Good morning, everyone. Welcome to Woodside's 2026 Capital Markets Day in Sydney. I am Vanessa Martin. I am Woodside's Vice President of Investor Relations. A very warm welcome to everybody in the room, and every one of those joining us on by webcast. Today, we are meeting on the land of the Gadigal people of the Eora Nation. We acknowledge their continued connection to these beautiful lands and waters. We pay our respects to Gadigal elders past and present, and honor their enduring traditions and culture. A few housekeeping and disclosure points. In an emergency, please leave all your belongings behind and please follow the instructions of hotel staff. Could you also please silence your mobile phones for the presentation, and also read the disclaimer, assumptions, and other important information on slides two, three, and four of the presentation pack.
A reminder that all dollar figures in the presentation are in USD, unless otherwise noted. Slide 60 in the appendix of the pack also provides detail on key assumptions relating to the information we are presenting today. This morning, we will provide a detailed overview of how Woodside plans to deliver long-term shareholder value. Woodside has made great, strong progress in our business and in executing our projects since our last Capital Markets Day. Of course, we have welcomed Liz Westcott, its appointment as our new Chief Executive Officer and Managing Director. Today, Liz will highlight the strong foundations of Woodside's business, the enduring global demand for our products, and our actions underway to sharpen execution and maximize value for our shareholders. You will also hear from two members of our executive leadership team, Chief Financial Officer Graham Tiver, and Chief Commercial Officer Mark Abbotsford.
Graham will outline our new capital strategy and new shareholder distributions framework, while Mark will explain how we are shaping a more resilient and competitive portfolio to further strengthen returns. Following Liz's closing remarks, we will open the floor to questions, so could you please hold your questions until then. We also invite you to join Liz, Graham, Mark, and the other members of the Woodside leadership team who are here today for lunch following the presentation. Today's slide presentation is available to download from the woodside.com website. With that, please join me in welcoming Liz to the stage.
Thanks, Vanessa. A warm welcome to everyone joining us in person and online. Thank you for your interest and engagement as we position Woodside to meet growing energy demand and deliver long-term value. Since becoming CEO in March, I have had the privilege of meeting with our investors, customers, and governments around the world. My discussions have reinforced two things. First, Woodside is a highly regarded company with a strong track record of safe and reliable production and consistent shareholder returns. Investors trust us to deliver. Second, Woodside has significant potential to unlock even more value by leveraging our proven strengths and applying even greater focus towards long-term profitability and resilience. As we look ahead to the significant capital expected to be generated over the next decade, I believe we must be diligent and disciplined in how we allocate that capital and ensuring it creates shareholder value.
Today, I will set out the next iteration of our strategy to realize this potential and deliver greater value for our investors. Slide seven sets out three key elements of this morning's presentation. First, our strong foundations for growth and value. Our high-quality portfolio and competitive advantages reflect decades of proven project delivery and reliable operations. Near-term volatility is real, but long-term energy demand is robust. We are positioned to deliver value through the cycle. Second, how we will sharpen execution to strengthen our long-term profitability and resilience. We will demonstrate where we have raised the bar on efficiency, execution, and capital allocation to support long-term shareholder value. Third, how we maximize value by making our assets and capital work harder to deliver strong returns and value-accretive growth. Recent announcements show we will make disciplined decisions to improve portfolio value and performance, even when they are not easy.
Slide eight shows the holistic set of actions underway to lift performance and strengthen shareholder returns. This begins with the safe delivery of our Scarborough, Trion, and Louisiana LNG growth projects to schedule and budget. We expect to deliver sales of approximately 280 million barrels of oil equivalent by 2032 and generate more than $40 billion in adjusted operating cash flow over the same period. We are converting these strong foundations into higher returns and long-term value through specific actions. These include resetting our cost base, targeting $400 million in annual structural savings from 2028, applying a single capital framework under which every investment opportunity competes equally for capital, introducing a new shareholder distributions policy that aligns dividends more closely with underlying performance, with flexibility for additional returns. Setting a new 2035 net equity Scope 1 and 2 greenhouse gas emissions intensity target.
Further strengthening our marketing, trading, and shipping capabilities to unlock more portfolio value. Actively shaping our portfolio to focus our investment where returns are highest. Together, these measures recalibrate our business to drive a significant uplift in performance and reflects our unrelenting focus towards achieving our new portfolio ROACE target of 12%-15% by the mid-2030s. This is a bold and clear target for the organization to deliver for our shareholders, and we will demonstrate today how we intend to achieve that. Delivering long-term shareholder value builds on Woodside's proven distinctive strengths. From our beginnings in Australia more than 70 years ago, we now operate across three continents with established customers in major energy markets. Our 2022 merger with BHP's petroleum business delivered a step change in production and sales.
It added quality assets in Bass Strait, Mexico, and the Gulf of America to our Western Australian LNG, pipeline gas, and offshore oil business. With approximately 19 million tons per annum of operated LNG capacity, we are one of the world's largest independent LNG companies, contributing just under 5% of 2025 global supply. Our reliable, cost-competitive operations generate strong margins that support value-accretive investment and consistent shareholder returns. Since 2022, we have returned nearly $13 billion in dividends to shareholders. Together, the quality, scale, and geographic diversity of our portfolio position us to meet growing global demand for reliable and affordable energy. Slide 11 shows our Australian business, built over more than 40 years of operations. The large-scale, long-life North West Shelf and Pluto LNG assets anchor this business, providing resilient production and cash flow.
Both continue to produce with outstanding consistency, achieving reliability above 99% in the most recent quarter. They have established Woodside as a significant supplier to Asia's major economies, with enduring customer relationships across the region. Our LNG operations are complemented by domestic gas production that is vital to Australia's economy and oil assets close to regional markets. The BHP merger added Bass Strait gas and liquids production, and four months ago, we assumed operatorship of these established assets. Our existing footprint and quality infrastructure create a strong platform for future resource development and value creation. Our Scarborough Energy Project will add long-term production and cash flow as legacy projects come off plateau. Slide 12 shows our high-performing international portfolio and its significant growth potential. Our oil assets in the Gulf of America and Senegal include Shenzi, Atlantis, Mad Dog, and Sangomar.
Sangomar reached full production within nine weeks of startup in 2024 and exceeded targets by sustaining near nameplate production well into this year. Two major projects will drive a step change in growth and contribute to our ROACE target. Trion is targeting first oil in 2028, adding a new source of long-life oil production. Louisiana LNG, targeting first LNG in 2029, creates a major U.S. production platform and Atlantic Basin supply option. Together, these projects are expected to almost triple our international sales volumes through to 2032. We have built competitive advantages over decades of operating experience that underpin our performance and position us for sustained value creation. First, our global portfolio of high-quality assets provides a resilient foundation for growth and cash generation. It combines long-life, low-decline LNG and gas assets with high-return oil projects. Our current average breakeven price of $30 supports resilience through changing market conditions.
Second, operational excellence, highlighted by our exceptional average operated LNG reliability of 98%. Third, project delivery. Our decades of LNG and deepwater oil execution experience is critical as we execute projects that will more than double our operated LNG capacity over the next five years. Fourth, trusted customer relationships. More than 7,700 LNG cargoes delivered since 1989 have established us as a supplier of choice in major energy markets. Finally, financial discipline. Our investment-grade credit rating allows us to invest in growth while providing returns to shareholders. Together, these advantages differentiate Woodside and underpin our ability to deliver shareholder value and uplift ROACE. The strategic priorities I set when I became CEO in March will guide how we build on these strengths. As our growth projects move from execution to operations, our focus is on disciplined delivery of value.
Operational excellence means safe, reliable operations, greater efficiency, and an enduring commitment to social and environmental performance. Disciplined execution means delivering projects to schedule and budget, transitioning them into high-performing operations, and optimizing value through enhanced marketing and trading. Sustained value creation means actively managing our portfolio and directing capital to the highest value opportunities. We are enabling these priorities through a sustained shift in how we work, with a focus on simplifying the business and improving cost competitiveness. This includes building a global one-team culture with stronger accountability and adaptability, embedding digital and AI innovation where it creates value, and developing workforce capabilities for an evolving energy landscape. Operational excellence is fundamental to maximizing value from our base business. Slide 15 shows how a focus on sustainability is embedded through our business to support reliable operations and project delivery, reducing risk, protecting cash flow.
Safe, reliable operations and lower operational greenhouse gas emissions can increase plant availability, reduce unit costs, and enhance asset value. Community engagement and effective management of environmental and cultural heritage risks support regulatory approvals and continued access to resources. Strong customer and stakeholder relationships help us understand changing expectations, improving flexibility across transition scenarios. Together, these actions protect our license to operate and support resilient cash flows, higher returns on investor capital, and future growth opportunities. Slide 16 shows the link between operating performance, sustainability, and value in practice. The left-hand chart shows the consistent reliability of our operated LNG assets in Western Australia. Reliability of at least 98% for five consecutive years puts us in the top quartile of industry peers. This reflects proactive management of potential risks to safe, environmentally responsible operations. Safety remains our highest priority, and strong process safety performance is fundamental to how we operate.
