Good afternoon, everyone, and welcome. To those of you who are here with us in the room, thank you for joining us over lunch. To everyone on the webcast, thank you for joining us, and welcome to our U.S. edition of our Capital Markets Day for 2026. I am Vanessa Martin. I am Vice President of Investor Relations. Joining me is Liz Westcott, our Chief Executive Officer and Managing Director, Graham Tiver, our Chief Financial Officer, and Mark Abbotsford, our Chief Commercial Officer, who leads our marketing, trading, and growth activities. Before we begin, today's discussion does include some forward-looking statements, so could you please make sure you read the disclaimer, notes, and assumptions on slides two to four of our presentation, and also on slide 60.
The full presentation is available on our website, and the references today to the slide numbers will refer to that presentation so that you can follow along. All of our dollar figures are in U.S. dollars, and any of the outlook figures you see are indicative and not guidance. Last week in Sydney, we set out our plan in full, we will not repeat the presentation today. Liz will give a short recap, then I will ask some of the more frequently asked questions that we have received from our investors, and we will also keep some time at the end of the presentation for questions from the room. For Liz, those who were not with us in Sydney last week, can you please provide a recap of the plan, and also our competitive advantages. We are starting on slide eight and slide 13.
Yeah, thanks, Vanessa. It is an absolute pleasure for us to be here in New York and for all those online. This is a really lovely format, so we are looking forward to hearing your questions at the end and looking forward to being able to share with you in a more casual way the plans that we outlined. Woodside, for those that are not as familiar, we are Australia's leading energy company with 40 years experience. Today, we started the LNG industry in Australia. We were the pioneers there, and we have got deep operating capability of both LNG as well as deepwater oil. So really, a company with long track record. We have delivered for shareholders since 2022, which is the year the merger with BHP occurred, $13 billion has been returned to shareholders from Woodside. It is a highly valued stock in the Australian market.
What we have been doing last week and what we are doing today is really outlining the next phase for Woodside. We have three major projects that we have been carefully executing that are now starting to come through into production, and they are going to generate material cash flow for the business moving forward. The question that we have been answering for you is, what are we doing with that. What are we going to do with that cash. How are we going to put it to work. The answer is, we are going to make every dollar compete for value. We are going to be really disciplined about that, and we have set some quite public targets that you can hold us to around how we are going to generate additional value for shareholders in the form of ROACE and returns. Back to these three projects. Scarborough, an LNG development in Australia.
It is on target to have first LNG this year. No surprise, 99% complete. We have got gas at shore. It is an offshore development. We have got the gas at shore, warm end commissioning of the LNG train, moving into cold end. You then get LNG. Very exciting for everyone in Australia. Trion, deepwater oil development in Mexico. It is 71% complete, so really materially moving. The floating production unit is being constructed in South Korea. That is largely complete. We have got 10 of 24 wells drilled in Mexico. Drilling will continue. Very exciting, targeting first oil 2028. Louisiana LNG, a three-train development is the commitment down in Louisiana. That project is 32% complete. All trains under construction. Train one, 41%. It is moving ahead on target for first LNG from 2029. These projects are going to deliver a sales uplift for Woodside of 30% from where we sit today.
We are looking at 280 MMboe sales by 2032, and a corresponding adjusted cash flow that is appropriate for that. We are seeing $40 billion of adjusted operating cash flow being returned through the base business and these projects across the period 2027 - 2032. That is super exciting, and how we are going to deliver value for shareholders through it, and that is part of what Capital Markets is going to talk to you. Some really distinct actions were described during our presentation. We have got a $400 million cost-out target. It was increased from the mid-year where we had $350 million. We are seeing a structural reduction in costs from 2028, referencing the 2025 actuals. We have got a range of initiatives behind that, and we will talk to that in a little bit. We introduced a single capital framework.
All investments will compete under a single framework, and we have carefully described how we balance between shareholder returns. We have a refreshed and changed distributions policy. It is broader than a dividend policy, and it is 20%-40% of the adjusted operating cash flow. Importantly, it talks about a dividend that is going to be prioritized ahead of any growth projects, and then the opportunity for additional discretionary returns. We outlined a program to get our return on average capital employed, ROACE, to 12%-15% by the mid-2030s. 2025 actual was a 6.7% ROACE. We know we have got work to do to continue to deliver value, and we will talk a little bit more about how we get there. The international part of our portfolio is really important to Woodside, and part of why we want to be here in New York and talk to investors here.
