GICS - Energy

Woodside Petroleum Limited ASX Code: WPL Price: $24.12 12 Mth Target Price: $22.74 Rating: Neutral

Business Summary Snapshot Limited (WPL) is an Australian oil and gas company Date 6 October 2021 involved in hydrocarbon exploration, evaluation, development, production and Market Cap. $23,388m Shares on issue 969.6m marketing. WPL also has a portfolio of offshore platforms, oil floating 12 Month High $27.60 production storage and off-loading vessels. WPL also holds operating assets 12 Month Low $17.12 both in and internationally. Rating Pluto LNG Pluto LNG processes gas from the offshore Pluto and Xena gas Rating Neutral fields in . Gas is piped through a 180 km trunkline to a 12 Mth Target Price $22.74 single onshore LNG-processing train. Pluto LNG is underpinned by 15-year Capital Gain -9.3% sales agreements with Kansai Electric and Tokyo Gas, which each hold a 5% Gross Yield 8.8% Implied Total Return interest in the project. Annual production of 37.1 MMboe was achieved at a -0.5% globally competitive LNG unit production cost of $3.5/boe. Investment Fundamentals Australia Oil This segment manages Exploration, evaluation, development, FYE 31 Dec 2020A 2021F 2022F 2023F production and sale of crude oil in assigned permit areas (North West Shelf, Profit $m 609.0 1,767.0 1,913.0 1,317.0 Enfield and Vincent). Companys share of annual production in 2019 from the Profit (norm)* $m 609.0 1,767.0 1,913.0 1,317.0 Ngujima-Yin FPSO was 4.0 MMboe, up from 1.3 MMboe in 2018. 2019 production was above target following project completion. EPS* ¢ 64.0 183.0 194.0 131.0 EPS Growth % -60.5 185.9 6.0 -32.5 North West Shelf The North West Shelf (NWS) Project supplies oil and gas P/E* x 39.2 13.7 12.9 19.1 to Australian and international markets from huge offshore gas, oil and P/E Relative % 0.0 0.0 0.0 0.0 condensate fields in the Carnarvon Basin, off the north-west coast of DPS ¢ 55.0 129.0 155.0 104.0 Australia. Annual production of 32.0 MMboe was achieved at a globally Yield % 2.2 5.1 6.2 4.1 competitive LNG unit production cost of $4.1/boe. Franking % 100.0 0.0 100.0 100.0 Other Business Companys other business consists of Wheatstone Project, * Adjusted for goodwill and unusual items Burrup Hub, Exploration Interest and Marketing Trading & Shipping. Source: Based on Citi estimates Share Price Chart Latest Research Deal, Dilute or Downgrade We model the proposed WPL acquisition of BHP Petroleum’s assets as value accretive, assuming ~50%+ of the expected synergies are realised. Though announced as a no premium/discount transaction, our work inside suggests the proposed deal slightly favours BHP shareholders. We also examine the balance sheet assuming FID is taken on Scarborough to Pluto T-2, with equity sold down at Pluto T-2 only. In this scenario, WPL could have leverage over its shareholders to pass the BHP vote, as a no-deal outcome could potentially trigger a rating agency downgrade or equity dilution event in CY23. Total Return on $10,000 Investment For more information see research 10 Sept 2021.