Following a trend of improved performance over 2024 and 2025, we have experienced three process safety incidents so far in 2026. That is three too many. While none of these process safety incidents caused injury or lasting environmental impact, they reinforce the need to apply lessons learned and strengthen our controls. We are also demonstrating global industry leadership in monitoring and managing methane emissions. While our methane emissions are already at around 0.1%, well below industry benchmarks, we are identifying opportunities to reduce them further. Proactive monitoring, including offshore drone surveys and a helicopter laser survey over the Karratha Gas Plant, has identified and addressed potential sources of methane leakage. Slide 17 shows the major projects driving our current phase of growth and cash generation. Our delivery of each of these projects to budget and schedule reflects Woodside's proven track record of disciplined project execution.
Our Scarborough Energy Project offshore Western Australia is 99% complete and on track for first LNG cargo this year. We made good progress on commissioning and startup activities offshore, and initial supply of Scarborough gas has entered the warm end of Pluto Train 2 ahead of liquefaction. Scarborough offers large-scale, cost-competitive supply close to major Asian markets. With reservoir carbon dioxide below 0.1%, it is one of the lowest carbon intensity LNG sources for delivery into North Asia. Our Trion project offshore Mexico is 71% complete. The floating production unit is nearing completion, with integration activities underway in the shipyard. In Mexico, we have drilled 10 of the project's 24 wells and begun offshore installation works. Louisiana LNG is 32% complete, with construction underway across all three foundation trains.
This transformative project establishes Woodside as a multi-basin LNG supplier, complementing our established Australian LNG business with a major production hub on the U.S. Gulf Coast. Slide 18 shows how these projects lift sales volumes and sustain cash generation into the 2030s. Annual sales volumes are projected to rise by more than 30% to approximately 280 million barrels of oil equivalent once Scarborough, Trion, and Louisiana LNG are all producing. Adjusted operating cash flow is expected to be around $7 billion per year through to 2032. Some of you may remember the case we showed last year included Louisiana LNG expansion, contributing to sales volume growth to more than 300 million barrels of oil equivalent per year and $9 billion net operating cash flow.
This year, we have deliberately sought to make the outlook more clearly anchored in the portfolio investors can see today, with future opportunities competing for capital. Strong cash generation gives us choices on where to invest and creates options for long-term shareholder value. These include additional distributions, targeted improvements to an already strong balance sheet, or disciplined investment in value-accretive growth. Slide 19 sets out our existing growth options that leverage established assets, infrastructure, and capabilities. In Australia and the Gulf of America, infill wells and tiebacks can add production without a new supply hub. In Bass Strait, we are evaluating a four-well opportunity that could deliver substantial new volumes to Australia's East Coast domestic gas market. In Senegal, a potential second phase of Sangomar could backfill declining production, leveraging an established facility with exceptional reliability.
For Browse to North West Shelf, we are progressing regulatory approvals, technical definition, and contractor and commercial agreements. Combining our interests in Browse, upstream resource, and North West Shelf infrastructure offers a capital-efficient way to create value while delivering long-term economic benefits for Western Australia and Australia. Louisiana LNG provides scope for value-accretive expansion, with potential Trains 4 and 5 offering 11.1 million tons per annum of fully permitted capacity. As we assess these existing portfolio growth options alongside other opportunities, they must each compete under the new capital framework. Let me close this section with three key messages. First, our proven performance has built enduring competitive advantages that set Woodside apart and position us to deliver through the cycle. Second, our base business and approved growth projects are expected to generate more than $40 billion in adjusted operating cash flow by 2032.
Third, this cash generation, our global footprint, and high-quality assets give us options to sustain growth and value into the 2030s and beyond. Our clear ambition is converting these strengths into greater shareholder value. Let's now watch a short video that highlights our major projects in execution.
Woodside is entering an exciting phase of value-accretive growth. Across our global portfolio, we are building on our strengths of operational excellence and disciplined execution to deliver Woodside's next generation of major projects. Scarborough, Trion, and Louisiana LNG are central to that growth. Three major projects across three different locations, each playing to Woodside's strengths and each being delivered with a disciplined focus on safe execution and long-term value. Here in Australia, the Scarborough Energy Project is set to become Woodside's next major source of production and cash flow. The development leverages our existing infrastructure and decades of LNG operating experience. It brings together offshore production, subsea infrastructure, a long-distance pipeline, and expanded LNG processing capacity at the Pluto LNG site, creating an integrated value chain from resource to market. Scarborough is designed to support production of up to 8 million tons of LNG a year.
At the same time, the project will have capacity to contribute up to 225 terajoules of domestic gas a day into the Western Australian market. Now, after years of disciplined execution, Scarborough is approaching a defining milestone, being on track for first LNG cargo this year. This will mark the beginning of an important new chapter for Woodside as we supply the reliable energy our customers need for decades to come.
Here in Mexico, Woodside is building another important platform for growth and further diversifying our global portfolio. In water depths of around 2,500 m, Trion draws directly on Woodside deepwater expertise and experience delivering complex offshore development. Drilling and subsea installation are well underway, alongside integration and pre-commissioning of the floating production unit as momentum continues to build towards targeted first oil in 2028. At full production, Trion is designed to produce 100,000 bp d, supplying crude to international market with excess gas not used or injected, supplied into Mexico domestic market. As we move closer to first oil, Trion is set to become another important source of production and cash flow to Woodside.
Here in the U.S., our Louisiana LNG project leverages Woodside's proven strengths to position us as a global LNG powerhouse. Strategically located on the U.S. Gulf Coast, the project brings together Woodside's LNG expertise, global market access, and customer relationships with access to abundant U.S. natural gas supply. Louisiana LNG will connect U.S. gas resources with customers in key global markets, positioning Woodside to help meet growing LNG demand for decades to come. Louisiana LNG is rapidly taking shape. More than 2,700 people are now on site, with construction advancing across the three-train, 16.5 million ton per annum development. Train one is already over 40% complete as we build momentum towards targeted first LNG in 2029.
Scarborough, Trion, and Louisiana LNG bring together different resources and markets, but are connected by our common approach: disciplined investment, strong execution, and a focus on creating sustained value. These projects will shape Woodside's portfolio for decades to come, playing to our strengths, providing energy our customers need, and delivering long-term value to our shareholders.
Enduring global demand for reliable energy underpins Woodside's long-term value proposition. Our diverse portfolio positions us to help meet that demand while supporting customers' energy, security, and decarbonization goals. Population growth, rising prosperity, and improved energy access continue to drive long-term demand. The energy transition is occurring alongside this demand. Renewables are adding to energy supply, not simply replacing traditional sources. Slide 22 shows much of the demand growth comes from non-OECD economies, where living standards are rising, but energy poverty persists. In OECD economies, demand is expected to remain relatively stable. New sources of demand from AI and data centers offsetting efficiency gains. Countries are following different transition pathways and adopting different energy mixes, but all need affordable, reliable energy. Slide 23 draws on S&P Global's 2026 Multidimensional Global Energy Pathways Study. The study shows that the global energy mix varies across transition scenarios.
In all scenarios, the role of renewables increases as coal declines and oil and gas consumption remains resilient. S&P Global estimates $8.1 trillion in upstream oil and gas investment is required through 2045 under the emissions reduction pathway, reinforcing the importance of competitive new supply. Underlying demand for LNG and oil remains strong despite more frequent market disruptions and occasional short-term demand destruction. Since COVID, successive shocks from the Russia-Ukraine conflict to shipping disruptions in the Red Sea, Panama Canal, and Strait of Hormuz have disrupted supply chains and contributed to significant price volatility. Meanwhile, data centers have emerged as a major demand driver, with their global power demand growing at almost 30% a year. The response is telling. Customers have sought alternate supplies, redirected shipments, and invested in energy infrastructure rather than fundamentally changing demand patterns. LNG's flexibility and reliability have proved valuable through these disruptions.
Demand for new supply has spurred approval of a further 21 million tons per annum of U.S. capacity over the past 12 months. Oil also remains essential in sectors where substitutes are not readily available, with underlying demand remaining resilient. Woodside's reliable supply, trusted customer relationships, and diversified portfolio enable us to navigate this volatility and capture emerging opportunities. Slide 25 shows rising gas demand and declining domestic production in emerging Asia. That widening gap creates a significant LNG opportunity to support development and industrialization. In OECD markets, LNG supports system reliability, backs up renewables, and can displace higher-emitting fuels. In South Korea, Woodside LNG supplied to SK Gas from 2027 could enable emissions reductions through industrial fuel switching and lower- emissions marine transport. Our proximity to key Asian markets, established infrastructure, and customer relationships position us to capture this diverse demand.
Slide 26 shows significant LNG supply under construction, but further investment is needed to meet projected demand from the late 2030s. Recent history shows supply does not always enter the market when expected. Geopolitical events, project delays, rising costs, and changing markets can all affect timing and location of supply. For Woodside, disciplined investment means bringing supply to the market competitively and at the right time. Slide 27 shows substantial global oil demand even as the energy transition progresses. Demand is forecast to remain resilient in hard-to-abate sectors such as aviation, heavy transport, and petrochemicals, with growth in non-OECD economies offsetting declines across the OECD. Natural field decline creates a persistent gap between production and demand, and suppliers must replace that production while keeping supply reliable and affordable. Let me close this section with three observations. First, diverse demand drivers underpin the long-term outlook for Woodside's core products.