Today, international represents about 1/3 of the sales volumes of Woodside. By 2030s, it is going to be more than half. We are going to take it from a 66 MMboe support to 155 MMboe. It is going to be very material. We are truly a global company and becoming even more so. I will just give you a few of the summary headlines around the competitive advantages that we think of for Woodside and that others agree with us on. World-class assets with the 40-year operating history, we have established ourselves through the Australian presence, but now internationally, with really high-quality assets, whether that be in Australia or Mexico, Senegal, and the U.S. The breakeven cost is sitting at $30 a barrel for these operating assets, so very resilient quality assets.
The way we operate them is recognized in the industry as world-leading. Our operational reliability, sitting at 98% on average for LNG, is top quartile. We are a reliable supplier. Project delivery. We punch above our weight in our ability to deliver these mega projects and do that on cost and schedule, and we keep demonstrating that. In 2024, we started up Sangomar. It came onto plateau within nine weeks of startup. We had great reservoir outcome. We stayed on that capacity for a year. Scarborough is on track for first LNG this year, and our other major projects, Trion and Louisiana, likewise. A trusted supplier to our partners. Deep relationships, particularly into Asia, Japan, and South Korea, among many, where we have delivered more than 7,700 cargoes. I think, competing with Cheniere, we were still ahead of them last year.
We are a material supplier on LNG, and continue to be recognized for that. Then the financial discipline. The investment-grade credit rating is very important to us. BBB+ today. That will be something that Graham will talk more to around how we are protecting that balance sheet. The guarantees we give you that that is a priority for Woodside, and our ability to simultaneously grow the business and return to shareholders. $13 billion, as I said before, returned since 2022. Very trusted as a partner, as a supplier in the industry, and we are now wanting to share with you how we are going to unlock even more value. Thank you.
Thanks, Liz. Liz has touched on a number of the areas that we will go into in some more detail over the next half hour or so. Liz, maybe for those who are not as familiar with our projects, you talked very briefly about Scarborough, Trion, and Louisiana, but could you maybe talk through the information on slide 17, and their impact on slide 38, and just provide a bit more color on those projects?
These projects are a material part of the future of Woodside, and as I mentioned, Scarborough is sitting there poised to have first LNG cargo, and a very exciting milestone in the Australia business. The Scarborough development sits alongside the Pluto asset, and these two facilities will be operated in a joint manner. That combined asset group is looking to deliver $2.9 billion of adjusted operating cash flow per year when they are online. That is material uplift to Woodside. The Trion project, scheduled to come on in 2028, as I mentioned, it has got drilling underway. We have got offshore installation underway, floating production unit there in South Korea, floating storage offtake unit in China. It is all coming together in Mexico. When it is online from 2028, it will deliver another $1.1 billion of adjusted operating cash flow. Louisiana, three trains, they start up consecutively.
Train one, 2029, train two to 2030, train three in 2031. When that operation is fully operational at rate, it will also deliver another $1.1 billion in adjusted operating cash flow. These are built into that outlook we've been sharing of where we're heading as a business. The 280 MMboe, 30% uplift in sales, and that average adjusted operating cash flow of $7 billion per year, and really underpins the options for Woodside moving forward and the ability to return value to shareholders. We've intentionally anchored the presentation this year around the commitments and the portfolio that you see. We've distinguished the growth opportunities as literally that, opportunities that will need to compete with each other and with alternatives in terms of returning to shareholders. The profile you see today is the profile that Woodside's committed to.
Thanks, Liz. Slide 12 sets out our international business, and slide 68 also provides an overview of Louisiana LNG offtake. As Liz said, the Louisiana project is a significant project for Woodside. Mark, this will make Woodside an LNG producer on the Gulf Coast. How is that going to change Woodside and how we manage our portfolio, and how is the offtake from Louisiana being put into the portfolio?
Yeah. Thanks, Vanessa. It's wonderful to be here in New York. Shame we didn't bring the Perth weather with us, which was blue skies when I left. I think to answer the question, and in fact, just following on from a little bit of the table conversation that I was having over entrée, just to take a backward step and say, well, what underpins Woodside's strategy? About four or five years ago, we recognized the increasing importance of the Atlantic Basin and Atlantic Basin supply nodes to underpinning what would be a truly global LNG platform. We'd gone about that previously through looking at FOB offtake deals from various different proponents on the U.S. Gulf Coast.
