The third cargo is being loaded out at this time. This achievement is a major step-out for Woodside and places it as a premium LNG developer in its own right.


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This video doesn’t do justice to the project’s scale. I’m pleased that most of you will have an opportunity to visit the Pluto site to see the scale in person. Pluto LNG plant construction commenced in 2007, first with the civil and earthworks. The site was levelled in preparation for the modules. The LNG tanks were installed prior to modules arriving. Pluto is an early modular train design, very similar to NWS LNG train five. Modules were fabricated in Thailand and started arriving at site in 2008. Pluto’s Pl to’s five fi e big bore wells ells are connected to the riser platform which hich ho houses ses limited processing facilities. Late 2009 we launched the platform. As you can see from the video, each of these milestones were major achievements in their own right. With the jacket installed, we lifted the platform topsides in place with three successive lifts. Unlike NR2, the Pluto topsides were sufficiently light that lifting was the most effective construction method. The LNG plant underwent final commissioning in January and February of this year. The video finishes with our first cargo sailing on 12 May. It is the culmination of five years of project execution, seven years since discovery and the fastest discovery to production LNG project ever constructed. This set us up well for riding the wave of the commodities boom.


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Woodside has undoubtedly demonstrated its ability to deliver multiple complex mega projects. ts cost and schedule performance is up there with the strongest of the majors, including ExxonMobil, BP and Chevron. On this slide I have highlighted the unique and valuable capabilities I have been impressed with already. Woodside has a proven track record in project execution, engineering and a range of cutting edge technologies that sets it apart from its peers. My remit as EVP Development is to combine and strengthen the Development and Project organisations. g We will be strengthening g g the bench with more world-class p project j managers g and functional leaders. We will also continue to leverage from technology opportunities to reduce our costs. My ExxonMobil and WorleyParsons experience includes considerable work with systems, processes and delivery programs. My aim is to build an organisation that can continue to deliver disciplined and consistent outcomes across multiple simultaneous mega projects as we continue to grow into the future. I would now like to hand over to Peter Moore Moore, our Executive Vice President of Exploration Exploration. Thank you for your time.


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Thank you Robert, and good morning.


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Woodside has a strong and proven history of growing through exploration, and exploration will remain a key competency and area of focus for the company. Consistent with the messages that Peter and Greg have already delivered around strategy, it is our intention to expand our efforts in the years ahead, in order to provide a greater diversity and broader balance of opportunities. Currently Woodside holds exploration permits in five countries, with its main focus being Australia. We have recently reviewed our exploration strategy and have decided to expand our efforts, with the aim of maintaining a premium exploration portfolio in Australia, while growing i our iinternational t ti lb business. i W We are d doing i thi this tto ensure th thatt we h have a b balanced l d portfolio of oil and gas opportunities, spread across a number of mature, emerging and frontier provinces. To help achieve these objectives, we will build on our existing capabilities and enhance our relationships with others, so as to become a partner of choice. Our strong seismic and geoscience capabilities, combined with our deepwater, LNG and FPSO experience form a good platform on which to build.


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In Australia, we are the dominant offshore exploration operator, holding 35 permits (34 operated), covering an area of over 115,000 square kilometres. In 2011, we drilled nine wells, all offshore Western Australia, and made six discoveries, four of which are expected to be commercial. The four comprise two gas discoveries in our North West Shelf acreage (Tidepole East-1 and Seraph-1); one gas discovery in the Central Pluto hub (Martin-1); and one oil discovery in the Greater Enfield area (Opel-1). Also in 2011, Woodside moved to expand its acreage position offshore Western Australia byy bidding g for,, and being g offered,, nine new permits p shown here in dark blue,, and covering ga very large area of over 45,000 square kilometres. We are very pleased with our 100% success rate of bidding in the 2011 gazettal rounds. Starting with the map on the left, two small permits were acquired to protect core acreage around the Exmouth oil province, in the vicinity of Opel and Laverda. Four permits, east of Seraph in the Beagle sub-basin, were acquired at 100% equity. In these blocks we will be pursuing both oil and gas, in shallow to moderate water depths. In the map on the right, you can see the three very large Outer Canning permits that we acquired in order to explore more frontier acreage that lies between the Browse and Carnarvon Basins. The intention here is to build on past encouragement and open up this vast, under-explored region. In the next slide, I’ll show you a seismic line across one of these blocks.


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The three large Outer Canning permits contain prospect sizes in the range of 200 Bcf to 12 Tcf. The permits are held in a joint venture with Shell, where Woodside is the operator and holds a 55% equity position. In this area we are currently mobilising to acquire over 11,000 square kilometres of 3D seismic data. This will be the largest single seismic survey ever conducted by Woodside, and also the largest acquired in Western Australia, in preparation for our eight well drilling programme expected to start in late 2013.


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We have also had success with our appraisal activities recently, with drilling around our Laverda discovery in the Exmouth Sub-basin. Last year, we made an oil and gas discovery in the Opel-1 exploration well, to the west of Laverda. We also drilled three successful appraisal wells in the Laverda field, at Laverda East-1, Laverda North-1, and Laverda North-2. In the Laverda North appraisal wells, we intersected a gross interval of 18 metres of oil bearing sands in a new zone. This year, Norton-1 was successful in extending the Laverda North pool, intersected oil and gas as predicted pre-drill pre drill. Preliminary interpretation of these results further underpins our belief that a recoverable resource of greater than 100 MMboe (100% project) exists at Laverda. The size and scale of the Laverda field will be a key factor in identifying Woodside’s preferred development option. Development options being assessed include a standalone floating facility, or a subsea tieback to existing infrastructure. Activities in 2012 will focus on field development, p engineering g g and environmental studies to underpin concept selection in 2013.


