“I think were quite happy with the runs on the board if we compare ourselves with our industry peers who got tempted into doing things that maybe they shouldnt do,” he responds brusquely.
“I think our returns look pretty darn good over that period of time. We consistently fit in the top quartile of the international group.
“So runs on the board? Im very pleased because at the end of the day, Im about shareholder returns.”
Supportive numbers
Going by production, the numbers are supportive. Output in the June half reached a record 50.1 million barrels of oil equivalent, compared with about 65 million for the full year of 2011 when Coleman came on board.
On returns, the data is more mixed, at least in recent years and when compared across the broader market.
Total shareholder returns at Woodside have averaged 8.6 per cent across 2017-19, according to proxy advisor CGI Glass Lewis, lagging the 10.4 per cent average across the S&P/ASX All Ords index.
While Woodside’s strong balance sheet thanks to having refrained from ploughing ahead with growth investments before the last oil price crash in 2014 has helped protect it from the dire oil and gas markets since March’s collapse, its share price is still down 40 per cent this year.
When it comes to the platform for future growth, critics point to the huge Browse gas resource, which remains undeveloped – although Coleman’s decision in 2013 to ditch the exorbitantly expensive James Price Point project has clearly proven justified.
The LNG train at the Pluto project, put in place under Coleman’s predecessor Don Voelte, also remains a solo train, and forays into Senegal oil and Myanmar gas have yet to prove their worth.
While the two oil price crashes since Coleman took over as CEO have to be taken into account, Woodside has also struggled to get its North West Shelf partners on board for agreements that would sustain gas supply to the five LNG production trains on the Burrup Peninsula.
On M&A, Woodside has scored wins with bringing partners such as PetroChina into Browse, and buying out ExxonMobil from Scarborough, an important step towards its Burrup Hub plan, targeting production of about 40 trillion cubic feet of gas.
The Scarborough acquisition will prove a game-changer for Woodside, which should reinvigorate Woodside’s asset base for decades to come.
Saul Kavonic, Credit Suisse
The latest write-downs, however, colour its $US2.75 billion acquisition of assets from Apache in 2014, affecting both the Wheatstone and Kitimat LNG assets included there.
Still, Coleman remains defiant.
“The growth stuff we dont get so much into because that often gets down to individuals pushing things too much and wanting to, quote-unquote, leave their legacy,” he told AFR Weekend.
“My legacy will be [that] Ill leave Woodside in much better shape than when I found it. Were a much better company, were producing a lot more, were diversified in our asset base, were a lot more sophisticated in what we do and we rightly hold a very special place within our industry.”
It is perhaps telling that while market sentiment around Woodside is downbeat underscored by this week’s news most analysts are bullish on the stock, notwithstanding the obvious difficulties.
Central to those views is the looming overhaul of the troubled North West Shelf venture, triggered by the decision by Chevron, one of the six equal partners, to sell. and some are also optimistic about the opportunity for Scarborough gas.
“For over a decade, Woodside has raised expectations for LNG growth that have subsequently been dashed, and engaged in M&A followed by write-downs, although such is the benefit only offered by hindsight,” Credit Suisse energy analyst Saul Kavonic said.
Game-changer
“But the Scarborough acquisition will prove a game-changer for Woodside, which should reinvigorate Woodside’s asset base for decades to come.”
Navigating a path for the development of Scarborough gas and deals to ensure the extension of the North West Shelf venture amid the difficult macro backdrop and partner alignment issues stand as the main priorities for Woodside.
“If Woodside delivers Scarborough and North West Shelf life extension, alongside strong M&A opportunities presented by the current market dislocation, then Woodside could emerge as the biggest success story of the sector over the next few years,” Kavonic said.
Analysts at Macquarie Securities also see the strategic options finally opening up in Woodside’s favour, with Chevron’s decision to sell its stake in the North West Shelf. The US major’s exit is expected to result in a more aligned joint venture intent on maximising output using third-party gas.
Coleman turns philosophical when asked about the challenges ahead.
“With respect to the next few years whatever they look like I think we all look at lemons every now and again, and my view is, how do I turn lemons into lemonade?” he said.
“Weve been doing our homework on some of these alternative options for ourselves so I get very excited by what I think Woodside can do, both in our core assets … over the next few years and then also in guiding Woodside into what this energy transition looks like and making sure that the company is well set up to be successful there.
“So no I dont spend too much time worrying about [runs on the board] because I know the legacy is a good one anyway.”