What often happened is, and this was the discussion over lunch, you'd be getting a phone call every six months saying my pricing had gone up or my project was running late. We started to recognize that execution and delivery of our strategy was actually outside of our hands. As Liz said, we've got 37 years of operational experience in Australia, delivery of projects. We know what we're doing. So if we're going to wear equity risks, then let's get involved in a project ourselves. That drove us to be scouting to say, well, where was the best U.S. Gulf Coast opportunity for us that would allow us to bring those skills that we've developed over decades in Australia to build a cost-competitive platform here in the United States that then would enable us to actually deliver upon that strategy?
That underpinned ultimately the acquisition of Tellurian, the final investment decision into Louisiana LNG, and as Liz said, that will deliver us around 16.5 million tonnes of LNG capacity by the early 2030s. Now, of that 16.5 million tonnes of LNG capacity, we do have a slide that is a donut slide that describes how we are trying to allocate that volume across our portfolio. Roughly half of that volume will go into the Woodside traded portfolio and be treated exactly the same as how our volumes in the Asia-Pacific are managed. We will look to deliver those volumes to end customers. Those end customers may be in Europe, they may be in the Far East or Asia, Latin America, and other markets, but we will bring that into the core Woodside portfolio.
Of the remaining half volumes, around 4 million tonnes will be put into what we would call low volatility constructs, so typically your FOB deals. You would have seen a couple of weeks ago, we did announce a large deal with QatarEnergy for 3 million tonnes per year for 20 years. That is, I think, the largest ever deal Woodside has done on a single basis. That falls within the category of those low volatility constructs that helps us manage ultimately price and basis risk. Then the remaining 4 million tonnes or about 4 million tonnes would be allocated through divestments of our holding company. Already, we have sold 10% to Williams. The remainder of that volume would be allocated to future HoldCo participants.
That is how we are allocating our volume across our portfolio, how we are trying to deliver upon building a truly global platform of Atlantic Basin and Pacific Basin supply, which I think is a very unique proposition. One of the other things that we have successfully done in the U.S. is through the introduction of Williams through our holding company, through Stonepeak coming into the infrastructure company, is we have also been able to do that without the full integrated greenfield investment that you would otherwise see. We have managed to actually reduce some of our capital exposure as we construct those three trains. Thanks, Vanessa.
Thanks, Mark. Liz, you announced a cost-out target as part of some of the initiatives that we have put in place, and at our half-year results, we talked about a $350 million cost out. At CMD, we advised that it increased to $400 million per year. Can you talk through where those savings are coming from and how we will make sure they are structural in nature?
Running a very efficient business is very important to us. Today, we are sitting at that $30 breakeven price. We need to continue to make sure we are highly efficient alongside that safe and reliable business. They are not in competition. We are going to continue safety, we are going to continue the focus on reliability, but we saw opportunity to be more efficient. As I mentioned half-year, we saw line of sight to $350 million. We now think that would be $400 million structural saving from 2028. It comes in three distinct buckets. The first is through portfolio decisions, and you have seen us take action in 2026 and earlier, but in 2026 on three material divestments, the Calypso asset in Trinidad and Tobago, the Sunrise asset just sitting north of Australia, and the Bonaparte CCS.
They are examples of portfolio decisions that will create structural savings as we move forward. We have also, though, seen opportunity to simplify how Woodside works. We have grown quite materially and through acquisition, and so we have inherited a BHP workforce, an Exxon workforce in the east coast of Australia, Tellurian workforce in the U.S. We could see that there is still opportunity for simplifying the business and getting efficiencies. So we have been looking at duplication of roles, workflow design, optimizing how processes work, and at the same time, deploying technology and AI where that makes sense. That is going to unlock a lot of value. Across those initiatives, we saw as well the opportunity to reduce the global workforce. We highlighted we saw 500 roles being freed up through all of this work. So we do the work, we reduce, we enhance the process, and the roles become available.
Very targeted structural savings that we are going to be able to report back to you through the regular reporting cycles on how we are achieving that, and you will be able to hold us to account.
Thanks, Liz. Graham, another big announcement last week in Sydney was our new capital framework and distributions policy. Slide 37 sets out the new framework, and slide 41 talks to how we will allocate that under that policy. Can you maybe walk us through the new framework?
Sure. Thanks, Vanessa, and good afternoon, everyone. What we have done here is we have brought together what we have today, capital allocation framework, which is really around project hurdles, growth opportunity hurdles. We brought together a capital management framework, which is really how we manage the balance sheet, and an NPAT, or a profit-based dividend policy into our new capital framework, which is effective immediately. What we are doing here is we are really wanting every dollar to compete to ultimately drive towards the improved ROACE performance of the business, which is at 12%-15% by the early 2030s. We start with our cash generated, so our adjusted operating cash flow, which is effectively our operating cash flow on the financial statements, adjusted for lease liabilities or lease payments, I should say, and non-controlling interests. So bringing it back to our version or our share of the cash flows.
