Annual Report 2010
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OUR
SUSTAINABLE
DEVELOPmENT
REPORT
For Woodside, sustainability is about
delivering shareholder wealth through
operating our existing business and
developing new business opportunities
in an economically, socially and
environmentally responsible way.
Woodside publishes a Sustainable
Development Report annually that
details our performance across these
key dimensions.
Available on request or from the
company’s website
(www.woodside.com.au).
ABOUT
WOODSIDE
REPORT
OBJECTIVES
Woodside is an independent Australian
oil and gas company playing a key role in
supplying energy to our region.
We are one of the world’s leading
producers of liquefied natural gas (LNG),
helping meet the demands for cleaner
energy from Japan, China, Korea and
other countries in the Asia-Pacific region.
Woodside was formed in 1954 and
initially focused on oil exploration off
Australia’s south coast.
major natural gas discoveries off the
Western Australian coast in the 1970s
changed the company’s direction, and
today Woodside is one of the world’s
pre-eminent producers of LNG.
We operate the A$27 billion North West
Shelf Project, which in 2009 celebrated
25 years of natural gas production and
20 years of LNG production.
We pride ourselves as a stable and reliable
supplier with a focus on delivering on our
commitments.
Woodside’s production of LNG continues
to grow, with the Pluto foundation project
targeted for first LNG in 2011.
We are already planning for an expansion
of our Pluto project, and are seeking to
develop a further two LNG projects –
Browse in Australia’s Kimberley region
and Sunrise off the northern coast.
Woodside also maintains a portfolio of
non-LNG projects. We produce natural
gas, liquefied petroleum gas, condensate
and oil for customers in Australia and
abroad.
With our large natural gas resource base,
Woodside is a sought-after provider of
cleaner energy. We seek excellence in
safety and environmental performance,
and aim to ensure that wherever we
operate, the local community benefits
from our presence.
The report is designed to provide easy
to read information on how Woodside
performed in 2010 for our stakeholders,
including shareholders, staff, customers
and the community.
We aim to build on awareness of our
operations and demonstrate how we
delivered on our mission and vision while
ensuring that we maintain our values and
commitment to sustainable development.
ABOUT THIS REPORT
This 2010 Annual Report is a summary
of Woodside’s operations, activities and
financial position as at 31 December 2010.
Woodside Petroleum Ltd (ABN 55 004
898 962) is the parent company of
the Woodside group of companies. In
this report, unless otherwise stated,
references to ‘Woodside’ and ‘the Group’,
‘we’, ‘us’ and ‘our’ refer to Woodside
Petroleum Ltd and its controlled entities,
as a whole. References to ‘the company’
refer to Woodside Petroleum Ltd unless
otherwise stated. The text does not
distinguish between the activities of
the parent company and those of its
controlled entities.
References in this report to a ‘year’ is to
the calendar and financial year ended
31 December 2010 unless otherwise
stated. All dollar figures are expressed in
U.S. currency unless otherwise stated.
Woodside is continuing efforts to reduce
its environmental footprint associated
with the production of the Annual Report.
Printed copies of the Annual Report will
only be posted to shareholders who have
elected to receive a printed copy.
The Annual Report is also printed
on an environmentally responsible
paper manufactured under ISO 14001
environmental management standards,
using elemental chlorine free pulps from
sustainable, well managed forests.
Woodside’s exploration and production activities.
The Western Legend seismic
exploration vessel conducts
an offshore survey to locate
prospective hydrocarbon targets.
The Jack Bates offshore
exploration rig is used to drill
into hydrocarbon target zones
in the sub-surface.
Discussions are held
with stakeholders before
development proceeds.
OUR
mISSION,
VISION AND
VALUES
MISSIOn
To create and deliver outstanding,
sustained growth in shareholder wealth
by providing energy for the future.
VISIOn
To be a world-class LNG leader.
To accomplish this, we need to be
the company of choice through speed,
execution skills, commercial acumen,
cost focus and technical capability.
Through our people and our values we
will satisfy our shareholders and deliver
a sustainable future.
VAlUES
Strong and sustainable performance
Care and respect
Integrity and trust
Initiative and accountability
Creativity and enterprise
Working together
We recognise that our business must be
profitable and sustainable. We believe
that living these values makes Woodside
distinctive and is essential to our success.
OUR
STRATEGy
In June 2010 the Board of Directors
reviewed Woodside’s long-term
strategy and reaffirmed the importance
of maintaining the existing strategic
direction and delivering against the
LNG growth plan.
Woodside continues to focus on improving
its foundation business and delivering
long-term growth in shareholder value
through commercialising its Australian
LNG portfolio.
>
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Woodside’s foundation Australian
business includes the producing assets
in the North West Shelf Project (NWS)
and Greater Exmouth area. These are
complemented by producing assets
elsewhere in Australia and the Gulf of
mexico. By maximising the returns
from these assets Woodside will meet
its financial obligations and contribute
funds to support the company’s growth
ambitions.
To further maximise the value of
the investment in these existing
assets Woodside will also pursue
selective exploration and development
opportunities. Continued operation of
these facilities to appropriate safety,
environmental standards and stakeholder
expectations will maintain and enhance
Woodside’s licence to operate.
p ti o n s
w t h o
LNG growth
1
Future gro
Foundation business
Time >
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Longer term growth in Woodside’s value
and its overall future will be shaped
by LNG. The company’s significant
natural gas assets and infrastructure in
Australia provide enviable opportunities
within an industry struggling to access
an ever depleting resource base. With
increasing global demand for energy,
driven by the continued growth of the
Asian economies, we believe Woodside
is well positioned to capitalise on new
opportunities in emerging LNG markets.
Delivery of the foundation Pluto LNG
Project will support future LNG growth
opportunities, through expansion of Pluto
and the development of Browse and
Sunrise. maintaining momentum on these
projects will continue to build Woodside’s
LNG capabilities.
A limited portfolio of exploration assets
outside of Australia will be maintained
to provide options for future business
growth while allowing the company to
focus on Australian LNG growth.
NWS gas is gathered
offshore at the Goodwyn A
production platform and then
piped to shore.
Offshore, crude oil from Enfield
is produced into the Nganhurra
floating production storage
and offloading vessel before
shipment to refiners.
At the onshore Karratha Gas
Plant, raw gas is processed and
separated into pipeline gas,
LPG, LNG and condensate.
Specialised LNG vessels like
the Woodside Donaldson
transport LNG to overseas
markets.
Future generations
will benefit from
Woodside’s
daring achievements
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R e p o r t 2 0 1 0
A n n u a l
ABOUT THE COVER
Woodside sails into a bright LNG future; operating five LNG trains for the
North West Shelf Project, with the first Pluto LNG train targeting start up in
2011. LNG transport vessels, such as the Woodside Donaldson depicted on
the front cover, provide the vital link between product and customer.
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Welcome to Woodside’s 2010
Annual Report. The report is
designed for our stakeholders,
including shareholders, staff,
customers and the community to
provide easy to read information on
how Woodside performed in 2010.
COnTEnTS
Overview
About Woodside (inside cover)
Mission, vision, values and strategy
Performance at a glance
Chairman’s overview
CEO report
Our people
Health and safety and security
CFO report
lnG market report
Reserves statement
Production
Exploration
Sustainable business principles
Business reviews
north West Shelf
Australia Business Unit
Pluto - the story so far
Pluto lnG
Browse lnG
Sunrise lnG
International
Governance
Board of Directors
Corporate governance statement
Directors’ report:
Remuneration report
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26
28
30
32
34
36
38
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54
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172
2010 Financial report
Financial report contents
Shareholder information
143
Shareholder statistics
144
Share registry: enquiries
144
Investor Relations: enquiries
144
Business directory
145
Key announcements 2010
145
Events calendar 2011
146
Conversion factors
146
Glossary
Quick reference guide
147
2010 product and revenue summary 148
10 Year comparative data summary 149
We have partnered with Green
Reports TM in an initiative that ensures
our Annual Report obligations are not
impacting the environment.
ABOUT THIS IMAGE
Workers at the Woodside-operated Karratha Gas Plant.
The North West Shelf Project facility constitutes Australia’s
largest oil and gas development and currently accounts for
more than 40% of Australia’s oil and gas production.
PERFORmANCE
AT A GLANCE
RECORD REPORTED nET PROFIT AFTER TAX DRIVEn BY STROnG SAlES REVEnUE
4
Comparative financial information in the Annual Report has been converted from Australian dollars to US dollars using the relevant historical exchange rate.
PRODUCTIOn
SAlES REVEnUE
(from continuing operations)
REPORTED nET PROFIT AFTER TAX
(post significant items)
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Production was in line with
guidance and down 10.1%. The
reduction was primarily due to the
sale of Woodside’s interest in the
Otway Gas Project and oil-field
natural decline.
Sales revenue up 20.2% due to
higher commodity prices and
additional revenue from sales
contract renegotiations.
Reported net profit after tax up
6.9% due to higher commodity
prices and one-off gains from
asset divestments.
nET PROFIT AFTER TAX
(pre significant items)
OPERATInG CASH FlOW
RETURn On EQUITY
(after significant items)
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Underlying profit up 34.8% due to
stronger sales revenue from higher
commodity prices.
Refer to page 13 for further detail.
Operating cash flow up 41.9%,
predominantly due to increased
receipts from higher commodity
prices.
Return on equity is down from
16.7% to 14.2% due to higher
equity on balance sheet prior to
commencement of Pluto production.
Additional 2010 summary charts can be found on page 148.
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DIVIDEnDS PER SHARE
(US cents per share)
SAFETY
EnVIROnMEnTAl InCIDEnTS
(Category D and above)
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Final dividend of 55 cents per
share (cps), fully franked. Total
2010 dividend up 10 cps from
95 cps to 105 cps.
HIGHlIGHTS FOR THE YEAR
6.9%
InCREASE In
nET PROFIT
AFTER TAX TO
$1,575 MIllIOn
171%
ORGAnIC RESERVES
REPlACEMEnT RATIO
(PROVED RESERVES )
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In 2010 TRCF and HPIF increased.
While disappointing, the severity of the
incidents has decreased.
Refer to page 11 for further detail.
The number of incidents has significantly
dropped over the last three years as a
result of continuous company-wide focus
to improve environmental performance.
Refer to page 22 for further detail.
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20.2%
InCREASE In
SAlES REVEnUE
TO $4,193 MIllIOn
105
CEnTS
FUll-YEAR DIVIDEnD
(US CEnTS PER SHARE)
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41.9%
InCREASE In
CASH FlOW FROM
OPERATInG ACTIVITIES
TO $2,104 MIllIOn
95%
COMPlETE On
FOUnDATIOn PlUTO
lnG PROJECT
RESUlTS FOR THE YEAR
InDEXED TEn YEAR PERFORMAnCE
2010
2009 % Change
600
Net profit after tax
Sales revenue
($ million)
1,575
1,474
6.9%
($ million)
4,193
3,487
20.2%
Cash flow from operating activities
($ million)
2,104
1,483
41.9%
Earnings per share
Total recordable case frequency
5 year total shareholder return
10 year total shareholder return
(cents)
(TRCF)
(TSR, %)
(TSR, %)
204
5.1
16(1)
78(2)
210
3.3
42(1)
85(2)
-2.9%
54.5%
-61.9%
-8.2%
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Woodside
Oil (WTI)
All Ords
Production
Proved reserves
(mmboe)
72.7
80.9
-10.1%
100
(mmboe)
1,308
1,296
Proved plus Probable reserves
(mmboe)
1,680
1,651
1.0%
1.7%
0
01/01/2001
31/12/2010
Contingent resources
(mmboe)
1,814
1,867
-2.8%
(1) Source: Bloomberg, 5 year average, annualised, US$.
(2) Source: Bloomberg, 10 year average, annualised, US$.
Over the last 10 years Woodside has outperformed
the All Ordinaries (values are indexed to base 100 from
1 January 2001).
100607080910
CHAIRmAN’S
REPORT
A MESSAGE FROM MICHAEl CHAnEY
With global lnG demand remaining strong, Woodside is well positioned to help
meet that demand through its portfolio of assets in production, construction
and development. Our company’s long experience as an lnG operator is
invaluable in the relationships we enjoy with our existing and potential customers.
Operating in Australia is not without its challenges, but as an Australian company
with strong local relationships we believe Woodside holds a competitive
advantage over many others in the growing Australian lnG industry.
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In a world often gripped by political and
economic uncertainty, one thing remains
constant: total energy consumption
continues to increase. And while the
world demands cleaner forms of energy,
the cost effectiveness of that energy
remains paramount. It is not surprising
that demand for liquefied natural gas
(LNG) – one of the cleanest hydrocarbon
fuels – continues to grow so quickly,
especially among the fast-developing
economies in our own Asia-Pacific region.
Despite the global financial crisis
continuing to cause uncertainty in sectors
of the world’s economy, demand for LNG
remains steadfastly robust. Woodside
has succeeded in helping meet this
demand, and expects to continue doing
so through our company’s strong portfolio
of Australian gas developments.
We look forward to commissioning the
foundation Pluto LNG Project in 2011,
thereby commencing a significant new
chapter in the company’s history. The
significance of Pluto should not be under-
estimated. When completed, it will be
one of only three producing LNG projects
in Australia; with another being, of course,
the iconic Woodside-operated North
West Shelf Project (NWS).
While we maintain plans to expand
Pluto, even at the foundation single-train
phase we expect this project to make
a significant positive contribution to
Woodside and our shareholders.
The cost and start up of the foundation
Pluto LNG Project will come in slightly
higher and later than our initial targets, but
Woodside’s performance on Pluto should
be seen in the context of the delivery of
other world-scale mega projects. Against
such comparisons, Woodside’s delivery
of Pluto compares favourably. This is
especially so against a background of
rising costs, increased competition for
labour and a fragile industrial relations
environment.
Pluto is effectively Woodside’s sixth LNG
mega-project, following the initial five
phases of the NWS, and I believe our
experience in this area has enabled us to
stay reasonably close to our initial targets.
With project costs across the country
continuing to rise, driven in part by wage
rises delivered without corresponding
gains in productivity, this experience
in managing mega projects will remain
one of Woodside’s major competitive
advantages.
Woodside has several of these projects
in the development phase, all of them
covered extensively within the pages of
this report.
The largest development in our portfolio
is the Browse LNG Development, which
made substantial progress in 2010 with
the finalisation of the basis of design.
The Development expects to move into
the front-end engineering and design
phase in 2011.
location of Woodside’s production, projects and developments
15
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Darwin
Broome
10
1
13
4
12
2 3
16
5
11
11
6
9
7
Karratha
Perth
Algeria
South Korea
Gulf of Mexico
Peru
Brazil
Our producing assets (operated)
1 Angel platform
2 Goodwyn A platform
3 North Rankin A platform
4 Cossack Pioneer FPSO
5 Karratha gas plant
6 Nganhurra FPSO
7 maersk Ngujima-yin FPSO
8 Northern Endeavour FPSO
NWS
NWS
NWS
NWS
NWS
Enfield
Vincent
Laminaria-Corallina
Our producing assets (non-operated)
9 Stybarrow Venture mV16 FPSO
10 mODEC Venture II FPSO
Stybarrow
mutineer-Exeter
7
Our projects
11 Pluto LNG Project including potential
Pluto
Pluto expansions
12 North Rankin Redevelopment
13 NWS Oil Redevelopment Project
NWS
NWS
Our developments
14 Browse
15 Sunrise
16 Greater Western Flank
International
Browse
Sunrise
NWS
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Browse promises to be a significant
success story in terms of environmental
sustainability and the economic
opportunities provided to the region’s
Indigenous people. Through the
government-led site evaluation
process, LNG development will
be confined to a single site in the
Kimberley and at a location which had
already been determined as likely to
be environmentally acceptable.
Importantly, the Development will seek
to provide economic opportunities for
Traditional Owners and the region’s
broader Indigenous communities through
commitments to providing jobs, education,
training and other business opportunities.
We believe the attractiveness of the
agreed benefits package is without
parallel for this style of development.
Browse has the potential to be a
genuine breakthrough project in terms
of strategically-planned environmentally
responsible developments, and in the
manner in which Indigenous communities
are engaged. We should also keep sight
of the global environmental benefits
which flow from such a development;
the LNG this project will produce will
offer an alternative to coal in customer
countries, thereby helping to reduce
global greenhouse emissions.
The year 2010 saw a significant change
in Woodside’s share registry, with Shell
divesting about 10% of its 34% holding
in our company. We were pleased with
the substantial support the market
showed for Woodside in taking up
Shell’s divested stock.
Late last year our managing Director and
CEO Don Voelte informed the Board that
he intends to retire from Woodside in 2011.
Don was initially appointed in 2004 for
a period of five years, and we are very
grateful that he will have given this
company more than seven years service
by the time he leaves us.
Don has made an enormous contribution
to Woodside during his tenure and has
provided significant leadership to the
organisation.
I thank Don for his work, and the efforts
of all Woodside management and staff
in 2010.
MICHAEl CHAnEY
CHAIRmAN
OUTlOOK Despite the global financial crisis continuing to cause uncertainty
in sectors of the world’s economy, demand for lnG remains steadfastly
robust. Woodside has succeeded in helping meet this demand, and expects
to continue doing so through our company’s strong portfolio of Australian
gas developments.
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CHIEF EXECUTIVE OFFICER’S
REPORT
A MESSAGE FROM DOn VOElTE
The north West Shelf Project continues to underpin Woodside’s financial performance
and growth ambitions, delivering more than 60% of Woodside’s revenue during the year.
We have also advanced our plans at Pluto, Browse and Sunrise to take advantage of
growing energy demand in the Asia-Pacific region.
While the global economy was recovering
from the economic downturn in 2010, at
Woodside we were laying the groundwork
to position the company for the future.
During the year we built on our track
record as a reliable supplier and continued
to maximise value from our existing oil
and gas assets.
As Asia led the way in world economic
recovery, we also advanced our plans
for Pluto expansion, Browse and Sunrise
to take advantage of growing energy
demand from the region.
In 2010 our net profit was $1.58 billion,
surpassing our previous record of
$1.47 billion in 2009. This increase was
largely driven by a 20.2% increase in
sales revenue due in part to higher
commodity prices. This result was
favourably impacted by an outstanding
year by North West Shelf Project (NWS)
operations which achieved records for
production, revenue and profit.
The NWS continues to underpin
Woodside’s financial performance
and growth ambitions, delivering
more than 60% of Woodside’s
revenue during the year.
Our operating cash flow increased
by 41.9% from the previous year to
$2.10 billion, putting us in a strong
position to invest in our LNG growth
strategy.
Production within guidance
Our total annual production for the year
was within guidance at 72.7 mmboe.
This was lower than the previous year
due to oil-field natural decline and the sale
of our interest in the Otway Gas Project.
Our people have made great efforts to
improve production reliability and capacity
utilisation at the Karratha Gas Plant (KGP),
resulting in record production levels being
achieved in 2010.
interest in WA-404-P and ongoing
exploration and appraisal activity, it is
expected that the Pluto inner and central
hubs could provide the foundation volume
of gas for an expansion train at Pluto.
We will continue to maximise value from
the NWS assets through the North Rankin
and NWS Oil Redevelopment projects.
And, we are progressing plans for the
development of the Greater Western
Flank, which would provide a new gas
supply for the KGP beyond 2020.
The progress of the Browse LNG
Development during the year was
remarkable. The Joint Venture
participants unanimously selected
the Western Australian Government’s
Browse LNG Precinct as the preferred
site for the onshore plant.
Infill drilling at the Enfield and Vincent oil
fields during the year boosted production,
mitigating the natural field decline.
The discovery of the Cimatti oil field
strengthens the long-term production
outlook for the region.
We support the State’s effort to
consolidate all development in the
Precinct and we continue discussions
with the Traditional Owners of James
Price Point to secure a land-use
agreement as a priority.
looking to the future
Since construction of the foundation
Pluto LNG Project began in 2007, we
have dedicated more than 40 million man
hours to the project in preparation for
start up in 2011.
Following a comprehensive review of
cost and schedule in November 2010,
we announced a later start-up date and a
revised cost of A$14 billion (100% project
share). While I was disappointed in this
result, Pluto still has solid economics and
will provide outstanding long-term value
to our shareholders.