Recent events have reinforced energy security as a priority for countries across the world. Second, the long-term demand outlook for LNG remains compelling. Its reliability and flexibility support a range of uses, particularly in Asia, from industrial baseload power to backing up renewables. Third, markets will change, but competitiveness and resilience remain essential. We are focused on what we control: safe delivery on time and budget, operational excellence, and lower costs. Our high-quality assets combined with disciplined delivery, strong operations, and active portfolio management position us to convert this growing demand into sustained value. The following video shows how Woodside, as a trusted supplier, is meeting our regional customers' LNG needs.
Volatility across global energy markets in 2026 has reinforced the vital importance of energy security. While meeting our customers' immediate needs, we are also growing our global portfolio to meet our customers' long-term demand for LNG as a reliable, flexible, and versatile energy source. For emerging economies, LNG provides reliable energy for industrial demand and economic growth while providing an alternative to higher-emitting coal when used to generate electricity. For developed economies, LNG can complement renewables and support system reliability as new energy demands arise from AI and data centers.
To meet the growing demand for power, certainly countries will pursue renewable energies and maybe to some extent nuclear, but they will not be sufficient to satisfy the substantial energy demand growth. That is where gas-fired power plants should play a role. It is also clearly stated in the strategic energy plan that LNG would play a major role beyond 2050, even after realizing carbon neutrality.
In response to ongoing demand, Woodside continues to sign multiple long-term supply agreements with new customers in Europe and Asia.
We are very pleased to have signed the long-term LNG supply agreement with Woodside. This is more than a supply contract. For SK Gas, our combined heat and power plant, which is SK Multi-Utility in Ulsan, already had converted from coal to LNG. This demonstrates how SK can work with reliable LNG suppliers like Woodside to keep delivering energy for our customer while supporting decarbonization.
Woodside supplies LNG from stable locations with a proven track record of reliable operations, making us ideally positioned to meet these customer objectives. As we grow our portfolio and further strengthen our global marketing capabilities, we will continue to meet evolving customer needs while driving shareholder value.
Woodside's competitive advantages and high-quality global portfolio position us to capture enduring demand for reliable energy, particularly LNG. Let me now turn to the actions underway to convert these strengths into higher returns and greater long-term value. Woodside is entering an important new phase as we renew our focus on extracting more value from our growing portfolio. Strong cash generation from our foundation business gives us choices about where to deploy capital and how to best position Woodside for the long term. Sharper execution across the board puts Woodside in the best possible shape to deliver shareholder value through the cycle. It helps us navigate near-term volatility and capture maximum value from long-term LNG demand. It keeps us a low-cost producer so we can continue meeting customer needs and capture new market opportunities.
Further sharpening our project execution ensures we deliver our projects to budget and schedule, converting investments into cash flow at the earliest stage. Our focus on capital and portfolio management will drive disciplined investment decisions and make every dollar work harder. We have made strong early progress on the structured review of our business I announced in April. Building on this momentum and reflecting recent portfolio announcements, we have increased the program's target to $400 million in annual structural cost savings from 2028 against a 2025 baseline. This represents a material reset of Woodside's cost base and a renewed commitment to strengthen our resilience and global cost competitiveness. We are targeting savings across three key areas: portfolio optimization, streamlining our processes, and external spend reductions. Importantly, we are already taking decisive action to deliver these savings.
Our portfolio decisions, including divestments in Calypso, Sunrise, and Bonaparte CCS, are simplifying the portfolio and directing resources to opportunities with the greatest potential to create value. We are accelerating the deployment of AI and other digital technologies. At the same time, we are simplifying workflows, reducing duplication, and optimizing processes across our global business. We expect the program to deliver a reduction in our global workforce by more than 500 positions over time. These targeted savings can be achieved without compromising safe and reliable operations, regulatory compliance, or our social license to operate. Slide 32 shows how our emissions management is evolving to support long-term resilience as our business grows. At our 2026 half-year results in August, I announced the retirement of our Scope 3 investment and emissions abatement targets.
This aligned our portfolio with the pace of the energy transition, as markets for lower carbon products and services have developed more slowly than anticipated. Our new Climate Transition Plan, released today, explains how climate-related risks and opportunities are integrated into strategy, capital allocation, operations, stakeholder engagement, and governance. It introduces a new 2035 net equity Scope 1 and 2 greenhouse gas emissions intensity target. Specifically, we are targeting a 30% reduction in net equity Scope 1 and 2 emissions intensity by 2035, relative to a 2025 gross equity emissions intensity baseline. On current planning assumptions, we expect to achieve this through portfolio modernization, operational improvements, and carbon credits where required for regulatory compliance. This approach supports resilience and long-term value across energy transition scenarios.
As I outlined earlier, we are committed to a material uplift in Woodside's return on average capital employed, or ROACE, with a portfolio target of 12%-15% by the mid-2030s. Slide 33 sets out our pathway to achieve this. Return on average capital employed is a key measure of how effectively we deploy capital to generate returns and create long-term shareholder value. As our major projects enter production and strengthen cash flow, we are focused on making disciplined choices and maximizing returns from our invested capital. Our high-performing base business and committed growth projects provide a strong foundation, expected to deliver ROACE of around 10% based on our mid-pricing assumptions. Sharper execution across our business, active management of our portfolio for value, and implementation of our new capital framework provide a pathway from this base 10% to achieving our target.
The pathway towards a higher ROACE may not be linear. Attractive long-term investments may temporarily dilute ROACE while still delivering enduring shareholder value. This is more than a financial target. It sets the discipline for how we run, shape, and grow Woodside. In summary, Woodside is entering an exciting new phase. Our major growth projects are moving into production and are set to deliver sustained cash flow. We are determined to unlock maximum value from this next phase through sharper execution to extract more value from our portfolio. Our higher portfolio ROACE target ensures shareholder returns remain at the center of our decisions. We remain a growth company, but one that is focused squarely on long-term value. Thank you, and I will now hand over to Graham.
Thanks, Liz. Thank you, Liz, and good morning, everyone. It is great to see many familiar faces in the room, and for those that do not know me, my name is Graham Tiver, and I am the Chief Financial Officer for Woodside and have been since 2022. As Liz noted, we are introducing a new capital framework and shareholder distribution policy to support Woodside's next phase of value creation. In recent years, we have strengthened our portfolio and invested through the cycle for growth and value. Since 2022, we have returned nearly $13 billion in dividends, and that is fully franked for Australian shareholders.
As major growth projects come online, we are focused on maximizing returns from our assets and effectively deploying the cash that they generate. I will explain how our refreshed capital framework underpins this, guides our investment decisions, and supports long-term shareholder returns. Capital discipline is central to this.
Our capital strategy builds on a record of financial discipline, strong performance, and prioritizing shareholder returns. Our commitments to safe, reliable operations, financial resilience, and an investment-grade credit rating through the cycle remains unchanged. We have consistently funded growth while maintaining liquidity and returning value to our shareholders, with an average dividend yield of around 7.5% since 2022. While our priority for shareholder returns remains unchanged, the way we bring our capital decisions together is changing. We are introducing a single capital framework, an updated shareholder distributions policy, and a portfolio ROACE target to guide decisions, which Liz just touched on. Directing our capital to the highest return option should improve capital efficiency, lift ROACE over time, and strengthen shareholder returns. As we move beyond peak capital expenditure to stronger cash generation, this framework guides how we will deploy that cash.
Each invested dollar must create value, and every investment must compete with returning capital to shareholders. Our new capital framework is effective immediately. It begins with the cash generated by our safe and reliable operations. This provides the foundation for everything that follows. Balance sheet management and capital allocation are guided by a target portfolio, excuse me, ROACE of 12%-15% by the mid-2030s, and retaining our investment-grade credit rating through the cycle. Our new shareholder distribution policy is 20%-40% of adjusted operating cash flow, aligning returns more closely with the underlying performance of the business. It also provides greater flexibility for distributions to be through dividends and/or buybacks. We define adjusted operating cash flow as cash flow from operating activities, including lease repayments, including dividends paid to non-controlling interests, and excluding working capital. Just to clarify, it excludes capital expenditure.
Our first priority for capital allocation is funding a base dividend of 20% of adjusted operating cash flow, then sustaining capital, and then our committed capital. These commitments protect our assets, fund sanctioned growth projects, and give shareholders a prioritized share of cash generation that does not compete with new growth opportunities. Excess cash is available for priority two, to be used for portfolio and balance sheet management, discretionary shareholder distributions, and/or future growth opportunities. Growth capital must compete against discretionary distributions of up to a further 20% of adjusted operating cash flows. The board retains the discretion to make distributions above 20% if additional cash flow is available. Let me take you through these elements in a little more detail. Slide 38 shows the cash we expect our base business to generate.