That is through our safe, reliable operations. As Liz touched on, through the period of the Capital Markets Day here from 2027 - 2032, we are talking at a $70 real price. We are talking about $40 billion in cash flow generation. If you were to take our high price assumption, which is $85, that will grow to $50 billion. If you were to just take the forward curves just for 2027, there is upside there again in 2027 of around the $5 billion mark. With that operating adjusted cash flow, or adjusted operating cash flow, from our safe, reliable operations, we then talk about our priority one capital allocation. That starts with our dividend, which is a cash-based dividend policy where we start with 20% of adjusted operating cash flow. We then cover our sustaining CapEx, and then we cover our committed CapEx.
What we are trying to say here is our shareholders, our owners of the company, will be granted 20% of our adjusted operating cash flow. It does not compete with any other part of the business. It is there alongside our sustaining capital and our longer-term capital commitments. You then drop below that into our priority two capital, and what we are talking about here is competition for every dollar. We have another component to the cash-based dividend policy, which allows us to pay up to 40%, and that could be through dividends or buybacks, and then the board has the discretion to go above and beyond. We then have our balance sheet. The key guardrail here is maintaining our investment-grade credit rating, and then we have growth opportunities.
Within growth opportunities, we have said it has to be a minimum 12% IRR, and then the NPV needs to be cash flow positive at our low price assumption, which is $55 today. There is competition, and we will make decisions on that as we work through it. We will be looking at internal factors, external factors, and we will be looking at how best to allocate that cash to grow our ROACE for our shareholders. That component of that $40 billion cash flow, once you allocate to the priority one capital, you are still talking here about $17 billion over the Capital Markets Day period being available for that allocation through priority two. If you were to take the high case, that grows to $26 billion. Competition, growth does not get an automatic allocation.
It must meet our hurdles. Then we will make the determination from there when we compare it to the likes of returning to our shareholders. We have tried to capture it all on one page to be able to clearly show how we are looking through allocating that cash to grow our ROACE as we move forward.
Thanks, Graham. You have talked a little bit around the new distributions policy and how it fits into the capital allocation framework. Can you maybe talk to it in a little bit more detail about what it means for investors and how this is different and how it is beneficial for them?
Yeah, sure. Thanks, Vanessa. Our dividend policy was 50%-80% of our underlying NPAT. What we have now is a distributions policy. I say that on the basis that through distributions, we have a very clear option for share buybacks. Through the distribution policy, we have moved to a cash flow-based policy, based off our adjusted operating cash flow, as I touched on on the previous slide. The first 20% is allocated under what we call priority one, so it sits along sustaining. It does not compete. It is a mandatory dividend allocation to our shareholders based on our adjusted operating cash flow. We then have the ability to pay up to a further 20%, up to 40%, of adjusted operating cash flow in the form of dividends or share buybacks. Then the board reserves the right to go above the 40%.
We think this is a better reflection of Woodside as we move forward, and it reflects the underlying cash flows of the business. As both Liz and Mark have outlined, we have our existing really strong base cash flow today coming from our base business. We have then got three new projects starting with Scarborough this quarter, then Trion, and then Louisiana LNG coming on. The cash generation grows as a part of that, and we see this as a better methodology to be able to allocate and distribute that cash as we move forward. Thanks, Vanessa.
Thanks, Graham. Liz, slide 43 takes a look-back comparison, but a question we have had from shareholders with the change in your distributions policy is this a plan to reduce dividends?
Well, it's fair, we've had that question a lot, and no, it is not a plan to reduce dividends. We've provided this slide to help guide you in that regard, but we truly understand the importance of returning to shareholders, and we know that our consistent performance of paying at 80% NPAT has been highly valued. And discussion at our tables talked about the predictability of dividends being really important to investors in general. What we've done here is provided a policy that not only is not going to cut your dividend, but it has the potential to pay you more. And the look-back that we show on the slide here, the last four halves of dividend payments, we can see that our new policy has that potential to return greater over the period.
In fact, the 80% payout that we did make was a cumulative $4.2 billion for those four periods. We're now looking at a potential we could have paid $5.4 billion. The equivalency is that it's at about 31% of our adjusted operating cash flow seems to equate with the 80% NPAT on average. It will all be price-dependent, but it's just a guide that this new policy is absolutely not reducing dividends and has that potential to pay higher as the market moves forward, recognizing that it will also have that competition with growth as we assess the right levels going forward.