When it comes to expansion, the Pluto
LNG Park provides us with the flexibility
to consider both equity gas development
and third party gas supply.
Our exploration campaign had success
with the discovery of gas in six out of ten
wells in the Pluto inner and central hubs.
With the acquisition of Hess Exploration’s
The Strategic Assessment Report for the
Precinct was released in December for
public comment and we are committed
to ongoing community consultation
as we progress our own project-level
assessments in 2011.
With basis of design for Browse now
complete, we are on track to commence
front-end engineering and design to be
ready for a final investment decision in
mid-2012.
Sunrise also reached a major milestone
during the year, with the Joint Venture
selecting Floating LNG as the preferred
development concept for the Greater
Sunrise fields.
In September 2010 we submitted
concept evaluation reports to the Sunrise
Commission, and the Australian and
Timor-Leste regulators. We look forward
to progressing the project in 2011 in line
with international treaty obligations.
InVESTMEnT GROWTH
LNG Growth
Exploration
Foundation business
TOTAl SHAREHOlDER RETURn (TSR)
PERFORMAnCE AGAInST PEERS
TOTAl SHAREHOlDER RETURn (TSR)
PERFORMAnCE AGAInST PEERS
Five year average annualised
Ten year average annualised
65
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Over the past five years Woodside has made
significant investment for the future, particularly
in the area of LNG growth.
The five year TSR reflects the consolidation of
Woodside’s previous growth performance against
our peer group which includes: Anadarko, Apache,
BG, CNOOC, marathon, murphy, Pioneer, Repsol,
Santos and Talisman.
Source: Bloomberg, five year average, annualised, US$.
The excellent ten year TSR reflects the long-term
sustainability of our business relative to our peer
group which includes: Anadarko, Apache, BG,
marathon, murphy, Pioneer, Repsol, Santos and
Talisman.
Source: Bloomberg, ten year average, annualised, US$.
Woodside has come a long way since
2004. We have the best people in the
business, reliable producing assets and
an exciting growth portfolio that will
provide value for our shareholders for
many years to come.
Our response to global events
There is no doubt that the montara
incident in the Timor Sea in 2009 and the
macondo incident in the Gulf of mexico
in 2010 will have long-lasting implications
for the global oil and gas industry.
The industry is now facing more scrutiny
from governments, regulators and the
community than ever before.
In response to these events, Woodside
developed a taskforce to ensure our
drilling systems and processes remain
robust and that we incorporate lessons
learned from these events. Details of
activities undertaken by the taskforce
are outlined in our 2010 Sustainable
Development Report.
maintaining the integrity of our facilities
and the safety of our people are priorities
for Woodside and our proactive approach
is testament to this.
On a personal note
I would like to thank mark Chatterji for his
invaluable contribution to the company
as Executive Vice President and Chief
Financial Officer. Lawrie Tremaine has
been appointed to the role and with
more than 20 years’ experience in senior
finance positions, he is well equipped to
takeover the reins from mark.
In October 2010, I announced that after
seven years at Woodside I will retire and
leave Woodside in 2011.
I have worked in many places over my
35-year career in the oil and gas industry,
but nothing comes close to topping my
time at Woodside.
When I joined the company in 2004,
I intended to stay for five years. Now
seven years later, I feel it is the right
time to hand over the reins. It is only fair
that I give the next CEO sufficient time
to mature our growth projects, Browse
and Sunrise, prior to final investment
decisions.
Although I will leave Woodside in 2011,
there won’t be a day I won’t follow the
fortunes of this company.
DOn VOElTE
mANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER
OUTlOOK Woodside has come a long way since 2004.
We have the best people in the business, reliable
producing assets and an exciting growth portfolio that
will provide value for our shareholders for many years
to come. I have no doubt that the future for Woodside
is very bright.
OUR PEOPLE
nUMBER OF EMPlOYEES AnD
VOlUnTARY TURnOVER
GRADUATES, TRAInEES
AnD APPREnTICES
11.2
10.1
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5.2
5.4
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2
InDIGEnOUS WORKFORCE*
Contractors construction
Indigenous employment pathways
Employees (permanent / fixed term)
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The low voluntary turnover rate is testimony to
our positive work environment and the success
of our retention strategies.
10
Employment of graduates, trainees and
apprentices has continued to increase.
Woodside’s Indigenous workforce has
strengthened significantly over the last four years.
* Data on the three categories was not recorded for 2006.
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Woodside recognises
that creating sustainable
shareholder wealth will
depend on our ability
to attract and retain an
engaged, highly skilled and
motivated workforce. We
continue to succeed in this
area, resulting in a record
number of new employees
in 2010 and an enviably low
attrition rate.
Strong performance in 2010
Strength through diversity
In 2010 Woodside piloted the ‘Leading
Diverse Teams’ program with its
executive team. It is intended that all
employees holding a leadership position
will attend this program over the next
three years.
Women represented 26.4% of Woodside’s
workforce in 2010. Of the 682 new
employees hired in 2010, 26.6% were
female.
Highlights in 2010 included an 11.3%
increase in female take up of part-time
employment, 39% increase in take up
of additional annual leave and a 90.5%
return from maternity leave. Woodside is
also pleased to have almost 4.5% of men
accessing at least one of its flexible
work options.
Woodside was pleased to meet all of
our Reconciliation Action Plan (RAP)
commitments in 2010, specifically
the aspiration to triple the number of
permanent Indigenous employees by
the end of 2012.
In 2010, Woodside directly employed
53 Indigenous people compared to
36 in 2009, representing a 47.2%
increase. Woodside had 49 people on
Indigenous Employment Pathways
Programs compared to 33 in 2009,
representing a 48.5% increase.
Additionally, Woodside had 128 Indigenous
people working for construction contractors,
a decrease compared to 2009 but within
expectation as the foundation Pluto LNG
Project approaches completion.
Further information on ‘Our People’
is available in our 2010 Sustainable
Development Report.
The Woodside workforce grew to 3,650
in 2010, representing a 13.4% increase
from 2009. In 2010, 682 new employees
joined Woodside to support our growing
portfolio of opportunities.
Employee retention continues to be a
highlight for Woodside. The low voluntary
turnover rate continued in 2010 with
an annualised rate of 5.4%. This was a
pleasing outcome in light of a competitive
labour market in the Australian and global
LNG industry. The 94.6% retention rate
was assisted by the employee equity plan
and further investment in Woodside’s
career development processes.
In 2010, 196 leaders completed
Woodside’s leadership development
program, taking the total attendees to
1,103 since inception in 2005.
Woodside has invested approximately
A$20 million in learning and development
in 2010. Woodside’s approach is
supported by a competency framework
that addresses core, leadership and
technical competencies.
Investing in the future
During 2010 more than 30 production
technician trainees and in excess of
30 apprentices received the majority of
their training through a single integrated
training framework implemented across
the Production Division.
Woodside had a total of 130 trainees and
apprentices participating in programs
throughout 2010.
In 2010, 43 new employees entered the
graduate development program; with a
total of 135 people participating in the
three-year program across Woodside’s
business.
IAn MASSOn
VICE PRESIDENT
HUmAN RESOURCES
06070809100607080910
TOTAl RECORDABlE CASES
5.1
5.1
4.1
4.3
3.3
3
5
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The focus to reduce TRCF and maintain a
downward trend in the number of safety
incidents will continue into 2011.
Ensuring strong security and
emergency management
In 2010, we continued to work with state,
national and international governments’
security agencies to protect our operating
assets, construction sites and the
workshops and yards of our contractors
and suppliers.
Capability development through training
and simulated exercises was conducted
for all assets and projects to ensure that
our people are well prepared to deal with
any type of incident. We also conducted
three company-wide crisis management
training exercises to test the capability
of broader areas of our business. These
exercises were conducted in partnership
with key contractors and a range of
government agencies to ensure the close
integration of industry and government
response measures.
11
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OUR HEALTH, SAFETy
AND SECURITy
We believe that the health and safety of our people
comes first in all our decisions and actions.
Our approach
Our aspiration is ‘no-one gets hurt, no
incidents’ and we seek to be recognised
by our people and peers as an industry
leader in the management of health and
safety. This includes ensuring the integrity
of our assets throughout their life cycle so
that they operate without jeopardising our
people’s health and safety and the value
of our assets.
We strive to ensure the security and
protection of Woodside’s people,
information, assets and reputation
throughout the company’s operations.
2010 performance
The frequency of injuries, measured by
total recordable case frequency (TRCF)
increased from 3.3 to 5.1. The total
number of injuries decreased by 24%,
relative to a 51% decrease in hours
worked compared with 2009. However,
we continue to see a trend of reduced
injury severity. There were no work-
related fatalities in 2010.
High potential incidents (those with
potential to cause serious injury)
increased from 40 in 2009 to 54 in 2010,
with 55% of these involving dropped
objects. Following a mid-year awareness
campaign, there was a substantial
decrease in ‘dropped object’ incidents.
Continued company-wide focus on
improving process safety and asset
integrity contributed to significantly
better integrity performance, including
a substantial reduction in ‘loss of
containment’ events. In 2010, there
was one hydrocarbon release that was
classified as major* and a further eight
deemed to be significant*, compared
with four major and 47 significant
releases during 2009.
The quality of integrity-related
investigations improved as a result
of implementing an improved qualitative
assessment process that provides direct
feedback to investigation team leaders.
Proactive response to safety results
The number and frequency of injuries
and incidents recorded in 2010 was
disappointing and we aim to improve
performance by delivering on our health
and safety strategic imperatives.
* As defined by the RIDDOR hydrocarbon release
classification system.
In late 2010, we updated our six health,
safety and security strategic imperatives,
following a review of our operating
environment and the integration of the
security and emergency management
team into a consolidated health, safety
and security (HS&S) function. Our
updated health, safety and security
strategic imperatives are listed below:
Strengthen Our Safety Culture and
implement other high impact human
factors tools and techniques;
Understand the consequences of
major accident events and manage
preventative and mitigative controls;
Consistently implement HS&S
standards, procedures and rules;
Improve learning, the communication
of lessons learned and the recognition
of warning signs from incidents in
order to avoid repeat incidents;
Design new and modified facilities
to be inherently safer. Assure the
integrity of existing assets; and
Undertake strong engagement and
relationship-building with government
agencies and contractors to achieve
excellent HS&S performance.
For 2011, Woodside has introduced a
new internal performance measure which
increases focus on more serious injuries
and illnesses and high potential incidents.
The new measure, which contributes
towards the rating for employee and
executive performance-based pay, draws
upon both lead and lagging indicators as
part of a more balanced performance
measure.
Continued focus on contractor safety
Woodside hosted a major Contractor
Safety Forum in October 2010, which
was attended by over 100 senior leaders
from Woodside and its most significant
contractors. We continued to work
closely with Contractor Safety Focus
Groups to identify and resolve issues and
promote continuous safety performance
improvement. We also continued to be
a leading participant in Stand Together
for Safety; an industry-wide safety event
that Woodside and its contractors helped
establish in 2009.
EVE HOWEll
EXECUTIVE VICE PRESIDENT
HEALTH, SAFETy AND SECURITy
0607080910
CHIEF FINANCIAL OFFICER’S
REPORT
Funding our growth plans and sustaining superior shareholder returns.
12
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In 2010 Woodside achieved a record
reported net profit of $1.575 billion and
generated $2.104 billion in cash flows
from operations.
Our foundation business continued to
perform well, providing the cash flow to
fund our growth. The North West Shelf
Project (NWS) business return on capital
was a strong 41.5% and the Australia
Business Unit was 17.3% despite the
impact of oil-field natural decline.
The Board of Directors declared a fully
franked final dividend of 55 cents per
share, resulting in a full-year dividend of
105 cents per share.
Consistent with our growth plans, we
invested a substantial $3.3 billion of
capital, predominantly on the foundation
Pluto LNG Project and invested a record
$660 million on our extensive exploration
program.
In February 2010 we successfully
completed a A$2.5 billion equity raising.
Utilising the accelerated, renounceable
entitlement offer structure, the raising
was launched in December 2009.
The institutional component was
finalised in December 2009, while
the retail component was finalised in
February 2010.
Improving external factors
As the global financial recovery
gained momentum, commodity
prices correspondingly improved. The
average realised sales price in 2010 was
approximately $16 per barrel higher
than in 2009.
All of Woodside’s sales products achieved
higher prices compared to those received
in 2009. This contributed to revenue
External factors
Avg WTI oil price (US$/bbl)
Avg AUD:USD
Closing AUD:USD
Avg one month LIBOR* %
*London Inter-Bank Offer Rate
2010
2009
79.61
0.92
1.01
0.2733
62.13
0.78
0.89
0.3325
Realised price per ($/boe)
2010
2009
Pipeline gas
LNG
Condensate
LPG
Oil
Average realised price ($/boe)
22.01
57.60
77.72
86.71
80.90
59.14
16.73
36.14
57.56
64.67
61.03
43.04
rising 20.2% to $4.193 billion, more
than offsetting the impact of lower sales
volumes.
Active capital management
2010 was another highly successful
year from a funding perspective.
In December 2010 the $1.1 billion
Asian-syndicated loan facility was
refinanced, extending the maturity
from 2012 to 2015. This was achieved
at a lower finance cost. In addition, we
also renewed a number of 364-day and
bilateral facilities during 2010.
Woodside enters 2011 with $1.725 billion
in undrawn debt facilities and $963 million
in cash. The equity raising, the divestment
of the Otway Gas Project and continued
strong cash flows, have strengthened our
balance sheet in preparation for the next
growth phase.
Our investment grade credit ratings
(S&P: BBB+; Moodys: Baa1) combined
with our established presence in global
capital markets, together with our
reputation for LNG development and
operating excellence, give us every
confidence of being able to fund our
continuing LNG growth.
Successful divestment of
non-core assets
Woodside constantly reviews its
asset portfolio position and looks for
opportunities to enhance shareholder
returns through the divestment of
non-core assets.
In March 2010 Woodside sold its 51.55%
interest in the Otway Gas Project to
Origin Energy Resources Ltd and Benaris
International N.V. for $643 million.
In addition, Woodside’s Sierra Leone
and Liberia interests were successfully
divested in August 2010. In consideration
for this sale Woodside received $65 million
in cash and interests in eight exploration
permits in the Gulf of Mexico.
These divestments, together with
Woodside’s exit from Libya in January
2011, represent a consolidation of our
portfolio allowing a greater focus on our
LNG growth opportunities in Australia.
US dollar functional currency
implemented
With approximately 90% of revenue and
more than 90% of debt denominated in
US dollars, Woodside’s directors adopted
a US dollar functional currency and
presentation currency for the purpose of
all financial reporting, effective 1 January
2010. This change provides shareholders
with a more accurate reflection of the
company’s underlying performance, while
increasing comparability of our financial
results with those of our industry peers.
The one-off impacts of this change
are highlighted in the Notes to the
Financial Report.
Positive engagement on resource
taxation
Woodside has engaged effectively
with the Commonwealth Government
throughout the period in which resource
taxation policy has been evolving.
Based on the Policy Transition Group’s
submissions to Treasury on 21 December
2010 and subject to the terms of the
enabling legislation, our expectation
is that the NWS will transition to a
Petroleum Resource Rent Tax (PRRT)
regime on terms that will result in a tax
position that is no more onerous than
nEt DEBt
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Realised prices for all products were materially
higher in 2010.
Woodside is well placed for growth with
conservative debt and gearing levels.
Australian dollar gas lifting costs remain steady,
while oil has increased due mainly to lower volumes.
Drivers of Woodside’s 2010 reported net profit after tax (nPAT)
Underlying nPAT versus reported nPAT*
2,800
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n
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n
Underlying NPAT
Significant items after tax
Gain on sale of Otway
Gain on adoption of US
functional currency
Gain on sale of Liberia/
Sierra Leone
Neptune impairment
Deferred tax asset
write downs
Foreign exchange gain on
USD debt
Libya writeoff
Sale of Browse permits
Oceanway writeoff
2010
1,418
2009
1,052
149
71
89
(92)
(60)
494
(81)
14
(5)
1,474
Reported nPAT
1,575
Compared to 2009, Woodside’s 2010 reported NPAT strengthened on the back of increased
prices, other income, net finance income and reduced income tax.
Reported NPAT was positively impacted by
successful asset sales.
* 2009 underlying profit adjusted to exclude $494 million non-recurring foreign exchange gain on US dollar debt as a result of the change to US dollar functional currency in 2010.
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lifting costs (Australian dollars)**
Total gas lifting costs decreased by
A$10 million to A$167 million. On a unit
basis gas lifting costs increased from
A$3.35/bbl to A$3.37/bbl (excluding
Ohanet) due to a small increase in costs at
KGP and lower gas production due to the
divestment of the Otway Gas Project.
Total oil lifting costs increased by
A$9 million to A$230 million in 2010. On a
unit basis, oil lifting costs increased from
A$8.53/bbl to A$11.05/bbl driven by lower
production volumes as a result of oil-field
natural decline and higher maintenance
costs at Laminaria-Corallina and Vincent.
** Lifting costs have been reported in Australian dollars as
the majority of expenditure is incurred in this currency.
See glossary for definition of lifting costs.
the present. It is also our expectation
that Woodside’s other interests, which
already fall under the PRRT regime, will
be unaffected by the proposed resource
taxation changes.
Drivers of 2010 profit versus
2009 profit
Revenue from sale of goods –
increased by $706 million. Higher
sales prices in 2010 increased
revenue by $1,066 million. The
higher AUD:USD exchange rate
also increased revenue on pipeline
natural gas by $48 million. This
was partially offset by oil hedging
losses of $36 million and lower
sales volumes, predominantly due
to oil-field natural decline, reducing
revenues by $372 million.
Cost of sales – increased by
$188 million. Royalty and excise
costs were $143 million higher,
associated with higher sales prices.
Production costs were unfavourably
impacted by higher AUD:USD
($49 million), higher Karratha Gas
Plant (KGP) costs ($5 million), partially
offset by lower production costs
following the divestment of the
Otway Gas Plant ($13 million) in
early 2010.
Other income – increased by
$298 million. This was largely
attributable to a $242 million gain
recognised on the sale of Otway Gas
Plant ($143 million) and interests in
Sierra Leone and Liberia ($99 million).
Other expenses – increased by
$863 million. mainly due to a
$714 million gain on foreign exchange
recognised in 2009 compared
with a $47 million loss in 2010. In
addition, exploration and evaluation
expenses were higher ($76 million),
coupled with increased general and
administrative costs ($28 million).
net finance income – increased
by $30 million. As a result of higher
cash balances.
Income Tax – decreased by
$216 million. Due to a reduction of
deferred tax liabilities arising from
the change to a US dollar functional
currency ($129 million) and the sale of
assets ($65 million).
Petroleum resource rent tax (PRRT)
– increased by $90 million. Due to
foreign exchange losses arising from
the change to a US dollar functional
currency, partially offset by higher
PRRT augmentation.
OUTlOOK Woodside enters 2011 in a sound
position with approximately $2.7 billion in cash and
undrawn debt facilities. We are well positioned to
fund our lnG growth plans, while continuing to
deliver strong returns to shareholders.
lAWRIE TREMAInE
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
LNG mARKET
REPORT
Our relationships in
the region are a core
strength in a market in
which buyer-supplier
partnerships are key to
launching new projects.
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Healthy outlook for lnG demand
Woodside anticipates robust growth
in global LNG demand. The economic
recovery from the global financial crisis
has been further consolidated over the
last twelve months. Growth in global LNG
demand over the next decade is expected
to average about 6% per annum, with
total demand expected to increase to
about 380 million tonnes per annum by
the end of 2020.
Global population growth and improving
standards of living in key markets underpin
the growing global demand for LNG, and
natural gas in general. A primary driver of
demand for natural gas is its increasing
role in power generation. Natural gas is the
cleanest hydrocarbon fuel and, in many
countries, its environmental and economic
advantages make it the fuel of choice for
meeting future energy demands. Security
of supply is an additional factor shaping
growth in demand for LNG. Buyers
preferentially target proven and reliable
sources. The company’s strong record of
reliability, LNG operations experience, and
geographical location places Woodside in
a great position to take advantage of this
opportunity.