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Woodside’s ongoing history of growth through exploration has been made possible by the technical excellence of our staff. We have a proven track record of safely introducing new technology in Australia that has given us a competitive edge. We acquired the first multiazimuth survey in Australia at the Tidepole field, which helped unlock the Tidepole East-1 discovery last year. We designed and operated Australia’s first dedicated 4D seismic survey at Enfield in 2007 and have subsequently acquired, processed and interpreted seven 4D monitor surveys in Australia and Mauritania. We will have a look at the Enfield 4D in the Sphere projection room later l t in i th the morning. i Our ability to operate safely in challenging environments was proven again with the successful acquisition of the complex Tridacna Ocean Bottom Cable survey in the Browse Basin in 2011. These examples of technology leadership stretch right back to the acquisition and processing of one of the first 3D seismic surveys in Australia, conducted by Woodside over the North Rankin field in 1981.


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Our leadership is not limited to geophysical technology. Recently Woodside has achieved a number of firsts in its exploration in Australia. In the Carnarvon Basin, for example, these achievements include: •

Extending the proven gas province to the north and west, with our gas discoveries at Martell-1, Alaric-1 and Cadwallon-1;

•

Significantly developing the Intra-Triassic play, with multiple discoveries in WA404-P and WA-434-P, plus drilling one of the thickest Triassic sequences encountered,, at Dalia South-1;; and

•

Drilling the deepest water depth wells in Australia at Alaric-1 (1960 metres) and Cadwallon-1 (2005 metres).

All of this was done in a safe manner, with up to three deepwater rigs active on exploration prospects at once, which illustrates the depth and operating capabilities of Woodside.


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Internationally, our current exploration assets comprises 97 lease blocks in the deepwater Gulf of Mexico, a large onshore permit in Peru with oil potential, two deepwater permits in Korea, and nine acreage blocks in the Canaries. It is pleasing to see exploration activities resume in the Gulf of Mexico post Macondo and to see the Spanish government have taken steps to free up our Canaries blocks. While these current permits provide growth opportunities for Woodside, we can do more, firstly by expanding the range of opportunities that we look at. Our p plan over the next few yyears is to evaluate the p prospective p basin areas within reach of our Asian LNG customers, while maintaining a premium portfolio in Australia. We will also evaluate the onshore potential of Australia, including for unconventionals. Globally, we will build our knowledge of the main prospective areas that are accessible and that fit with our core competencies, especially in shelfal and deepwater clastic basins. The first evidence of our progress here is the submission of bids on the emerging gas province in the Eastern Mediterranean.


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We have also reviewed our exploration strategy in line with the overall corporate review of strategy – as discussed earlier by Peter and Greg – and have decided to expand our efforts to be more in line with our mid-cap competitors and peer group. As such, we plan to significantly increase our average exploration spend over the next two to three years, of course subject to identifying and capturing high value opportunities. Our aim is to maintain a premier exploration portfolio in Australia, while growing our international business.


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In recent times, our exploration spending has focused on supporting our existing business units with an emphasis on mature basin exploration, as shown in the pie chart on the left. Moving forward, as shown by the pie chart on the right, we plan to broaden our approach to include a better balance of oil and gas opportunities, spread across a number of mature, emerging and frontier provinces. The middle chart shows a short-term increase in frontier spending due to drilling in the Outer Canning acreage in Australia, as discussed earlier. Let me emphasise that it is not about specific countries or basin types, but about creating value, l and d we will ill go tto countries t i where h can achieve hi thi this while hil lleveraging i our core capabilities.


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Looking forward, we expect 2012 to be another busy year, as we mature our existing portfolio and pursue new opportunities, both within Australia and globally. In 2012 in Australia, we have drilled two exploration wells and one appraisal well resulting in a gas discovery at Ragnar-1A, an oil and gas discovery at Norton-1 and a dry hole at Vucko-1. The Jujak-1 well in the Republic of Korea has been plugged and abandoned. Ragnar-1A, north of Enfield, intersected a large (190 metres) gross gas column. We intend to follow up on this discovery by reprocessing the 3D seismic data and then drilling a second well on a new p prospect p in 2013. In conclusion, Woodside has a long and proud history of successful exploration, especially in Australia. We operate at the forefront of technology, particularly in deepwater environments. We intend to expand our exploration efforts over the next few years. Our aim to be a top quartile exploration performer in terms of value creation, with a global presence; while still maintaining an enviable portfolio in Australia. Thank you for your time this morning. I’d now like to hand back to Peter for the question and answer session. session


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Thanks Peter, good morning everyone. We have put a lot of information in front of you this morning, but I trust that you have picked up on the key themes running through the presentations: First, our unrelenting focus on delivering superior shareholder returns. Second, the depth of our capabilities. Third, our proven ability to develop and operate world-class projects. Fourth, our clear, Fourth clear disciplined strategy to build value by maximising our core business business, leveraging our capabilities and relationships, and growing our portfolio. And finally, our strong financial position. These elements are aligned in a way that leaves us very well placed to build shareholder value into the future.


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So let me briefly re-cap on each of these themes. First, our unrelenting focus on delivering superior shareholder returns. Peter mentioned before that we recently revised Woodside’s mission down to one simple statement: To deliver superior shareholder returns. That is it. It is the aspiration that drives everything we do. You have seen this philosophy in action already, in the way we conducted the Browse equity sell-down. This process ticks all the boxes for investors - de-risking our exposure while retaining all the benefits of operatorship. And most importantly, realising early value from the premium Browse resource for our shareholders. Second, the depth of our capabilities. We invest a great deal in attaining and improving our capabilities, because we believe it is these world-class capabilities that make us a world-class choice for partners and for investors. In each of the presentations this morning, you have seen demonstration of our strong experience and capabilities across the different aspects of our business – exploration, development, operations, strategy and finance. Deep experience and strong expertise in areas with very high barriers to entry such as deepwater exploration, LNG development and FPSO operations give us an important competitive edge. As Peter said, we are confident that very few Australian E&P companies can match our experience and knowhow in these and other fields. Robert and Vince also demonstrated how we have drawn on these capabilities to develop and operate world-class projects. Look at that list of our operated assets that Vince shared with you earlier – 14 major projects across a period spanning almost 30 years. As explained by Robert, Woodside’s ability to deliver world scale projects using cutting-edge technologies is equal to the best. Our aspiration is to get even better in this area. We will continue to leverage new technologies to reduce our costs. And as Vince pointed out, we will seek every advantage we can from the synergies across our portfolio of facilities, increasing learnings and efficiencies across shared operating systems so that we generate maximum value from our producing assets.