Thanks, Liz. Maybe another question for Mark is, we've had a lot of new U.S. LNG supply which has been sanctioned, and we do expect some tightening of competition in the early 2030s. Could you maybe talk us through slides 50 and 51, and how Woodside is managing its marketing portfolio in this light?
Thanks, Vanessa. Woodside, for again, that 8 million tonnes that we referred to on the donut slide that I previously discussed, we will bring that into our broader equity portfolio, and what we want to do is layer those volumes into the market over time. As Liz has articulated, we have a cost-competitive business, and what we want to do is ensure that our marketing strategy ensures resilience to the downside, but also provides us with exposure to the asymmetric upside. And obviously, we're in one of those environments as we speak where you're seeing quite a fat right-hand side tail event.
We want to make sure that we have a portfolio that gives us the right level of exposure, but also the flexibility at the right time when we see maybe the fundamentals indicating that the market is not so exuberant, to also take some risk off the table. And that's exactly the strategy that we've been putting into place, not just today, but over the last couple of years. Now, as we look forward into the short to medium term, and we look into the period 2027, 2028, 75% of our portfolio is committed under contracts, and most of those are linked to oil links, Brent and JCC links, leaving us a residual exposure around 25% to the spot markets, which are obviously providing us with a significant level of upside at this point in time.
When our Scarborough project starts production soon, that will provide us, obviously, additional volumes that we can place into the Asia-Pacific. When we look forward to the period 2029 to 2032, we have about 20% of our portfolio exposure being currently uncommitted. We've also been quite active in the last couple of years signing up to long-term SPAs, again, part of that broader layering strategy. Just over 11 million tonnes of long-term LNG contracts have been executed by the organization for, in general, portfolio sales that we've executed over the last couple of years. One of the things that we've also been looking to do, and again, this is largely driven by our Louisiana LNG position, is to build offtake points in Europe. So, of those 11 million tonnes, around 3.5 million tonnes is specifically related to flexible arrangements for LNG supply into Europe.
By flexible, what I mean is we have the ability, but not it's an option, the right, but not the obligation to deliver volumes into that market. So, if we see an environment where there's an arbitrage opportunity between JKM and TTF, we have the shipping capacity, we have the flexibility in our contracts to move volumes and extract additional value. One of the things that we do see, and Graham touched upon our ROACE targets, is one of the things as the marketing portfolio grows in terms of scale and diversity, we see an opportunity to extract additional value from the portfolio where we see around a 1% ROACE uplift being attainable by the early 2030s by leveraging the flexibility and optionality that sits across our assets, but also our contract portfolio.
If we then take a little bit of a step back and look more broadly at the macro environment in the Asia-Pacific, we see continued strong demand, particularly in South Asia, where we see roughly tripling of demand from 60 million tonnes to up to 180 million tonnes of demand growth between today and 2040. When we look at the European markets, we see approximately 40 million tonnes of incremental demand over that period, and that's data provided independently to us from Wood Mackenzie. To get back to the ROACE and delivering value, our increasingly integrated portfolio, flexibility that exists with our portfolio, the growing scale in our portfolio, I think provides a very unique proposition for Woodside to extract additional value through optimizing what is going to become an increasingly global portfolio by the early 2030s.
Thanks, Mark. Liz, Mark's talked to marketing's proposed contribution to the ROACE target, but obviously we've set a ROACE target of 12%-15% by the mid-2030s. Can you talk us about the plan to get there in addition to the marketing point?
Yeah, thank you. We will be holding Mark to his contribution, as you can see on this slide. The basis of our build-up here starts on the left-hand side. The operating business that we've got today, the projects that we've talked about that are under construction and will come online in this period, they're supporting a ROACE uplift from, as I said, about a 6.7% level at 2025 actuals through to 10%. But we had ambition and continue to see more opportunity in the portfolio. What you've got is the building blocks. So, 10% at a notional $70 barrel price point. The cost-out discussion that I gave you, that will increase ROACE by 0.5 of a percent. The marketing and trading capability, the contribution to earnings through those activities increase ROACE by 1%.
And then the portfolio work, the competition we will place on the growth projects between the distribution options, the buybacks that we have once balance sheet is measured, is another 1%-3%. We are demonstrating to you the commitments we are making around hitting 12%-15% by the mid-2030s. Yes, price plays into this. This is based on the $70 pricing. You will be able to hold us to account. Scarborough online, on budget, Trion, and the startup of Louisiana, really big unlockers for doing this. Then we have the cost-out program, we have the marketing contribution. That will be visible in our accounts as we move forward.