Asia remains Woodside’s core market
Asian LNG demand is the engine
powering Australian LNG growth. Asian
economies have recovered well from
the global downturn and have generally
returned to high levels of economic
growth. As an example South Korea,
Taiwan and China set new records during
2010 for monthly LNG import volumes
including a 95% year-on-year growth
in LNG imports for South Korea in
September 2010. Looking forward, while
the traditional LNG markets of Japan
and South Korea will continue to be the
core of the LNG market, the growth LNG
markets in the region are China and India.
New entrants such as Singapore, Thailand
and Vietnam will grow quickly and also
add to regional LNG demand. In the next
few years malaysia and Indonesia, who
have historically been suppliers of natural
gas, will join the growing list of
REInHARDT MATISOnS
PRESIDENT mARKETING
LNG import countries in the Asia-Pacific
region. Importantly the expansion of
new markets through the construction
of import capacity can occur relatively
quickly with floating regasification
terminals providing short-term capacity
until onshore terminals can be built.
In the US the development of
unconventional gas has led to medium-
term self-sufficiency, nearly eliminating
the need for LNG imports. In contrast
there is robust growth in demand from
the EU and, in particular, the UK where
domestic resources are in rapid decline.
Natural gas demand in the middle East is
still characterised by uncertainty. While
the region has vast hydrocarbon reserves,
many countries are also committed to
new economic and social development
plans that have already caused rapidly
increasing gas usage, resulting in some
countries facing gas supply shortages.
Kuwait and Dubai are currently importing
LNG to meet a seasonal peak in power
demand. With peaking requirements and
gas shortages set to continue, there is the
potential for rapid growth in LNG demand
from this region.
Despite the potential demand outside the
Asia-Pacific, Woodside continues to focus
on the Asian market due to its significant
demand prospects and close proximity
to our projects. Woodside anticipates
that demand from both traditional and
non-traditional markets in this region is
sufficient to support all of our projects in
meeting their targeted timelines.
Market to tighten
The market is currently well-supplied
following recent start ups from several
new projects. Looking forward there is
limited additional new capacity under
construction that will reach the market
before 2014. As a result the market is
progressively tightening, at least until the
middle of this decade. The strong interest
Woodside continues to receive in the
expansion of Pluto is evidence that many
customers share a similar view.
In the longer term, the world still needs a
new Browse-sized LNG project to come
online every year from 2014 in order to
meet expected growth in LNG demand.
90
)
a
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(
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N
L
ASIA-PACIFIC TO DRIVE WORlD lnG DEMAnD
ASIA-PACIFIC IMPORT CAPACITY SUPPORTS
InDUSTRY GROWTH
2010
2015
2020
2025
500
Emerging markets
India
China
Traditional markets
)
a
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2010
2025
0
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Asia- Pacific countries drive global LNG demand.
Source: Woodmackenzie Global LNG Tool.
Increasing Asia-Pacific LNG import capacity is supporting Australian LNG growth.
Source: Woodmackenzie Global LNG Tool.
There are many new projects under
discussion but these all face challenges
to reaching the point of final investment
decision (FID). During 2010 only one
new project achieved this milestone with
expected output significantly less than that
required to meet average annual growth.
Australia is the key to new supply and
Woodside is playing a lead role
Australia is the country with the greatest
potential to be the leading supplier of
new LNG. These good prospects are
reinforced by the Qatari moratorium on
new projects. Australia’s advantages
include political stability, a relatively
favourable fiscal regime and close
proximity to the premium Asian markets.
Woodside has extensive experience in
developing, constructing and operating
LNG projects, and has a strong
relationship with government and
customers in the region. Woodside is
well-placed to proceed with its portfolio
of conventional LNG projects. In doing so,
we continue to play a leading role in the
industry, both in Australia and in the global
LNG community.
Pluto implements foundation contracts
Pluto’s activities in 2010 were largely
centred around the successful
implementation of the Foundation
Customer Sale and Purchase Contracts
with The Kansai Electric Power Co.,
Inc and Tokyo Gas Co. Ltd, to ensure
the safe and reliable delivery of LNG
from the foundation Pluto LNG Project.
Woodside’s extensive LNG experience
supports the adoption of ‘best-in-class’
practices in all aspects of LNG supply.
Our customers should feel confident
that Pluto LNG is able to provide a
dependable and environmentally
conscious source of energy.
In late 2010, discussions were held with
potential buyers in relation to the sale of
uncommitted Pluto LNG cargoes.
The Pluto LNG brand was well received
by the market, and in January 2011 a LNG
Sale and Purchase Agreement was signed
with Asean LNG Trading Co. Ltd (ALTCO),
a subsidiary of Petronas International
Corporation Ltd, for the supply of up to 19
uncommitted cargoes from the foundation
project through to 2014.
This deal includes provisions for shipping
that ensure Pluto is able to meet all of its
LNG delivery obligations.
Browse marketing to continue Heads of
Agreement discussions into 2011
Browse LNG is premium heating quality
gas which, in the Asian market place,
gives it a competitive advantage over
many of the other proposed new supply
projects, particularly those based on coal-
seam methane which is a low heating
quality gas. Browse is now progressing
from the stage of basis of design and into
front-end engineering and design.
Under the conditions of the Retention
Leases all sellers are required to pursue
binding marketing agreements ahead of
FID in mid-2012. Woodside marketing
is well advanced in securing a portfolio
of customers for its share of Browse.
Woodside’s equity share of the LNG is
expected to be in the order of 5.5 million
tonnes per annum. Central to this activity is
progression of the Key Terms Agreement
with CPC Taiwan for 2 million tonnes
per annum into a Sales and Purchase
Agreement.
nWS successfully concludes
negotiations
NWS successfully concluded price-out-
of-range (POR) negotiations under Train 4
contracts with four Japanese customers;
and a further recontracting agreement,
also with a Japanese customer. POR is
triggered for LNG sold under oil-linked
contracts when the oil price is outside the
range provided for in the contract.
The outcomes of these discussions were
positive and are further evidence of recent
consolidation of market pricing for long-
term supply in the region.
Strong long-term lnG prices into Asia
Sales agreements for long-term LNG
supply into Asia are expected to continue
to achieve very high indexations to crude
oil prices. At present, long-term sales
represent more than 85% of Woodside’s
sales portfolio. This strong outlook for
LNG prices is underpinned by our view of
the long-term global supply and demand
balance. LNG pricing expectations in Asia
have been strongly reinforced during the
past twelve months by the outcomes
of sales agreements for new supply,
negotiations for price-out-of-range and
price reviews between a range of buyers
and suppliers.
Short-term sales complement long-
term supply agreements
While long-term sales agreements
continue to dominate global LNG trade,
the market has become more flexible and
the proportion of spot sales has increased
from 20% in 2009 to about 25% of global
LNG output. The opportunity to trade on
a short-term basis is important to both
buyers and suppliers for the management
of uncertainties such as weather and
unplanned maintenance, and supporting
the ramp-up profiles of new supply projects.
Outlook
Currently, spot prices into Asia are at a
discount to the average long-term price.
Looking forward, Woodside expects spot
prices to improve as the market tightens
over the next few years. With the start
up of Pluto, Woodside will become more
active in the short-term market.
The focus of Woodside’s marketing will
remain on long-term sales agreements to
underpin investment in new supply.
RESERVES
STATEmENT
16
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Reserves growth continued in 2010, increasing Proved
reserves to 1,308.5 MMboe, with an organic reserves
replacement ratio of 171%.
Woodside’s reserves(1) overview
Proved(2)
Proved plus Probable(3)
Contingent resources(4)
mmboe
mmboe
mmboe
2010
1,308.5
1,680.1
1,813.8
2009
1,295.9
1,651.2
1,866.6
Change
1.0%
1.7%
-2.8%
Key metrics
2010 reserves replacement ratio(5)
Organic 2010 reserves replacement ratio(6)
3 year reserves replacement ratio
3 year organic reserves replacement ratio
Reserves life
Annual production(7)
Net acquisitions and divestments
Proved
118
171
136
148
18
71.4
-38.0
Proved plus
Probable
140
231
96
117
24
71.4
-64.5
%
%
%
%
years
mmboe
mmboe
Proved plus Probable reserves annual reconciliation by product*
(Woodside share)
Reserves at 31 December 2009
Revision of previous estimates(13)
Extensions and discoveries(14)
Acquisitions and divestments
Annual production(7)
Reserves at 31 December 2010
*small differences are due to rounding to first decimal place
Dry gas(8) Condensate(9)
Oil
Total
Bcf(10)
7,794
232
572
-342
-231
8,025
mmbbl(11)
147.8
3.2
18.3
-4.5
-10.1
154.7
mmbbl
136.1
-3.7
5.9
0.0
-20.8
117.5
mmboe(12)
1,651.2
40.3
124.5
-64.5
-71.4
1,680.1
Best estimate contingent resources annual reconciliation by product
Contingent resources at 31 December 2009
Transfer to reserves
Revision of previous estimates
Extensions and discoveries
Acquisitions and divestments
Contingent resources at 31 December 2010
Dry gas
Condensate
Oil
Total
Bcf
8,531
-223
-14
85
-82
8,298
mmbbl
248.8
-2.9
0.7
1.3
-1.0
246.9
mmbbl
121.0
-1.8
-13.6
5.5
0.0
111.2
mmboe
1,866.6
-43.8
-15.3
21.6
-15.3
1,813.8
FEISAl AHMED
EXECUTIVE VICE PRESIDENT
DEVELOPmENT
See page 18 for notes to the reserve
statement..
17
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PROVED PlUS PROBABlE
RESERVES SPlIT
21.1%
23.1%
55.8%
Developed
Other (undeveloped)
Greater Pluto (undeveloped)
PROVED RESERVES
302
8
2
3
1
,
6
9
2
,
1
8
0
3
,
1
265
245
7
2
2
1
,
3
9
1
1
,
148
146
)
e
o
b
m
m
(
s
e
v
r
e
s
e
R
PROVED PlUS
PROBABlE RESERVES
i
c
n
a
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r
o
r
a
e
y
3
)
%
(
o
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l
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v
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285
0
8
5
,
1
)
e
o
b
m
m
(
s
e
v
r
e
s
e
R
334 318
8
8
6
,
1
3
0
7
1
,
1
5
6
,
1
0
8
6
1
,
i
c
n
a
g
r
o
r
a
e
y
3
132
117
)
%
(
o
i
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a
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l
t
n
e
m
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c
a
p
e
r
s
e
v
r
e
s
e
r
06
07
08
09
10
06
07
08
09
10
The majority of Woodside’s reserves
are undeveloped.
Proved reserves have increased over
the last five years.
Proved plus Probable reserves have maintained
an increasing trend over the past five years.
Proved reserves summary by region
Governance and Assurance
Project
Greater Pluto(15)
North West Shelf(16)
Greater Exmouth(17)
United States of America(18)
Other Australia(19)
Other International(20)
Reserves
Dry gas
Condensate
Oil
Total
Bcf
3,663
2,776
0
8
0
4
6,450
mmbbl
54.0
67.1
0.0
0.0
0.0
1.1
122.3
mmbbl
0.0
11.6
35.5
3.8
3.8
0.0
54.6
mmboe
696.6
565.6
35.5
5.1
3.8
1.9
1,308.5
Proved plus Probable reserves summary by region
Project
Greater Pluto
North West Shelf
Greater Exmouth
United States of America
Other Australia
Other International
Reserves
Dry gas
Condensate
Oil
Total
Bcf
4,923
3,078
0
19
0
4
8,025
mmbbl
74.3
79.2
0.0
0.1
0.0
1.1
154.7
mmbbl
0.0
29.4
71.9
8.1
8.1
0.0
117.5
mmboe
938.0
648.6
71.9
11.4
8.1
1.9
1,680.1
Best estimate contingent resources summary by region
Project
Greater Browse(21)
Greater Sunrise(22)
Greater Pluto
North West Shelf
Greater Exmouth
United States of America
Other Australia
Other International
Total
Dry gas
Condensate
Oil
Total
Bcf
mmbbl
mmbbl
mmboe
5,892
1,717
316
149
0
3
66
156
8,298
154.1
75.6
4.3
4.7
0.5
0.0
0.5
7.4
246.9
0.0
0.0
0.0
19.1
75.5
2.6
9.2
4.8
111.2
1,187.7
376.7
59.6
50.0
76.0
3.1
21.1
39.6
1,813.8
The Reserves Statement has been compiled by mr Ian F. Sylvester, Woodside’s
Chief Reservoir Engineer, who is a full-time employee of the company. mr Sylvester’s
qualifications include a master of Engineering (Petroleum Engineering) from Imperial
College, University of London, England, and more than 20 years of relevant experience.
mr Sylvester has consented in writing to the inclusion of this information in this report.
Woodside, as an Australian company
listed on the Australian Securities
Exchange, reports its petroleum resource
estimates using definitions and guidelines
consistent with the 2007 Society of
Petroleum Engineers (SPE)/World
Petroleum Council (WPC)/American
Association of Petroleum Geologists
(AAPG)/Society of Petroleum Evaluation
Engineers (SPEE) Petroleum Resources
management System (PRmS).
In accordance with the PRmS guidelines,
Woodside uses crude oil price forecasts
and, where applicable, individual project
production sales contract terms or other
financial products, for the purpose of
reserves estimation.
Unless otherwise stated, all petroleum
resource estimates are quoted as net
Woodside share at standard oilfield
conditions of 14.696 psi (101.325 kPa)
and 60 degrees Fahrenheit (15.56 deg
Celsius).
Woodside has several processes to
provide assurance for reserves reporting,
including the Woodside Reserves Policy,
the Petroleum Resources management
Operating Standard, staff training and
minimum competency levels and external
reserves audits. Woodside’s Reserves
Policy requires an external audit of all
material projects or fields at least once
every four years.
On average, more than 95% of
Woodside’s Proved reserves have been
externally verified by independent review
over the past four years.
See page 18 for notes to the reserve
statement..
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NOTES TO THE
RESERVES STATEmENT
1
2
3
4
‘Reserves’ are estimated quantities of
petroleum that have been demonstrated to
be producible from known accumulations in
which the company has a material interest
from a given date forward, at commercial
rates, under presently anticipated
production methods, operating conditions,
prices and costs. Woodside reports
reserves net of the upstream (offshore)
gas required for production, processing and
transportation to a reference point defined
as the inlet to the downstream (onshore)
processing facility. Downstream fuel and
flare represents 11.8% of total Proved
reserves, and 12.0% of total Proved plus
Probable reserves.
‘Proved reserves’ are those reserves which
analysis of geological and engineering data
suggests, to a high degree of certainty
(90% confidence), are recoverable. There
is relatively little risk associated with these
reserves.
‘Probable reserves’ are those reserves
which analysis of geological and
engineering data suggests are ‘more likely
than not’ to be recoverable. There is at
least a 50% probability that the quantities
actually recovered will exceed the sum of
estimated Proved plus Probable reserves.
‘Contingent resources’ are those quantities
of petroleum estimated, as of a given
date, to be potentially recoverable from
known accumulations, but the applied
project(s) are not yet considered mature
enough for commercial development due
to one or more contingencies. Contingent
resources may include, for example,
projects for which there are currently no
viable markets, or where commercial
recovery is dependent on technology
under development, or where evaluation of
the accumulation is insufficient to clearly
assess commerciality. Woodside reports
contingent resources net of the upstream
(offshore) fuel and non-hydrocarbons not
present in sales products. Contingent
resource estimates may not always
mature to reserves and do not necessarily
represent future reserves bookings.
All contingent resource volumes are
reported at the ‘Best Estimate’ (P50)
confidence level.
5 The ‘reserves replacement ratio’ is the
reserves change during the year, before
the deduction of production, divided by
production during the year. The ‘three-
year reserves replacement ratio’ is the
reserves change over three years, before
the deduction of production for that period,
divided by production during the same
period.
6 The ‘organic annual reserves replacement
15 The ‘Greater Pluto’ region comprises the
Pluto and Xena fields, plus fields in the
Pluto inner and central hubs.
16 The ‘North West Shelf’ (NWS) includes all
oil and gas fields within the North West
Shelf Project Area.
As the NWS consists of a portfolio of
fields, probabilistic aggregation is more
appropriate than arithmetic summation as
inter-field dependencies reflecting different
reservoir characteristics between fields are
incorporated. Probabilistic aggregation of
individual fields in the NWS accounts for
12% of Proved dry gas reserves. In 2010
a new booking was made for probabilistic
addition of Proved condensate reserves
which accounts for 16% of Proved
condensate reserves.
17 The ‘Greater Exmouth’ region comprises
Vincent, Enfield, Stybarrow- Eskdale
Cimatti, Laverda-Skiddaw, and Coniston-
Novara fields.
18 Woodside’s resources in the United States
of America includes the Neptune field and
eight other fields in the Gulf of mexico.
19
‘Other Australia’ includes resources from
the mutineer-Exeter, Laminaria-Corallina
and Argus fields.
20 ‘Other International’ includes fields in
Algeria, Libya and Brazil.
The Ohanet project in Algeria (operated by
BHP Billiton) is a risk services contract with
Algeria’s national oil company, Sonatrach.
Woodside does not have any share in the
sales gas delivered. Reserves associated
with Woodside’s interest in Ohanet are
reported using an economic interest
approach.
21 ‘Greater Browse’ comprises the Brecknock,
Calliance and Torosa fields.
22 ‘Greater Sunrise’ comprises the Sunrise
and Troubadour fields in the Timor Sea.
7
8
9
10
11
12
13
14
ratio’ is the reserves change during the year,
before the deduction of production and
adjustment for acquisition and divestments,
divided by production during the year.
‘Annual production’ is the volume of dry
gas, condensate and oil (see Notes 8 and
9) produced during the year and converted
to ’mmboe’ (see Note 12) for the specific
purpose of reserves reconciliation and
the calculation of reserves replacement
ratios. The ‘Reserves Statement’ annual
production differs from production volumes
reported in the company’s annual and
quarterly reports due to differences in the
sales product definitions and the ‘mmboe’
conversion factors applied.
’Dry gas’ is defined as ‘C4 minus’
petroleum components including non-
hydrocarbons. These volumes include LPG
(propane and butane) resources. Dry gas
reserves include ‘C4 minus’ hydrocarbon
components and non-hydrocarbon volumes
that are present in sales product.
’Condensate’ is defined as ‘C5 plus’
petroleum components for the NWS
Venture and as sales product for the
Ohanet project and the Gulf of mexico
assets.
’Bcf’ means billions (109) of cubic feet
of gas at standard oilfield conditions of
14.696 psi (101.325 kPa) and 60 degrees
Fahrenheit (15.56 degrees Celsius).
‘mmbbl’ means millions (106) of barrels
of oil and condensate at standard oilfield
conditions of 14.696 psi (101.325 kPa) and
60 degrees Fahrenheit (15.56 degrees
Celsius).
‘mmboe’ means millions (106) of barrels of
oil equivalent. Consistent with international
practice, dry gas volumes are converted
to oil equivalent volumes via a constant
conversion factor, which for Woodside is
5.7 Bcf of dry gas per 1 mmboe. Volumes
of oil and condensate are converted from
mmbbl to mmboe on a 1:1 ratio.
‘Revision of previous estimates’ are
changes in previous estimates of reserves
or contingent resources, either up or down,
resulting from new information normally
obtained from development drilling and
production history or resulting from a
change in economic factors.
‘Extensions and discoveries’ represents
additions to reserves or contingent
resources that result from increased areal
extensions of previously discovered fields,
discovery of reserves in new fields or new
reservoirs in old fields.
PRODUCTION
REVIEW
In 2010 Woodside achieved its production target
of 70-75 MMboe; safely, effectively and efficiently
delivering 72.7 MMboe.
An integrated one-team approach
The Production Division is responsible
for operating and maintaining Woodside’s
producing assets. The division employs
over 1,400 people and utilises an integrated
one-team approach that ensures efficient,
reliable and profitable operations. Common
standards, processes and tools are applied
to all activities to ensure efficiency.