In a mid-price environment, our base business and projects under construction are expected to generate more than $40 billion in adjusted operating cash flow from 2027 to 2032. This equates to an average of approximately $7 billion annually in adjusted operating cash flows. In a high-price scenario, this rises to more than $50 billion over the same period. The current forward curve reflects a stronger pricing environment and is upside to our mid-case, which we are presenting today. For 2027, this would generate an additional $5 billion in adjusted operating cash flows. As Liz described earlier, this year's plan is focused on current approved growth only. Key changes from the case we showed last year include the removal of Louisiana LNG expansion, T rains 4 and 5, and Beaumont New Ammonia, given our previously announced process to reduce our investment, which is now underway.
We have also rebased our $70 mid-price to 2026 real terms, which on an average is a lower price across the plan of about 5%. This does add some conservatism to the outlook. As mentioned, our current pricing and forward curves are well in excess of this assumption. This plan supports a delivery of an improved ROACE target and provides us with great optionality due to our strong cash generation and strength of balance sheet. Priority one maintains the business and gives shareholders a priority share of portfolio cash generation. Sustaining capital funds safe and reliable operations, production integrity, low-cost infill opportunities, and regulatory and environmental obligations. These will not be compromised. We will remain disciplined and seek efficiencies in our sustaining expenditure. Committed capital funds projects in execution. We are talking about Trion and Louisiana LNG.
Capital for any future sanctioned projects will become a part of committed capital in future years. The base dividend of 20% of adjusted operating cash flow ranks alongside these commitments, prioritized ahead of unsanctioned growth projects. This sequencing is very important. It prioritizes essential expenditure and the base dividend above discretionary growth. The remaining cash is then available for priority two, with the right-hand chart showing a significant expected increase over the next five years. This creates optionality where every dollar competes. Long-term ROACE will be driven by disciplined priority two allocation. In the $70 Brent case, we have got approximately $17 billion available for priority two from 2027 to 2032. In a high case of $85 Brent, that increases by approximately $9 billion to $26 billion. These funds may support balance sheet resilience through debt and liquidity management, additional distributions, or portfolio actions, or growth.
Growth receives no automatic allocation. Risk-adjusted returns for each investment must offer more value than the alternatives. That includes returning capital directly to shareholders. Stronger prices create more capacity, not less discipline. Slide 41 shows how it would be applied to both priority one and priority two. As outlined earlier, between 2027 and 2032, our base business and projects under construction are expected to deliver an adjusted operating cash flow averaging around the $7 billion per annum. Maintaining our investment-grade credit rating and strong balance sheet are key parameters to our capital discipline and value proposition to shareholders. This will be our first consideration under priority two. Remaining priority two funds are then available for additional distributions and growth. We have simplified our investment criteria for growth. All projects compete equally, and capital must compete against discretionary distributions to shareholders.
Every growth project must achieve an internal rate of return above 12% and be positive net present value under our low price assumptions. We will also consider a range of other factors, including market demand, risk, fiscal and regulatory settings, and strategic fit. In all cases, growth opportunities must further the achievement of the 12%-15% ROACE target by mid-2030s. Discretionary distributions of up to 20% of adjusted operating cash flow will be paid from priority two as dividends, buybacks, or a combination of both. The board has the discretion to make distributions above the 20% where priority two capital is not utilized for the balance sheet or qualifying growth projects. The choice between dividends and buybacks will consider share price and relative value at the time.
The decisions we make under our new capital framework will be based on long-term value creation, where growth must compete with shareholder distributions. Our new shareholder distribution policy will be deployed for full- year 2026 results and combines a sustainable base dividend with greater flexibility for additional shareholder returns. The base return is a targeted dividend of 20% of adjusted operating cash flow. As I mentioned, this does not compete and ranks alongside sustaining and committed capital expenditure. A further 20% may be returned from priority two funds through dividends and buybacks, or a combination of the two, with board discretion to go above this limit. Linking the base dividend to cash generation improves transparency and forecastability while reducing the effect of and the impact of non-cash earnings volatility.
We have made the additional distributions more flexible in their form, which can be beneficial to a broad range of shareholders. Slide 43 illustrates what the policy means for shareholders. Over the historical period shown, applying the upper threshold of 40% adjusted operating cash flow would have delivered higher distributions than the prior policy based on a range of 50%-80% of underlying NPAT, noting we paid at the 80% level. Distributions over this period would have totaled approximately $5.4 billion under the new framework, with the full 20% discretionary paid out, compared with $4.2 billion paid under the previous policy. This is an illustrative historical comparison, not a guarantee of future distributions, but combined with our historical and continued commitment to shareholder returns, it demonstrates the policy's potential upside for shareholders. As slide 44 shows, our strong balance sheet is fundamental to the new capital framework.
Our commitment to an investment-grade credit rating through the cycle remains unchanged. Gearing remains important, but does not tell the full story. We also assess liquidity, debt maturities, committed expenditures, and resilience at lower commodity prices. Our committed liquidity and staggered debt maturity profile provides flexibility and reduces refinancing risk. Under the indicative base case of $70 Brent and meeting our priority one obligations, we could be net cash positive by the early 2030s, illustrating the business's cash generation capacity. Current forward curves are above our base case, which has the potential to achieve a net cash position earlier. This creates significant opportunities for shareholder distributions and growth. Before I hand over to Mark, let me recap three key messages. First, having a single framework applies common criteria to every capital decision, directing allocation towards higher portfolio ROACE.
Second, shareholder distributions are linked more directly to cash generation of the business, with an enduring base dividend and flexibility for additional returns. Third, the balance sheet strength preserves our choices to invest, manage the portfolio, and return capital through the cycle. Together, these make every dollar work harder for sustained value. Thank you.
Thank you, Graham, and good morning, everyone. For those who do not know me, my name is Mark Abbotsford, and I lead our commercial, marketing, and trading teams, as well as our growth activities through mergers and acquisitions, business development, and also exploration. As Graham has outlined, every capital allocation decision must compete to deliver long-term value. Our invested capital must be managed in the same way through disciplined portfolio management. Our global footprint and established customer relationships provide us with a strong platform to extract more value from existing assets and to pursue disciplined growth. We focus on opportunities where our competitive advantages can deliver attractive returns. I will explain how Woodside's active portfolio management strengthens returns, increases resilience, and delivers long-term profitability. Slide 47 sets out three connected activities. Together, they guide how we maximize portfolio value towards our ROACE target of 12%-15% by the mid-2030s.
We shape our global portfolio around long-life, multi-basin LNG positions, supported by deepwater oil that deliver quick payback cash flows. We choose where we own, operate, partner, or recycle capital to concentrate investment where it delivers us the best returns. Two recent examples illustrate this. Our Louisiana LNG investment and subsequent sell-downs secured an Atlantic LNG supply position without the full capital commitment that comes with a greenfield facility. Our asset swap with Chevron improved joint venture and commercial alignment at our North West Shelf Project. Where another owner sees superior risk-reward, we will consider reducing or exiting a position, subject to delivering value to our shareholders. We applied this approach in divesting our Greater Angostura and Calypso positions in Trinidad, with the Calypso deal completing just last week. It drove our necessary but difficult decision announced last week to sell our interest in the Greater Sunrise fields.
We optimize by combining physical supply, customer contracts, shipping, and active risk management across the entire value chain, rather than treating each asset as a standalone production source. This captures more value from our production. As our portfolio and capabilities continue to grow, we expect optimization to contribute an additional 1% uplift in our ROACE by the early 2030s. We will grow through backfill, brownfield development, and expansion while selectively evaluating new basins where our capabilities and customer relationships provide us with an advantage. Existing hubs come first. New basin opportunities face a disciplined assessment. Our range of attractive opportunities and strong financial position gives us choice. Each must compete rigorously with each other and with shareholder distributions for capital. Slide 48 shows how we shape our portfolio across different product types and ownership models.
We direct capital where we have competitive advantage, multi-basin LNG, selected deepwater oil opportunities, and new energy paced to customer demand. In LNG, we build upon our experience developing, operating, and marketing supply globally and at scale. We seek growth where cost, scale, or customer relationships give us an advantage and expand our optimization opportunities. For deepwater oil, we target opportunities where our subsurface knowledge and project execution skills can provide us with an edge. Reservoir quality and quick payback oil underpin our investments, including both Sangomar and Trion. Demand for emerging lower carbon products has developed slower than what we expected. Investment must therefore follow market demand and deliver acceptable returns underpinned by durable policy support. Competitive economics and firm long-term customer commitments have underpinned LNG development for decades. We are open to new energy investment when hydrogen, ammonia, and CCS markets develop on a similar basis.
We retain the skills and market relationships to preserve these options without committing capital ahead of a strong business case. We also engage with customers and government on supportive policy and market frameworks to enable lower carbon solutions to become commercially viable. How we participate in the value chain also matters. We own and operate where control and integration add value, partner to improve capital efficiency or capability, and contract services to others who provide capability more efficiently. We recycle capital where another owner values an asset more highly. Growing scale gives us more supply options and more ways to capture value. The chart on slide 49 shows Woodside sales are expected to grow from approximately 212 million barrels of oil equivalent in 2025 to approximately 280 million barrels of oil equivalent by 2032, built on a strong foundation of existing operations and projects in execution.
