Woodside forecasts increase in oil and gas production as Santos M&A talks continue

Carmeli Argana and David Stringer, Bloomberg January 24, 2024

(Bloomberg) – Woodside Energy Group Ltd. has shown its ability to add value through acquisitions as it continues talks over a tie-up with Santos Ltd., according to the company’s top executive.

Australia’s largest energy producer reported production rose 19% to 187.2 MMboe last year, following completion of a deal to add BHP Group Ltd.’s oil and gas division.

“We’ve now demonstrated that we do have that ability to bring two organizations together and to capture value,” Woodside Chief Executive Officer Meg O’Neill said in a phone interview. “We’re looking at a range of ways to grow the business — Santos is one of them.”

Recent major oil and gas sector deals in the U.S. have involved low premiums and Woodside would only pursue a transaction with smaller rival Santos that “is value-accretive for shareholders,” the company said in a statement.

“It’s very early stage discussions and we’re going to be thorough in our due diligence and disciplined in our approach to any sort of commercial discussions,” O’Neill said in the interview.

Woodside’s shares declined 0.6% as of 12:33 p.m. in Sydney, as Australia’s benchmark index was steady.

“We are keen to grow the business in the areas where we have capability and expertise, which is focused on LNG and deep water,” O’Neill said. “The fact that we now have a bigger global presence means we’re involved in a number of discussions on these sorts of opportunities.”

LNG demand is likely to remain stable this year, even with importer nations holding robust stockpiles and milder winter weather in Asia and Europe, she said.

“There is an expectation that China’s economy will continue to grow,” according to O’Neill. “We’ve seen buying resume from places like India and Bangladesh as they’re more able to participate in the market at the prices we’re at today.”

Perth-based Woodside forecasts production of 185 MMboe to 195 MMboe in 2024, of which about 45% of output will be LNG.

Capital expenditure rose to $5.7 billion in 2023 and is forecast at between $5 billion and $5.5 billion this year, the company said.

Lead image: Meg O'Neill, chief executive officer of Woodside (Photographer: Nicky Loh/Bloomberg)

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