Activities align with our eight
strategic goals
In 2010 we have had great success in
incrementally improving our performance
by organising our activities in line with
our eight strategic goals, outlined below.
This approach is expected to continue
to deliver improvements into 2011 and
beyond.
People – we are committed to
developing future capability and
creating an engaging and rewarding
organisational climate that allows us to
retain and attract a capable and highly
motivated workforce.
Health and safety – we have instilled
a health and safety culture which
permeates through every level of the
organisation. Our ultimate goal is
‘no-one gets hurt, no incidents’.
Production optimisation – to support
sustained growth in shareholder wealth
we seek to maximise production with
Woodside Strategy
Production Planning
Cost Management
Health & Safety
VInCE SAnTOSTEFAnO
Environment
EXECUTIVE VICE PRESIDENT
PRODUCTION
Engineering & Assurance
Woodside Strategy
Overview of 2010 Production Division key performance indicators
Theme
Maintenance
Production Planning
Key performance indicator
Turnover
People objectives met
People
People
Cost Management
Woodside Strategy
Woodside Strategy
Woodside Strategy
Production Readiness
Health & Safety
Production Planning
Woodside Strategy
Woodside Strategy
Production Planning
Production Planning
Health and
safety
Health and safety targets met
Divisional total recordable case
frequency: % improvement
Incident actions overdue
Production
Environment
Cost Management
Production Planning
Production Planning
Cost Management
Cost Management
Production target met1
Cost
management
Engineering & Assurance
Health & Safety
Cost Management
Cost Management
Health & Safety
Health & Safety
Opex spend versus budget ($m)
minor Capex spend versus budget ($m)
Environment
Maintenance
Environment
Health & Safety
Health & Safety
Environment
Environment
Environment incidents Category D or
greater (includes reportable)
People
Engineering & Assurance
Environment
Integrity
Environment
Engineering & Assurance
Engineering & Assurance
Technical deviations overdue:
% improvement*
Standing alarms: % above (+)
or below (-) target*
Production Readiness
Maintenance
Engineering & Assurance
Engineering & Assurance
Maintenance
Maintenance
Maintenance
maintenance backlog: % above (+)
or below (-) target*
Achieved Achieved
2009
4.2%
86%
96%
29%
0
2010
3.6%
92%
99%
-52%
0
99.9%
100%
96%
81%
96%
85%
7
4
70%
53%
103%
-7%
72%
-2%
* Excludes Vincent, non-operated and international assets.
1 Produced volumes as a ratio of the production target. If in range the ratio equals 100%.
If outside of the range, it is the percentage variance from the top or bottom of the range.
People
Maintenance
Maintenance
People
People
Improved or target met
Declined or target not met
Production Readiness
People
People
Production Readiness
Production Readiness
Production Readiness
Production Readiness
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an ongoing focus on reliability and
availability of our facilities.
Cost management – we seek
opportunities to reduce expenditure
per unit of production where it does
not compromise our commitment to
health, safety and the environment.
Environment – we are committed to
ongoing compliance and continued
improvement in environmental
performance to ensure that we
minimise our environmental footprint
and maintain our licence to operate.
Technical integrity and process
safety – by safeguarding the integrity
of our facilities, we protect both our
people and assets.
Maintenance and reliability – we
need to ensure that the correct level
of maintenance is undertaken and
that maintenance is performed in a
proficient and timely manner.
Production readiness – we engage
early in a project’s life cycle to ensure
a smooth transition into production
and continued steady-state production
during operational life.
2010 improvements and highlights
In 2010 we improved on, or maintained,
our results for most of our key performance
indicators. We were particularly pleased
with the success of our ‘dropped
objects’ campaign, which has reduced
‘high potential’ events by 90% since
implementation in mid-2010. We also
achieved a remarkable 80% reduction in
major and significant loss of containment
events compared to the previous year, all
of which were key focus areas for the year.
In addition, we were pleased to open the
Woodside Production Training Academy.
Outlook: Further improvements
targeted for 2011
In 2011 operations excellence will
become our ninth strategic goal and
our activity plan continues to focus on
meeting production targets while avoiding
major and significant loss of containment
events. Based on our track record we are
encouraged that further improvement can
be achieved. KPI targets for 2011 have
been refined and represent challenging
industry-benchmarked levels. We look
forward to continuing the improvement
in all aspects of our performance, and
implementing ongoing efficiencies as the
Pluto LNG Plant starts up.
EXPLORATION
REVIEW
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PETER MOORE
EXECUTIVE VICE PRESIDENT
EXPLORATION
The role of Woodside’s Exploration Division is to
contribute to the growth targets of the business through
the discovery of new oil and gas volumes. Discovered
volumes are used to establish new developments or to
maximise the value of existing production infrastructure.
Our Approach
The Exploration Division manages
Woodside’s exploration strategy, assets
and associated expenditure. Exploration
works closely with the business units to
ensure that value-creating opportunities
are identified, captured and drilled to
support the foundation business and LNG
growth strategies. In addition, Exploration
supports selective exposure to ‘future
growth options’ outside of Australia.
Strong Australian focus
Within Australia, the aggressive
exploration campaign that commenced
in 2009 continued throughout 2010.
The primary campaign objective is to
provide gas for the expansion of the Pluto
LNG facilities and is centred on acreage
holdings within the Carnarvon Basin.
During 2010, 12 exploration wells were
drilled to support both Pluto expansion
and producing oil assets. Of these wells,
ten were drilled for gas with five being
successful, and two for oil – one of which
was successful. The overall success rate
for 2010 was 50%.
During 2010, over 9,000 km2 of new
3D seismic data has been acquired
to support the planned 2011 drilling
campaign, which is primarily focused
on Pluto expansion.
Expanding permit portfolio
12 new exploration permits have been
added to the Australian exploration
portfolio during the last two years.
These additions bring the total number
of Woodside’s exploration permits to 30,
as shown in the adjacent Carnarvon and
Browse exploration area permits maps.
Woodside’s current Browse Basin
exploration position has grown to
comprise 12 permits and one retention
lease. The mid-term goal is to identify
additional volumes to add value to the
planned Browse LNG Development. In
2010, one exploration well and one Argus
field appraisal well were matured, ready
for drilling in 2011.
2010 EXPlORATIOn EXPEnDITURE
BY CATEGORY
2010 EXPlORATIOn EXPEnDITURE
BY COUnTRY
9%
8%
9%
7%
19%
74%
74%
Drilling
Seismic
Studies
Other
Australia
USA
International excluding USA
The majority of exploration spend was focused
on drilling in order to support current operations
and our LNG growth strategy.
Consistent with our strategy, the majority
of our exploration expenditure occurred in
Australia.
Encouraging drilling results
WA-404-P, Greater Pluto, Central hub*
Woodside 100%** (operator)
Drilling activity in WA-404-P in 2010
commenced with the successful
discovery of hydrocarbons in Noblige-1.
Including Noblige-1, seven wells were
completed in WA-404-P with four
discoveries made: Noblige-1, Larsen-1,
Larsen Deep-1 and Remy-1. In addition,
martin-1 commenced drilling before the
end of 2010. WA-404-P activity during
2011 is expected to focus on drilling Kelt-1
and appraising discovered volumes.
WA-347-P, Greater Pluto, Cazadores
south hub
Woodside 90% (operator)
Dalia South-1 was drilled but failed to
intersect hydrocarbons. Permits in the
Cazadores Hub are being renewed.
WA-434-P, Greater Pluto, Claudius hub
Woodside 100% (operator)
Tiberius-1 was drilled to test a newly
identified carbonate play and although the
prognosis was successful, the well failed
to intersect hydrocarbons. Alaric-1 was
then drilled and penetrated a gross gas
bearing interval in excess of 185m.
* Refer to map on page 31 for location of hubs.
** Subject to Government approval and registration of
Woodside’s acquisition of a 50% interests in the permit.
During 2011, preparations will be made
to drill two more Claudius Hub wells
scheduled for 2012, following up on the
success of Alaric-1.
Pluto Expansion and one for Browse),
two in support of Foundation Business
(NWS), and one oil prospect in the
Greater Exmouth Area.
WA-28-l, Greater Exmouth Area
Woodside 60% (operator)
Cimatti-1 was drilled to test a ‘near field’
prospect within tieback distance to
Enfield. Cimatti-1 successfully intersected
a gross 15 metres oil column in line with
the pre-drill prognosis.
WA-255-P, Greater Exmouth Area
Woodside 50% (non-operator)
Furness-1 was drilled to evaluate the oil
potential of a significant prospect in the
southern portion of WA-255-P. The well
failed to intersect hydrocarbons and was
plugged and abandoned.
WA-428-P, WA-430-P, WA-433-P,
Greater Pluto, Ragnar Hub
Woodside 70% (operator)
A Controlled Source Electromagnetic
Survey (CSEm) was acquired over the
Ragnar Hub permits during December
2010. Data processing is underway
and two Ragnar Hub gas prospects are
proposed for drilling during 2011.
Australian outlook
Selected international exposure
Woodside also retains opportunity for
growth outside Australia with exposure to
exploration and development in selected
international areas.
In the Gulf of mexico, exploration plans
were put on hold due to the Government
imposed moritorium on deepwater
drilling, following the BP Deepwater
Horizon (macondo) incident. This led to
the suspension of drilling operations on
the Innsbruck prospect in Q2 2010, prior
to penetrating the well’s target zones.
In Brazil, two exploration wells were
drilled. The Pepe-1 well did not encounter
hydrocarbons; however, the Asterix-1 well
intersected gas in tight reservoir.
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International outlook
Activity in selected international areas will
continue in 2011. In the Gulf of mexico,
it is anticipated that drilling operations for
Innsbruck will resume in 2011. In Korea,
Woodside plans to drill its first exploration
well in offshore Block 8/6-1 N in late 2011.
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In 2011, Exploration plans to drill
eight to nine wells. Up to six are in
support of LNG growth (four to five for
Further discussion on Woodside’s
international activities is contained on
pages 36 and 37 of this report.
Carnarvon exploration area
Browse exploration area
17°0'0"S
112°0'0"E
114°0'0"E
116°0'0"E
17°0'0"S
120°0'0"E
123°0'0"E
Australia
WA-353-P
Australia
0
50
100
150
kilometres (scale approximate)
Datum: GDA 1994
19°0'0"S
WA-434-P
Alaric
21°0'0"S
WA-347-P
WA-348-P
WA-269-P
WA-389-P
WA-404-P
Perseus
WA-401-P
WA-5-L
Lambert / Hermes
WA-27-L
19°0'0"S
WA-26-L
Angel
WA-3-L
WA-350-P (1)
WA -369 - P
WA-34-L
Pluto
WA-350-P (2)
Martell
Remy
Noblige
Larsen
Larsen Deep
Xena
Eris
WA-428-P
Cimatti
WA-433-P
WA-430-P
Stybarrow
WA-271-P (3) R2
Laverda / Skiddaw
WA-271-P (4) R2
WA-255-P
Vincent
Enfield
WA-28- L
WA-36- R
Exmouth
WA-271-P (2) R2
WA-271-P (1) R2
Wanaea / Cossack
Goodwyn
Dixon
WA-451-P
WA-7-R
Wilcox
Karratha
21°0'0"S
0
50
100
150
kilometres (scale approximate)
Datum: GDA 1994
12°0'0"S
PLSA
Argus
AC/P 48
AC/RL 8
WA-30-R
WA-32-R
WA-275-P
WA-31-R
WA-28-R
Torosa
TR/5
Brecknock
Calliance
WA-449-P
WA-397-P
WA-447-P
WA-378-P
WA-396-P
WA-432-P
WA-429-P
15°0'0"S
WA-415-P
WA-416-P
WA-417-P
James Price Point
Derby
Broome
123°0'0"E
18°0'0"S
112°0'0"E
114°0'0"E
116°0'0"E
120°0'0"E
Woodside has significant acreage in prospective exploration areas.
Permit
Oil field
Gas field
Gas/oil discovery
FlARE GAS AnD InTEnSITY
SUSTAINABLE
BUSINESS PRINCIPLES
18.6
6
6
5
0
3
2
9.5
9.5
9.6
9.3
8
9
2
2
0
1
0
1
3
5
1
1
3
4
3
0
5
1
7
2
3
6
2
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TInA THOMAS
SENIOR VICE PRESIDENT
CORPORATE
Woodside’s Business
Principles are categorised
into three areas -
economic performance,
environmental excellence
and social contribution.
The focus in this section
is on environmental
excellence and social
contribution.
EnVIROnMEnTAl
EXCEllEnCE
Our approach
Ongoing compliance and continued
improvement in our environmental
performance are central to Woodside’s
sustainable development as a company.
We integrate environmental management
into the design, construction and
operation of our facilities.
Environmental incidents reduced
In 2010 we reduced the number of
environmental incidents, with four
events recorded as Category D* in our
internal incident rating system, where
Category A is an incident with the
greatest consequences. There were no
incidents greater than a Category D.
These incidents were considered
Category D due to the requirement to
report them to government as part of our
legal obligations. The incidents comprised
a dark smoke event and three separate
unplanned subsea releases of methanol.
We did not incur any environmental fines
or penalties in respect of these incidents.
The incidents represent a reduction in the
number of incidents in this category over
the past three years, with 21 events being
recorded in 2008 and eight in 2009. This
improvement is a result of continuous
company-wide focus to improve
environmental performance.
Total gas flared for operated ventures
Woodside portion of flaring
Intensity flared gas (tonne)/hydrocarbon
production (kilotonne)
Total gas flared and the flared gas intensity per
unit of production for 2010 was lower than the
previous year with most facilities performing well.
Managing emissions to air
Our flared gas and greenhouse gas
emissions intensity decreased in 2010.
Emissions intensity refers to the emissions
per tonne of hydrocarbon production. Our
total flared gas also decreased in 2010 with
most facilities performing well.
Additional improvements in flaring were
not achieved due to flaring from the
maersk Ngujima-yin and Cossack Pioneer
floating production, storage and offloading
oil facilities. A fire on the maersk Ngujima-
yin in 2009 damaged the gas reinjection
compressors that are normally used to
reinject gas into the reservoir during oil
production. Flaring was maintained within
regulatory approved limits and repairs are
expected to be completed during 2011.
Higher rates of flaring occurred on the
Cossack Pioneer as a result of recycle
compressor issues.
Baseline biodiversity studies were a
focus in 2010
Woodside’s approach to biodiversity
focuses on establishing high quality
baseline studies. These studies support
environmental impact assessments as
part of approvals processes and ongoing
monitoring of our operational footprint.
In 2010 much of our focus was on
baseline research to support our Browse
LNG Development. These studies
included continuation of extensive annual
survey programs for humpback whale
and turtle monitoring, a baseline fish
monitoring survey (including sail fish
tagging) and various dredging studies.
marine monitoring programs for the Pluto
LNG Project continued and analysis of
monitoring results showed that impacts
were significantly less than predicted
during the impact assessment and
environmental approvals process.
* A change to the naming of incidents in the Woodside incident classification system was made in early 2010. ‘Category D’ incidents were previously referred to as ‘Category C’.
There has been no material change to the criteria that would trigger an incident being considered for this category and therefore previous performance against Category C incidents
is considered equivalent to the new Category D.
0607080910
EnVIROnMEnTAl InCIDEnTS
(CATEGORY D AnD ABOVE)
WOODSIDE’S SOCIAl InVESTMEnT
BY CATEGORY 2010
WOODSIDE’S SOCIAl InVESTMEnT
BY GEOGRAPHIC REGIOn 2010
s
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19%
37%
44%
1% 14%
3%
18%
64%
Living energy - personal health and wellbeing
Creative energy - community health and wellbeing
Natural energy - environmental health and wellbeing
WA
Pilbara
Kimberley
International
National
NB: WA includes social investment programs which
were implemented in two or more WA locations.
The number of incidents has significantly
dropped over the last three years as a result
of continuous company-wide focus to improve
environmental performance.
In order to enhance long-term, meaningful
relationships social investment is now focused
into three categories.
more than 80% of our social investment is in
Western Australia, reflecting our commitment to
the communities in which we live and work.
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SOCIAl
COnTRIBUTIOn
Our approach
Woodside recognises that long-term
and meaningful relationships with the
communities where we operate are
fundamental to maintaining our licence
to operate. Our community relations
strategy has three focus areas: social
impacts, stakeholder engagement and
social investment.
Management of social impact to
support projects
Social impact management in 2010
supported our Pluto LNG Project and the
proposed Browse LNG Development.
Woodside’s social impact assessment
specific to its Browse LNG Development
focuses on consultation with local
stakeholders, seeking their views
on the current status of key social
issues in the community.
In 2010 the Western Australian
Government continued its program of
social, environmental and heritage studies
to support its proposed LNG Precinct at
James Price Point, 60 kilometres north
of Broome.
The State Government Strategic
Assessment Report recommended
strategies for mitigating and managing
impacts and maximising opportunities
for local community benefit.
Details of the State Government report
can be found at www.dsd.wa.gov.au.
While the State Government’s studies
focus on precinct development scenarios,
a decision by the Federal Government
on the Precinct is expected in 2011.
In 2010 we initiated a social impact
standard to provide a consistent approach
across our business. The standard will be
finalised in 2011.
Active stakeholder engagement
In 2010 our stakeholder engagement
activities focused on supporting existing
operations, construction projects and
proposed developments.
Active stakeholder engagement occurred
with government regulators, community
and Indigenous representatives,
near neighbours to our facilities, non-
government organisations, special
interests groups, customers and suppliers.
In 2010 we developed and implemented
an external stakeholder engagement
standard to provide consistency in this area.
Participation in social investment
The three social investment categories are:
living energy - personal health and
wellbeing;
natural energy - environmental
health and wellbeing; and
Creative energy - community health
and wellbeing.
Woodside’s equity contribution to social
investment in 2010 was A$4.9 million.
Our total social investment in 2010,
inclusive of management costs, was
A$8.7 million slightly lower than
A$9.2 million in 2009. This reflects
our strategy of reducing the number of
corporate community partners, which
allows us to focus on investing in
social investment programs for longer
time frames.
In 2010 Woodside formalised a three-
tiered approach to social investment.
Broadly these tiers cover national,
state and local programs. In 2010 we
announced our national ‘Living energy’
partner – Surf Life Saving (SLS). SLS is
an active part of Australian communities
and is the largest volunteer movement
of its kind. We see many similarities
between our two organisations – coastal
operating environments, the dedication
of our people by getting involved in the
community and common values of safety
and wellbeing.
Woodside’s 2010 social investment data
was independently verified by the London
Benchmarking Group (LBG) and will be
published in LBG’s 2011 Benchmarking
Report.
The LBG 2010 Benchmarking Report
benchmarks us against our peers
throughout Australia and New Zealand.
The report showed Woodside is
a benchmark leader in employee
volunteering and participation. Our 2009
volunteering rate was 13.1% – well
ahead of our resource sector peers and
LBG membership at 8.4% and 5.8%
respectively. Woodside’s employee
participation rate was 16.7% – well
ahead of our resource sector peers and
LBG membership at 10.5% and 7.2%
respectively.
Employee participation in, and support
of, partnership activities is a hallmark of
Woodside culture. This trend continued in
2010 with Woodside employees donating
more than A$190,000 of their own
money to 36 not-for-profit organisations.
Our employees also contributed 4,261
volunteering hours. The value of this was
A$151,050. All Woodside employees
are entitled to 12 hours paid volunteering
leave per year.
Further information on Sustainable
Business Principles is available in our
2010 Sustainable Development Report.
060708091018202184
NORTH WEST SHELF
BUSINESS REVIEW
The north West Shelf Project continues to underpin
Woodside’s growth strategy by delivering more than
60% of total revenue. To extend the Project’s field life
and enable top quartile reliability for decades to come
the Joint Venture is investing almost A$7 billion in
redevelopment projects. The north West Shelf Project
remains one of Australia’s largest oil and gas resource
developments and currently accounts for more than
40% of Australia’s oil and gas production.
2010 a year of records
In 2010 the North West Shelf Project
(NWS) achieved record production,
cargoes, revenue and profit. These
outstanding results were due to
continued strong performance at
both the Karratha Gas Plant (KGP)
and offshore facilities, improvements
in overall capacity utilisation and
additional revenue from sales contract
renegotiations.