We will make sure we explain all of those priority two decisions, the use of the discretionary distributions, any commitments we make under growth, so that it is clear to shareholders that we are honoring these commitments and that we are on this track.
Thanks, Liz. Mark, slide 47 shows a huge amount of portfolio activity this year, and slide 19 talks to the opportunities that we currently have in the portfolio. How is the portfolio changing, and where does growth start to come from beyond 2032?
Thanks, Vanessa. I mean, as Graham said, every decision that we will be making will be underpinned by making sure that independent or incremental decision delivers value to the organization, both in terms of its resilience to downside outcomes, but also its contribution to internal rates of return being above 12% to get you to the starting place to a discussion about whether we want to invest in a particular opportunity. Clearly for us, discipline about those growth decisions is going to be critical. Also, as Liz has touched upon, we will look to simplify the portfolio where someone else may see incremental value over and above where we see, or where we do not see necessarily line of sight to be able to achieve those objectives. Liz has touched upon the Calypso transaction in Trinidad and Tobago, which completed about two weeks ago.
We made a difficult decision a couple of weeks ago also to announce an exit of the Greater Sunrise fields. We announced a strategic review and a process to investigate possible alternative options for our Beaumont New Ammonia project. We have rationalized our portfolio through our swap of our Wheatstone interest to Chevron, in return for their North West Shelf interest, which we expect will complete during this quarter as well. All of these things are around driving simplification to our portfolio, focus on our portfolio where we see we bring competitive edge and incumbency to the table. When we look forward to the growth of the organization and the committed projects that we have in place at the moment, in 2025, 212 MMboe of sales.
By the early 2030s, when Louisiana LNG trains one, two, and three are operational, we see that rising to 280 MMboe. Beyond Louisiana LNG trains one, two, three, we have articulated four things on this slide in terms of existing organic opportunities for growth. One is we have a fully permitted expansion for Louisiana LNG trains four and five that could take that production capacity to 27.6 million tonnes. We have our Browse opportunity in Northwest Australia, which is effectively a backfill to the North West Shelf project, which we acquired some additional equity, and that is in the process of completing at the moment, that we are looking to mature also that could deliver incremental growth in the 2030s.
We have a portfolio of smaller but infrastructure-led opportunities in the Gulf of America, but also off the Gippsland coast of Victoria in Australia, where we see opportunities for infill tieback opportunities. Generally relatively small but highly economic opportunities that we can look to bring online. Finally, we also have our Sangomar phase two development, offshore Senegal. This project has been exceptional in terms of its production performance since startup. We have an opportunity to potentially bring in a second phase of that development to unlock some additional resource there. There are four opportunities sitting there, all competing with each other for capital, all competing with additional shareholder distributions, and all needing to satisfy, obviously, our base criteria for getting allocation to investment capital.
We will then, of course, look, we have an exploration portfolio, relatively modest spend at the moment, but we are looking at the opportunities to bring in new resource into the portfolio through the drill bit in the early 2030s. We will selectively look at M&A, particularly asset-based opportunities. If you look at Trion, Sangomar, Scarborough, Louisiana LNG, these are all opportunities that came in through the portfolio through direct resource capture, through asset-based acquisitions. We will look at those opportunities as well, but again, reinforcing every opportunity is going to be looked at through the lens of that capital allocation that Graham described.
Thanks, Mark. We've got some time for some questions from the room. If you do have a question, if you could just raise your hand, and we'll provide a microphone for you. If you could please introduce yourself and where you're from for the benefit of those online as well, that'd be appreciated. Thank you.
Craig Shere with Tuohy Brothers. I have three, two are pretty quick, I guess. Thoughts on potential timing for the rest of the Louisiana LNG HoldCo sell-down. Can we expect that at least by first half next year? Thoughts about the latest, you can FID Louisiana LNG cluster trains four and five to maximize your brownfield advantages. I mean, you got labor on site and stuff, you don't want to have hiccups. If you can opine about the long-term value of LNG carriers and how content you are with your portfolio.
Well, great set of questions, Craig, and appreciate all of that. I might take the first two and pass the carrier question across to Mark. Louisiana sell-down, we continue to have strong interest in Louisiana. The counterparties are very active with us. We have needed to be patient. Parties this year have had a number of events that they've needed to deal with. Some of our counterparties have needed to manage their books and understand exactly how they're going to get their own LNG in 2026. Doing deals in the period of volatility is challenging.