We are also expanding our global customer portfolio, securing long-term LNG supply arrangements with high-quality buyers across Asia, Europe, and the Middle East. Recent agreements demonstrate the breadth of our customer relationships and underpin future sales. This list is intentionally long, reflective of our truly global portfolio. Of Louisiana LNG's total annual capacity of 16.5 million tons, approximately 4 million tons have been contracted to third-party buyers on a free-on-board, FOB, basis. Approximately 4.5 million tons can be allocated to HoldCo participants, which includes committed volumes to Williams. The remaining 8 million tons sits within the broader Woodside LNG portfolio. This approach provides flexibility to capture value, manage risk, and capital requirements in a growing but volatile market. We layer contracts across different pricing mechanisms and tenors, balancing revenue certainty with flexibility to capture value from changing market opportunities.
As our Atlantic and Pacific supply grows, we expect more opportunities to optimize pricing and destinations and our shipping position by directing LNG to the highest value markets. Integrated marketing, shipping, and trading capabilities help us capture additional value from market dislocations and shifting demand patterns. Slide 50 shows how we balance near-term sales certainty and cash flows with flexibility to capture value as markets change. Our mix of crude-linked, gas hub-linked, and fixed pricing spreads our risk across cycles whilst preserving our exposure to asymmetric upside. About 75% of our portfolio LNG volumes are contracted over the next two years, mostly at crude-linked or fixed prices, providing strong protection from short-term volatility. For the 2029 to 2032 period, 70% of LNG volumes are contracted, with a slightly greater exposure to gas hub pricing. Across our overall portfolio, uncontracted LNG only represents 20% of total volumes over this period.
Recent market volatility has renewed customer focus on secure and reliable LNG supply, playing to our operational strengths and our asset locations. Last week's agreement with QatarEnergy is one of the largest ever Woodside LNG deals and reflects increased global demand from high-quality counterparties seeking LNG from suppliers with a track record of delivery and reliability. In addition, agreements cover approximately 3.5 million tons to European markets, with flexibility to divert to other markets, demonstrating our multi-basin capability and continued disciplined execution of our marketing strategy. Woodside is one of the few global LNG companies with the scale, diversity, and balance sheet to manage an integrated portfolio of supply, customer relationships and commitments, and shipping. We have evolved our business from a point-to-point LNG sale, now managing an increasingly integrated global portfolio.
Today, we are further developing our trading backed by physical supply, combining our diverse production platform with shipping, infrastructure, and storage access to sell and move our product to where it is most valuable. Four levers will drive additional value. Firstly, consistently capturing optimization opportunities from within our existing portfolio. Secondly, growing our third-party traded volumes. Thirdly, leveraging increased supply from our global LNG positions. And fourthly, dynamically managing financial exposures as market conditions change. We are investing in systems, data analytics, and AI that will support faster and better-informed decisions. Robust risk management and governance, including clear trading controls, will underpin this approach so we can capture opportunities while managing our exposures. Together, these capabilities are expected to contribute an additional 1% uplift in ROACE by the early 2030s. Long-term energy demand creates significant growth opportunities. Our focus is where these opportunities deliver value.
As slide 52 shows, LNG demand is expected to grow strongly across Asia and Europe, while substantial new investment will be needed to sustain global oil and gas supplies. Our portfolio is well-positioned to capture these opportunities across both the Atlantic and Pacific basins. In the Pacific, our proximity to Asian markets provides a cost, geopolitical, and reliability competitive advantage. Scarborough will add new LNG supply, while Browse offers potential future growth by leveraging our existing infrastructure. In the Atlantic, Louisiana LNG will establish a significant U.S. Gulf Coast supply opportunity, with flexibility to serve European and global markets with scope for further expansion. Trion will add deepwater oil production with potential exploration and backfill opportunities. Beyond our existing portfolio, we are also evaluating opportunities through exploration, strategic partnerships, and M&A. Choice with corresponding discipline is an important advantage.
Given the strength of our base business, we can pursue growth where the economics are compelling. Each option is assessed against returns, execution risk, financial capacity, and the alternative of shareholder distributions. Let me close by summarizing our three portfolio priorities. Firstly, we will shape the portfolio by focusing capital where our assets, capabilities, and ownership choices deliver the most attractive returns, using sell-downs and divestments to optimize the portfolio. Secondly, we optimize the portfolio by combining global scale and supply diversity with enhanced marketing and trading capabilities to capture more value from our production and assets. And finally, we grow the portfolio in a disciplined way by preserving choice, requiring every opportunity to compete for capital and meet our return thresholds. Thank you, and I will now hand you back to Liz.
Thank you, Mark and Graham, and thank you all for joining us this morning. I trust our presentation has given you a clearer view of our plans to deliver long-term value. What you have heard today is that Woodside is building on our strong foundations to deliver sustained shareholder returns. As Scarborough, Trion, and Louisiana LNG move into production, we will enter a period of significant sales growth and sustained cash flow. Enduring demand for reliable energy supports continued investment in Woodside's core products, supporting long-term value creation. To capture that opportunity, we are sharpening execution and making Woodside more cost-competitive and value-focused. We are reducing structural costs and have implemented a new framework under which every investment competes rigorously for capital. We are also ensuring our assets and capital work harder for shareholders.
Our portfolio ROACE target of 12%-15% by the mid-2030s puts long-term shareholder value at the center of decision-making. Our new distributions policy supports durable returns with greater flexibility to return additional value. Together, these strengths and actions make a compelling investment case for Woodside. The plan we outline today leverages our distinctive strengths, including our global portfolio, proven capabilities, and deep customer relationships. We are putting those advantages to work, improving efficiency, reducing costs, and directing capital to the highest value opportunities. As we enter a new phase of cash generation, our focus is on disciplined delivery of value to create a more profitable, resilient Woodside. A Woodside that can help meeting growing and global energy demand, achieve our 12%-15% ROACE target, and deliver long-term shareholder value. Thank you.
Thanks, Liz. If everyone could just bear with us, we will just get ready for Q&A, but thank you very much. Try that again. We have got two roving microphones in the room. The team have got them there, and if you could just put your hand up when you are ready, and Tom's ready to roll, so all good. Yep. When you do ask the question, if you could please say your name and where you are from, just for the benefit of the audio and for those online. Can I ask that you limit to two questions, just so we give everyone the chance to ask. If you want to ask a question, just please raise your hand. I think Tom will let you kick off.
Sure. Tom Allen here from UBS. Congratulations, Liz, Graham, Mark, Vanessa, on the information released today with the new capital strategy. Just on the definition of how you are going to employ your new target for a return on average capital employed, will you apply it in the same way that your current long-term incentive plan works, where you will adjust the ROACE measure to exclude capital employed for major projects prior to their production?
Yeah, I will take that one, Tom. In the annual report that got released at the beginning of 2026, there was a revised executive incentive plan, and ROACE was introduced as part of the long-term plan. We have now released a revised capital framework, and the board is going through the process of understanding our revised ROACE program through the capital framework and how that needs to apply into executive remuneration. They will be continuing to look at the normal features for remuneration around attracting talent, ensuring we have a competitive package. The definitions we are using in the capital framework will be absolutely how we guide the business, and I expect the board to be contemplating that. We will not be changing our capital strategy for the organization to match the current definitions in the executive plan. It is more likely to be the opposite.
Okay, growth capital for projects that have not yet started production, that will be included in the way that you assess your ROACE.
Yeah, that is right.
Correct.
Tom, this would be—
Okay
100% reconcilable to the prima facie balance sheet.
Yes.
Profit and loss statement. It's, yeah, no adjustments.
Okay, that sounds like a helpful change. One of the challenges has been, Woodside have found a number of large growth projects historically, and have had indicated a willingness to enter into those projects with a higher equity contribution, so that has at times weighed on shareholders, and so it's helpful that that will be included. It would be interesting, Graham, just to hear how you might position the balance sheet against this new target. I think you made very clear that gearing is only one measure. Is there a through-the-cycle metric that we should think that you're going to aim for?
Yeah, I will kick off, and Graham will fill in. We are absolutely committed to the investment credit rating for Woodside. That is our overarching balance sheet metric that we're looking at. We recognize there's a number of features that play into that. Operating cash flow is a really big, important part, and that will be the guide. Balance sheet, liquidity, these features of priority two are going to be super important to the structure of what we do. I will let Graham add to the details on how you're balancing it.
Yeah, Tom, under a single capital framework, our overarching guardrail, non-negotiable, is investment grade. Today, we are BBB+. Within investment grade, and it is not jumping out on the capital strategy or capital framework one-pager, there is a whole suite of metrics that help us manage our investment grade guardrail. One of those is gearing. We have generally given that a higher profile. It is still very important to us. We will still report gearing on a half-yearly basis with our accounts. We look at our debt maturities, we look at what the macros are doing. So, in terms of, I guess, lifting up, we are absolutely focused where we were previously on maintaining investment-grade credit rating. Within that is a whole suite of metrics that we look at, including gearing, like I said, including liquidity, our net debt, our maturity profiles, et cetera.
