Transcript is up:
https://files.woodside/docs/default...day-2019-q-a-transcript.pdf?sfvrsn=87800623_4
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Damien Gare: Peter, we’ve got a webcast question as well, from Peter Arden from Bell Potter Securities. He says, Woodside traditionally holds the majority interest in all of its long-term projects. If Sangomar is to be a long-term project, why doesn’t Woodside hold more like 50% to 60%? Or is this indicating that Woodside doesn’t regard Sangomar as a long-term project?
Peter Coleman: I would say, typically, what we try and do in our projects is, when we operate, we target an equity level of anywhere between 40% to 60%. The reason for that is when you’re operator, you take on certain liabilities and obligations. To make that worthwhile, you generally want to hold a larger equity in there. It also means that some of the voting requirements and so forth means you can kind of get it across the line, because you’ve got a larger percentage.
Then that gives you surety on development and so forth. Simply, in Sangomar, in answer to the question, all that was available at the time was 35% and so, we purchased the 35% that was available. With respect to other equity coming into the market, if it does come into the market, then of course, we’d look at it very very closely. But we’re all about value for our shareholders. Clearly, we know the asset, we’ve got a view on what the value is and so if it comes into the market, we’ll look at it very closely.
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Ben Wilson: (RBC, Analyst) Thanks for that. Just a quick one - thanks for the granularity on Sangomar phase one CapEx. As you look at phase two, the next 250 million odd barrels, what sort of confidence level do you have, at this point, around that scope for phase two? Or will that evolve as you see phase one production?
Peter Coleman: Look, it will get de-risked, clearly, as we go through phase one. That was really the intention of why we developed phase one the way we are. Remember, phase one is going for the lower reservoir. The upper reservoir has about 3 billion barrels in place, but the sands are not connected. We’ll drill anywhere between 24 to 27 wells penetrations through that upper reservoir as we develop the lower and of course, some of those wells will actually produce in that upper reservoir so we’ll get a lot more information on it. We’re also running probably the densest seismic survey that we’ve ever run for Woodside - the most technologically complex survey right now and we’ll have that data available to us as well. We just waned to make sure that we don’t over-capitalise in the field, but we’ll get more than 20 well penetrations into this reservoir. Half a dozen of those wells will actually flow the reservoir so we’ll be able to unlock it.
There’s some numbers out, we’d support those numbers today. But we don’t have - I wouldn’t say we have a robust development plan and we won’t have a robust development plan until we drill the phase one wells and we’re able to do the well testing and of course, also, review the seismic.
Ben Wilson: (RBC, Analyst) Thank you.
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James Redfern: (Bank of America, Analyst) Yes, thanks. Then in terms of Sangomar phase one, what needs to happen to reach FID by the end of the year? Is that subject to FAR and Cairn selling down equity? Or FAR raising private - sorry, project funding?
Peter Coleman: Well, I’m going to let the joint venture partners speak for themselves because now, they’re funding challenges of their own, not mine. Where we are with the process, at the moment, is we have just gone to a vote on submitting the exploitation plan. That occurred over the weekend. That vote - at the moment, we have three out of the four partners who have voted affirmatively for that. Now, we’re working with the other - final partner to get their vote. They’ve got about 14 days to do that. That vote then will come just before the exploration of the PSC. So, to maintain the rights on the PSC, we have to apply for the exploitation plan and for the exploitation approval from the government.
So, we have to submit the plan and apply for the approval. That needs to be done before December. So, the vote that we’ve just put in, as I've said, three of the four parties have voted in favour. The fourth one is considering their position but they've got 14 days.
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(20min delay)
