TIDMWDS
RNS Number : 7837K
Woodside Energy Group Ltd
30 August 2023
Woodside Energy Group Ltd
ACN 004 898 962
Mia Yellagonga
11 Mount Street
Perth WA 6000
Australia
T +61 8 9348 4000
www.woodside.com
ASX: WDS
NYSE: WDS
LSE: WDS
Announcement
Wednesday, 30 August 2023
TRION RECEIVES REGULATORY APPROVAL
The Trion field development plan (FDP) has been approved by the
Mexican regulator, Comision Nacional de Hidrocarburos (CNH).
Woodside's final investment decision (FID) to develop the Trion
resource, announced 20 June 2023, was subject to Trion joint
venture approval and regulatory approval of the FDP. [1] Both of
these conditions have now been met.
Woodside CEO Meg O'Neill welcomed the approval of the FDP.
"This milestone allows us to fully progress into execution phase
activities with our contractors.
"We look forward to working with PEMEX and our other
stakeholders in Mexico to deliver this important project," she
said.
Following the approval of the FDP, Woodside has booked Proved
(1P) Undeveloped Reserves of 324.7 MMboe gross (194.8 MMboe
Woodside share) and Proved plus Probable (2P) Undeveloped Reserves
of 478.7 MMboe gross (287.2 MMboe Woodside share). [2]
The project execution phase activities are progressing and
Woodside has executed key contracts relating to the development
including:
-- the floating production unit (FPU) engineering, procurement
and construction (EPC) contract with HD Hyundai Heavy
Industries
-- the rig contract with Transocean
-- the FPU and floating storage offloading (FSO) installation contract with SBM Offshore
-- the subsea trees contract with OneSubsea UK.
First oil is targeted for 2028. Woodside is operator of the
Trion development with a 60% participating interest and PEMEX
Exploración y Producción (PEMEX) holds the remaining 40%.
The attached notes on petroleum resource estimates form part of
this announcement.
About Trion
Trion is located in a water depth of 2,500 m, approximately 180
km off the Mexican coastline and 30 km south of the Mexico/US
maritime border. Trion was discovered in 2012 by PEMEX. BHP
Petroleum acquired an interest in 2017 which subsequently became
part of Woodside's portfolio in 2022. The resource will be
developed through a FPU with an oil production capacity of 100,000
barrels per day. The FPU will be connected to a FSO vessel with a
capacity of 950,000 barrels of oil. Crude is expected to be shipped
to international markets and the development is expected to include
18 wells (nine producers, seven water injectors and two gas
injectors) drilled in the initial phase, with a total of 24 wells
drilled over the life of the Trion project. Gas that is not
reinjected or used on the FPU will be delivered to the domestic
natural gas pipeline network by a subsea gas pipeline. The forecast
total capital expenditure is US$7.2 billion (US$4.8 billion
Woodside share including capital carry of PEMEX of approximately
US$460 million) including all 24 wells. [3]
Contacts:
INVESTORS MEDIA
Matthew Turnbull Christine Forster
(Group) M: +61 484 112 469
M: +61 410 471 079 E: christine.forster@woodside.com
Sarah Peyman (Australia)
M: +61 457 513 249
Rohan Goudge (US)
M: +1 (713) 679-1550
E: investor@woodside.com
This announcement was approved and authorised for release by
Woodside's Disclosure Committee
Forward-looking statements
-- This announcement contains forward-looking statements with
respect to Woodside's business and operations, market conditions,
results of operations and financial condition, including, for
example, but not limited to, statements regarding development,
completion and execution of Woodside's projects, expectations
regarding future capital expenditures and future results of
projects. All statements, other than statements of historical or
present facts, are forward-looking statements and generally may be
identified by the use of forward-looking words such as 'guidance',
'foresee', 'likely', 'potential', 'anticipate', 'believe', 'aim',
'estimate', 'expect', 'intend', 'may', 'target', 'plan',
'strategy', 'forecast', 'outlook', 'project', 'schedule', 'will',
'should', 'seek' and other similar words or expressions. Similarly,
statements that describe the objectives, plans, goals or
expectations of Woodside are forward-looking statements.