Super important for us. Today, $8 billion in liquidity, $9 billion in net debt, and the cash flow is starting to open up as Scarborough comes online, Trion in 2028, and the first train from Louisiana in 2029. We are in pretty good shape. Well, I would say excellent shape. And you can see that in our net debt and gearing graph in the back end of my section.
Yeah, we have got another question. Gordon.
Oh, thank you. Gordon Ramsay, RBC Capital Markets. Another quick question on the capital framework. Just trying to understand the discretionary distribution and how we model that going forward. Looking at slide 62 in the back of your pack, it basically implies that it has to be at least 10% to match prior dividends that have been paid over the last, what, 12 years by Woodside. So, just trying to get a feel, Graham, whether that is at risk going forward. And I know the old policy was a minimum of 50% of underlying NPAT, and you paid out 80%. How do we look at the discretionary payment going forward? Is it excess cash, as you mentioned earlier?
Yeah. Yep.
I will start with that one.
Yeah, go.
When I think about our distributions policy now, I sort of think back to what we have had. We have had for more than 10 years a dividend policy of paying out under NPAT. We have now moved to a distributions policy. It has got more options with buybacks, and it is now paying out on the adjusted operating cash flow. So, we have made an adjustment to the backdrop. We had 50%-80% as our payout range. We have got 20%-40% as our payout range in our new framework. And what we have shown through looking at the last four halves is that the range we have got actually allows for a higher upside payout than the traditional 50%-80% did. We understand the importance of returns to shareholders. We understand that the 80% that we have maintained consistently for a number of payouts has been highly valued by everyone. That is part of our understanding.
We've shown that that would be, on those quarters, the equivalent of a 30% total payout under the adjusted operating cash flow. That's part of what we're thinking. What we can't do is promise and forecast, but the ranges are retained as they had been, a 50%-80%, a 20%-40%. We've got more options through the discretion, whether it's dividends or buybacks, and we've made, importantly, that commitment that the 20% is ahead of any growth investment consideration. So, that one is locked in alongside the commitments we've made under capital.
I think you've said it, Liz, but maybe just, Gordon, on page 43, we do a two-year look back, and the 80% NPAT equivalent, the policy we've been operating under for 12 or 13 years, over those two years would have been equivalent to about 31% of the new proposed policy. So, that gives you a feel for the upside. I can't look back and tell you whether that would have been paid out at the upside, but just to give you a feel of the sense of it. It's got more breadth in it, if you want to call it, in the range for upside. But first and foremost, as I was just touching on with Tom, we've got to make sure the balance sheet's in good shape.
We've got to have a look at what options are out there to grow ROACE towards our North Star of 12%-15%. Then we'll look at how that plays out into the discretionary returns. But yeah, I think it's really exciting, and it's great upside for our shareholders while allowing us to maintain a really strong business going forward.
Okay, second question relates to Louisiana LNG, and congratulations on the QatarEnergy transaction. Going forward, Stonepeak's contribution finishes this year in terms of the capital. Does that increase pressure on Woodside to enter into an agreement for sell-down and HoldCo or additional equity LNG sales to help contribute to the capital for that project?
Yeah, thank you. Louisiana LNG, the Stonepeak contribution and the Williams participation in Louisiana have resulted in Woodside having 57% of the total capex for this project. Yes, Stonepeak was front-loaded, so we've been benefiting from 2025 and 2026 from a 75% loading. But having 57% has given us the time and the patience available to be super disciplined in where we take transactions, and we continue to be. We have strong interest in Louisiana LNG. It is from a range of parties. As we've been showing, the market has been changing through 2026, and diversification is high on the agenda of companies in the energy sector. So, we do have interest from a number of parties in participating. We've secured the FOB deal with QatarEnergy. We have interest in offtake. We have interest in HoldCo participation.
The discipline we're able to exercise in bringing in a strategic partner for the next 20 years has been enabled through the original sell-downs, but it's also been enabled in how we've managed the business and the cash we've got available to continue to fund capital through 2027 and onwards to give us that disciplined time. I think it's fair to say it's hard to do deals in volatile times. Companies are trying to understand where the markets might be moving and dealing, so we need to be patient and work with them, but we continue to have good interest.
I got another question over. Yep.
Yeah. Morning, Adam Martin, E&P. Liz, Graham, Mark, I suppose first question just on sort of buybacks. You've always had buybacks as an option. You haven't really bought back any stock over the last at least 10 years, from my memory. Is this a pivot today on buybacks? You've obviously got a growing U.S. investor base as well. Franking credits aren't as important for them. Just talk us through how you think about buybacks now.
We were very conscious in moving from a dividend policy to a distributions policy and bringing buybacks into that discussion in a really deliberate manner. It is part of policy more so now. It was available, but it required a board decision. The way we will assess buybacks will be in a manner that reflects our underlying internal view of the assets, what the share price is doing, our view on the market, what the alternatives are. This is all part of that priority to discretionary distributions, competing with growth capital, competing with balance sheet activity. It will be part of the consideration that we will exercise. In a large part, it is informed as well by stakeholders and preferences. We understand a strong preference for fully franked dividends from the Australian shareholders. We have got an international shareholder base.
It is providing us optionality moving forward to be able to respond as we see fit.
I cannot add any more, Liz.
Yeah. Okay.
Thank you.
Thank you. Just a second operational question. Just on Pluto, I think you've got about, just over 1 TCF of reserves there, sort of seven or eight years of 2 million, 3 million tons production. How are you going on sort of trying to fill that ullage, whether it's other forms of gas, whether it's anything you could do on the 2C resource? Just talk us through that piece, please.
Pluto is a great asset and delivering strongly for Woodside today and will continue to do so. We announced a reserves uplift at the beginning of 2026 on the back of performance, so it continues to be a strong asset. We've recently completed new infill wells in three in the Pluto offshore asset. We've got plans for Pluto 09.
Nine.
We continue to see infill option. When we think about capacity, though, we've got Train 1 that had been and continues to be dedicated to Pluto. We'll start to share its capacity with the Scarborough project. That means our trains will stay fuller for longer. With Scarborough sharing the Pluto Train 1 facility, building up to the 8 million tons per annum that the Scarborough development is capable of, we've got optionality, and we are running it as an integrated asset. We run the two trains that we recognize the ability to send volumes to North West Shelf for the interconnector, domestic gas, LNG export capability. So a lot of options to keep capacity full at that location.
Adam, just to add, right down in the depths of the presentation in the appendix, there is an integrated flow table similar to what we provided last year, but updated.
We have Rob here next, and then, I think Ewan down the back, and then Mark here.
Good morning. It is Rob Koh from Morgan Stanley. Thank you very much for the preso. I have, I guess, a boring question for Mr. Tiver and hopefully an interesting question for Mr. Abbotsford. Mr. Tiver, just on investment grade ratings, I guess Moody's is one of your agencies, and they focus on an RCF to total debt metric. Given that you are now having a base dividend concept, have you had discussions with Moody's about how they might change their RCF metric to just that base dividend? Because I assume that is part of the alignment—
Yeah.
—of stakeholders. Does that actually give you more debt capacity?
Yeah.
I will not answer that question for you, Rob.
Rob, I am going to answer that quite generically. We are constantly talking to our rating agencies, whether it is something like what we saw come through last week with the Qatar deal, we are always talking to them. We do not anticipate any issues, is all I will say in terms of what we are proposing here. We have those conversations on a regular basis.
Okay, great.
To be frank, sitting behind this was not to get greater room with a rating agency. That has not been in our thinking at all. This is more about strengthening and improving value.
Yeah. Okay. Sounds good. Okay. Mr. Abbotsford, I guess I got a bit excited earlier in the preso because Ms. Westcott said that we were getting more of the trading, and you have talked about an extra percentage point of ROACE from optimization, and I guess that is nearly $1 billion in the 2030s. Is that the right kind of order of magnitude, and can you maybe just give us a little bit more color on the kinds of physical-backed trading activities that you will be planning?
Yeah. Great question, Rob, and maybe it was the more interesting one, Graham. I do not know. I mean, we are already at the moment doing a number of these activities. So we are actually, as you know, through the marketing segment, which you will see reported, already engaging a number of physical-backed trading activities. The opportunity for us is with Louisiana LNG, our portfolio significantly diversifies geographically. As I mentioned in the presentation, we have got significant optionality that sits, for example, in European positions where, in essence, whilst we have a backstop for 3.5 million tons of volume based upon those agreements that we described, those volumes can be moved to alternative markets where pricing signals, when cyclic price signals push them.
If we look at this year, for example, and it is a good example, so with our Corpus Christi volumes, we have now moved two of the cargoes that were otherwise earmarked to flexibly go into our European positions across to the Far East, leveraging our shipping position, and of course, seeing the pricing spread that has emerged between JKM and TTF. That is a good example of the sorts of opportunities we will be pursuing. With scale and with increasing diversity in your portfolio, the number of opportunities will increase, and that is why we see the opportunity for a significant uplift. Of course, like anything, trading margins are going to be driven by volatility. So we will see some variability in that ROACE return. In the current environment, we have heightened volatility.
