woodside set to rocket!, page-15

JohnnyThunders,

Do you mean there has been a Pluto Reserves downgrade since FID, or do you mean the projected future Reserves growth hasn't materialised?

Because WPL still report on their website Reserves of 5 TCF for Pluto and Xena. If there has been a downgrade large enough to threaten the viability of Pluto and they haven't announced it, they would be in breach of their disclosure obligations, wouldn't they? Listing known incorrect Reserves on their website would be extremely problematic.

At any rate, 5 TCF should be enough to feed a 4.3Mtpa LNG plant for 15 years.

And reserves additions have not been large - hence no second train.

This is inarguable. Extremely disappointing results from the exploration program, a good way to blow a few hundred million dollars.

Doubt they will be price takers with options to go to NWS, Pluto, Wheatstone, Gorgon, Standalone new build, FLNG perhaps.

While new build and FLNG are possible, the cost blowouts, technical problems, regulatory issues, political factors and LNG glut risks make any new LNG projects in the NWS unlikely IMO, because they are just too risky.

Far more likely that the gas will go to expansion of existing projects. Of those, Pluto obviously needs the gas the most, and has space for up to five trains in total from what I understand.

Hess also has gas in Equus but it's not enough for Pluto II by itself. However it's also not enough for any standalone development, so Hess will definitely be looking to monetise it somehow.

IMO WPL needs to make discoveries or otherwise get its hands on feedstock through acquisition - both are going to be difficult and expensive which, as you note, will impact ROI.

I don't honestly see them making any discoveries themselves for Pluto II. They would have drilled their best prospects first and they were all either dry or subcommercial. Acquisition or some sort of GSA is their only hope for Pluto II. And while it will impact ROI, keep in mind what I said earlier about Pluto II benefitting massively from reduced capex - so while ROI will be reduced, it should still be profitable.

Last I looked BRU had the Canning locked up and BPT, DLS, SXY have the Cooper Basin locked up. Perth Basin is largely taken.

I wouldn't say any of these basins are 'locked up' - they are taken, yes (particularly the Canning), and the majors are moving in, but the Cooper in particular has opportunities and is the first that is likely to be developed.

So the problem isn't that they've already missed the train. The problem is, as you pointed out, the Board's inaction.

Agree CSG was a good dodge for WPL. CSG being such a dud is what makes dry shale gas in the Cooper Basin a likely goer.

I don't see CSG as a dud in the technical sense - Queensland CSG is the best in the entire world. You can get wells that cost $800k to drill and complete that put out 3+ MMscfd. You'll never get that in shale, or in the Cooper conventionals.

WPL clearly didn't appreciate the potential there, when others like Origin and Santos did. It's the social license and environmental issues that are crippling CSG, which nobody saw coming. Plus the fact there's just not enough CSG for all 4 projects. I see this as EXACTLY the risk for Cooper Basin dry shale gas. Too many players, too few sweet spots.

My point was putting all eggs in the LNG basket was risky and it hasn't paid off with Pluto, Browse or Sunrise. Diversification through rebuilding overseas portfolio or other will take time

I don't disagree with that. However this Leviathan prospect is looking attractive for WPL precisely because of their focus on LNG.

Liquids is what makes money for oil and gas companies.

Agreed, but liquids are getting increasingly high risk and hard to find. There is no reason why WPL can't focus on both liquids and LNG as long as the opportunities are there. It comes back to risk vs reward. If you farm into a bunch of high-risk liquids prospects and they don't come off, you better hope you have some stable income from LNG to back you up.

Liquids, LNG and shale/CSG on the other hand might be getting a bit much for a company of WPL's size. The unconventional plays require a completely different set of skills.

Anyway, my view. Is on the right track but has to play the cards in its hand. Or throw a few out and draw some new ones.

That's a fair summary. I definitely hear what you are saying about the Board being profligate with comparatively risky Australian LNG projects while being stingy on other opportunities, but maybe that's looking at it through the benefit of hindsight.

As usual with these things, WPL's performance is not just black or white. There are some positives and some negatives.