-- Forward-looking statements in this announcement are not
guidance, forecasts, guarantees or predictions of future events or
performance, but are in the nature of future expectations that are
based on management's current expectations and assumptions. Those
statements and any assumptions on which they are based are subject
to change without notice and are subject to inherent known and
unknown risks, uncertainties, assumptions and other factors, many
of which are beyond the control of Woodside, its related bodies
corporate and their respective officers, directors, employees,
advisers or representatives.
-- A more detailed summary of the key risks relating to Woodside
and its business can be found in the "Risk" section of Woodside's
most recent Annual Report released to the Australian Securities
Exchange and the London Stock Exchange, and in Woodside's most
recent Annual Report on Form 20-F filed with the United States
Securities and Exchange Commission (SEC) and available on the
Woodside website at
https://www.woodside.com/investors/reports-investor-briefings . You
should review and have regard to these risks when considering the
information contained in this announcement.
-- All forward-looking statements contained in this announcement
reflect Woodside's views held as at the date of this announcement
and, except as required by applicable law, Woodside does not intend
to, undertake to, or assume any obligation to, provide any
additional information or update or revise any of these statements
after the date of this announcement, either to make them conform to
actual results or as a result of new information, future events,
changes in Woodside's expectations or otherwise.
-- Investors are strongly cautioned not to place undue reliance
on any forward-looking statements. Actual results or performance
may vary materially from those expressed in, or implied by, any
forward-looking statements.
Notes to petroleum resource estimates
1. Woodside holds a 60% interest in the Contract for Exploration
and Extraction relating to Trion.
2. The Woodside Reserves estimates are based on Woodside's
technical evaluation of subsurface and seismic data. The subsurface
has been extensively appraised, with six well penetrations and
numerous formation evaluation studies undertaken across the field.
There is no requirement for further appraisal to confirm the
estimates.
3. Gas injection and water injection have been included in the
FDP based on technical studies and analogues.
4. At FID, Woodside confirmed the expected returns from the
development exceed Woodside's capital allocation framework of
>15%IRR and payback within 5 years. Forecast IRR and payback
period assumed Woodside equity of 60% in Trion and included capital
carry of approximately US$460 million of capital expenditure for
PEMEX. IRR and the payback period are a look forward from June 2023
and assume US$70/bbl (real terms 2022) Brent oil price. Payback
period is calculated from undiscounted cash flows from ready for
start--up (RFSU).
5. Woodside estimates and reports its Proved (1P) Reserves in
accordance with SEC regulations, which are also compliant with 2018
Society of Petroleum Engineers/ World Petroleum Council/American
Association of Petroleum Geologists/Society of Petroleum Evaluation
Engineers Petroleum Resources Management System (SPE-PRMS)
guidelines. Woodside estimates and reports its Proved plus Probable
(2P) Reserves and Best Estimate (2C) Contingent Resources in
accordance with SPE-PRMS guidelines.
6. The effective date for all petroleum resource estimates in
this announcement is 29 August 2023. Unless otherwise stated, all
petroleum resource estimates are quoted as at the effective date,
net Woodside share at standard oilfield conditions of 14.696 psi
(101.325 kPa) and 60 degrees Fahrenheit (15.56 degrees
Celsius).
7. The reference points are the custody transfer points which
are: for oil, the outlet connector of the FSO off-loading hose; and
for gas, the inlet to the connecting residue gas pipeline.
8. Woodside uses both deterministic and probabilistic methods
for the estimation of Reserves at the eld and project levels. All
Proved (1P) Reserves estimates have been estimated using
deterministic methodology and reported on a net interest basis in
accordance with the SEC regulations and have been determined in
accordance with SEC Rule 4-10(a) of Regulation S-X.