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We know that to investors, capabilities and track record are only part of the story. You want to see a clear, disciplined strategy to deliver shareholder value into the future. Greg outlined each element of this strategy: maximising our core business; leveraging capabilities; and growing our portfolio. As he explained, a guiding principle behind the way we progress these different elements is to hold a balanced portfolio that delivers steady growth in value across time. We will pursue a broader opportunity set that will deliver us a combination of near, medium and long-term growth. To o repeat, epeat, we e will take ta e a disciplined d sc p ed approach app oac to assessing assess g a all tthese ese opt options, o s, focusing ocus g o only y on value-creating opportunities that leverage our core capabilities As Peter Moore explained, our exploration efforts also follow this principle of a balanced portfolio. We aim to hold the best exploration portfolio in Australia while also growing our international business. We will increase our exploration spend significantly over the next three years, across a mixture of mature, emerging and frontier basins. Being a partner of choice, based on our distinctive capabilities, culture and track record, is also a key element of our growth plans plans. Being invited into the promising Eastern Mediterranean gas province was great recognition of our capabilities in exploration and LNG development. We are also very pleased with the MoU that we agreed with MIMI on global opportunities, as part of the Browse equity deal. We have a variety of other global partnering opportunities in front of us. Finally, underpinning our efforts to deliver superior shareholder returns is our strong financial position. As Lawrie explained, our portfolio expansion will be funded by our strong balance sheet sheet, which makes it possible for us to borrow and invest with confidence confidence. The revenue from Pluto LNG, a completed Browse equity deal and other sources won’t burn a hole in our pocket. We will adopt a disciplined approach, and only pursue opportunities that promise additional value for our shareholders.


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In summary, we believe Woodside has a strong foundation from which to deliver superior shareholder returns. And we have a plan to build from this foundation that leverages our capabilities in all the areas of our business that you heard from this morning – exploration, development, operations, strategy and finance. It is therefore not only our track record that sets us apart from our peers. It is also our future, a future that we are very confident will be a rewarding one for our shareholders. Th k you. I now invite Thank i it you allll tto jjoin i us ffor morning i ttea iin th the ffoyer.


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Good morning again and just to remind you, my name is Peter Moore and I am the Executive Vice President of Exploration. This morning we will be showing the direct business impact and value of one of the technology “firsts” that I discussed in the presentation earlier this morning – the acquisition of Australia’s first dedicated 4D seismic survey at Enfield.


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Woodside is a leader in using advanced seismic techniques such as 4D, or what we call “time-lapse seismic.” 4D seismic was planned from early in the field life of Enfield in order to manage reservoir development and production performance. We recognised that production performance at the Enfield oil field relied on the connectivity between water injectors and oil producers in order to maintain good production levels. During the field development planning process, we studied concepts that would allow us to monitor and react to any connectivity issues during production. We predicted that 4D technology would allow us to monitor fluid movements due to water injection and oil production, d ti d despite it no other th company h having i used d th the ttechnology h l iin A Australia. t li We had enough confidence in our technical work to include it as part of the base field management plan, including such changes to the plan as moving the position of the FPSO so that our 4D monitor surveys could be acquired more efficiently and accurately. The results proved that our confidence in our technical abilities was correct. The 4D surveys at Enfield have added significant value to the project, and we accurately predicted the success of the technology.


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Before we talk about some of the decisions that we took as a result of the 4D survey, I’d like to briefly explain the technology. Seismic technology has been a cornerstone of the petroleum industry for over past 50 years. Initial surveys were 2D profiles, generally straight lines, through the earth. They provided valuable information about the location of gross structural features. 3D seismic surveys are an extension of the 2D technique, and work by putting a series of 2D profiles very close together to build up a 3D image of the subsurface. The first 3Ds were shot in the 1980s,, with Woodside acquiring q g Australia’s first 3D in 1981. However the approach did not reach maturity until the mid-1990s, when 3D seismic because the tool of choice for exploration and development. 4D seismic is a further evolution of the 3D seismic technique, where repeated 3D seismic surveys are acquired over the same area to identify changes in the image. It can potentially identify oil production, water sweep, gas coming out of solution in the reservoir and even changes in reservoir pressure.


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A critical component to the success of a 4D survey is the ability to repeat accurately the position of the seismic sources and receivers. There is a direct correlation between the accuracy in repeating the acquisition design and the quality of the 4D image. In order to obtain the highest quality 4D seismic data, Woodside pioneered the use of a seismic acquisition technique for 4D, called “push reverse acquisition”, where the seismic source sits behind the receivers instead of in front. This allows the receiver cables and seismic sources to be steered independently to maximise the accuracy of the repeat positioning. This was an important reason behind how we were able to consistently achieve hi h quality high lit results. lt


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The Enfield oil field was discovered in 1999 and is located in the Exmouth sub-basin, near our Vincent and Laverda discoveries. Woodside has 60% equity in the field, and operates the field on behalf of the joint venture with Mitsui. The field began production in 2006 using the Nganhurra FPSO. The field itself contains both oil and gas in a relatively thin reservoir layer, and the field development plan incorporates water injection to maintain pressure support at the oil production wells. We knew that that connectivity between the producers and injectors was critical to maintaining the planned production rates, however this connectivity is difficult to accurately t l predict di t prior i tto starting t ti production. d ti We chose to make 4D seismic an integral part of the reservoir management plan in order to give us a better understanding of the impact of reservoir stratigraphy and structure on oil production, as we predicted 4D technology would allow us to monitor fluid movements due to water injection and oil production. The baseline seismic survey was acquired in 2004 and the first monitor survey in 2006, after the field had been on production for just over six months. As of today, we have acquired five monitor surveys, all of which have been very successful in improving the production and safety performance of the field. Every survey has improved our knowledge of the field, helped maximise production and reduce costs. Now I will pass over to Noel Guppy, Geophysical Advisor. He will walk you through the field, and show two of the cases where 4D has been integral in the successful continued development of Enfield.


