Woodside has a backup plan if McDermott fails

OUTSIDE headline figures of tripling reserves to 3.7 billion barrels of oil equivalent and production growth of 6% a year to 2028 there were plenty of other takeaways from Woodside’s investor briefing day. 
Woodside has a backup plan if McDermott fails Woodside has a backup plan if McDermott fails Woodside has a backup plan if McDermott fails Woodside has a backup plan if McDermott fails Woodside has a backup plan if McDermott fails

Also: Waitsia talking tolling with NWS JV

Helen Clark

Editor

One is that contractor McDermott, which will build the floating offshore production unit, has given Woodside a monthly look at the books, but the oiler still has a backup plan should things go wrong. 
 
"They've got certain covenants with us or certain triggers of which they need to inform us," CEO Peter Coleman said today. 
 
While sanguine he said the company is "also developing backup plans in case we need to take over that contract. We are still confident the base business is a very good one, what they're struggling with is financial pressure". 
 
"We're developing backup plans as they restructure their debt, it is something that on our risk radar, no doubt about that." 
 
McDermott has been in financial difficulties since its acquisition of CBI, cutting guidance and losing 35% of its share price in a single day some months ago.
 
McDermott also contracts for a variety of west coast producers and hopefuls, and will help Western Gas develop its ex-Hess asset Equus, offshore Western Australia. 
 
Coleman said McDermott is "an excellent contractor" with excellent shipyards. 
 
"Of course they're in financial difficulties at the moment through the acquisition of CBI and the liabilities that came from completing LNG plants in the US both in Cameron and in Freeport." 
 
The other news was that Coleman confirmed the North West Shelf venture had been talking separately to the Waitsia partners about sending gas to the facility for third party processing.
 
Beach Energy and Mitsui eventually plan a 250 terrajoule processing plant as part of their wider Waitsia stage 2 project in the onshore Perth Basin. 
 
"We don't own Waitsia. Waitsia is separately in discussion with the north west shelf joint venture as to whether their gas can be treated at the north west shelf, so that's a separate discussion." 
 
There has been plenty of speculation what could fill the plant between field decline at the North West Shelf and Scarborough or Browse coming online. Strike Energy, which has its own Perth Basin resources, has been suggesting it could send gas from its West Erregulla project north. 
 
Also, Woodside might consider farming in further to its Senegal oil project, renamed Sangomar from SNE, with Coleman saying he was looking "very, very closely" at a larger stake.
 
Junior partner FAR Limited which holds 13.67% may yet farm down further to pay its share of costs, which are now significantly higher with the purchase not lease of an FPSO, rather than the lease of one. 
 
When asked if he thought the other partners could secure funding for a 2019 final investment decision he said, "I'm going to let the joint venture partners speak for themselves as their funding challenges are their own not mine". 
 
Previously an arbitration case between FAR and Woodside has been suggested as a roadblock to financing.