Despite an environment of increasing
costs, the NWS was able to maintain
lifting costs at around 2009 levels,
with 2010 lifting costs amounting to
A$3.66 per barrel of oil equivalent (boe).
Safety was a priority in 2010, and at the
KGP a cumulative total of 3.9 million man
hours without a single lost time incident
was recorded up to October 2010.
The annual may and September
shutdowns were successfully
completed without a recordable
safety incident. The annual shutdown
work programs at the KGP included
the completion of an external
corrosion intervention campaign and
modifications to the main Cryogenic
Heat Exchangers on LNG Train 5.
This has resulted in productivity
improvements of around 25,000 boe per
day. All offshore facility shutdowns were
also executed successfully, on time and
on budget.
A continued strong focus on reliability
resulted in improved production rates
throughout the year, including the
record daily production of 797,000 boe.
The improved reliability at the KGP was
highlighted when the record of 85 days
without interruption to production was
achieved in July; the previous record
was 64 days since the start up of
Train 4 in 2004. Overall LNG production
reliability in 2010 was 94.3%, compared
to 87.9% in 2009.
Condensate production was positively
impacted due to high gas system
utilisation, which partially offset
natural field decline in 2010.
These achievements have resulted in
a record number of LNG cargoes, with
Woodside delivering 261 cargoes of
LNG in 2010; of which 30 were sold on
the spot market. Woodside’s share of
total sales volumes for 2010 is
2.55 million tonnes.
Pipeline gas production continued to
meet customer demand in 2010 with
100% reliable delivery to customers in
Western Australia.
nWS Oil Redevelopment Project
targets start up in Q2 2011
The A$1.8 billion (A$600 million
Woodside share) NWS Oil
Redevelopment Project includes
conversion of the Okha floating
production storage and offloading
vessel (FPSO), which will replace the
Cossack Pioneer FPSO in 2011, and the
replacement of subsea infrastructure.
The project will provide state-of-the-art
facilities for continuous production from
the Cossack, Wanaea, Lambert and
Hermes (CWLH) fields.
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EXECUTIVE VICE PRESIDENT
NORTH WEST SHELF
north West Shelf Project (nWS)
InTEREST
NWS Venture
Domestic Gas JV
Incremental Pipeline JV
China LNG JV
CWLH (crude oil)
16.67%
50.00%*
16.67%
12.50%
33.33%
OPERATOR Woodside
FACIlITIES
North Rankin A platform
Goodwyn A platform
Angel platform
Cossack Pioneer FPSO
Karratha Gas Plant
~130 km north-west of Karratha, WA
80 - 130 metres
LNG, pipeline gas,
condensate, crude oil and LPG
lOCATIOn
WATER
DEPTH
PRODUCTS
FIRST
PRODUCTIOn
1984 (pipeline gas)
* During 2010 Woodside’s average share of gas production was
approximately 40%. Woodside’s exact share of domestic gas
production depends on the quantities and aggregate rate of
production.
KEY ACHIEVEMEnTS
51.8
MMbbl
RECORD
PRODUCTIOn
$2.75
Billion
RECORD
REVEnUE
$1.33
Billion*
RECORD PROFIT
* A notional tax rate of 30% has been
applied on the NWS profit before tax
less net finance costs.
261
RECORD nUMBER
OF CARGOES
DElIVERED
At year end, overall progress on the project
was 86% and scheduled for start up in
Q2 2011.
north Rankin Redevelopment Project
on track for 2013 completion
The Project will recover remaining low
pressure gas from the North Rankin and
Perseus gas fields. It is expected to cost
approximately A$5 billion (A$840 million
Woodside share).
At year end, overall progress was 63%
complete and remains on schedule for
completion in 2013.
All welding on the North Rankin A (NRA)
for the north bridge support structure
was completed in November, three
months ahead of the original schedule.
Construction of the North Rankin B
(NRB) jacket is also ahead of schedule
and construction of the NRB topsides is
progressing well.
Greater Western Flank Development
targets undeveloped reserves
The Greater Western Flank (GWF) area
consists of 14 fields to the south-west
of Goodwyn A and is estimated to hold
approximately three Tcf of recoverable
gas and approximately 100 mmbbl of
condensate (100% project).
The concept for the first phase of GWF
was selected in 2010. Project planning
for the subsea tieback to Goodwyn A has
commenced with front-end engineering
and design targeted for 2011.
GWF, together with other undeveloped
gas reserves, will maximise returns from
existing infrastructure, maintain offshore
supply to fill the KGP to capacity beyond
2020 and support ongoing marketing
efforts for LNG and domestic gas.
Outlook
Safety is a priority in 2011 and the
NWS will work with industry to ensure
sustained improvement in health, safety
and environmental performance.
The overall focus for the NWS in 2011 will
remain on maximising asset utilisation,
reliability and return on invested capital.
Enhancing the NWS’s LNG operating
capability advantage also remains a
priority. This will be achieved through
world-class training and people-
development programs, advanced
operations and operating management
systems.
The NWS will continue to market pipeline
gas to new and existing customers in
Western Australia in 2011. The most
significant benefit to WA gas consumers
will come from the long-term growth of a
competitive, transparent, unencumbered
and diverse energy market.
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Preparations continue for the NRB
platform start up in 2013, resulting in
modifications to the NRA platform which
will occur during an extended shutdown
in Q3 2011.
LNG Train 5 has now been operational
for two years and in 2011 is due for its
first major shutdown and maintenance
program. The increased work program is
likely to result in an extended shutdown in
Q3 2011.
Shut-in of production at the CWLH fields
is planned for Q1 2011. This will enable
completion of the subsea work program
before the planned start up of the Okha
FPSO in Q2 2011.
The NWS plans to drill up to two
exploration wells in 2011 to explore and
appraise near-field, low development cost
prospects capable of short tiebacks to
existing and newly installed infrastructure.
These significant projects and activities
are paving the way for the NWS to
deliver top quartile reliability for decades
to come.
nWS contribution to Woodside's
total production (MMboe)
nWS key metrics (Woodside share)
NWS gas and condensate
NWS oil
Woodside other
65%
6%
29%
During 2010, NWS made a significant contribution of 51.8 mmboe to
Woodside’s annual production of 72.7 mmboe.
2010
2009
Sales revenue
($ million)
2,749
1,989
Net gas production
Net liquids production
(mmboe)
(mmbbl)
Proved plus Probable reserves
(mmboe)
38.5
13.3
649
37.0
13.9
701
Acreage
Gross
4,184.5
Net
683.9
(km2)
AUSTRALIA BUSINESS UNIT
BUSINESS REVIEW
Enfield oil field
Stybarrow oil field
InTEREST
OPERATOR
FACIlITIES
lOCATIOn
WA-28-L
Woodside
Nganhurra FPSO
~40 km off the
North West Cape, WA
WATER DEPTH 400 - 500 metres
PRODUCTS
Crude oil
FIRST
PRODUCTIOn
July 2006
60%
InTEREST
OPERATOR
FACIlITIES
lOCATIOn
50%
WA-32-L
BHP Billiton
Stybarrow Venture FPSO
~50 km off the
North West Cape, WA
WATER DEPTH 825 metres
PRODUCTS
Crude oil
FIRST
PRODUCTIOn
November 2007
Since start up in 2006, Enfield has
produced 57.4 million barrels (mmbbl) of
oil with 2010 production of 9.6 mmbbl.
Since start up in 2007, Stybarrow has
produced 42.8 mmbbl of oil, with 2010
production of 4.2 mmbbl.
In 2010, ongoing activity at Enfield has
focused on maintaining production
and identifying new opportunities for
development. Compared to 2009, Enfield
achieved a significant increase in oil
production following restoration of gas
lift to all wells and a successful 2009 infill
drilling campaign. Two new development
wells were drilled in 2010; the main West
well came on stream in August and the
Horst well in October.
In November the Cimatti-1 exploration
well successfully intersected a gross
oil column of 15 metres. The Cimatti-2
sidetrack well was also completed during
the year to further appraise the field and
speed up potential development. The
Cimatti field may be tied back to Enfield
with first oil from the field possibly as
early as mid-2013.
The Enfield Development currently
comprises eight oil-production wells,
five water-injection wells and two gas-
injection wells tied back to the Nganhurra
floating production storage and offloading
vessel (FPSO). At the end of 2010 the
facility was producing a total of 31,000
barrels of oil per day.
In 2011 a 4D seismic survey to evaluate
further infill and near field exploration
opportunities is planned. Past surveys
have assisted in locating successful infill
opportunities. This will be the fifth Enfield
4D survey.
During 2010, Stybarrow production
was supported by water injection and
continued to be managed in line with
natural field decline.
It is expected that production will
be slightly higher next year as 2010
production was impacted by significant
off-station maintenance work on the
FPSO swivel and a number of unplanned
shutdowns in 2H 2010 to perform critical
maintenance activities. The Stybarrow
North infill well, drilled in Q3 2010 and
tied-in during December 2010, will
contribute to production in 2011.
The Stybarrow Development comprises
five oil-production and three water-injection
wells tied back to the Stybarrow Venture
FPSO. At the end of 2010 production was
26,900 barrels of oil per day.
In order to identify further infill drilling
opportunities a 4D seismic survey is
planned for 2011.
Mutineer oil field
InTEREST
FACIlITIES
OPERATOR
WA-26-L; WA-27-L 8.20%
Santos
mODEC Venture II FPSO
~150 km north of
Dampier, WA
WATER DEPTH ~165 metres
PRODUCTS
lOCATIOn
Crude oil
FIRST
PRODUCTIOn
march 2005
Since start up in 2005, mutineer-Exeter
has produced 53.7 mmbbl of oil with
2010 production of 1.7 mmbbl.
Consistent with our previously announced
strategy of reviewing non-core assets,
Woodside is reviewing options to
monetise the remaining value in this field.
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JARVAS CROOME
VICE PRESIDENT
AUSTRALIA BUSINESS UNIT
In 2010 we continued our
focus on efficiently and
safely producing from
current fields, delivering
infill opportunities,
and aggressively
pursuing exploration
and development
opportunities.
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KEY ACHIEVEMEnTS
IMPROVED
RElIABIlITY AnD
AVAIlABIlITY
SUCCESSFUl
InFIll DRIllInG
PROGRESSInG
DEVElOPMEnT
OPPORTUnITIES
EXPlORATIOn
SUCCESS WITH
CIMATTI WEllS
Vincent oil field
laminaria - Corallina oil field
Otway gas field
InTEREST
OPERATOR
FACIlITIES
lOCATIOn
60%
WA-28-L
Woodside
maersk Ngujima-yin FPSO
45 km off the
North West Cape, WA
WATER DEPTH 350-400 metres
PRODUCTS
Crude oil
FIRST
PRODUCTIOn
August 2008
Since start up in 2008, Vincent has
produced 18.5 mmbbl of oil, with 2010
production of 8.5 mmbbl.
While 2009 was a challenging year for
Vincent, 2010 has seen increasing oil
production throughout the year. This
is due to higher facility uptime, the
successful introduction of production
from new infill wells adding over
10,000 bbl a day, and the use of the
subsea multiphase pumps in Q3 2010
to provide artificial lift to the wells.
Work is continuing to reinstate the gas
compressors and current plans are to
have them fully operational in 1H 2011.
The Vincent 4D seismic acquisition
commenced in late 2010 providing
valuable information on additional long-
term infill opportunities along with detailed
performance data on existing wells.
The Vincent Development currently
comprises ten producing oil wells tied
back to the Ngujima-yin FPSO. At the end
of the year the facility was producing
25,000 barrels of oil per day.
In 1H 2011 we plan to drill two new infill
wells which are expected to increase
production as they target unswept parts
of the reservoir. A third well is planned for
late 2011 or early 2012 depending on drill
rig availability.
InTEREST
OPERATOR
FACIlITIES
lOCATIOn
Laminaria
Corallina
AC/L5
59.90%*
66.67%
Woodside
Northern Endeavour FPSO
Timor Sea, 550 km
north-west of Darwin
WATER DEPTH ~340 metres
PRODUCTS
Crude oil
FIRST
PRODUCTIOn
1999
* Interests on a post-unitisation basis, i.e. after agreeing to pool
Woodside’s interest with other field owners and to exploit the
field as a single venture.
Since start up in 1999, the Laminaria-
Corallina fields have produced
195 mmbbl of oil, with 2010
production of 3.6 mmbbl.
While natural field decline continued
at Laminaria-Corallina during 2010,
ongoing reservoir studies provided
better understanding of the fields and
will ensure production and recovery
is maximised. Additional production
capacity of approximately 500 barrels
of oil per day was realised with the
reinstatement of the production test riser.
The Laminaria-Corallina Development
currently comprises five production wells
and one gas-injection well tied back to
the Northern Endeavour FPSO. At the
end of the year the facility was producing
9,200 barrels of oil per day, and provides
the highest reliability of a Woodside-
manned and operated facility. A range of
additional opportunities continue to be
evaluated which could further increase
short-term production levels.
A strategic review of future opportunities
for this asset is now underway.
The sale of the Otway assets to
Origin Energy Resources Ltd and
Benaris International N.V. for $643 million
was completed on 16 march 2010. The
gain from the sale was $149 million
(after tax).
laverda development
InTEREST
OPERATOR
lOCATIOn
60%
WA-36-R
Woodside
~50 km off the
North West Cape, WA
WATER DEPTH ~800 metres
Appraisal drilling commenced in
December 2010, continuing into 1H
2011. Development concepts include
possible stand-alone FPSO or tie-back to
existing projects in the area. Engineering
work is progressing, including subsea
evaluation, potential topside requirements
and optimised well locations. Concept
narrowing is underway to reduce the
number of development options and
progress to the next stage of engineering.
The Opel-1 exploration well, located
adjacent to Laverda, is scheduled to be
drilled in early 2011 as part of the Laverda
appraisal drilling program.
Outlook
As we look beyond 2010, the key to
maintaining our level of production will
be our ability to maintain or improve our
facility reliability and availability; as well as
the success of our infill drilling and near-
field exploration programs. These various
activities have been outlined under each
of the preceding oil field discussions in
this business review.
Australia (non-nWS) contribution
to Woodside’s total production (MMboe)
Enfield
Laminaria-Corrallina
Stybarrow
mutineer–Exeter
Otway
Vincent
Woodside other
8%
3%
3%
<0.5%
<1.5%
7%
77%
During 2010, Australia (non-NWS) fields contributed approximately
23% of Woodside’s annual production.
Australia (non-nWS) Business key metrics
2010
2009
Sales revenue
($ million)
1,272
1,319
Net gas production
Net liquids production
(mmboe)
(mmbbl)
Proved plus Probable reserves
(mmboe)
0.9
15.5
80
4.4
20.1
154
Acreage
Gross
5,198
Net
2,703
(km2)
2005
2006
2007
Woodside discovers the Pluto gas field in
April and announces a stand-alone lnG
development in August. Woodside and
Tokyo Gas sign a Heads of Agreement for
the sale of lnG.
Woodside’s Board approves front-end
engineering and design (FEED). Woodside and
Kansai Electric sign a Heads of Agreement
for the sale of lnG. The Xena gas field is
discovered.
Woodside’s Board approves the foundation
Pluto lnG Project on 27 July – conditional
on environmental approvals. Engineering,
procurement, construction and management
contracts are awarded. State and
Commonwealth environmental approvals are
granted. Construction begins at the Pluto lnG
Park and Gap Ridge accommodation village.
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PlUTO
THE STORY SO FAR
2008
2009
2010
2011
Sale and Purchase Agreements with Tokyo
Gas and Kansai Electric completed with both
acquiring 5% equity interest in the project.
Construction work at the Pluto lnG Park
progresses with the first modules for the
lnG train arriving from Thailand.
The Woodside Donaldson lnG tanker
launched. Construction of Pluto A platform
is completed. Martell gas field discovered in
permit WA-404-P, to the north-west of the Pluto
gas field.
last of the 264 lnG train modules arrives from
Thailand. Exploration wells at Eris, noblige,
larsen, larsen Deep and Remy discovered
gas in the Pluto Inner and Central Hubs. Alaric
exploration well in the Claudius hub also
discovered gas. Woodside buys Hess’s 50%
stake in WA-404-P.
Pluto lnG Plant targeted for start up in
2011 with the opportunity for future
additional trains.
The Pluto lnG Project, together with
its growth potential, will consolidate
Woodside’s position as a global lnG leader.
Panoramic view of the Pluto lnG Park. Offshore gas will be piped
approximately 180 km to the onshore Pluto lnG Plant and liquefied
for transport to overseas customers.
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PLUTO LNG
BUSINESS REVIEW
2011 will mark the end of one journey and the
beginning of another for Woodside, when the
Pluto lnG Plant starts up as a production facility.
We have overcome many challenges constructing
Pluto and along the way have built capability
unmatched by any other lnG company operating
in Australia today. Our people are our competitive
edge. looking to the future, Pluto offers exciting
opportunities which will build on the value created
by the foundation project.
Approved for development in
July 2007, the foundation Pluto
LNG Project will process gas from
the Pluto and Xena gas fields, located
about 190 km north-west of Karratha
in Western Australia, into LNG and
condensate.
The initial phase of the foundation
Pluto LNG Project comprises five
subsea wells on the Pluto gas field
connected to an offshore processing
platform in 85 m of water. Gas will be
piped about 180 km to the onshore
plant in a 36-inch pipeline.
Onshore facilities at the Pluto LNG
Park include a single LNG processing
train with forecast production
capacity of 4.3 million tonnes per year
(mtpa), in addition to storage facilities
and an export jetty. The LNG train
was built in modular form in Thailand
and shipped to site as 264 modules.
The foundation Pluto LNG Project
is underpinned by 15-year sales
contracts for up to 3.75 mtpa with
foundation customers and partners
Kansai Electric and Tokyo Gas which
each hold a 5% equity interest in the
foundation project.
The project has generated more
than 5,000 Australian jobs and is
making a significant contribution to
the Western Australian and Australian
economies, as well as providing
opportunities for local businesses.
By the end of 2010, Pluto had
delivered more than A$6 billion
in local content.
Successful Indigenous
participation
Indigenous employment on the
project peaked at 170 against a target
of 150. Throughout 2010 the project
recruited and trained 29 Indigenous
people for jobs in the Pluto operations
team, in line with our Reconciliation
Action Plan commitments. This
represents about 10% of the Pluto
operations workforce.
Woodside also continued to
successfully manage our heritage
requirements and deepen our
relationships with Traditional
Custodians who, for the first time,
participated in site audits.
Achievements in 2010 pave the
way for start up in 2011
The foundation Pluto LNG Project
was 95% complete at the end of
December 2010.
Onshore, the transition from
construction to commissioning
continued throughout the year.
All heavy lifts were completed in
August, allowing work to advance
on mechanical completion and
readying systems for use.
Pre-commissioning, commissioning
and pre-operations teams joined the
construction team on site to progress
the integrated start-up approach for
production.
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lUCIO DEllA MARTInA
EXECUTIVE VICE PRESIDENT
PLUTO
Pluto lnG
InTEREST
OPERATOR
lOCATIOn
WATER DEPTH
GREATER PlUTO
PROVED + PROBABlE
RESERVES^
90%
90%
80%
70%
70%
100%*
100%
53.33%**
90%
100%***
50%
WA-34-L
WA-350-P; WA-347-P
WA-369-P
WA-428-P; WA-430-P
WA-433-P
WA-353-P
WA-434-P; WA-401-P
WA-269-P
WA-348-P
WA-404-P
WA-448-P
Woodside
Pluto and Xena fields, 190 km
north-west of Karratha, WA
400 - 1,000 metres
4,923 Bcf dry gas,
74.3 mmbbl condensate
ACREAGE
(km2)
Gross
42,191
Net
36,958
* Tokyo Gas and Kansai Electric have options to each take
5% equity in this permit.
** Permit withdrawal subject to Government and regulatory
approval will reduce Woodside’s interest to 0%.
*** Subject to Government approval and registration of
Woodside’s acquisition of a 50% interest in the permit.
^ Woodside share.