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This is a key result from the first 4D monitor survey. The red colours on the left image represent pressure build-up in the reservoir sands, whereas blue represents pressure depletion. You can see the effects of production around producers: as the oil is produced the pressure in the immediate vicinity of the producing well drops, which is detected by the monitor survey. The large portion of red in the aquifer is showing the effect of water injection, as the water is injected in has increased the reservoir pressure across a large area. Of particular interest here is the pressure response in this fault block, commonly referred to as the th “sliver “ li bl block”. k” P Prior i tto th the 4D 4D, th the reservoir i model d l predicted di t d th thatt th the east-west t t fault f lt would seal and prevent pressure from the water injector from coming into this compartment. As a result, two wells, one producer and one injector, were planned to adequately recover oil from this area. However, the 4D signal shows us that the pressure had actually increased in this area. In the image to the right you can see some water has started to sweep across the fault – it turns out the fault we had modelled as sealing was in fact allowing flow across it. This discovery had two significant implications. implications Most importantly, importantly it predicted a reservoir pressure 800 psi higher than we had modelled earlier. Drilling a producer into an over pressured reservoir zone carries additional risk if the well is not planned correctly. Accurate prediction of this overpressure meant that we changed the well design and were able to more safely and effectively drill the additional producer. The second implication was that the new planned water injector was no longer required, as the 4D showed us that the existing water injectors were already supporting oil production in this block. block


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This is a map p showing g the changes g in fluid saturations, another important p result from the 4D seismic. The blue colours show where water is replacing oil and the red shows gas coming out of solution in the reservoir layer. In this area, production rates from these wells were lower than expected and total recoveries were also anticipated to be lower. You can see from this map that there was a significant amount of gas coming out of solution near the producers, which is often a sign that there is insufficient pressure support coming from the water injectors. The other surprise was that there is a fault, between the producer and injector, which appears to be blocking the support. Because of this survey, the development team decided to put in an additional sidetrack injector on the other side of the sealing fault. This gave the oil producing wells the required pressure support, which results in significantly increased production, increased total recovery, and the increase in production paid for the cost of the additional injection well in just one and a half months after injection started. I’ll now hand back to Peter to wrap up the session for us. For more information on Enfield and our 4D seismic acquisition experiences, you can read the following published articles: Ali, A., Taggart, I., Mee, B., Smith, M., Gerhardt, A. and Bourdon, L. [2008] Integrating 4D seismic data with production related effects at Enfield, North West Shelf, Australia. Paper SPE 116916 presented at the 2008 SPE Asia Pacific Oil and Gas Conference and Exhibition, Perth, Australia, 20-22 October 2008. Hamp, R., Mee, B.C., Duggan, T.J. and Bada, I.A. [2008] Early reservoir management insights from the Enfield oil development, offshore Western Australia. Paper SPE 116915 presented at the 2008 SPE Asia Pacific Oil and Gas Conference and Exhibition, Perth, Australia, 20-22 October 2008. Ridsdill-Smith, T., Flynn, D., and Darling, S. [2008] Benefits of two-boat 4D acquisition – an Australian case study. The Leading Edge, 27, 940-944. Smith, M., Gerhardt, A., Mee, B. and Bourdon, L. [2007] Using 4D seismic data to understand production related changes in Enfield, North West Shelf, Australia. Presented at the 19th annual ASEG conference, Perth , Australia, Extended Abstracts. Thomas, P. and Smith, M. [2010] Value-add and safe drilling from 4D AVO evaluation in the Enfield oil field, North West Shelf, Australia. Presented at the 21st annual ASEG conference, Sydney, Australia, Extended Abstracts. Wulff, A., Wulff A Gerhardt, Gerhardt A A., Ridsdill-Smith Ridsdill-Smith, T T. and Smith Smith, M M., [2008] The role of rock physics for the Enfield 4D seismic monitoring project project, Exploration Geophysics Geophysics, 39, 39 108– 114. Davis, Owen [2011] Improved Reservoir Management Using 4D Seismic at Enfield Oil Development, Western Australia. EAGE Medd, D., Thomas, P., Sibbons, C., Smith, M., and Ali, A. [2010] Integration of 4D Seismic to Add Value: The Enfield ENC01 Sidetrack Story. SPE Asia Pacific Oil & Gas Conference Abstracts. Hamson, G.[2012] Leveraging 4D Seismic and Production Data to Advance the Geological Model of the Enfield Oil Field, Western Australia 2012 AAPG Annual Convention and Exhibition, extended abstracts


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4D seismic technology takes knowledge and experience to ensure it is applied successfully. Woodside only applies this technology wherever we believe it will impact business decisions and add value to the development. There are many factors to consider when using 4D seismic, such as the physics of the rocks, the field development plan and the business environment. To have the ability to acquire 4D seismic is not enough – to create value from this technology you need to understand how to interpret the results and measure information that impacts business decisions. These case studies are just two of numerous examples where the 4D seismic technique h added has dd d value l tto th the Enfield E fi ld development d l t and d th the tteam has h a number b off ffollow ll up wells ll planned based off the most recent surveys. Woodside has proved time and again that we are Australia’s leader in 4D seismic technology and we will carry these learnings onto future projects.


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Welcome everyone, My name is Feisal Ahmed and I will be leading our new Technology organisation which you heard about earlier today. I’m going to share with you some of the technologies we have developed and what our strategy will be going forward.


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In the formative years, Woodside worked with its partners to build its internal oil and gas capabilities. But as time progressed Woodside started to become a leader in its own right. We have developed and implemented several new technologies that have had a significant impact on our projects and operations. More importantly, people often talk of a defining moment within a company. Our successful execution of Pluto is one of them, which has triggered a shift in our thinking. We not only want to leverage our distinctive capabilities to add value, but also plan to build new capabilities p that p push us even further. We have created the Technology organisation to maintain a sharp focus on delivering this growth, not just via our discovered resources but also through resources discovered by others.