If we had an environment with lower levels of volatility, you should expect some variability, but that is what we expect to see over the cycles.
Ewan from the back.
Morning, guys. Ewan Minogue from Barrenjoey. Just one from me on growth. You talk about exploration, M&A, strategic partnering. Can you give us more color around what growth you might be targeting? Beyond the returns framework, is it diversification or growth into particular basins or products, or are there any other considerations that we should think about?
Yeah, growth is an important part of the future of Woodside. We remain a growth company, and what we are highlighting today is how tightly we are going to be chasing value. So we have the four brackets of growth that we identified in the presentation today, which is the organic growth, the portfolio growth that we have around our established assets today. We continue to have discussions with strategic partnerships, looking at M&A opportunities and exploration. We wanted to flag that we are not limited by what you can see and we can put titles to on pages today. So that is part of how we think about our growth going forward. But we know every growth option needs to compete. It will be competing for the growth available capex. It will be competing for the distributions with the program. We are not bound by a geographic bias.
Certainly, the portfolio opportunities with your established assets offer you the brownfield capability, the ability to get growth with lower CapEx by utilizing existing infrastructure. We are not constrained to that. We are looking at options around the globe. I will let Mark add if you want.
Yeah, I think you have addressed it well, and maybe to preemptively address a question that will come around, say, for example, the North West Shelf preemption opportunity that sits in front of us. The lens that Graham, Liz, and I have gone through today is exactly the lens that we will look at that type of opportunity through. Is it consistent with strategy? What does the macro look like? What does the balance sheet look like? Does it deliver value, and how does it compete versus our alternative uses for capital?
We have got a question from Mark here, then there is a question over the back of the room, and then there is another question in the middle of the room.
Thanks. It is Mark Wiseman from Macquarie. Just on slide 33, the bridge from 10% ROACE up to 12%-15%, I was just wondering if you could unpack the capital and returns part of that. How do you get to the 3% in that component, and how have you modeled the 1%-3%? Because it sounds like that is beyond the growth projects that are in execution phase. Is this bolt-on acquisitions? Is it something else?
I'll start and then let Graham or Mark add to this. This chart, there's quite a bit happening on it. The committed projects, Scarborough, Trion, Louisiana LNG, and our base business all contribute to the 10% on the left. The sanctioned world that you're familiar with Woodside, is in that 10%. The sharpening of our execution and our focus on maximizing value is where we get our uplift. The point you were making is at the bottom there on the capital strategy, how does that deliver additional ROACE? You may recall in Graham's section, we talked about the $40 billion of the adjusted operating cash flow that we anticipate coming from the investments we've made, and how $17 billion of it across this six-year period is available for these priority two types of investments.
When you prioritize that level of investment with the attention on value that we will give it, we can see how you can uplift ROACE for the organization from the 10% plus the strengthened execution section. We can see 1%-3% more value through buybacks, through deploying the capital and the cash available in a really disciplined way, having all investments included, seeking greater than the 12% return, being very disciplined with our portfolio, ensuring every part of the capital that we have invested is adding value. You've seen our portfolio activity of recent, where we're tidying up early-stage projects where we don't see runway to being value -accretive for shareholders. When you do all of those things, that's where we see that 1%-3% coming through.
Now, just to round out, very simply, Mark, priority two, you would have heard me mention, and you can see the graph, there's at a $70 mid-case, and I think it's a $9 or $10 JKM, we are sitting on $17 billion of cash that goes into priority two. That's putting that to work. It's not letting it sit in the bank account. This is really around buybacks, distributions, shareholder returns, in the form of buybacks or dividends, and its potential growth options as well. So it's putting that $17 billion to work.
Great. Thank you. Second question, just on the balance sheet, the 10%-20% gearing guardrails that you had previously, am I right in saying those are released? I think the discussion in the past was you're a little bit over 20%, but the priority has always been investment-grade credit.
Yes.
And the actual cost to your value—
Yeah.
—was very minimal, going down a notch anyway. I guess what I wanted to get at is, you have a lot of infrastructure-style assets in the portfolio. You should be able to tolerate more than 20% gearing. Some of your LNG peers do. Is there a signal here that you are wanting to actually enhance returns through running a higher gearing ratio?
No. To be frank, no. What we're saying is that, as I touched on earlier with the question from Tom, I think it was, in terms of the capital framework and bringing it together, our North Star, our guardrail, is investment-grade credit rating. Sitting within that is a whole bunch of metrics. Gearing is one of them. Yes, we were just above 20% for the half -year. Will be, my view, what I'm seeing today, will be below 20% for the full year, and I think I said that to Rob in the Q&A session at the half-year results. You know, we'll still report. We look at it. We look at it with a whole suite of other metrics. But it's not indicating that we're going to stretch that.
If the opportunity's there and Mark brings along a great opportunity, a growth opportunity that can deliver an IRR that's going to drive us towards 15%, let's have the conversation, and we'll weigh all that up, Mark. But underpinning all of this is we will not jeopardize or put at risk our investment-grade credit rating.
Thank you. It is Henry Meyer from JP Morgan.
Hi.
Hey, Graham.
Hi, Henry.
Expand on the gearing a little bit more. Can we confirm that the 20% target is gone now? Is it still there?
Yes, it is. The target is no longer front and center on our capital framework, but we will report it regularly, like we do today, and we will talk about it. We will talk through the analysis and the movements on it, but it is not a target in the framework as we move forward. It forms a part of assessing our guardrail of investment-grade credit rating. That will be combined with liquidity. It will be combined with our debt maturities. We will be having a look at what the prices are doing. It feeds into it. Just because it does not have a target between 10% and 20%, it does not make it any less important in our assessment of our decisions as we move forward, because it all feeds into that guardrail of investment-grade credit rating.
Okay, that is clear. Thank you. If I can still hold onto this as the first question. Could you share an update on the strategy for the LNG carriers for Louisiana? Just number of carriers you think you might need, the ship capacity to contract those, and if you do have gearing constraints potentially that could limit charter terms.
I will just have a start on that. I mean, the shipping strategy is interwoven with the marketing strategy. It is not sitting there as independent of that. We aim to be, balanced along in shipping, and it is very much informed by the portfolios that we are building in Louisiana and the need for shipping going forward. We are doing a phased approach into strategically getting additional ships, and we have been deliberate in entering the market in a number of stages. It allows us to manage the profile, as you are saying, the debt maturity and the leasing of that, and it also allows us to adjust our plans as markets evolve. But Mark has got the detail for you.
Henry. I think where we are at the moment for Louisiana LNG, on my slide, you will recall the reference to the 8 million tons. 8 million tons into Europe is roughly eight vessels. 8 million tons into the Far East on 100% of the volumes is roughly double that. Earlier this year, we ran a process, and we secured five vessels for delivery in the late 2020s. To the balance sheet question, and Graham will kick me when I get this wrong, but they only come onto the balance sheet upon delivery.
Yep.
One of the things that we also focused on through our procurement activity is actually reducing the tenor of a lot of those charters, which we're pleased that owners were responding to. Historically, many ship charters, even that we've had, have been 15 or 20 years. Some of the charters that we've had more recently have been as short as, long-term charters have been as short as seven years, which also reduce that balance sheet impact. We expect, like everything in our portfolio, we don't want to be in the market at a single point in time, whether it be upstream gas procurement for Louisiana LNG marketing sales, and also shipping. We'll be in the market progressively, and we will be in the market for quite a significant number of more vessels, but they will be delivered in the early 2030s.
A quick third question, if I can. The $400 million cost-out target's significant.
Bigger than we've seen. We've touched on this over the last few months. Could you confirm if that's a nominal reduction from 2025 cost base, or is there still some escalation that would come through there, and it's on a nominal basis, a little bit less than that?
Maybe I'll just, I'll sort of explain a little more on the cost-out target. We took up the merger with BHP in 2022, and as some of our slides showed, we inherited a BHP workforce. We inherited, through the acquisition of Louisiana, the Tellurian workforce. We've now inherited an ExxonMobil workforce in Bass Strait. We have grown materially as an organization. Each one of those transactions had synergies, and costs were displayed and taken out of the business. But when we look today at our organization, we can see there's room for efficiencies. What we're talking about is taking cost out of the base that would otherwise have been there in 2028 without this initiative. So your nominal and real questions are all important, and we will be able to identify on balance sheet going forward exactly where you're seeing this.
The costs in 2025 that we saw associated with work, we are going through a simplification process of how we do work. We can see that we have duplication in roles, duplication in effort, and we can see opportunities to increase productivity, often through the deployment of technology. It does not need to be AI in some cases, but yes, AI as well. So we can see line of sight to this level of cost, and it will be structurally out of our business, relative to what you would have otherwise seen in that year of 2028.
