Strong Quarters Boost Woodside, Santos Ahead of FIDs

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Australian players Woodside and Santos are riding momentum from positive quarterly results as they prepare to move forward on their respective major oil and natural gas projects this year and next year. Strong production levels drove higher first-quarter revenues for both companies. Realized LNG prices in the first three months of the year were down, but a strengthening price outlook positions the companies well for potential final investment decisions (FIDs) on some key projects in 2021 and 2022 (IOD Jan.21'21). Woodside aims to sanction a major expansion at its Scarborough gas project in the second half of the year but first wants to appoint a permanent CEO following the departure this month of Peter Coleman, who had helmed the company for the last decade. Meanwhile, Santos plans to give the nod for its Moomba carbon capture and storage (CCS) project later this year if it is eligible for carbon credits (IOD Feb.18'21). It plans to proceed with its Dorado oil project next year. Scarborough Advances Woodside said it has finalized the design concept for modifications to its Pluto Train 1 that will enable it to process up to 3 million tons per year of gas from the offshore Scarborough field. These modifications, combined with the 5 million ton/yr capacity of Pluto Train 2, would enable full utilization of the 8 million ton/yr offshore capacity. The sell-down of Woodside’s stake in Pluto Train 2 -- a precondition for FID -- is also progressing. The company said it could start marketing half of its 100% stake by the end of the second quarter. Infrastructure fund managers such as IFM Investors are seen as strong candidates, according to reports. Woodside is also finalizing commercial agreements with BHP; FID at Scarborough is expected in the second half of this year. The A$16 billion (US$12.3 billion) expansion at Scarborough is expected to shape Woodside's future for the next decade or more. Head-Hunting It is a pivotal time for Woodside as it searches for a replacement for its long-serving CEO while at the same time seeking to find its place in the emerging low-carbon world. Acting CEO Meg O'Neill is seen as a likely successor, having served as COO since she joined the company in 2018. She was responsible for Woodside’s developments, including Scarborough, along with overseeing the firm’s marketing, trading and shipping activities. BHP’s Head of Petroleum Geraldine Slattery, Royal Dutch Shell’s Zoe Yujnovich and BP’s Emma Delaney are also seen as contenders for the top job, according to reports. Santos Moves Santos expects its A$2 billion Dorado project to enter front-end engineering and design in the coming months and to be sanctioned in the first half of 2022. Initial cost of production for the 75,000-100,000 barrel per day project is targeted to be less than A$5 per barrel, Santos says. Santos is also testing the market to sell nonoperated equity in Dorado, and potentially other Western Australia oil assets as well. Elsewhere, the Moomba CCS project remains ready for FID, with an estimated lifecycle break-even cost of less than A$24 per ton of CO2, according to Santos. Concept studies looking at options to produce carbon-neutral hydrogen from Moomba indicate that the production cost would be lower than the Australian government’s target of A$2/kg. Marc Roussot, Singapore Santos Q1'21 Earnings Q1'21 Q1'20 %Chg. Q4'20 Sales Revenue (US$ million) 964 883 9% 922 LNG Realized Price ($/MMBtu) 6.12 8.88 -31 5.34 Production Volume ('000 boe/d) 276 197 40 276 Sales Volume ('000 boe/d) 304 245 24% 338 Source: Santos Woodside Q1'21 Earnings Q1'21 Q1'20 %Chg. Q4'20 Sales Revenue (US$ million) 1,166 1,112 5% 957 LNG Realized Price ($/boe) 40 47 -15 28 Production Volume ('000 boe/d) 263 266 -1 270 Sales Volume ('000 boe/d) 286 263 9% 316 Source: Woodside

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