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The Technology organisation has two key objectives. The first is to enable business growth through differentiated technologies and the second is to enhance the technical capability across the company. We will pursue business growth opportunities along two key themes, market leadership and cost leadership. Market leadership creates value. Market leaders typically benefit from scale efficiencies and valuable relationships with customers and suppliers. They are sought after partners when new entrants seek to participate in the marketplace marketplace. This is why we have the focus on retaining and improving our world leading capability in LNG and deepwater operations. The second aspect is to continue pursuing cost leadership in construction of new developments and operation of existing assets. How will we do this? We’re going to work closely with established technology providers, especially those who are looking to grow their business. We’re going to develop solutions that differentiate us us. Solutions that work well for our own assets and solutions that create leverage to partner with others. The Technology organisation will not be folks with lab coats. It will bring together experienced engineers, project managers, commercial analysts and supply chain experts. Our focus will be on early adoption and practical application.


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I will discuss a couple of examples of our well construction technologies which we have successfully executed. Woodside has been an industry leader in big bore gas wells since 2000. Normally high rate gas wells produce through 5 ½” tubing and achieve rates of around 100 million standard cubic feet per day. Woodside’s big bore wells can produce up to 400 million standard cubic feet per day through 9 5/8” tubing. That’s four times more production from one well. The photo that you see above is the not normally manned Angel platform, where just three wells can deliver around 1 billion cubic feet per day of gas. My colleagues ll b back k iin the h US consider id this hi to b be a pretty iimpressive i ffeat. The second technology I would like to discuss is multilaterals. Woodside was the first operator in Australia to drill and complete multilateral wells and the first operator in the world to drill large-bore 10 ¾” multilaterals. On Vincent, Woodside’s drilling team positions it’s wells with pin-point accuracy to within a 1 metre vertical tolerance and over distances of up to 2.5 kilometres. Although Vincent contains 31 laterals, only 13 upper completions and 13 subsea trees were required. As a result, Woodside and its joint venture partners saved over $1 billion in capital expenditure expenditure. In addition, our technical teams have really excelled on Vincent, the world’s first subsea development based entirely on a multilateral system. By utilising new reservoir drilling fluids, altering the well design, using new directional drilling technology and new well inflow devices we have achieved a four-fold improvement in well productivity over the three phases of development. About 25,000 barrels per day of additional production can be attributed to these new technologies.


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Now for a couple of examples of subsea technologies that we have deployed. The first is the award winning O-Tube research testing facility. Woodside has many subsea pipelines connecting our wells and platforms to our facilities. During cyclones, these pipelines can move. Sometimes, we need to stabilise our pipelines to ensure that pipe movement doesn’t affect its integrity. To study this phenomenon, Woodside helped fund the O-Tube facility at the University of Western Australia. This is a large scale model that allows us to circulate water to simulate wave and current conditions. It’s like a wind tunnel, but with water, and is the only one of its scale l iin th the world. ld The O-Tube facility allows us to challenge traditional design rules where we can save money while retaining pipeline integrity. The O-Tube facility will help reduce costs by optimising the stabilisation designs for long gas pipelines such as for Browse. The second subsea technology I’d like to discuss is light well intervention, which is a cost effective alternative to intervene and repair subsea wells compared to drilling rigs. Ten years ago, Woodside identified an opportunity to reduce subsea well intervention costs and was instrumental in bringing a light well intervention (LWI) capability to our region. The LWI system we currently use is a 7” system, which has deeper water capability than the 5” LWI system we pioneered. With continuous improvement, the next step is to implement subsea coiled tubing from a LWI vessel to intervene in horizontal wells. These capabilities allow us to intervene in wells at approximately half the cost of a typical drilling rig.


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Now for a taste of some new technologies g we are p pursuing. g Woodside has been a leader in the development of modularised LNG trains through its experience with North West Shelf and Pluto. Woodside was originally drawn towards modular design because of the limited workforce and high cost of Australian construction. The NWS Train 4 was an on-site stick built train, while NWS Train 5 and Pluto were modularised. We now believe that modular construction is fundamentally more attractive in many other aspects as well. This 2.5 million tonne per annum modular train represents the cutting edge of LNG design. Everything has been designed with low cost construction, maintenance and operations in mind. This train is more than 20% cheaper to construct on a per tonne basis than a conventional train. Let’s talk about the degree of modularisation. The 4.3 million tonne per annum Pluto train had 264 units, where roughly a third could be considered core modules, the largest being 2,000 tonnes. This new generation train design has only five modules which are self contained, meaning we can pre-commission the modules before they arrive on site essentially a “plug-and-play” concept. The largest of these is 3,700 tonnes. This substantially b t ti ll reduces d th the construction t ti risks i k and d costs. t It allows ll us tto construct t t LNG facilities f iliti in places with either expensive or unskilled workforces. This design has best in class efficiency as it reduces liquefaction losses and emits less carbon dioxide. Because of its compact footprint, it can be used relatively unaltered for both onshore and near-shore applications, while a similar concept could be considered for offshore applications as well. We are very excited about this modular design and have incorporated a similar concept in Browse.


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So in closing, Woodside is a company that embraces technology and as you have seen, technology will continue to lower our costs and create differentiated capabilities. Consistent with Woodside’s strategy which you heard about earlier today, we will leverage technology to unlock new opportunities and enable our next phase of growth. Thank you for your attention. I’ll be glad to answer any questions.


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Thanks for coming along today. My name is Michael Hession, and I’m the Senior Vice President Browse. I’ll be giving you an outline of where we are at with Browse and the approach we are taking to develop this resource. It will take me about 15 minutes and then there will be an opportunity for some discussion.