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KEY ACHIEVEMEnTS
95%
COMPlETE On
FOUnDATIOn PlUTO
lnG PROJECT
A$6
BIllIOn
lOCAl COnTEnT
DElIVERED
100%
COMPlETIOn OF OnSHORE
FEED STUDIES FOR TWO
EXPAnSIOn TRAInS
Offshore continued to progress to
schedule. This included the successful
drilling and completion of the fifth and
final Pluto production well and the de-
watering of the 36-inch 180 km pipeline
and two 20-inch 27 km flowlines.
Cost and schedule revised
A comprehensive review of cost and
schedule completed in November 2010
revised the target start-up date to August
2011. The first LNG cargo is targeted a
month after start up.
The revised cost of the foundation
Pluto LNG Project is A$14 billion.
This represents a 6.9% increase to the
project’s 2009 A$13.1 billion estimate,
which includes pre-FID costs.
Outlook: Potential growth through
Pluto expansion
Pluto expansion provides an opportunity
to capture additional value from the
foundation Pluto LNG Project. Synergies
created by existing infrastructure,
execution capabilities, operations and
management, will lead to improved
economics and enable earlier construction
of further LNG trains.
Our exploration and appraisal activity
is expected to provide the foundation
volumes for growth.
The exploration campaign to support Pluto
equity gas expansion will continue into
2011. During the current Carnarvon Basin
campaign Woodside has drilled six gas
discoveries from ten exploration wells in
the inner and central hubs (including blocks
WA-34-L, WA-350-P and WA-404-P).
Gas discoveries to date in the Pluto inner
and central hubs include martell, Eris,
Noblige, Larsen, Larsen Deep and Remy.
In the Claudius Hub, Alaric also found gas.
During the fourth quarter of 2010
Woodside purchased a 50% participating
interest in exploration permit WA-404-P
from Hess Exploration (Carnarvon) Pty Ltd,
increasing our equity to 100%.
Discussions continue with third parties
regarding the potential to process
Carnarvon Basin gas through additional
trains at Pluto.
Woodside has completed front-end
engineering and design for the next two
onshore trains. We plan to order long-
lead items in 2011 to maintain the earliest
ready for start up for an expansion train
by end 2014.
PHIlIP MEIER
SENIOR VICE PRESIDENT
PROJECTS
location of Woodside’s permits in the Greater Pluto area
Permit
Hub
Gas discovery
Gas field
Cazadores
north hub
martell
Remy
Noblige
Larsen
Larsen Deep
Australia
Cazadores
south hub
Central hub
Alaric
Claudius hub
Pluto inner hub
Pluto
Eris
Xena
05
01
00
150
kilometres (approximate only)
Datum: GDA 1994
Karratha
Ragnar hub
BROWSE LNG
BUSINESS REVIEW
In 2010 the Browse lnG Development
made rapid progress; from selecting a
development concept in February, to
completing basis of design studies, on
schedule and to budget, by the end of
the calendar year. The Development is
well placed to move through the front-
end engineering and design (FEED)
phase in 2011, and be ready to make a
final investment decision by mid-2012.
Browse momentum builds
Woodside is the major equity holder and operator of the
Browse LNG Development, which is an important part of
Woodside’s LNG production growth plans.
The Browse LNG Development concept is to commercialise
the Browse Joint Venture’s three gas and condensate fields,
Brecknock, Calliance and Torosa. Gas and liquids from these
fields will be brought to an onshore LNG plant at the Western
Australian Government’s Browse LNG Precinct, 60 km north
of Broome.
Basis of design work completed
In 2010 the Browse LNG Development reached a number
of significant milestones and invested approximately
A$350 million in geoscience, engineering, environmental
and social impact studies. In February, the Joint Venture
participants unanimously selected the development concept
for Browse, which included the Browse LNG Precinct as the
location of the onshore processing facilities, complying with
the retention lease conditions accepted in December 2009.
Basis of design work started in February and was completed
in November 2010, on schedule and to budget. The first of
the pre-FEED contracts, for the central processing facility, and
Downstream pre-FEED packages were awarded in December.
Pre-FEED packages for the dry tree units and subsea pipelines are
to be awarded in early 2011, to facilitate a seamless transition into
FEED in 2011.
land and environment approvals on track
Land tenure at the Browse LNG Precinct is being secured
through Western Australian Government-led negotiations with
Traditional Owners. The Government commenced a right-to-
negotiate process that provides a timeframe for all parties to
establish a settlement for land access at the Precinct.
Woodside has worked closely with the Traditional Owners of
James Price Point, the Goolaraboolo-Jabirr Jabirr people, to
progress the Development in a way that meets the needs of
local Indigenous people.
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MICHAEl HESSIOn
SENIOR VICE PRESIDENT
BROWSE
Browse lnG
InTEREST
OPERATOR
lOCATIOn
WATER DEPTH
COnTInGEnT
RESOURCES*
ACREAGE
*Woodside share
50%
50%
25%
25%
50%
50%
70%
70%
60%
100%
100%
75%
TR/5; R2; WA-30-R
WA-31-R; WA-32-R
WA-28-R; WA-29-R
WA-275-P
WA-378-P; WA-396-P
WA-397-P
WA-429-P
WA-432-P; AC/P48
AC/RL8
WA-415-P; WA-416-P
WA-417-P
WA-447-P; WA-449-P
Woodside
Offshore 425 km
north of Broome, WA
400 - 800 metres
5,892 Bcf dry gas,
154.1 mmbbl condensate
(km2)
Gross
50,204
Net
38,309
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KEY ACHIEVEMEnTS
DEVElOPMEnT
COnCEPT
SElECTED
BASIS OF
DESIGn
STUDIES
COMPlETED
STRATEGIC
ASSESSMEnT
REPORT FOR
BROWSE lnG
PRECInCT
RElEASED
EnTERInG
FROnT-EnD
EnGInEERInG
AnD DESIGn
Our preference is to secure a negotiated
agreement with Traditional Owners for
land access at James Price Point. An
agreement would include a significant
benefits package for Kimberley Indigenous
people, which deals with training and
employment opportunities on the
Development and business opportunities
for local Indigenous businesses.
These initiatives include commitments
to Indigenous employment and new
training and education programs to
assist Kimberley Indigenous people to
become job-ready for the oil and gas
industry. At the close of 2010 Woodside
had employed 15 Kimberley Indigenous
people in Browse, including eight young
people as trainees. We had also engaged
several Kimberley Indigenous contractors
to provide services including transport,
cultural heritage monitoring, catering,
audio-visual production and workshop
facilitation.
During the year Woodside established
its Broome office and has continued its
community consultation program, which
includes a comprehensive social impact
assessment of the Development.
In December the Western Australian
Government issued its Strategic
Assessment Report for the Browse LNG
Precinct. The Strategic Assessment is
now in its public comment period, and
environmental assessment of the Precinct
is expected to be completed in 2011.
Outlook
By the end of 2011 Woodside expects
that primary environmental approvals will
have been obtained and FEED studies
completed. The company will continue to
work closely with Traditional Owners and
the Western Australian Government and
plans to secure a negotiated outcome to
facilitate the establishment of the Browse
LNG Precinct at James Price Point during
2011. By achieving these milestones the
Browse Joint Venture will be in a position
to make a final investment decision by
mid-2012, and process our first gas from
Browse by 2017.
location of Woodside’s permits in the Browse area
Permit
Gas field
Argus
Torosa
Brecknock
Calliance
0
50
100
150
kilometres (approximate only)
Datum: GDA 1994
Australia
James Price Point
Broome
SUNRISE LNG
BUSINESS REVIEW
Major milestones were achieved
in 2010 including the Sunrise Joint
Venture unanimously selecting
Floating lnG as its preferred
development concept. The concept
is now being progressed with
the Australian and Timor-leste
governments in accordance with
international treaty obligations.
The Sunrise LNG Development involves developing the Sunrise
and Troubadour gas and condensate fields, collectively known
as the Greater Sunrise fields, located approximately 450 km
north-west of Darwin, Northern Territory and 150 km south-
east of Timor-Leste.
The fields, discovered in 1974, hold a total contingent resource
of 5.13 Tcf of dry gas and 225.9 million barrels of condensate.
Another key milestone in 2010 was the independent
certification of these volumes.
Approximately 80% of the Greater Sunrise fields is attributed
to Australia with the remaining 20% attributed to the Joint
Petroleum Development Area (JPDA), which is jointly
administered by the governments of Australia and Timor-Leste.
Woodside and its Sunrise joint venture participants have
made a substantial investment in the Greater Sunrise fields
- more than $300 million since discovery. The Joint Venture
has acquired and processed seismic data, drilled appraisal
wells and undertaken extensive studies to select the best
development concept consistent with international treaty
requirements. The concept selection work has taken more
than 300,000 hours with the Sunrise Joint Venture applying
its wealth of LNG experience to a comprehensive technical
and commercial evaluation.
The development of the Greater Sunrise fields offers both
Australia and Timor-Leste a significant opportunity to meet
growing worldwide demand for cleaner energy and deliver
sustainable benefits to both resource owners.
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SENIOR VICE PRESIDENT
SUNRISE
Sunrise lnG
InTEREST
OPERATOR
lOCATIOn
PSC JPDA 03-19;
PSC JPDA 03-20;
NT/RL2; NT/RL4
Woodside
33.44%
(unitised)
Offshore 450 km
north-west of Darwin, NT
150 km south-east of
Timor–Leste
WATER DEPTH Less than 100 metres to
greater than 600 metres
1,717 Bcf dry gas,
75.6 mmbbl condensate
(km2)
COnTInGEnT
RESOURCES*
ACREAGE
Gross
2,998
Net
958
*Woodside share
KEY ACHIEVEMEnTS
UnAnIMOUS
SElECTIOn OF
FlOATInG lnG
COnCEPT
Momentum in 2010
During 2010 Woodside and its joint
venture participants actively progressed
the development of the Greater Sunrise
fields with a rigorous technical and
commercial evaluation of the following
three concepts:
an offshore processing facility linked
by an export pipeline to a brownfield
onshore expansion of the existing
Darwin LNG plant in the Northern
Territory (Darwin LNG);
a standalone Floating LNG processing
facility located above the Greater
Sunrise fields; and
an offshore processing facility linked
by an export pipeline to a greenfield
LNG plant located on the south coast
of Timor-Leste (Timor-Leste LNG).
On 29 April 2010, the Sunrise Joint
Venture achieved a major milestone and
announced the unanimous selection of
Floating LNG as its preferred development
concept. Floating LNG is deemed to best
meet the requirements of the International
Unitisation Agreement (IUA) to develop the
fields to the best commercial advantage
consistent with good oilfield practice.
location of Woodside’s permits in the Greater Sunrise area
Permit
Gas field
ROBUST
PROJECT
ECOnOMICS
InDEPEnDEnT
CERTIFICATIOn
OF RESOURCES
GOVERnMEnT
REGUlATORS
EnGAGED
Floating LNG has the lowest capital
cost, lowest operating cost and is the
most commercially advantageous
development for both Australia and
Timor-Leste as resource owners and
the Sunrise Joint Venture.
The Sunrise floating facility will be
approximately 480 m in length by 75 m
wide and will be designed to produce
approximately 4 million tonnes per annum
of LNG and approximately 10.3 million
barrels per annum of condensate for export.
The selection of Floating LNG, in addition
to generating the greatest long-term
petroleum revenue for Timor-Leste and
Australia, provides a broad range of social
investment, employment and training
opportunities for Timor-Leste. It also has
the advantage of having the smallest
environmental footprint.
In September 2010, to progress
the approvals process, Woodside
submitted to the Sunrise Commission,
the JPDA and Australian regulators,
three Concept Evaluation Reports
(Timor-Leste LNG, Darwin LNG and
Floating LNG) that underpin its preferred
development concept.
Outlook
In 2011 Woodside and the Joint Venture
will continue its drive towards a final
investment decision and progress
with the Australian and Timor-Leste
governments the development of Greater
Sunrise to the benefit of all stakeholders.
Following the necessary approvals the
Joint Venture will enter upstream and
downstream basis of design and front-end
engineering and design.
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200
300
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Datum: GDA 1994
INTERNATIONAL
BUSINESS REVIEW
UnITED STATES
neptune oil field
Gulf of Mexico shelf fields
AT 573-575;
617; 618
WI 20%
NRI 17.5%
PRODUCInG
FIElDS
7
InTEREST
OPERATOR
lOCATIOn
BHP Billiton
Atwater Valley, 220 km
offshore Louisiana, USA
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PRESIDENT
WOODSIDE ENERGy (USA) INC.
In 2010, we continued
to consolidate our focus
around our core assets.
WATER DEPTH ~ 2,000 metres
FIRST
PRODUCTIOn
6 July 2008
WI - Working interest , NRI - Net revenue interest
Neptune is a multi-well subsea
development tied back to a stand-alone
tension leg platform (TLP). The Neptune
field produced first oil on 6 July 2008
and quickly reached a peak production
rate of more than 53,000 barrels of oil
per day and 42,000 mcf of gas per day.
During 2010, the operator of the Neptune
field initiated optimisation efforts through
a bottom-hole pressure reduction
campaign for each of the producing
wells. This campaign has resulted in
substantially increasing production during
the second half of the year with Q4 2010
production rates peaking 43% higher
and ending 15% higher than Q2 2010
production rates. Woodside’s net share of
Neptune’s production at the end of 2010
was approximately 2,265 barrels of oil and
1,425 mcf of gas per day.
Although the Joint Venture planned for
additional Neptune development wells
during 2010, a drilling moratorium and
ongoing regulatory uncertainty following
the BP Deepwater Horizon (macondo)
incident delayed these plans. The near-
term development plan for Neptune
entails the drilling and completion of one
additional development well and one re-
completion well, which are contingent on
securing permit approvals.
4
OPERATED
FIElDS
WATER DEPTH 5 – 100 metres
AVERAGE
InTEREST
28% (reserve basis)
At the end of the year, Woodside’s net
shelf production was 70 barrels of oil
per day and 7,700 mcf gas per day, from
five producing fields. Two fields were
temporarily shut-in at the end of the
year due to downstream constraints,
but are expected back online in early
2011. In 2010, the company plugged
and abandoned several depleted non-
producing fields.
Gulf of Mexico exploration impacted
by drilling moratorium
As a result of the macondo incident the
US federal government put a drilling
moratorium in place in the deepwater of
the Gulf of mexico from may 2010 until
it was lifted on 12 October 2010. Since
the lifting of the moratorium, until the
end of 2010, no new exploration drilling
permits were granted in the deepwater
of the Gulf of mexico, and as such, no
exploration drilling occurred. The oil and
gas industry expects deepwater drilling
activity to resume in early 2011 with new
regulations in place.
In Q2 2010, Woodside participated in
the drilling of the Innsbruck exploration
prospect. Drilling operations were
suspended above the targeted sections,
in order to comply with the moratorium.
The prospect was temporarily plugged
and abandoned. It is anticipated that
drilling operations will resume in 2011.
Gulf of Mexico
Gulf of Mexico key metrics (Woodside share)
Gulf of mexico production
Woodside other
3%
97%
During 2010, United States production was derived from gas,
condensate and oil operations in the Gulf of mexico and contributed
2.2 mmboe to Woodside’s annual production.
Sales revenue
Net production
($ million)
(mmboe)
Proved plus Probable reserves
(mmboe)
2010
2009
117
2.2
11.4
124
3.2
14.0
Acreage
Gross
2,578
Net
1,160
(km2)
In late 2010, StatOil and Woodside
agreed to sublet the drilling rig to
Exxonmobil. As a result of the farm-
out, Woodside’s commitments on the
maersk Developer have been significantly
reduced with our first committed slot
expected to occur in mid-2012.
In addition to the operated portfolio,
Woodside has a substantial portfolio of
non-operated drilling candidates which
will begin to be drilled when deepwater
activity resumes.
Since the macondo incident, Woodside
has been an active participant in several
industry work groups focusing on
emergency and oil spill response and
new regulations. This led to Woodside
signing a two year commitment with the
Helix Well Containment Group for subsea
containment as a critical component of
future drilling programs.
Power Play oil field
InTEREST
OPERATOR
lOCATIOn
GB 302
WI 20%
NRI 16.3%
Anadarko
Garden Banks, 200 km
offshore Lousiana, USA
WATER DEPTH 700 metres
WI - Working interest , NRI - Net revenue interest
Power Play began production in June
2008 as a subsea tieback to the deepwater
Baldpate facility. During 2010, facility
optimisation work was performed to
reduce back pressure on the well, resulting
in better than expected well performance
for the year. Power Play was producing
3,790 barrels of oil per day and 5,600 mcf
of gas per day (gross) at the end of 2010,
(Woodside’s net share 620 barrels of oil
and 912 mcf of gas per day).
Outlook
In 2011, Woodside will be looking to reduce
the effects of natural decline for our Gulf of
mexico fields. At Neptune the drilling and
completion of one development well and
the re-completion of another is planned.
In addition, exploration drilling for Woodside
is expected to resume in 2011 at the
Innsbruck well in the deepwater Gulf of
mexico.
Ohanet production
OTHER
Ohanet condensate and lPG
15%
Ohanet North;
Ohanet South;
Askarene Guelta;
Dimeta West
BHP Billiton
Ohanet Gas
Processing Plant
Onshore Illizi Basin,
Southern Algeria
LPG and condensate
October 2003
InTEREST
OPERATOR
FACIlITIES
lOCATIOn
PRODUCTS
FIRST
PRODUCTIOn
In 2010, the Ohanet Joint Venture
received its full revenue entitlement of
$55 million (Woodside share), which
equals 1.37 million barrels of condensate
and 111,200 tonnes of LPG. These
volumes were calculated using the
ten-year oil price prevailing at the time of
initial production.
Canary Islands
Woodside 30% (non-operator)
Woodside holds a 30% interest in blocks
1-9 operated by Repsol. Activity remains
suspended until such time as a Royal
Decree will provide full rights to permit
activity.
Brazil
Woodside 12.5% (non-operator)
Woodside holds a 12.5% interest in two
concession agreements covering
1,400 km2 in the Santos Basin, offshore
south-eastern Brazil. The blocks are about
180 km south-east of Sao Paulo.
The Panoramix-2 appraisal well, a
stepout into the northern fault block
of the structure, was drilled in the first
half of 2010. The well did not encounter
significant hydrocarbons and proved
that the oil and gas accumulations are
restricted to the southern compartment.
Two exploration wells were also drilled.
The Asterix-1 well encountered gas in a
tight reservoir and the Pepe-1 well did not
find any hydrocarbons.
Peru
Woodside 20% (non-operator)
Woodside has executed an agreement
for a 20% interest in onshore block 108
which is operated by Pluspetrol. Covering
approximately 12,000 km2, block 108
includes the entire, highly prospective, Ene
Basin with numerous large leads and oil
seeps. The exploration block is currently
under force majeure conditions. Once the
force majeure conditions cease, Woodside
plans to acquire 800 km of 2D seismic.
Korea
Woodside 50% (operator)
Woodside holds a 50% interest in
offshore block 8/6-1 N, which covers
9,922 km2. During 2009, Woodside
entered into the second exploration
period of the contract and plans to drill the
first well in this block in late 2011.
Divesting non-core assets
Consistent with Woodside’s strategy of
divesting non-core assets, Woodside
has divested its interests in Sierra Leone,
Liberia and Libya.
Sierra leone Woodside 25% (non-operator)
and liberia Woodside 17.5% (non-operator)
In August 2010, Woodside completed
its divestment of its Sierra Leone and
Liberian interests. The consideration
received for the divestment comprised of
interests in eight exploration permits in
the Gulf of mexico and a cash payment
of $65 million.
libya EPSA* III
On 16 December 2010, Woodside
signed a Heads of Agreement with
the Libyan Investment Authority for
the sale of Woodside’s interests. The
sale was finalised in early 2011.
libya EPSA* IV
Woodside 55% (operator)
The EPSA IV contract expired in
Q1 2010. Woodside has no further
interest in the blocks.
