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Strong commodity prices have improved short-term resilience for Australia’s largest exploration and production (E&P) companies, but long-term uncertainties remain according to Andrew Harwood, Research Director of Corporate and Upstream Research at Wood Mackenzie.
Speaking at the Australian Petroleum Production and Exploration Association (APPEA) Conference in Adelaide, Mr Harwood told delegates that operators must adapt their strategies to be robust enough to handle future bumps on the road to decarbonisation.
"Plotting a strategy for the energy transition has become more complex than ever. Satisfying investors, government and public stakeholders while pursuing secure, affordable and sustainable sources of energy requires a delicate balance,” Mr Harwood said. “[Wood Mackenzie] believes assessing a company’s ability to weather short-term volatility, and its long-term positioning for the energy transition can enable us to identify who looks good, and who looks ‘less good’ for the future.”
Mr Harwood added that the likes of Woodside Energy and Santos score well on Wood Mackenzie’s Corporate Resilience and Sustainability Indices (CoRSI) in terms of their long-term cash flow outlook, reflecting ongoing investment in new long-life LNG supply. Strategies have been set and compare favourably with international peers. But concentration risk, new project returns, and carbon exposure remain areas to address.
“Rising capital allocation for lower carbon opportunities and strengthened emission targets have also boosted the sector’s long-term prospects for navigating the energy transition,” Mr Harwood said.
- The APPEA Conference is taking place in Adelaide between 15-18 May. For more information, click here.