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Let me start by saying that Browse is a world-class resource in a world-class basin. This is a major basin with reserves estimated in excess of 34 Tcf, which is expected to grow to in excess of 40 tcf. It’s not just our project – there are others such as Prelude and Ichthys that are in development in the basin. Browse consists of three fields, Brecknock, Calliance and Torosa, located about 425 kilometres north of Broome. Our contingent resource has recently increased 20% to 15.5 Tcf of gas and 417 million barrels of condensate. We p plan to develop p the g gas resource by y installing g Dry y Tree Units ((DTUs)) on each field,, bringing g gg gas and liquids through to a Central Processing Facility (CPF) and then on to a 12 mtpa LNG plant at the Western Australian Government’s Browse LNG Precinct near James Price Point. To date, the Browse Joint Venture has invested $1.24 billion on a work program to progress the James Price Point reference case. James Price Point is the main game for us. The core value of Browse has been demonstrated through the offer for equity sale and LNG agreements from a subsidiary of Japan Australia LNG (MIMI Pty Ltd) (MIMI) on 1 May. This $2 billion offer is a strong endorsement of the value of the Browse LNG Development. MIMI will be taking an estimated 14.7%. Woodside will retain 31.3% plus operatorship As you know the Government recently approved variations to our retention leases. The conditions require us to complete our evaluation of the James Price Point development concept in readiness for an final investment decision in first half 2013. The extension provides us with time to better evaluate FEED outcomes, major tender packages and complete necessary assurance activities.


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I’d like to show you a short video of our development concept. Just let me orientate you here – we start by looking at the north west of Western Australia. Moving out to the Browse Basin which lies about 425 kilometres north of Broome in the Indian Ocean. We have three fields in the Browse Basin: Brecknock, to the south, Calliance and Torosa, which were first discovered in 1971. These fields contain a combined contingent resource of 15.5 trillion cubic feet of recoverable gas and 417 million barrels of condensate. Browse is a greenfields development, which requires the construction and installation of all offshore and onshore production and storage facilities. Our plan is to develop the Brecknock and Calliance fields first, followed by the staged development of Torosa. Dry tree units, supported by tension leg platforms, will be installed in each field, with subsea tiebacks. These deep water platforms will be unmanned and controlled by fibre optic links back to a central control facility. Each platform can support up to 80 people for maintenance. The gas and condensate will be piped between 50 and 140 kilometres from the DTUs to the Central Processing Facility (CPF), in shallower water, approximately 300 kilometres from shore. The CPF is a dual platform design that separates the processing equipment from the accommodation and utilities, for greater safety. From the CPF there will be 350 kilomtres of 42” export pipeline to James Price Point on the north-west coast of Western Australia. The pipeline route will take into account underwater geography, avoiding features on the seabed. What you can see here is the red line marking the WA Government’s proposed Browse LNG Precinct, just south of James Price Point. The 2500 hectare Precinct will be a multi user site, with room for up to three LNG processing proponents. Woodside is the foundation proponent, with a site at the southern end of the Precinct. The location was selected by the State Government after an evaluation of 43 different locations in the Kimberley, Pilbara and Northern Territory. The site was selected on the basis of environmental and technical criteria. Our onshore development includes LNG and condensate processing facilities with an initial production capacity of 12 million tonnes per annum. The project has the potential to expand to process up to 25 million tonnes of LNG per annum. An integrated marine facility will be used as a base for supply vessels and for LNG and condensate loading. During the construction and operations phase, workers will stay at a self contained, purpose-built accommodation village 5 kilometres to the south of the precinct, precinct housing up to 6000 construction workers and about 400 during operations operations. The Precinct is about 60 kilometres north of Broome. Broome is a major town that has key infrastructure including port facilities that can support the early stages of the Browse LNG Development.


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I’ve explained what we want to do, so let me outline how we are developing Browse to create maximum value for Woodside and our partners. We are taking a disciplined approach to drive certainty of cost and schedule. We have a contracting strategy to drive competition, innovation and risk sharing. We will harness Woodside’s capabilities in LNG development to deliver a best in class technical and commercial outcomes.


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During basis of design (BOD) phase, we had 400 people mobilised within Woodside, working with leading contractors to get us ready for front-end engineering and design (FEED). The quality and quantity of the technical work since concept select is recognised by our Joint Venture Partners and contractors as first class. A review of the BOD conducted by megaproject specialists Independent Project Analysis (IPA) found that our work was “consistent with mega projects that had good outcomes”. Moving into FEED, our aim is to achieve a top decile for FEED definition (ie: ranked in top 10% for major projects). We have conducted rigorous reviews of FEED as we have progressed. As an example, the JV review of the CPF FEED concluded that the work we had done was “best in class”. Detailed reservoir analysis has seen us book a 20% increase in the resources base (15.5 Tcf of dry gas / 417 mmbbl of condensate) since FEED entry – this has been independently verified by Miller & Lents. We have spent in excess of $80 million on environmental studies - both onshore and offshore - so we can put in place the right mitigation strategies to ensure we have a minimal impact on the environment. That work forms the backbone of both the Strategic Assessment of the WA Government's proposed LNG Precinct at James Price Point and the Draft Upstream Environmental Impact Statement. We expect that the State Environmental Protection Authority will make a recommendation on the Strategic Assessment report by end of 1H 2012.


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There is no doubt that there are cost pressures for all major developments in Australia. Our focus is to deliver certainty of cost and schedule, while mitigating key commercial risks. So how are we doing this? We have a competitive FEED and tender process. This competition creates commercial tension which we believe will deliver the best outcome in terms of quality, schedule and price. For example, we have KLH and Chiyoda JV in competition to execute the full downstream scope under a single engineering procurement and construction contract. We are maximising the front end loading. Greater definition of the engineering and design has a track record of delivering greater certainty of outcome for cost and schedule (e.g. minimising variation orders). e as a jo jointt venture e tu e have a ea already eady invested ested $ $1.2 b billion o a and de expended pe ded about 4.5 5 million o man a hours ou s in pu pursuit su t We this goal. We have mobilised a large and experienced team to support the Browse development during FEED. There are currently about 1,500 people around the world working on Browse based in Australia, UK, Norway, USA and Japan. We aim to optimise lump sum contracts. By maximising the proportion of lump sum in the contracts we can further increase certainty of cost and schedule. Our target is for at least 60% of the value of our contracts to be lump sum. Another way we are maximising cost and certainty is through optimising the modular construction of key infrastructure components. Browse has planned and designed for a modularised construction concept since the early engineering phase. We expect this to reduce the amount of man hours required at site during execution phase, with positive implications for cost and schedule during execution phase. We have engaged tier one contractors. It is very important to ensure we have the quality of contractor and the quality of staff to execute this. We have selected tier one contractors on the basis of their proven track record in delivering mega projects like Browse. As an example we have engaged Fluor for the CPF; and MODEC and Aker Solutions for the DTUs. To let you know where we are with the tender process, all upstream and downstream commercial bids will be received by end first half 2012. We will start to evaluate project costs and economics in Q3 in readiness for a fi t h first half lf 2013 FID. FID So to recap, we are confident that our competitive FEED process is driving quality, cost and schedule certainty in the upstream and downstream scopes.


