Woodside Petroleum Ltd.

Overview Key strengths Key risks Low-cost operations Cyclical and capital-intensive LNG industry Long-life gas reserves, albeit midscale globally Earnings sensitivity to oil-price fluctuations Good asset and cash flow diversity Exposure to LNG market risk LNG portfolio remains highly contracted under medium- and long-term arrangements Execution risk associated with upcoming phase of capital investment Challenge of managing financial policy objectives, including balancing large annual dividend payments and growth aspirations As such, we expect Woodside's free operating cash flow (FOCF) to be material in 2021 and its ratio of funds from operations (FFO) to debt to strengthen to above 45% from 2020's 30.5% (on a stand-alone basis). For Woodside to sustain the cash flow metrics consistent with the 'BBB+' rating, we believe

...Woodside Petroleum Ltd. has benefited from the present robust oil price conditions and global demand for liquified natural gas (LNG). But continued adherence to prudent financial policies will be key to maintaining the '###+' rating. As such, we expect Woodside's free operating cash flow (FOCF) to be material in 2021 and its ratio of funds from operations (FFO) to debt to strengthen to above 45% from 2020's 30.5% (on a stand-alone basis). For Woodside to sustain the cash flow metrics consistent with the '###+' rating, we believe management will have to remain committed to disciplined financial policies while executing on its capital management strategies. Given the recovery in oil prices in 2021, we anticipate that a final investment decision will most likely be taken for the Pluto Train 2 and Scarborough projects prior to the end of 2021. Once committed, Woodside would be locked into progressing the US$12.0 billion projects to completion, which, based on management guidance, we expect...

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