There's a need for us to be patient, but we're looking for strategic partners, ones that will stay with us for the decades, ones that bring complementary skills or capabilities to the table, and we're making sure they truly understand the investment that they're taking on so that those relationships and partnerships have duration. But it is progressing. I can't give you a timeline. The next question was around the expansion opportunity, and I think what we've shared today is that the expansion at Louisiana will be a growth opportunity that has strong merit today. We're continuing to proceed with the pre-FEED activity, but it doesn't necessarily get a free kick relative to the other options that we have on the table. Yes, we're mindful of the sort of, I guess, the general view that continued execution of construction of projects has value.
But this is a market that is moving quite materially as well. The construction market, whether it is LNG or data centers, is very active. There is a lot of supply chain inputs that companies are needing to grapple with. So, there is plenty ahead of us still before we take a decision there. So, there may be just two updates for you on that, and I will pass across to Mark.
Yeah. On the question of LNG carriers, I mean, I think for Woodside as an organization, again, for that 8 million tonnes of Louisiana LNG and our equity portfolio, we are a delivered seller. So, we want to have access and certain access to LNG tonnage. We also need to make sure that we are managing the balance sheet implications, obviously, of bringing long-term tonnage onto the books. But one of the things you do not want to be in a situation with, and again, the carrier market is probably one of the most volatile markets you will see. I mean, currently, spot rates for LNG carriers are around $25,000 a day. When the arbitrage, and it is a question of when, not if, when the arbitrage opens between the Atlantic and the Pacific, you can see those rates explode.
And you can see them easily go to $500,000 a day. So, you do not want to be caught in a situation where, one, you are putting flow assurance or your asset at risk because you cannot actually lift your volume through a lack of access to shipping, or alternatively, you are giving a lot of that commodity benefit or arbitrage benefit to the holder of infrastructure. So, our position was, I suppose, simplistically speaking, our strategy is to be balanced to marginally long from a shipping standpoint, and then optimize from around that position, not be exposed to the short-term market, which can really bite you. But obviously, we have to work very closely with Graham and team to make sure that the additional tonnage that we bring onto our books are also manageable from a balance sheet standpoint as well.
Maybe just to continue on with trains four and five, it does fit perfectly into sort of the priority two capital that we spoke about with the capital framework in that, as Liz touched on, it has got to develop the right economics, it has got to compete against other capital options within the portfolio, and there are several of those, and then it has got to compete against additional returns to our shareholders, and also keeping our balance sheet healthy. So, it is a really good example of how we are thinking about it and trying to drive that cultural and organizational thinking around how to think about deploying our capital to the most effective opportunity.
Yeah. Hey, Jason Gabelman from TD Cowen. Thanks for the presentation. Two, if I could. First, on the priority two capital, how dynamic is that with the balance sheet? Would you look to preferentially strengthen the balance sheet, especially in an environment where commodity prices are high, and then perhaps have the payout ratio be higher down the road once the balance sheet is in a stronger spot? My second question is just on what's going on in the Middle East. We've all seen here in the U.S. the impact of the LNG flow disruption on interest in U.S. LNG, but are you seeing that impact interest in Australian LNG and some of the backfill opportunities that you have over there? Thanks.
They're both really good questions. While we could all answer, I think maybe Graham could take your first one—
Sure.
—on how we're going to work the balance sheet and recognizing we're in a strong starting point, then Mark maybe can comment on the Middle East. He's quite close to it.
I'm not sure, Derek, if we can bring up slide 44. I think it's worthwhile calling out, we've got a slide here on our gearing and our net debt. Based on our reference case and the three projects that are in execution and about to deliver, we will be net cash positive in the early 2030s, and that's on a $70 real oil price. That's the far right diagram there. Our base case has us in a very, very healthy position. What that says is that we can look at how to deploy that balance sheet strength across those growth opportunities and across returns to our shareholders. What the underlying guardrail is we must maintain investment-grade credit rating. We're BBB+ today.
We'll look at our gearing, we'll look at our debt maturities, we'll look at our liquidity, and we obviously look at our net debt. We'll always start with the balance sheet, and when we put up the reference case, which is pretty well what we have today, we're in a pretty healthy situation. Our challenge and opportunity is how we deploy that in the best possible way forward. We'll look at both internal factors, external factors, as I touched on previously, to ensure that we don't jeopardize that credit rating or investment-grade credit rating, but also then deploy it into the best returns for us, which could be buybacks, it could be an investment in a new growth project.