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Let’s look at our core capabilities. Browse is a continuum of Woodside’s core business that leverages off our core capabilities. Woodside has constructed six out of the seven operating LNG trains in Australia to date. Browse will be trains seven, eight and nine for Woodside. This is what Woodside does – we commercialise gas resources through the construction and operation of LNG facilities. As outlined earlier by Robert Edwardes – an industry veteran and former ExxonMobil executive, Woodside has a demonstrated ability to deliver complex mega projects. We continually review what we have done and draw on that experience as we develop new projects. Our Joint Venture Partners are the tier one multinationals in our field. They bring substantial experience to major LNG projects to the table. They have been deploying their people to participate in a cold eye assurance review of the work we are doing and we are listening and learning from those reviews. We are drawing on the experience and capability of our JVPs in evaluating the James Price Point development. In June 2011, we signed a Native Title Agreement with the State Government and the Goolarabooloo Jabirr Jabirr peoples. The Agreement provides for a significant package of financial, employment, education, training and other benefits for Indigenous people in the Kimberley (estimated worth $1 billion over the life of the project subject to FID). This underpins land tenure at the Precinct and evidences the mature relationship we have with the local Indigenous community.


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So where to from here? We will take a disciplined approach to complete the evaluation of the James Price Point development concept in readiness for an FID in 1H 2013. We are very pleased with the response we have received from the market so far – from contractors, customers and investors. As we progress through FEED and the evaluation of bids, we are also building our project team to ensure a seamless transition to execution, post-FID. We are preparing for the execute phase in a judicious and disciplined fashion. We are building on our capabilities for the execute phase by assuring we have the right people in place – from project engineers to Indigenous trainees in the Kimberley. We will bring best in class experience and capability to the project. The story for Browse does not end with this project. Woodside is well positioned through existing petroleum titles and future prospects. As Peter Moore (EVP Exploration) outlined earlier, we are evaluating future opportunities within the Browse basin region, both in terms of acreage and partnerships partnerships. Browse is a world class resource and we have the capacity to process up to 25 mtpa at James Price Point. We think this will be a world-class development. Thank you.


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Hello, my name is Reinhardt Matisons and I am president of Woodside’s marketing area.


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Woodside’s marketing strategy is to build on the strong base we have secured over more than 25 years in the premium Asian LNG market. Our NWS and Pluto volumes are highly valued by the market and uncommitted long-term Pluto volumes in particular provide us with leverage. Our track record and strong customer relationships mean we are well placed to secure sales to support project FIDs. The recently announced MIMI sale effectively placed some 3.3 Mtpa of Browse volumes into the premium Asian market, market and joint marketing with partners such as Mitsui and Mitsubishi affords us market priority We will also be looking to broaden our portfolio and remain open to, for example, pursuing alternative supplies and regasification opportunities, to the extent they add value to Woodside and to our customers. Over the last 12 months Woodside was one of the most active LNG traders in the industry buying and selling some 30 third-party cargoes, as well as being an active charterer and sub-charterer of shipping capacity. We have had the three ship Pluto fleet under our effective control since July last year. We intend to continue to build our capabilities in this regard to add value to our growing portfolio.


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The outlook for the global LNG industry is positive and this is underpinned by the growing role for gas in a world with strong population growth, increasing living standards and growing environmental concerns. The largest regional market for LNG is here in Asia and the outlook for growth in LNG demand is particularly strong in the developing economies of India, China and South East Asia. For a number of countries in our region LNG is the only gas supply option, whilst for others it is an important p p part of supply pp y equation q along g with p pipeline p exports p and domestic supplies, pp , which may increasingly include a role for unconventional gas. Obviously there are also many uncertainties in the long-term outlook, and we continue to monitor these. Turning to the Woodside strategy of LNG growth, there is strong competition between potential suppliers, however we believe that Woodside’s strengths in the market outweigh potential threats to our strategy. Those strengths are driving customer interest in Woodside’s projects, and are helping to differentiate us from competing suppliers. The recently announced arrangement with MIMI for joint marketing of Browse volumes further strengthens Woodside’s position.


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Woodside sees global demand for LNG remaining robust, with consumption continuing to grow strongly at an average rate of about 4% per annum between now and 2025. Established markets should continue to be significant contributors to global trade, with combined demand from Japan, South Korea & Taiwan (JKT) still accounting for more than a third of total LNG consumption in 2025, compared to over 50% today. Growth will primarily be driven by increasing demand in new and emerging markets in the Asia Pacific region, where countries including China and India are expected to see growth rates of over 10% p per annum. Between 2012 and 2020, China alone could add 35 mtpa of incremental LNG demand; the equivalent of three Browse-sized mega projects.


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Uncontracted demand in the Asia-Pacific region, taking into account the outlook for growth in demand, contract expiries and decline from existing projects, represents a significant opportunity for Woodside’s new LNG projects. Unmet demand in the 2018-2020 timeframe, when these projects are targeting startup, is projected to be between 65 and 80 million tonnes, with the majority of this in premium markets. LNG prices in these markets are expected to remain high, and to continue to be primarily linked to oil. Woodside enjoys a comparative advantage in this region due to its proximity and established relationships with major buyers.


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The outlook for a rapidly expanding role for LNG in the region is underpinned by ongoing investment in regasification capacity. Import capacity, based on current proposals for new terminals, is set to increase by more than 150 Mtpa, or 50% of current capacity, between now and 2020. This includes the start-up of imports into both Indonesia and Malaysia during 2012, both traditional LNG exporters. There are also plans for Asia Pacific import terminals in Bangladesh, New Caledonia, Pakistan the Philippines and Vietnam Pakistan, Vietnam.


