Woodside Petroleum is targeting $US800 million in "enduring" cash flow benefits by the end of 2016 from a rigorous productivity improvement program ranging from working existing assets harder to cutting corporate overheads.
Chief financial officer Lawrie Tremaine today outlined the financial targets of the program, which began internally at Woodside late last year.
Adressing about 100 institutional shareholders, analysts and financiers at Woodside's annual investor day in Sydney, Mr Tremaine said the productivity targets included improving production volumes at existing operations by 3 per cent to 5 per cent, savings of up to 20 per cent on external spending and a similar target on "improved organisation efficiency".
Mr Tremaine did not provide more detail on what impact the productivity initiative would have on staff numbers but said the $US800 million benefits target assumed the Woodside-led Browse floating LNG project was in development.
His comments, followed by an introduction by chief executive Peter Coleman this morning that focused heavily on fiscal discipline and enhancing shareholder returns, came a day after Woodside terminated a much-hyped farm-in deal into the Leviathan gas field off Israel that was to have provided the Perth company's next step change in production.
The decision to walk from Leviathan has raised questions about Woodside's growth plans.
Mr Coleman did not discuss Leviathan in his opening remarks but Mr Tremaine said "if there isn't value to be seen we will walk away from investment (opportunities), and that is quite tough".
Amid some industry chatter Woodside may view a takeover of PNG-focused Oil Search or even a merger with Santos as part of its growth strategy, Mr Tremaine said the company's focus on investments was "ideally" no greater than $5 billion or a project equity stake of not more than 40 per cent to maintain its "disciplined" focus on protecting shareholder returns.
The day-long investor day will include presentations from Woodside's top brass and focus on operations, marketing and exploration, as well as progress on the Browse project.
Woodside today reiterated its target of beginning front end engineering and design work on the floating LNG development in the second half of this year to be able to make a final investment decision late next year.
- The reporter travelled to Sydney as a guest of Woodside Petroleum.