9. Assessment of the economic value in support of an SPE PRMS
(2018) reserves and resources classi cation, uses Woodside
Portfolio Economic Assumptions (Woodside PEAs). The Woodside PEAs
are reviewed on an annual basis or more often if required. The
review is based on historical data and forecast estimates for
economic variables such as product prices and exchange rates. The
Woodside PEAs are approved by the Woodside Board. Speci c
contractual arrangements for individual projects are also taken
into account.
10. 'Reserves' are estimated quantities of petroleum that have
been demonstrated to be producible from known accumulations in
which the company has a material interest from a given date
forward, at commercial rates, under presently anticipated
production methods, operating conditions, prices, and costs. Proved
(1P) Reserves are estimated and reported in accordance with SEC
regulations which are also compliant with SPE-PRMS guidelines.
SEC-compliant Proved (1P) Reserves estimates use a more
restrictive, rules-based approach and are generally lower than
estimates prepared solely in accordance with SPE-PRMS guidelines
due to, among other things, the requirement to use commodity prices
based on the average of rst of month prices during the 12-month
period in the reporting company's scal year. Proved plus Probable
(2P) Reserves are estimated and reported in accordance with
SPE-PRMS guidelines and are not compliant with SEC regulations.
11. 'Bcf' means Billions (10(9) ) of cubic feet of gas at
standard oilfield conditions of 14.696 psi (101.325 kPa) and 60
degrees Fahrenheit (15.56 degrees Celsius).
12. 'MMbbl' means millions (10(6) ) of barrels of natural gas
liquids (NGL), oil and condensate at standard oilfield conditions
of 14.696 psi (101.325 kPa) and 60 degrees Fahrenheit (15.56
degrees Celsius).
13. 'MMboe' means millions (10(6) ) of barrels of oil
equivalent. Natural gas volumes are converted to oil equivalent
volumes via a constant conversion factor, which for Woodside is 5.7
Bcf of dry gas per 1 MMboe. Volumes of NGLs, oil and condensate are
converted from MMbbl to MMboe on a 1:1 ratio.
14. 'Proved Reserves' are those quantities of crude oil,
condensate, natural gas and NGLs that, by analysis of geoscience
and engineering data, can be estimated with reasonable certainty to
be economically producible from a given date forward from known
reservoirs and under existing economic conditions, operating
methods, operating contracts, and government regulations. Proved
Reserves are estimated and reported on a net interest basis in
accordance with the SEC regulations and have been determined in
accordance with SEC Rule 4-10(a) of Regulation S-X.
15. 'Undeveloped Reserves' are those Reserves for which wells
and facilities have not been installed or executed but are expected
to be recovered through signi cant future investments.
16. 'Probable Reserves' are those Reserves which analysis of
geological and engineering data suggests are more likely than not
to be recoverable. Proved plus Probable (2P) Reserves represent the
best estimate of recoverable quantities. Where probabilistic
methods are used, there is at least a 50% probability that the
actual quantities recovered will equal or exceed the sum of
estimated Proved plus Probable (2P) Reserves. Proved plus Probable
(2P) Reserves are estimated and reported in accordance with
SPE-PRMS guidelines and are not compliant with SEC regulations.
17. 'Natural gas' is defined as the gas product associated with
liquefied natural gas (LNG) and pipeline gas. Liquid volumes of
crude oil, condensate and NGLs are reported separately.
18. 'Natural gas liquids' or 'NGL' is defined as the product
associated with liquified petroleum gas (LPG) and consists of
propane, butane, and ethane - individually or as a mixture.
19. The estimates of petroleum reserves are based on and fairly
represent information and supporting documentation prepared by, or
under the supervision of, Mr Ben Stephens, Woodside's Vice
President Reserves and Subsurface, who is a full-time employee of
the company and a member of the Society of Petroleum Engineers. Mr
Stephen's qualifications include a Bachelor of Engineering
(Petroleum Engineering) from the University of New South Wales,
Australia, and 19 years of relevant experience.