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Following the start-up of Pluto and Angola LNG in 2012, no new supplies of LNG are due to enter the market until late 2014 or 2015. Combined with the large and unexpected increases in demand following the Great East Japan Earthquake, this has caused the LNG market to tighten significantly, putting upward pressure on both short and long-term LNG prices, as well as shipping rates. Possible delays to Australian projects under construction will further exacerbate this period of tightness and sellers with short-term volumes available between 2012 and 2015/16 will be well positioned to benefit. Significant new supplies of LNG from projects yet to take FID will be required to meet demand, and long-term SPAs with pricing linked to oil will continue to be used to support project economics, especially in the Asia Pacific basin. The chart shown here reflects Woodside’s expectation that between 40 and 50 mtpa of LNG supply from North America will enter global markets by 2025, noting that US and Canadian projects face very different drivers and constraints. North American exports of LNG are expected to make up only about 10% of g global supply pp y by y 2025,, compared p to nearly y 30% from Australia and 20% from Q Qatar. Notes Chart Methodology: •

Outlook for Global LNG demand is sourced from Wood Mackenzie and FACTS Global Energy.

•

Outlook for supply from currently operational projects utilises Wood Mackenzie forward looking production data.

•

g of sources,, including gp project j p proponents’ p p public statements,, consultant information,, and Woodside uses a range market intelligence, to form a forward looking view of LNG supply from proposed and under construction LNG developments around the world.


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Following a few years of consolidation of long-term prices into Asia at the traditional level of 85-90% indexation to oil price movements, post March 2011 there was some uncertainty about whether the events in Japan would lead to a change in pricing. In fact, price outcomes since March last year have seen further consolidation, and long term LNG prices for delivery into Asia remain close to $15/MMBtu when oil is priced at $100 per bbl. A number of recent deals from Greenfield projects include so-called S-curve mechanisms. These provide relief to the customer in the event of very high oil prices and provide some protection for the seller against a downside oil price. Recently reported SPAs between pre-FID US export projects and Korea and India are priced on the basis of a capacity charge plus a commodity charge linked to the Henry Hub natural gas benchmark. It is expected that buyers will initially limit their portfolio exposure to Henry Hub and continue to accept oil-linked pricing for Asia Pacific projects. Should Henry Hub remain low for an extended period beyond initial deliveries later in the decade then this could be expected to only progressively influence Asian pricing formulae through periodic price review mechanisms. The influence on Asian pricing will ultimately be dependent on the proportion of Asian sales captured by US LNG and the extent to which US supplies become and remain the marginal supply choice for the region.


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LNG sale and purchase agreements (SPAs) are bilateral confidential arrangements which typically provide for periodic price discussions over the term of the contract. The impact of price reviews and Price Out of Range negotiations is to recalibrate contract pricing to reflect market trends. Woodside currently has more than 15 SPAs and we have a strategy to stagger the timing of price reviews. % of Woodside’s equity q y LNG volumes will be subject j Between 2011 and 2014,, more than 80% to some form of price renegotiation, which is expected to generate incremental value for the company due to the tightness of the market and the robust outlook for short, mid and longterm pricing. As part of our pricing strategy, Woodside will continue to build protection against a downside oil price into a significant portion of our LNG portfolio through the use of a combination of price floors, S-curves and other mechanisms as can be negotiated.


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Woodside’s preference is Delivered Ex-Ship (DES) LNG sales. The value in shipping has been particularly apparent over the last year, with little short term shipping availability and very high short term charter rates. Short-term charter rates have risen rapidly over the last year to be significantly higher than long-term rates. The higher rates followed the surge in Japanese demand post-Fukushima and an increase in average journey distances due to increased diversions from the Atlantic. Since the beginning of 2011, the shipping market has seen a relatively large number of orders for new ships (more than 70), the majority of which have been placed on a speculative basis by shipping companies, as opposed to being dedicated to specific projects. The current tightness in the short-term shipping market is not expected to ease until new ships begin to be delivered from 2013 onwards.


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Woodside currently manages an integrated fleet of three ships for Pluto LNG. The fleet comprises the W d id D Woodside Donaldson ld and d ttwo ships hi provided id d b by th the ffoundation d ti customers. t This Pluto arrangement is underpinned by a unique hybrid SPA with components of both DES and free on board (FOB) LNG sales. Pluto time chartered all three ships from mid-2011 and they have been used for delivery of some mitigation cargoes, some trading cargos and we have also sub-chartered the ships opportunistically. The incremental value generated from Pluto shipping arrangements during this period was about $26 million. To meet the expected future shipping needs of Pluto LNG, and to take advantage of other potential opportunities, Woodside has recently chartered an additional LNG ship, to be delivered in 2013. Further details on the ship will be included in the notes we release following this session.

Notes: Additional Pluto LNG Ship 4 information •

New build, to be constructed by Daewoo Shipbuilding & Marine Engineering Co Ltd (DSME), in Okpo, South Korea

•

Delivery July 2013

•

Contracted under long term Time Charter Party through an affiliate of Angelicoussis Shipping Group Ltd.

•

Angelicoussis Shipping Group Ltd:

•

One of the largest private shipping companies in the world, founded in 1947

•

Have over 100 ships in operation / on order, of which 16 are LNG Carriers

•

Vessel will be managed by ASGL affiliate, Maran Gas Maritime

•

Vessel Capacity – 159,800m3 LNG

•

Fuel: Tri Tri-Fuel Fuel Diesel Electric (TFDE)

•

Competitive with charter arrangement for the Woodside Donaldson


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To finish, I would like to leave you with some key messages. Firstly, the fundamental drivers of LNG demand are strong, with the Asia Pacific being the core regional market and the centre of the majority of growth. Secondly, Woodside has a number of major strengths in the market which include: • Existing relationships, in particular with key buyers in premium markets; • Gas quality that compares favourably to volumes being offered by other suppliers; and • Shipping capability, which we are continuing to build. And finally, as a consequence, Woodside is well positioned to support our existing projects and to pursue our new projects and other opportunities. Thank you.


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