20 Woodside Petroleum Ltd|Annual Report 2018
Capital allocation
We continue to maintain a prudent financial position by
appropriately servicing our debt, investing in future growth
and distributing funds to shareholders. During the year we
generated $3,296 million of operating cashflow, raised
$1,949 million in net proceeds from the Q1 2018 equity
raising and ended the period with liquidity of $3,918 million.
This, combined with the operating cash flows anticipated
in Horizon I and into Horizon II, positions us to deliver our
growth plans.
In 2018 we funded investment in line with our Horizon II
growth strategy, investing $1,935 million in capital and
exploration expenditure. Our 2018 capital expenditure
of $1,646 million increased by $383 million. This was
predominately due to the acquisition of an increased interest
in the Scarborough resources. Capital expenditure was also
allocated to the Greater Enfield Project, Greater Western
Flank Phase 2 and Wheatstone LNG, all of which underpin our
targeted production of approximately 100 MMboe in 2020.
A prudent reduction to future investment expenditure was
made to exploration following wells drilled in Myanmar,
Gabon, Australia, Morocco and Peru in 2018.
A 2018 final dividend of US 91 cents per share (cps) has been
declared. The final dividend reflects 2018 underlying NPAT of
$1,416 million, and was adjusted to reflect our strong operating
cash flow for the year due to higher realised prices, reliable
production and low operating costs. Woodside continues to
target a payout ratio of 80% of underlying NPAT subject to
market conditions and investment requirements. The full-
year 2018 dividend is 144 cps, the value of the final dividend
payment is $852 million and the dividend will be fully franked
for Australian taxation purposes.
Unit production cost, cash costs and margins
Total unit production costs decreased by 2% to $5.1/boe despite
a full year of higher non-operated Wheatstone LNG production
costs and the Ngujima-Yin FPSO suspension of operations,
underscoring our focus on high reliability and cost management
in operations.
Gas unit production costs of $4.0/boe remained the
same compared to 2017. Pluto gas and NWS gas unit
production costs both reduced to $3.6/boe from $3.9/boe
and $3.8/boe respectively, which were oset by higher
non-operated Wheatstone production costs of $6.80/boe.
We will continue to work with Operator in 2019 to reduce
Wheatstone production costs.
Gross margin increased by 21% from $23.8/boe to $28.8/boe
and our break-even cash cost of sales remains competitive at
$10.4/boe. Our high margin, low cost operations will generate
cash flow to help fund our Horizon II growth projects.
 Undrawn debt
2017 liquidity
cash flow
cash flow
2019 early bond
Proceeds from
equity raising
Other debt
2018 liquidity
$ million
Production costs
2014 2015 2016 2017 2018
Total production cost
($ million)
Unit production cost
5.0 5.2 5.1