20. In accordance with article 45 of the Hydrocarbons Law of
Mexico, Woodside has the right to report, for accounting and
financial purposes, the relevant Exploration and Extraction
Contract as well as the expected benefit therefrom.
21. Reserves quoted in this release are not CNH certified
resources. In accordance with the Guidelines regulating the
procedure to quantify and certify the Reserves of the Nation issued
by the National Hydrocarbons Commission of the United Mexican
States, available in Spanish at:
https://cnh.gob.mx/media/18296/lineamientos-que-regulan-el-procedimiento-de-cuantificacion-y-certificacion-de-reservas-de-la-nacion.pdf,
the petroleum resources estimates will undergo the required
certification process when and as established thereunder.
22. Petroleum resource estimates included in the FDP submitted
to CNH were estimated using calendar year 2022 vintage data and
analysis.
Additional information for US investors concerning resource
estimates
-- Woodside is an Australian company listed on the Australian
Securities Exchange, the New York Stock Exchange and the London
Stock Exchange. As noted above, Woodside estimates and reports its
Proved (1P) Reserves in accordance with the SEC regulations, which
are also compliant with SPE-PRMS guidelines, and estimates and
reports its Proved plus Probable (2P) Reserves and Best Estimate
(2C) Contingent Resources in accordance with SPE-PRMS guidelines.
Woodside reports all of its petroleum resource estimates using
definitions consistent with the 2018 Society of Petroleum Engineers
(SPE)/World Petroleum Council (WPC)/American Association of
Petroleum Geologists (AAPG)/Society of Petroleum Evaluation
Engineers (SPEE) Petroleum Resources Management System (PRMS).
-- The SEC permits oil and gas companies, in their filings with
the SEC, to disclose only Proved, Probable and Possible Reserves,
and only when such Reserves have been determined in accordance with
the SEC guidelines. In this announcement, Woodside includes
estimates of quantities of oil and gas using certain terms, such as
"Proved plus Probable (2P) Reserves", "Proved plus Probable",
"Developed and Undeveloped", "Probable Developed", "Probable
Undeveloped", or other descriptions of volumes of reserves, which
terms include quantities of oil and gas that may not meet the SEC's
definitions of proved, probable and possible reserves, and which
the SEC's guidelines strictly prohibit Woodside from including in
filings with the SEC. These types of estimates do not represent,
and are not intended to represent, any category of reserves based
on SEC definitions, and may differ from and may not be comparable
to the same or similarly-named measures used by other companies.
These estimates are by their nature more speculative than estimates
of proved reserves, and accordingly are subject to substantially
greater risk of not being recovered by Woodside. In addition,
actual locations drilled and quantities that may be ultimately
recovered from Woodside's properties may differ substantially. US
investors are urged to consider closely the disclosures in
Woodside's most recent Annual Report on Form 20-F filed with the
SEC and available on the Woodside website at
https://www.woodside.com/investors/reports-investor-briefings and
its other filings with the SEC, which are available from Woodside
at https://www.woodside.com . These reports can also be obtained
from the SEC at www.sec.gov .
Other important information
All references to dollars, cents or $ in this announcement are
to US currency, unless otherwise stated. References to "Woodside"
may be references to Woodside Energy Group Ltd and/or its
applicable subsidiaries (as the context requires). This
announcement does not include any express or implied prices at
which Woodside will buy or sell financial products. A securities
rating is not a recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any time.
[1] "Woodside approves investment in Trion development",
announced 20 June 2023.
[2] 1P and 2P Reserves estimates include 12.6 MMboe gross (7.6
MMboe Woodside share) and 15.2 MMboe gross (9.1 MMboe Woodside
share) of fuel consumed in operations respectively.
[3] Woodside share assumes Woodside equity of 60% in Trion.
Total capital expenditure excludes the forecast lease amount for
the FSO unit.
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