Yeah, I think the second part of the question, we could spend a long time talking about it. I mean, if you put yourself in the shoes of, say, a Far East or an Asian LNG buyer, the word you often hear from them is, "I really want to be able to diversify my portfolio." If I'm particularly focusing on an energy complex, I'll be looking to diversify amongst the various different, whether it be if you're a Japanese buyer, nuclear versus renewables, coal, LNG, et cetera. But if you then focus on the LNG complex and you say, "Well, how am I going to diversify?" You look at the global supply sources of LNG, you've got concentration in supply from Australia, the Middle East, United States.
Okay, there's a question mark over Russia, and then pretty much everywhere else globally is greenfield or comes with greenfield risk. You look at where Woodside's portfolio has strength, it's got strength in low geopolitical risk jurisdictions, being Australia and the United States. There is only open waters between Australia and North Asia. There's only open waters between the United States and Asia, albeit there's a lot more of it. That is something that provides us, I think, with a competitive advantage from a portfolio standpoint.
We do see a lot of parties coming to us saying, "Well, we'd like to buy volume off you because you're seen as being a lower risk organization, but also where your supply is coming from lower risk." If you then look at it probably on a more asset-specific basis, I mean, obviously this has just talked about Louisiana LNG, but you have seen quite a lot of interest more recently in Australian assets that we're partners in. You've seen some Middle East interest in our North West Shelf asset, which will result in some consolidation of equity there. You've seen some also acquisitions that are occurring in our Browse project, again, from other joint venture participants selling their interest, which I think is reflective of the interest in what is seen to be relatively low sovereign risk, cost-competitive LNG supply that's in the region.
Do you have any other questions? No? Oh, yes.
Hi. Thanks so much for today and laying out your new capital framework. I had a question about that $3 billion-$4 billion on growth capital and how it relates to an organic reserve replacement aspiration goal. How are you thinking about the reserve replacement ratio in that context of the new capital allocation? Thanks so much.
Yeah. Certainly, a typical upstream oil and gas company reserve replacement ratios were a very important marker and a KPI that many of us have been chasing. Our portfolio is diversifying, because particularly Louisiana LNG, where we're going to be purchasing the gas for the upstream, so we're moving into a hybrid portfolio. We've been talking internally around that, recognizing that some of our sales is not coming on the back of reserves, and some is. The $3 billion-$4 billion is the notional value of money that we see on an average basis that could be deployed for growth alongside still retaining max payouts in distributions. It was just to provide scale that you can do two things at once. Where we as Woodside will look in our growth opportunities, we look at the whole portfolio impact of an asset.
Not only does the asset need to meet its investment framework in its own totality, but we look at the contribution to reserves, the contribution to upstream exposure, or the lack of that, whether it's an oil asset and it provides that really great payback, that really sort of great cash injection that oil does, whether it's a long-life LNG backfill for an opportunity. So things provide portfolio benefits beyond just that asset specific, and reserves replacement is a good feature in that. We continue to have some contingent resources out there that we'd love to bring to market as well. It's something that we do concentrate on, recognizing we're now a bit of more of a hybrid.
I think, and maybe just to supplement what Liz is saying as well. On slide 41, we average over the years of the Capital Markets Day. We are averaging about $7 billion a year. Once we cover our sustaining CapEx, once we cover our base 20% dividend of adjusted operating cash flow, we have $4.6 billion on average, typical year, to allocate either to additional dividends through our discretionary policy or into growth or a combination. To complement what Liz is saying is we have the balance sheet capacity, we have the cash flow coming, and that is at a $70 real price. We have flexibility, we have optionality to deploy that in the best possible way.
I think we are pretty much at time. Look, thank you very much for the questions from the room. Really appreciate it. Liz, if you asked everyone to remember just one or two things from today, what would they be?
We are entering a new phase of cash generation. It is clear that we are going to need disciplined delivery of value to shareholders, and we have set up a framework to do that. The cash from our assets, the projects that we are deploying today, it is going to generate $40 billion of adjusted operating cash flow, commitment to give it back to shareholders, and then a competition for the piece that comes after that, and a demonstration that we can do growth initiatives alongside high returns to shareholders. We are building a very resilient business. We have a commitment to a ROACE target to ensure that you can track our value that we are returning to the business and growing the portfolio of Woodside, and a lot of great growth opportunities to come. Thank you.
I would like to thank everybody who has braved the New York rain and made it here today. Also a very big thank you to those who have joined us online, and thanks to Liz, Graham, and Mark. That concludes our webcast. For those who are in the room, dessert and coffee is on the way, so please stay and enjoy that. Thank you all.