There is a lot of moving parts. Woodside is not a static entity. What we look like in 2028, we will have operating business in Mexico, we will have an operating business in the U.S. standing up ready for first LNG. Scarborough is in operation, it is not a project. A lot of change. We will need to help all of you understand the ups and downs, but we can see that we can pull out what is essentially structural cost built into the machine to the level of $400 million per annum.
Thank you. We have got a question in the middle of the floor here. Thank you.
Venn Purnell from Vision Super. Thank you for your comprehensive presentation. I just have one question. Will management look at realigning incentives in light of all these changes, in particular, the focus on ROACE? Thanks.
Yeah, thank you. The board look at the executive incentive plan, and management look at the program for the whole of Woodside. We run a scorecard that applies to a large number of the staff, and there is a subset of that that is applied to the executive. It is always reflecting on the business and the strategy of the business, the ambition the business has, and setting targets, but then maximum and stretch ambition, something that the directors will work through. I think in relation, in particular, to the ROACE target, which became a metric as part of the long-term incentive plan for the executive pool, the directors will be reflecting on the changes we have now recommended and supported as what we have shared today. So it will continue to evolve as we do.
A question from Nik over there.
Yeah, thanks, Liz, Graham, and Mark. It is Nik Burns here from Jarden Australia. Just a question on the new capital framework. Graham talked about the increased predictability, forecasting dividends moving from NPAT to operating cash flow.
I am impressed. Do you think we will do any better in forecasting operating cash flow over NPAT? I must admit, particularly around things like cash tax, and thanks for giving some guidance this year for this year, but hopefully going forward, that will be the case as well. We now have to estimate a number between 0% and 20% on the priority two returns. In that light, I guess the timing and cost and Woodside equity in new growth projects is very important in our ability to be able to forecast that.
Just wondering if you could give any color on particularly the next two years in terms of what new discretionary capex could be coming through. You have outlined a range of projects that you are looking at, but in terms of ones that could come through and influence that range, anything you could say about that would be appreciated. Thanks.
Yeah, Nik, look, I will help you there. The adjusted operating cash flow does still require estimation. Our view, though, is because it no longer has the non-cash items in there, that true uncertainty, particularly with our lovely derivatives that we have got in our business, those things are no longer part of it. Things that move wildly are no longer there. The types of items we are predicting are more predictable, and we will continue to provide guidance, and we have updated guidance for this year reflecting the changed methodology. We do believe it will be more predictable. It is certainly more representative of the operation that we run and returning shareholders what is truly operational returns. That is an important part. The 0%-20%, as we highlighted, is part of this priority two.
It really is the adjustment between going from 50% to 80% of NPAT and going from 20% to 40% of the adjusted operating cash flow. We have got a track record of recognizing the importance of returns to shareholders. We have paid at the top end of the range. We have highlighted that across the next six years, there is $17 billion sitting in that opportunity set, and we can see capacity to do a lot of things. We can see capacity to pay shareholders, you know, right to the top of the range if we have those good years, as well as making important competitive growth investments. Your particular question around, can I tell you what we are going to be investing in for the next two years? No, I cannot.
But what I can say is that the types of investments we are thinking of that compete are the large material investments, the Scarboroughs, the Trions, the Louisianas. We are assuming that our tiebacks, our more modest activities that often have greater than 30% rate of return, will be in our sustaining and then become committed capex. We are talking about the material activities, and they will be things we will talk to you about at those points. That is maybe what I can share.
That is great. Thank you. My second question is on Browse. There has obviously been a lot of equity changes announced, both with Browse and North West Shelf over the last 12 months or so. Can you talk about, given what has happened globally, Middle East conflict, et cetera, how you are viewing the project as it stands today and what your target equity position would be down the track at FID or at startup, both upstream and in the North West Shelf as well? Thank you.
Browse remains a fabulous resource for Woodside, 11.4 TCF. It is a resource that is the largest undeveloped gas resource in Australia, and the role Australia plays in Asia, and as we showed, the emerging demand in Asia for LNG is very material. What we are seeing with the equity moves is a number of parties worldwide recognizing the importance of undeveloped resources today. The ability to participate in the development of an upstream resource in the Asia-Pacific region with customers almost guaranteed based on proximity, based on interest, is high. You are seeing some of our long-term partners. I mean, Shell has been a partner with Woodside sort of since kindergarten, and 40-plus years of working with us on this asset. They are now saying, "Look, it is time for somebody else to come in." BP sold down their equity.
We are seeing a lot of good interest in Browse. It is still an early-stage project. It will need to compete for capital. It will have to meet the hurdle rate, and it will have to meet the hurdle rate for every partner, of which there are now four, five. There are a lot of parties for whom this needs to be the right investment. But we are seeing that enthusiasm, so we continue to work it, the technical work, commercial work, the regulatory approvals. You will see us still out there talking about it, because we see the potential. We see the potential to make this a great investment, but it still has to do all of that hard work on its own. In regards to the equity we hold, we make every decision as they present.
The pre-emption rights that we took during the year with INPEX was a very considered decision from both commercial perspective and from retaining the development pathway that we saw as the highest value for Woodside shareholders. We will continue to consider as opportunities present themselves with movements around the right equity position. I think Mark explained it well. We remain open to hearing if others see more value than we do, and how would we optimize our capital going forward? What else do we want to do with this? What is the right level for us in particular assets? They are all part of the discussions that we will have.
Thanks. We have a question over on the left.
Thanks. It is Cameron Needham from Bank of America. Just intrigued by the decision to use a 12% IRR hurdle. From memory, Louisiana was sanctioned at a greater than 13% IRR. I guess one would expect trains four and five to have superior economics given it is brownfield expansion. So don't want to put words in your mouth, but feels like the current framework might actually make sanction quite likely at some point. Just intrigued to get a little bit of color from yourselves, the process that you went through internally, why 12% IRR is the right hurdle rate. Just given, again, from memory, it is in line with the LNG IRR you had at last year's CMD. How do you guys get comfortable that that is a mechanism to actually drive better returns from here? Thanks.
We had a good discussion about our move to the single framework for all capital investments. As you rightly point out, we had three different hurdle rates for the internal rate of return based on the type of investment. It was clear to us that all investments should compete. We needed a single framework. We are LNG-led as Woodside. The majority of our portfolio is LNG. The orientation to the LNG metric of 12% was high. We will be looking, though, at a range of things. This is just the floor. You need to meet that hurdle. It doesn't mean you are home and hosed and you are being developed. It is one feature that we will need to clear. But we look at the risk-adjusted value of all of our investments.
We will look at the uncertainty, whether it is cost schedule, regulatory approvals, fiscal regimes, partner contributions, customer offtake, demand, all the features that go with different investments, and they will feature into what becomes a risk-adjusted view of the investment's quality. Importantly, though, with the IRR hurdle, new energy now needs to sort of step up to the plate. But it doesn't mean that oil has somehow got a free game either. We need to look at the full suite of risks and opportunities with each investment. But we wanted to show that there is going to be a threshold floor at which the investments will need to clear. When we thought about that, it was in line with our 12%-15% ambition. We could see that investments needed to be at that scale to meet the 12%-15% ambition.
It is not going to mean that we don't stop chasing value just because we hit 12%. Not at all, because there will be competition. Different investments will be able to clear that more easily, and they will compete for capital alongside all the risks that I just spoke through. So there is no sort of direct formula that an investment is going to get a go. Of course, it has to compete now with the distributions that we have been talking about, not just the other capital opportunities.
Thanks, Cameron. I think we've got time for one more question. Yep.
Thank you. Rob Koh here from Morgan Stanley again. Can I maybe just ask about your accompanying document here, the Climate Transition Plan? Just can you give us some of your thoughts around moving to an intensity-based target and shifting the baseline for measurement on that versus the previous absolute target, please?
The Climate Transition Plan that we've released today, maybe just to start with, we will be running a session in a couple of weeks where some of the team will be able to speak deeply to a lot of the content, so we can handle more in-depth questions. The intensity target was a very deliberate discussion. We think about the role that LNG is playing today in the transition in the energy system and its role in supporting so many countries and companies in meeting their decarbonization goals. We wanted to set ourselves a goal to make sure our operations continue to strive to be the best they can for Scope 1 and 2 emissions, while recognizing that our product should not be constrained while doing that. An absolute target would tend to favor a constraint in your growth output. We therefore picked the intensity.
It incentivizes operational efficiency. It incentivizes you to chase down the molecules while not burdening you with the ability to meet targets whilst continuing to grow the value of the portfolio. That's why.
Thank you. I think that is all we have got time for.
Well, I would just like to thank everybody for the questions. I think we are more caught by time than lack of interest, so thank you again. There will be a number of Woodside people, they will have badges on, in case you ask somebody that does not work for us, that you can come and speak to over lunch. We are more than happy to have your questions and see your interest, and I look forward to engaging with many of you again moving forward. Thank you very much.
Thank you.
Just a reminder, we have got our fourth quarter report, which will be released on the 20th of January , and the annual report on the 23rd of February . Also, as Liz Westcott mentioned, on November 23, we will hold a Q&A session on the Climate Transition Plan. We will be reaching out about that, but also please reach out to the team if you have any questions. Thank you.