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International key metrics, excluding Gulf of Mexico
(Woodside share)
Sales revenue
Net production
($ million)
(mmboe)
Proved plus Probable reserves
(mmboe)
2010
2009
55
2.3
1.9
55
2.3
1.7
Acreage
Gross
52,586
Net
19,335
(km2)
Ohanet production
Woodside other
3%
97%
During 2010, other international production was derived from condensate
and LPG operations in Algeria and contributed 2.3 mmboe to Woodside’s
annual production.
BOARD OF DIRECTORS
38
michael Chaney
Don Voelte
melinda Cilento
Erich Fraunschiel
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Michael A Chaney, AO
Chairman
BSc, MBA, Hon LLD (UWA), FAICD
Term of office: Director since November
2005. Chairman since July 2007.
Independent: yes.
Age: 60.
Donald R Voelte
Managing Director and CEO
BSc (University of Nebraska), FTSE,
FAICD
Term of office: Director since April 2004.
Independent: No.
Age: 58.
Experience: 22 years with Wesfarmers
Limited, including managing Director and
CEO from 1992 to 2005. Three years
with investment bank Australian Industry
Development Corporation (1980 to
1983) and, prior to that, eight years as a
petroleum geologist working on the North
West Shelf and in the USA and Indonesia.
Previously a non-executive director of
BHP Billiton Limited (1995 to 2005) and
BHP Billiton Plc (2001 to 2005).
Experience: more than 35 years
experience in the global oil and gas
business, including 22 years with mobil
Corporation culminating as Executive Vice
President New Exploration and Producing
Ventures, three years with Atlantic
Richfield Company (ending as Executive
Vice President International Exploration)
and three years as Director, President
and CEO of Chroma Energy Inc, a private
exploration and production company.
Committee membership:
Chair of the Nominations Committee.
Attends other Board committee
meetings.
Current directorships:
Chair: Gresham Partners Holdings
Limited (director since 1985) and
National Australia Bank Limited (director
since 2004).
Director: The Centre for Independent
Studies Ltd (since 2000).
Chancellor: The University of Western
Australia (since 2006).
member: JP morgan International Council
(since 2003).
Committee membership:
Attends Board committee meetings.
Current directorships:
Director: The University of Western
Australia Business School (since 2006),
West Australian Newspapers Holdings
Limited (since 2008) and Business Council
of Australia (since 2010).
Melinda A Cilento
BA, BEc (Hons), MEc
Term of office: Director since December
2008.
Independent: yes.
Age: 45.
Experience: Significant public and private
sector experience in economic policy
development and analysis. Previously
Deputy Chief Executive (2006 to 2010)
and Chief Economist (2002 to 2010) of
the Business Council of Australia. Prior
to that worked with County Investment
management (now Invesco) as Head of
Economics, the Department of Treasury
and the International monetary Fund.
Committee membership:
member of the Human Resources
& Compensation, Sustainability, and
Nominations Committees.
Current directorships:
Director: Reconciliation Australia (since
2010) and Wesfarmers General Insurance
Limited (since 2010).
Erich Fraunschiel
BCom (Hons) (UWA)
Term of office: Director since December
2002.
Independent: yes.
Age: 65.
Experience: more than 18 years
experience in senior executive positions
with Wesfarmers Limited, including ten
years as CFO and Executive Director.
Committee membership:
Chair of the Audit & Risk Committee.
member of the Sustainability and
Nominations Committees.
Current directorships:
Chair: Wesfarmers General Insurance
Limited (since 2003).
Director: Rabobank Australia Limited
(since 2003), Rabobank New Zealand
Limited (since 2007), The WCm Group
Ltd (since 2005) and WorleyParsons
Limited (since 2003).
Directorships of other listed entities
within the past three years:
Director: West Australian Newspapers
Holdings Limited (2002 to 2008).
Andrew Jamieson
Pierre Jungels
David mcEvoy
Din megat
Ian Robertson
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Committee membership:
Chair of the Human Resources &
Compensation Committee. member
of the Sustainability and Nominations
Committees.
Current directorships:
Chair: malayan Banking Berhad (since
October 2009, director from 2004 to
February 2009).
Director: ICLIF Leadership and
Governance Centre (since 2004).
President Commissioner: Bank
Internasional Indonesia (since 2010).
Directorships of other listed entities
within the past three years:
Chair: maxis Communications Berhad
(2004 to 2007).
Ian Robertson
BA (Business Management), FCMA (UK)
Term of office: Director since June 2008.
Independent: No.
Age: 52.
Experience: Almost 30 years experience
with Royal Dutch Shell Group working
in the downstream, upstream, transport
and trading elements of the business.
Currently Executive Vice President for
Shell’s finance operations.
Committee membership:
member of the Audit & Risk and
Nominations Committees.
Andrew Jamieson, OBE
F.R.Eng., C.Eng., F. Inst Chem E.
Term of office: Director since February
2005.
Independent: yes.
Age: 63.
Experience: Former Executive Vice
President Gas and Projects of Shell Gas
and Power International BV with more
than 30 years experience with Shell in
Europe, Australia and Africa. From 1997
to 1999 Dr Jamieson was seconded to
Woodside as General manager North
West Shelf Venture. Retired from Shell in
June 2009.
Committee membership:
member of the Human Resources
& Compensation, Sustainability and
Nominations Committees.
Current directorships:
Director: Leif Hoegh & Co Ltd (since
2009) and Oxford Catalysts Group PLC
(since 2010).
Pierre JMH Jungels, CBE
PhD (Geophysics and Hydraulics) (Caltech)
Term of office: Director since December
2002.
Independent: yes.
Age: 67.
Experience: Former CEO of Enterprise
Oil plc and President of the Institute
of Petroleum. more than 30 years
experience in the international oil and
gas industry.
Committee membership:
member of the Human Resources
& Compensation, Audit & Risk and
Nominations Committees.
Current directorships:
Chair: Oxford Catalyst Group PLC
(since 2006) and Rockhopper Exploration
plc (since 2005).
Director: Baker Hughes Inc (since 2006)
and Imperial Tobacco Group PLC
(since 2002).
Directorships of other listed entities
within the past three years:
Director: Offshore Hydrocarbon mapping
plc (2004 to 2008).
David I McEvoy
BSc (Physics), Grad Dip (Geophysics)
Term of office: Director since September
2005.
Independent: yes.
Age: 64.
Experience: 34 year career with
Exxonmobil involving extensive
international exploration and development
experience.
Committee membership:
Chair of the Sustainability Committee.
member of the Audit & Risk and
Nominations Committees.
Current directorships:
Director: AWE Limited (since 2006),
Innamincka Petroleum Ltd (since 2002)
and Po Valley Energy Ltd (since 2004).
Tan Sri Dato’ Megat zaharuddin
(Din Megat)
BSc (Hons) (Mining Engineering)
Term of office: Director since December
2007.
Independent: yes.
Age: 62.
Experience: 31 year career with Royal
Dutch Shell Group including Regional
Business CEO of Shell Exploration and
Production BV with responsibilities for
the middle East, Central and South Asia
and Russia region (1999 to 2004) and
Chairman/CEO of Shell group companies
in malaysia (1995 to 1999). Retired from
Shell in 2004.
CORPORATE GOVERNANCE
STATEMENT
ContEntS
Corporate governance at Woodside
Board of Directors
Committees of the Board
Shareholders
Promoting responsible and ethical behaviour
Risk management and internal control
External auditor relationship
Diversity
ASX Corporate Governance Council
recommendations checklist
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ExECuTiVE ViCE PRESidENT
COMMERCiAL & GENERAL COuNSEL
Woodside is committed to a high level of corporate governance and
fostering a culture that values ethical behaviour, integrity and respect.
We believe that adopting and operating in accordance with high
standards of corporate governance is essential for sustainable long-
term performance and value creation.
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1 Corporate Governance at Woodside
Woodside is committed to a high level
of corporate governance and fostering
a culture that values ethical behaviour,
integrity and respect. We believe that
adopting and operating in accordance with
high standards of corporate governance
is essential for sustainable long-term
performance and value creation.
This statement reports on Woodside’s
key governance principles and practices.
These principles and practices are
reviewed regularly and revised as
appropriate to reflect changes in law and
developments in corporate governance.
Woodside’s corporate governance model
is illustrated below. The Woodside
Management System (WMS) sets out
how Woodside provides management
governance and assurance. it defines
how Woodside will deliver its business
objectives and the boundaries within
which Woodside employees and
contractors are expected to work. The
WMS establishes a common approach to
how we operate, wherever the location.
The company, as a listed entity, must
comply with the Corporations Act 2001
(Cwlth) (Corporations Act), the Australian
Securities Exchange (ASx) Listing Rules
(ASx Listing Rules) and other Australian
and international laws. The ASx Listing
Rules require the company to report on
the extent to which it has followed the
Corporate Governance Recommendations
contained in the ASx Corporate
Governance Council’s (ASxCGC) second
edition of its Corporate Governance
Principles and Recommendations
(August 2007). Woodside believes that,
throughout the 2010 year and to the date
of this report, it has complied with all the
ASxCGC Recommendations.
A number of significant changes to
the ASxCGC Recommendations
were made on 30 June 2010 which
apply to listed entities from 1 January
2011. in most cases Woodside was
already in compliance with the revised
Recommendations, and during the year
revised its governance documents and
practices to enable it to early adopt all the
revised Recommendations.
A checklist cross-referencing the
ASxCGC Recommendations to the
relevant sections of this statement and
the Remuneration Report is provided
on page 52.
information on Woodside’s governance
framework is also provided in the corporate
governance section of Woodside’s website
(www.woodside.com.au).
The website also contains copies of Board
and committee charters and copies of
many of the policies and documents
mentioned in this statement. The website
is updated regularly to ensure it reflects
Woodside’s most current corporate
governance information.
2 Board of Directors
2.1 Board Role and Responsibilities
ASXCGC Recommendations 1.1, 1.3
The Constitution provides that the
management and control of the
business and affairs of the Company
are vested in the Board*. The Board
has approved a formal Board Charter
which details the Board’s role, powers,
duties and functions. Other than as
specifically reserved to the Board in
the Board Charter, responsibility for the
management of Woodside’s business
activities is delegated to the CEO who
is accountable to the Board. The Board
Charter and the delegation of Board
authority to the CEO are reviewed
regularly.
The central role of the Board is to set the
company’s strategic direction, to select
and appoint a CEO and to oversee the
company’s management and business
activities.
in addition to matters required by law to
be approved by the Board, the following
powers are reserved to the Board for
decision:
the appointment and removal of the
CEO and the Company Secretary and
determination of their remuneration
and conditions of service;
* Amendments are proposed to the Constitution at the
2011 AGM which, if passed by shareholders, will clarify
that the business and affairs of the Company are to be
managed by or under the direction of the Board.
Woodside Corporate Governance Model
Shareholders
Board
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Audit & Risk
Committee
Human Resources
& Compensation
Committee
Chief Executive Officer
nominations
Committee
Sustainability
Committee
Independent
Assurance
External
Auditors
Internal
Audit
Major Project
Assurance Checks
Management Governance and Assurance
Strategy
Risk
Management
Mission
Vision
Values
Policies
Management Review and
Improvement
Management Standards
operating Standards
Woodside Management System
Authorities
Framework
operating
Structure
Management
Committees
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approving the appointment and,
where appropriate, the removal of
executives who report directly to the
CEO together with their remuneration
and conditions of service;
approving senior management
succession plans and significant
changes to organisational structure;
authorising the issue of shares,
options, equity instruments or other
securities;
authorising borrowings, other than
in the ordinary course of business,
and the granting of security over the
undertaking of the company or any of
its assets;
authorising expenditures which
exceed the CEO’s delegated authority
levels;
approving strategic plans and
budgets;
approving the acquisition,
establishment, disposal or cessation
of any significant business of the
company;
approving annual and half-year
reports and disclosures to the market
that contain or relate to financial
projections, statements as to future
financial performance or changes to
the policy or strategy of the company;
approving policies of company-wide
or general application;
the appointment of directors who will
come before shareholders for election
at the next annual general meeting
(AGM); and
establishing procedures which ensure
that the Board is in a position to
exercise its powers and to discharge
its responsibilities as set out in the
Board Charter.
during the year, the Board Charter was
amended to provide that the Board is
responsible for establishing and annually
assessing measurable objectives for
achieving gender diversity.
A copy of the Board Charter is available
in the corporate governance section of
Woodside’s website.
2.2 Board Composition
ASXCGC Recommendations
2.1, 2.2, 2.3, 2.6
The Board is comprised of eight non-
executive directors and the CEO.
details of the directors, including their
qualifications, experience, date of
appointment and independent status, are
set out on pages 38 and 39.
The Board and its committees actively
seek to ensure that the Board continues
to have the right balance of skills,
knowledge and experience necessary to
direct the company in accordance with
high standards of corporate governance.
in assessing the composition of the
Board, the directors have regard to the
following principles:
the Chairman should be non-
executive, independent and an
Australian citizen or permanent
resident;
the role of the Chairman and the
CEO should not be filled by the same
person;
the CEO should be a full-time
employee of the company;
the majority of the Board should
comprise directors who are both non-
executive and independent;
the Board should represent a broad
range of qualifications, diversity,
experience and expertise considered
of benefit to the company; and
the number of Shell-nominated
directors, as a proportion of the
Board, should normally be in the
proportion that Shell’s holding of fully
paid ordinary shares in the company
bears to all of the issued fully paid
ordinary shares in the company.
Section 2.6 on Board succession planning
provides further information on the mix
of skills and diversity the Board seeks to
achieve in membership of the Board.
The Board considers that collectively
the directors have the range of skills,
knowledge and experience necessary
to direct the company. The non-
executive directors contribute operational
and international experience, an
understanding of the industry in which
Woodside operates, knowledge of
financial markets and an understanding
of the health, safety, environmental and
community matters that are important
to the company. The CEO brings an
additional perspective to the Board
through a thorough understanding of
Woodside’s business. While the directors
on the Board represent a diverse range of
nationalities and backgrounds, the Board
recognises the current gender imbalance
and the opportunity to address this upon
future retirements of non-executive
directors.
For the time being the Board has
determined that the number of directors
on the Board should be eight non-
executive directors and the CEO as
Managing director. This number may be
increased, providing it does not exceed
the maximum set by the constitution,
where it is felt that additional expertise
is required in specific areas, where an
outstanding candidate is identified or
to ensure a smooth transition between
outgoing and incoming non-executive
directors.
2.3 Chairman
ASXCGC Recommendations 2.2, 2.3
The Chairman of the Board, Mr Michael
Chaney, is an independent, non-executive
director and a resident Australian citizen.
The Chairman is responsible for
leadership and effective performance
of the Board and for the maintenance
of relations between directors and
management that are open, cordial and
conducive to productive cooperation. The
Chairman’s responsibilities are set out in
more detail in the Board Charter.
A copy of the Board Charter is available
in the corporate governance section of
Woodside’s website.
Mr Chaney is also chairman of National
Australia Bank Limited (NAB). The Board
considers that neither his chairmanship of
NAB, nor any of his other commitments
(listed on page 38), interfere with the
discharge of his duties to the company.
The Board is satisfied that Mr Chaney
commits the time necessary to discharge
his role effectively.
2.4 Director Independence
ASXCGC Recommendations 2.1, 2.6
The independence of a director is
assessed in accordance with Woodside’s
Policy on independence of directors.
A copy of the Policy on independence
of directors is available in the corporate
governance section of Woodside’s website.
in accordance with the policy, the Board
assesses independence with reference to
whether a director is non-executive, not a
member of management and who is free
of any business or other relationship that
could materially interfere with, or could
reasonably be perceived to materially
interfere with, the independent exercise
of their judgement.
in making this assessment, the
Board considers all relevant facts and
circumstances. Relationships that the
Board will take into consideration when
assessing independence are whether a
director:
is a substantial shareholder of the
company or an officer of, or otherwise
associated directly with, a substantial
shareholder of the company;
is employed, or has previously been
employed in an executive capacity
by the company or another Group
member, and there has not been a
period of at least three years between
ceasing such employment and
serving on the Board;
has within the last three years been
a principal of a material professional
adviser or a material consultant to the
company or another Group member,
or an employee materially associated
with the service provided;
is a material supplier or customer
of the company or other Group
member, or an officer of or otherwise
associated directly or indirectly with a
material supplier or customer; or
has a material contractual relationship
with the company or another Group
member other than as a director.
The test of whether a relationship or
business is material is based on the
nature of the relationship or business
and on the circumstances and activities
of the director. Materiality is considered
from the perspective of the company
and its Group members, the persons or
organisations with which the director has
an affiliation and from the perspective
of the director. To assist in assessing
the materiality of a supplier or customer
the Board has adopted the following
materiality thresholds:
a material customer is a customer of
Woodside which accounts for more
than 2% of Woodside’s consolidated
gross revenue; and
a supplier is material if Woodside
accounts for more than 2% of the
supplier’s consolidated gross revenue.
The Board reviews the independence of
directors before they are appointed, on an
annual basis and at any other time where
the circumstances of a director changes
such as to require reassessment. The
Board has reviewed the independence
of each of the directors in office at the
date of this report and has determined
that seven of the nine directors are
independent. The two directors that are
not considered independent are:
Mr don Voelte as he is an
executive director and a member of
management; and
Mr ian Robertson as he is a
current executive of Shell, which
is a substantial shareholder of the
company.
dr Andrew Jamieson was nominated
to the Woodside Board by Shell and
was previously an executive of Shell.
He retired from Shell on 30 June 2009
and continues to serve on the Woodside
Board. Subsequent to his retirement, the
Woodside Board assessed dr Jamieson
as being an independent director.
Mr din Megat was nominated to the
Woodside Board by Shell and was
previously an executive of Shell. Over
six years have elapsed since Mr Megat
retired as an executive of Shell.
The Board is satisfied that dr Jamieson
and Mr Megat have no continuing
association with Shell that would
interfere with their independent exercise
of judgement, and that each is an
independent director.
Mr Erich Fraunschiel serves on the board
of directors of WorleyParsons Limited,
a supplier of engineering services
to Woodside. The value of services
provided by the WorleyParsons Limited
group of companies to Woodside in
2010 exceeded the Board’s materiality
threshold relating to suppliers. The Board,
having regard to the nature and value of
the commercial relationship between
Woodside and WorleyParsons Limited,
is satisfied that Mr Fraunschiel remains
independent. Where a matter involving
WorleyParsons Limited comes before the
Board, the directors’ Conflict of interest
Guidelines apply (refer section 2.5 below).
Certain non-executive directors hold
directorships or executive positions in
companies with which Woodside has
commercial relationships. details of other
directorships and executive positions held
by non-executive directors are set out on
pages 38 and 39.
Two of the non-executive directors have
been employed by Woodside in the past,
however a significant period of time has
elapsed since they ceased employment.
dr Jamieson was seconded to Woodside
as General Manager of the North West
Shelf Venture from 1997 to 1999 and Mr
Chaney was employed by Woodside as a
petroleum geologist in the 1970s.
The independent status of directors
standing for election or re-election is
identified in the notice of AGM. if the
Board’s assessment of a director’s
independence changes, the change is
disclosed to the market.
2.5 Conflicts of Interest
The Board has approved directors’
Conflict of interest Guidelines which
apply if there is, or may be, a conflict
between the personal interests of a
director, or the duties a director owes
to another company, and the duties the
director owes to Woodside. directors are
required to disclose circumstances that
may affect, or be perceived to affect,
their ability to exercise independent
judgment so that the Board can assess
independence on a regular basis.
A director with an actual or potential
conflict of interest in relation to a matter
before the Board does not receive the
Board papers relating to that matter and
when the matter comes before the Board
for discussion, the director withdraws
from the meeting for the period the
matter is considered and takes no part
in the discussions or decision-making
process.
Minutes reporting on matters in which a
director is considered to have a conflict
of interest are not provided to that
director. However, the director is given
notice of the broad nature of the matter
for discussion and is updated in general
terms on the progress of the matter.
2.6 Board Succession Planning
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ASXCGC Recommendation 2.6
The Board manages its succession
planning with the assistance of the
Nominations Committee. The committee
annually reviews the size, composition
and diversity of the Board and the mix of
existing and desired competencies across
members and reports its conclusions
to the Board. in conducting the review
a skills matrix is used to enable the
committee to assess the skills and
experience of each director and the
combined capabilities of the Board. The
results of this review are considered in
the context of Woodside’s operations and
strategy. Where the committee identifies
existing or projected competency gaps,
it recommends a succession plan to
the Board that addresses those gaps.