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Profit & Loss ($M) Cash Flow ($M) 2016A 2017A 2018A 2019A 2020A 2016A 2017A 2018A 2019A 2020A Sales Revenue 5,716 5,050 7,536 7,141 4,714 Receipts from Customers ------Total Revenue ex. Int. 5,716 5,050 7,536 7,141 4,714 Funds from Operations ------EBITDA 3,742 3,638 5,341 3,991 -4,331 Net Operating Cashflow 3,575 3,077 4,670 4,717 2,401 Depreciation & Amort. -1,824 -1,523 -2,056 -2,409 -2,353 Capex -2,242 -1,782 -2,519 -1,731 -1,841 Goodwill Amortisation ------Acquisitions & Investments -965 ------684 EBIT 1,918 2,115 3,286 1,582 -6,684 Sale of Invest. & Subsid. ------Net Interest -66 -108 -259 -327 -349 Net Investing Cashflow -3,418 -2,010 -2,511 -1,767 -2,742 Profit Before Tax 1,852 2,008 3,026 1,255 -7,033 Proceeds from Issues -- -- 2,761 -- 30 Income Tax -507 -572 -890 -685 1,902 Dividends Paid -391 -1,059 -1,288 -1,516 -589 Outside Equity Int. -145 -123 -146 -56 -69 Net Financing Cashflow 70 -1,032 -225 452 -264 Profit after Tax 1,200 1,313 1,991 514 -5,200 Net Increase Cash 228 35 1,934 3,403 -605 Significant Items after Tax -- -- -58 -24 -30 Cash at Beginning 169 365 451 2,389 5,269 Reported Profit after Tax 1,200 1,313 1,933 490 -5,230 Exchange Rate Adjust. -3 8 -13 -- 16 Preferred Dividends ------Cash at End 394 408 2,372 5,792 4,679

Ratios and Substantial Shareholders Balance Sheet ($M) 2016A 2017A 2018A 2019A 2020A 2016A 2017A 2018A 2019A 2020A Profitability Ratios Cash & Equivalent 394 408 2,372 5,792 4,679 EBITDA Margin % 65.47 72.05 70.88 55.89 -91.88 Receivables 616 618 690 490 393 EBIT Margin % 33.56 41.89 43.60 22.15 -141.78 Inventories 206 238 220 251 162 Net Profit Margin % 20.99 26.00 26.41 7.20 -110.30 Other Current Assets 28 35 120 100 286 Return on Equity % 5.85 6.80 8.03 2.17 -33.17 Current Assets 1,244 1,299 3,416 6,633 5,521 Return on Assets % 3.79 4.44 5.93 2.04 -15.85 Prop. Plant & Equipment 26,873 25,050 27,009 27,723 21,358 Intangibles ------Debt/Safety Ratios Other Non-Current Assets 265 233 415 450 835 Net Debt/Equity % 29.93 29.89 13.45 16.19 30.75 Non-Current Assets 32,964 31,267 34,963 35,264 26,449 Interest Cover x 28.92 19.64 12.67 4.84 -19.14 Total Assets 34,208 32,565 38,379 41,897 31,970 Interest Bearing Debt 6,873 6,494 5,864 9,814 9,820 Top 5 Substantial Shareholders Other Liabilities 5,691 5,713 6,556 7,234 5,434 BlackRock Group 6.1% Total Liabilities 12,564 12,206 12,420 17,048 15,253 The Vanguard Group,Inc 6.0% Net Assets 21,645 20,359 25,959 24,849 16,716 Share Capital 9,562 8,871 12,581 12,860 12,071 Reserves 1,311 1,233 1,352 1,360 1,792 Retained Earnings 9,634 9,191 10,846 9,498 1,815 Outside Equity Int. 1,137 1,064 1,180 1,130 1,039 Total Shareholders Equity 21,645 20,359 25,959 24,849 16,716

Current Analyst Recommendations * Principals & Directors Principals Company Secretary Mr Andrew Cox Mr Warren Baillie Directors Mr Christopher (Chris) Michael Haynes(Non-Executive Director) Mr Gene Thomas Tilbrook(Non-Executive Director) Mr Richard James Barr Goyder(Non-Executive Director,Non-Executive Chairman) Mr Frank Charles Cooper(Non-Executive Director) Ms Ann Darlene Pickard(Non-Executive Director) Dr Sarah Elizabeth Ryan(Non-Executive Director) Mr Ian Elgin Macfarlane(Non-Executive Director) Mr Larry Archibald(Non-Executive Director) Ms Swee Chen Goh(Non-Executive Director) Ms Marguerite (Meg) Eileen O'Neil(Chief Executive Officer,Managing Director) Mr Benjamin (Ben) Sana Wyatt(Non-Executive Director) * Source: Morningstar. This chart shows the spread of recommendations from those broker analyst's in Australia with research coverage of this stock.

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