Woodside needs to ‘get after’ clean energy investments, to prove commitment to climate goals: Meg O’Neill

Woodside Petroleum chief executive Meg O’Neill concedes the group has to get cracking on clean energy projects if it is to convince critics of its commitment to climate change goals. Fresh from a big protest vote against its climate report at Thursday’s annual general meeting, Woodside is sticking with an energy transition strategy that will see it develop new oil and gas projects. However, management acknowledge they need to do more to win over sceptics by simultaneously moving quicker on its clean energy promises. “While we would have liked a better outcome (on the climate report), we do still stand behind our strategy and its two key elements,” Ms O’Neill said. Woodside’s two-part climate change plan sees it aiming to eliminate Scope 1 and Scope 2 net emissions by 2050 while investing in the new products and services its customers need to also decarbonise, thereby reducing the Australian company’s Scope 3 or end-user emissions. Ms O’Neill said the company needed to better understand shareholder expectations on climate goals and “have that dialogue around what they’re hoping to see from us”. “But the second thing which is really important is for us is to demonstrate that we are serious about that second pillar and really start to get after some of these new energy investments we have been talking about.” The climate change report was opposed by nearly 49 per cent of the shareholder vote, influenced by negative recommendations from two proxy advisers who criticised Woodside’s emission reduction plan. However, the same meeting gave a ringing 98.66 per cent endorsement to Woodside’s $27 billion share buyout of BHP’s oil and gas business, a deal which will considerably expand the WA energy group’s presence in fossil fuels. The AGM was again dominated by questions from activists, most of them holding proxies, who were critical of Woodside’s continued exploitation of oil and gas. Ms O’Neill, however, said she “would differentiate between the ordinary shareholder who wants to see companies who are making progress in supporting the world’s decarbonisation journey and the activists, and many of the questions posed yesterday were by activists who philosophically disagree with what we do”. “Most of our investors want to ensure that we are doing the right thing when it comes to decarbonisation and also provide them with the return they count on. “We do have a bit of work to understand the breadth of shareholder perspective and that will inform our thinking in terms of future climate reporting as well as the actions we are taking in the business.” The BHP deal is significant, doubling the size of Woodside by adding oil and gas production in the US, Bass Strait and the Caribbean. Woodside, soon to change its name to Woodside Energy, argues the buyout puts it in a stronger position to make the required investments in renewables and hydrogen it has promised as part of its emission reduction strategy. Greenpeace, however, accuses the company of “breathtaking arrogance and a fundamental misunderstanding of the global energy transition”. Ms O’Neill echoed chairman Richard Goyder by claiming the overwhelming support for the BHP tie-up “demonstrates that our shareholders understand the compelling strategic and financial rationale for the merger and support our long-term strategy to thrive during the energy transition”. Woodside is paying for the BHP oil and gas business with 914.8 million new shares which will be handed over when the purchase takes effect on June 1 and then distributed between BHP’s 543,000 shareholders. The stock issue — BHP investors will be given one Woodside share for every 5.5 BHP shares — has sparked talk of a possible overhang of Woodside shares given it is not known how many will be kept by the recipients. For example, some of BHP’s big investors may have doubts about investing in an oil and gas company, while many small shareholders will end up with unmarketable parcels. BHP has set up a sale facility to help those shareholders with unwanted Woodside shares, but Ms O’Neill is hoping efforts by Woodside over the last few months to convince investors of the investment merits of the merged group will limit selling. “A lot of the BHP retail shareholders are similar to Woodside retail shareholders, who are just happy to be invested in proud Australian companies that pay robust dividends,” she said. Woodside had “been working very closely with BHP to understand their share register”. “We have a good handle on those who can’t hold our shares, and there some shareholders in South Africa for legal reasons who aren’t going to be allowed to, but we have been working with BHP on how it puts those shares into the market. “It’s important for BHP to ensure their shareholders get fair value for those shares, so I think it’s going to be a pretty smooth process.” However, Ms O’Neill cautioned that there were no guarantees given the volatile equity markets of recent months, suggesting that could weigh on short-term trading in the post-merged stock. “The market is extraordinarily volatile right now, so it may be a little hard to see what’s going on generally as opposed to what’s happening in the merger, but we expect that to settle out over the next few months.”

Woodside needs to ‘get after’ clean energy investments, to prove commitment to climate goals: Meg O’Neill

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