Recognising the importance of Board
renewal, the committee takes each
director’s tenure into consideration in its
succession planning. As a general rule
directors are not expected to serve on the
Board beyond 10 years.
The Nominations Committee is
responsible for evaluating Board
candidates and recommending individuals
for appointment to the Board. The
committee evaluates prospective
candidates against a range of criteria
including the skills, experience, expertise
and diversity that will best complement
Board effectiveness at the time. The
Board may engage an independent
recruitment firm to undertake a search
for suitable candidates. .
in its evaluation of candidates for the
Board, the Nominations Committee
will have regard to normally accepted
nomination criteria, including:
(a) honesty and integrity;
(b) the ability to exercise sound business
judgement;
(c) appropriate experience and
professional qualifications;
(d) absence of conflicts of interest or
other legal impediments to serving on
the Board;
(e) willingness to devote the required
time; and
(f) availability to attend Board and
committee meetings.
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in considering overall Board balance, the
Nominations Committee will give due
consideration to the value of a diversity
of backgrounds and experiences among
the members, and to having some of
the directors based in the centres of
operation of Woodside.
With the exception of the Managing
director, directors appointed by the Board
are subject to shareholder election at the
next AGM.
A copy of the Nominations Committee
Charter and a description of Woodside’s
procedure for the selection and
appointment of new directors and the
re-election of incumbent directors is
available in the corporate governance
section of Woodside’s website.
CEO succession planning is considered
by the Nominations Committee
and during Board sessions without
management present. in October 2010
the CEO, Mr don Voelte, advised that he
intends to retire from Woodside during
the second half of 2011. The Board
directly engaged executive recruitment
specialists, Heidrick & Struggles, to
conduct an internal and external search
for the company’s next CEO.
2.7 Directors’ Retirement and
Re-election
ASXCGC Recommendation 2.6
Non-executive directors must retire at
the third AGM following their election or
most recent re-election. At least one non-
executive director must stand for election
at each AGM. Any director appointed to
fill a casual vacancy since the date of the
previous AGM must submit themselves
to shareholders for election at the next
AGM.
Board support for a director’s re-election
is not automatic and is subject to
satisfactory director performance
(in accordance with the evaluation
process described in section 2.9).
2.8 Directors’ Appointment, Induction
training and Continuing Education
All new directors are required to sign and
return a letter of appointment which sets
out the key terms and conditions of their
appointment, including duties, rights and
responsibilities, the time commitment
envisaged and the Board’s expectations
regarding their involvement with
committee work.
induction training is provided to all new
directors. it includes a comprehensive
induction manual, discussions with
the CEO and senior executives and
the option to visit Woodside’s principal
operations either upon appointment
or with the Board during its next site
tour. The induction materials and
discussions include information on
Woodside’s strategy, culture and values;
key corporate and Board policies; the
company’s financial, operational and risk
management position; the rights and
responsibilities of directors; and the role
of the Board and its committees and
meeting arrangements.
All directors are expected to maintain
the skills required to discharge their
obligations to the company. directors
are encouraged to undertake continuing
professional education including industry
seminars and approved education
courses. These are paid for by the
company, where appropriate. in addition,
the company provides the Board with
regular educational information papers
and presentations on industry-related
matters and new developments with the
potential to affect Woodside.
2.9 Board Performance Evaluation
ASXCGC Recommendations 1.3, 2.5, 2.6
The Nominations Committee is
responsible for determining the process
for evaluating Board performance.
Evaluations are conducted annually and
have produced improvements in Board
processes and overall efficiency.
The Board performance evaluation
process is conducted by way of
questionnaires appropriate in scope and
content to effectively review:
the performance of the Board and
each of its committees against the
requirements of their respective
charters; and
the individual performance of the
Chairman and each director.
The questionnaires are completed by
each director and the responses compiled
by an external consultant. The reports on
Board and committee performance are
provided to all directors and discussed by
the Board. The report on the Chairman’s
performance is provided to the Chairman
and two committee chairmen for
discussion. The report on each individual
director is provided to the individual and
copied to the Chairman. The Chairman
meets individually with each director to
discuss the findings of their report.
The performance of each director retiring
at the next AGM is taken into account by
the Board in determining whether or not
the Board should support the re-election
of the director.
The Human Resources & Compensation
Committee reviews and makes
recommendations to the Board
on the criteria for the evaluation of
the performance of the CEO. The
Board conducts the evaluation of the
performance of the CEO.
A description of the company’s process
for evaluation of the Board, its committees
and individual directors is available in
the corporate governance section of
Woodside’s website.
The Remuneration Report on pages
55 to 70 discloses the process for
evaluating the performance of senior
executives, including the CEO.
in 2010, performance evaluations for
the Board, its committees, directors
and senior executives took place in
accordance with the process disclosed
above and in the Remuneration Report.
2.10 Board Access to Information and
Independent Advice
ASXCGC Recommendation 2.6
Subject to the directors’ Conflict of
interest Guidelines referred to in section
2.5, directors have direct access to
members of company management and
to company information in the possession
of management.
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or Board consider appropriate for
consideration by the committees.
Each committee’s charter is available
in the corporate governance section of
Woodside’s website.
Membership of the committees is based
on directors’ qualifications, skills and
experience. Each standing committee is
comprised of:
only non-executive directors;
at least three members, the majority
of whom are independent; and
a chairman appointed by the Board
who is one of the independent non-
executive directors.
The Audit & Risk Committee and the
Human Resources & Compensation
Committee have additional membership
requirements which are discussed in
sections 3.2 and 3.4.
The composition of each committee and
details of the attendance of members at
meetings held during the year are set out
in Table 1 on page 47.
All directors are entitled to attend
meetings of the standing committees.
Papers considered by the standing
committees are available on request to
directors who are not on that committee.
Minutes of the standing committee
meetings are provided to all directors
and the proceedings of each meeting
are reported by the chairman of the
committee at the next Board meeting.
Each committee is entitled to seek
information from any employee of the
company and to obtain any professional
advice it requires in order to perform its
duties.
Each standing committee participates in
a regular review of its performance and
effectiveness. As a result of the 2010
review, the Board is satisfied that the
committees have performed effectively
with reference to their charters.
Ad hoc committees are convened to
consider matters of special importance
or to exercise the delegated authority of
the Board.
The Board has agreed a procedure under
which directors are entitled to obtain
independent legal, accounting or other
professional advice at the company’s
expense. directors are entitled to
reimbursement of all reasonable costs
where a request for such advice is
approved by the Chairman. in the case
of a request made by the Chairman,
approval is required by a majority of the
non-executive directors.
2.11 Directors’ Remuneration
details of remuneration paid to directors
(executive and non-executive) are set out
in the Remuneration Report on pages
55 to 70. The Remuneration Report also
contains information on the company’s
policy for determining the nature and
amount of remuneration for directors and
senior executives and the relationship
between the policy and company
performance.
Shareholders will be invited to consider
and approve the Remuneration Report at
the 2011 AGM.
2.12 Board Meetings
during the year ended 31 december
2010, the Board held six Board meetings.
in addition, site visits and a strategic
planning session were held in conjunction
with the June Board meeting. details of
directors’ attendance at Board meetings
are set out in Table 1 on page 47.
The Chairman, in conjunction with the
CEO and the Company Secretary, sets
the agenda for each meeting. Any director
may request matters be included on the
agenda.
Typically at Board meetings the agenda
will include:
minutes of the previous meeting and
matters arising;
the CEO’s report;
the CFO’s report;
reports on major projects and current
issues;
specific business proposals;
reports from the chairs of the
committees on matters considered at
committee meetings; and
minutes of previous committee
meetings.
The Board works to an annual agenda
encompassing periodic reviews of
Woodside’s operating business units and
site visits; approval of strategy, business
plans, budgets and financial statements;
and review of statutory obligations and
other responsibilities identified in the
Board Charter.
The CFO, the General Counsel and the
Company Secretary attend meetings of
the Board by invitation. Other members
of senior management attend Board
meetings when a matter under their area
of responsibility is being considered or as
otherwise requested by the Board.
At each scheduled Board meeting there
is a session for non-executive directors to
meet without management present. This
session is presided over by the Chairman.
Copies of Board papers are circulated
in advance of the meetings in either
electronic or hard copy form. directors are
entitled to request additional information
where they consider further information is
necessary to support informed decision-
making.
2.13 Company Secretaries
details of the Company Secretaries
are set out on page 54 in the directors’
Report. The appointment and removal
of a Company Secretary is a matter for
decision by the Board. The Company
Secretaries are responsible for ensuring
that Board procedures are complied
with and that governance matters are
addressed.
3 Committees of the Board
3.1 Board Committees, Membership
and Charters
ASXCGC Recommendations 2.4, 2.6, 4.1,
4.2, 4.3, 4.4, 8.1, 8.3
The Board has the ability under the
company’s constitution to delegate
its powers and responsibilities to
committees of the Board. This allows
the directors to spend additional and
more focused time on specific issues.
The Board has four standing committees
to assist in the discharge of its
responsibilities. These are the:
Audit & Risk Committee;
Nominations Committee;
Human Resources & Compensation
Committee; and
Sustainability Committee.
The committees operate principally in
a review or advisory capacity, except
in cases where powers are specifically
conferred on a committee by the Board.
Each committee has a charter, detailing
its role, duties and membership
requirements. The committee charters
are reviewed regularly and updated as
required. Prior to the commencement
of each year, the committees set an
annual agenda for the coming year with
reference to the committee charters and
other issues the committee members
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3.2 Audit & Risk Committee
ASXCGC Recommendations
4.1, 4.2, 4.3, 4.4
The role of the Audit & Risk Committee
is to assist the Board to meet its
oversight responsibilities in relation
to the company’s financial reporting,
compliance with legal and regulatory
requirements, internal control structure,
risk management procedures and the
internal and external audit functions.
The Audit & Risk Committee’s charter,
which sets out further details on the role
and duties of the committee, is available
in the corporate governance section of
Woodside’s website.
The committee’s charter requires that the
committee be composed of directors who
are financially literate, with at least one
director possessing accounting or related
financial expertise and qualifications, and
at least one director who has experience
in, and an understanding of, the oil and
gas industry. The chairman of the Audit &
Risk Committee cannot be the Chairman
of the company.
Members of the Audit & Risk Committee
are identified in Table 1 on page 47 which
sets out their attendance at meetings.
Their qualifications are listed on pages
38 and 39.
Key activities undertaken by the Audit &
Risk Committee during the year included:
monitoring developments in
accounting and financial reporting
relevant to Woodside;
approval of the scope, plan and fees
for the 2010 external audit;
review of the independence and
performance of the external auditor;
review of significant accounting
policies and practices;
review of internal Audit reports and
approval of the 2011 internal Audit
program;
review of the Group’s key risks and
risk management framework;
review of reports from management
on the effectiveness of the Group’s
management of its material business
risks;
monitoring progress of the Woodside
Management System and matters
arising under the Code of Conduct
and the Whistleblower Policy; and
review and recommendation to
the Board for the adoption of the
Group’s half-year and annual financial
statements.
The external auditors, the Chairman, the
CEO, the CFO, the General Counsel, the
Group Financial Controller, the head of
internal Audit and the head of Enterprise
Risk attend Audit & Risk Committee
meetings by invitation. At each
committee meeting, time is scheduled for
the committee to meet with the external
auditors without management present.
3.3 nominations Committee
ASXCGC Recommendations 2.4, 2.6
The role of the Nominations Committee
is to assist the Board to review Board
composition, performance and
succession planning. This includes
identifying, evaluating and recommending
candidates for the Board.
The Nominations Committee’s charter,
which sets out further details on the role
and duties of the committee, is available
in the corporate governance section of
Woodside’s website.
All non-executive directors are currently
members of the Nominations Committee.
Table 1 on page 47 sets out their
attendance at committee meetings.
Key activities undertaken by the
Nominations Committee during the year
included:
review of the size and composition of
the Board;
Board succession planning;
consideration of gender diversity in
the context of director succession
planning;
making recommendations to the
Board regarding the directors seeking
re-election at the 2011 AGM; and
approval of the process for the annual
Board performance evaluation.
during the year, the charter of the
Nominations Committee was amended to
add diversity as a factor to be considered
when reviewing the composition of the
Board and succession planning.
3.4 Human Resources &
Compensation Committee
ASXCGC Recommendations 8.1, 8.3
The role of the Human Resources &
Compensation Committee is to assist the
Board in establishing human resources
and compensation policies and practices
which:
enable the company to attract, retain
and motivate employees who achieve
operational excellence and create
value for shareholders; and
reward employees fairly and
responsibly, having regard to the
results of the Group, individual
performance and general
remuneration conditions.
The Human Resources & Compensation
Committee’s charter, which sets out
further details on the role and duties of
the committee, is available in the
corporate governance section of
Woodside’s website.
The committee’s charter requires at least
one member to have been a director of
Woodside for not less than three years
and states that it is desirable that at least
one member has an understanding of
remuneration policies and practices.
Members of the Human Resources &
Compensation Committee are identified
in Table 1 on page 47 which sets out their
attendance at meetings.
Key activities undertaken by the Human
Resources & Compensation Committee
during the year included:
monitoring legislative and corporate
governance developments in relation
to employment and remuneration
matters relevant to Woodside;
reviewing the company’s
remuneration policies and practices;
approval of the appointment and
remuneration packages of executives
reporting directly to the CEO; and
reviewing and making
recommendations to the Board on:
amendments to Board and
committee charters and
Woodside’s diversity Policy
to early adopt the new ASx
Recommendations in respect of
diversity;
setting measurable objectives in
respect of gender diversity;
remuneration, and share
ownership rules, for non-
executive directors;
the criteria for the evaluation of
the performance of the CEO;
the remuneration of the CEO;
incentives payable to the CEO and
senior executives; and
the annual Remuneration Report.
Review of the 2010 performance of the
CEO and executive succession planning
was conducted by the Board.
The Chairman, the CEO, the head of the
Corporate function and the head of the
Human Resources department attend
Human Resources & Compensation
Committee meetings by invitation.
The CEO was not present during any
committee or Board agenda item where
his remuneration was considered or
discussed.
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during the year, the charter of the
Human Resources & Compensation
Committee was amended to reflect
that the committee will review and
make recommendations to the Board
on the company’s diversity policies and
practices.
3.5 Sustainability Committee
The role of the Sustainability Committee
is to assist the Board to meet its
oversight responsibilities in relation
to the company’s sustainability policies
and practices.
The Sustainability Committee’s charter,
which sets out further details on the role
and duties of the committee, is available
in the corporate governance section of
Woodside’s website.
Members of the Sustainability Committee
are identified in Table 1 below which sets
out their attendance at meetings.
Key activities undertaken by the
Sustainability Committee during the
year included:
review of the Group’s environmental,
health, safety and technical integrity
performance, incidents and
improvement plans;
consideration of the implications of
the Montara and Macondo oil spills;
monitoring Australian government
policy development in respect
of climate change and reviewing
Woodside’s initiatives to reduce
greenhouse gas emissions;
review of delivery against Woodside’s
Reconciliation Action Plan
commitments;
review of social investment themes
and planned expenditure; and
approval of the annual Sustainable
development Report.
Further information on the activities of the
Sustainability Committee is provided in the
Sustainable development Report which is
available in the sustainable development
section of Woodside’s website.
The Chairman, the CEO, the head of
the Corporate function, the head of the
Environment department and the head of
the Health and Safety department attend
Sustainability Committee meetings by
invitation.
4 Shareholders
4.1 Shareholder Communication
ASXCGC Recommendations 6.1, 6.2
directors recognise that shareholders,
as the ultimate owners of the company,
are entitled to receive timely and relevant
high quality information about their
investment. Similarly, prospective new
investors are entitled to be able to make
informed investment decisions when
considering the purchase of shares.
Woodside’s Continuous disclosure
and Market Communications Policy
encourages effective communication
with its shareholders by requiring:
the disclosure of full and timely
information about Woodside’s
activities in accordance with the
disclosure requirements contained
in the ASx Listing Rules and the
Corporations Act;
all information released to the market
to be placed on Woodside’s website
promptly following release;
the company’s market announcements
to be maintained on Woodside’s
website for at least three years; and
that all disclosures, including notices
of meetings and other shareholder
communications, are drafted clearly
and concisely.
A copy of the Continuous disclosure and
Market Communications Policy is available
in the corporate governance section of
Woodside’s website.
Briefings on the financial results, and
other significant briefings with major
institutional investors and analysts, are
webcast live and made available on
Woodside’s website. Shareholders are
notified in advance of the date of investor
briefing webcasts. Presentation material
from significant briefings or management
speeches is also posted to the website.
The company produces a short form
annual and half-year shareholder
review. The Annual Report, Sustainable
development Report and short form
shareholder reviews are available on the
company’s website, or shareholders can
table 1 - Directors in office, committee membership and directors’ attendance at meetings during 2010
Director
Board
Audit & Risk
Committee
Human Resources
& Compensation
Committee
Sustainability
Committee
nominations
Committee
(1) (2)
Held Attended Held Attended Held Attended Held Attended Held Attended
Executive Director
dR Voelte (CEO)
non-executive directors
MA Chaney
MA Cilento
E Fraunschiel
A Jamieson
PJMH Jungels
di McEvoy
d Megat
i Robertson
legend:
6
6
6
6
6
6
6
5
6
6
6
6
6
6
6
6
6
6
notes:
6
6
6
6
6
6
6
5
4
6(3)
6
6
6
6
7
7
7
5
7
7
6
7
7
5(4)
7
6
4
4
4
4
4
4
4
4
4
2
4
3
4
4
3
2(5)
2
2
2
2
2
2
2
2
2
1
2
2
2
2
2
2
1
2
Current Chairman
Current Member
‘Held’ indicates the number of meetings held during the period of each director’s tenure.
(1)
(2)
‘Attended’ indicates the number of meetings attended by each director.
(3) Ms Cilento attended six Audit & Risk Committee meetings by invitation.
(4) dr Jamieson has been a member of the Human Resources & Compensation Committee since 28 April 2010.
(5) Mr Robertson attended two Sustainability Committee meetings by invitation.
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elect to receive hard copies. Shareholders
can elect to receive email notification
when these reports are posted to the
website.
Any person wishing to receive email alerts
of significant market announcements can
subscribe through Woodside’s website.
The company recognises the importance
of shareholder participation in general
meetings and supports and encourages
that participation. The company has direct
voting arrangements in place, allowing
shareholders unable to attend the AGM
to vote on resolutions without having
to appoint someone else as a proxy.
Shareholders are also able to register their
voting instructions electronically.
The company’s AGM is webcast live and
is archived for viewing on Woodside’s
website. The company also makes
available podcasts of the AGM. Copies of
the addresses by the Chairman and CEO
are disclosed to the market and posted
to the company’s website. The outcome
of voting on the items of business are
disclosed to the market and posted to the
company’s website after the AGM.
All of Woodside’s directors attended the
company’s 2010 AGM and are expected
to attend the 2011 AGM.
The company’s external auditor
attends the company’s AGM to answer
shareholder questions about the conduct
of the audit, the preparation and content
of the audit report, the accounting
policies adopted by the company and the
independence of the auditor in relation to
the conduct of the audit.
4.2 Continuous Disclosure and Market
Communications
ASXCGC Recommendations 5.1, 5.2
Woodside is committed to ensuring that
shareholders and the market are provided
with full and timely information and that
all stakeholders have equal opportunities
to receive externally available information
issued by Woodside.
A disclosure Committee manages
compliance with market disclosure
obligations and is responsible for
implementing reporting processes and
controls and setting guidelines for the
release of information. The disclosure
Committee is comprised of senior
executives.
Woodside’s Continuous disclosure
and Market Communications Policy,
referred to in section 4.1, and associated
guidelines reinforce Woodside’s
commitment to continuous disclosure and
outline management’s accountabilities
and the processes to be followed for
ensuring compliance. The policy also
describes Woodside’s guiding principles
for market communications. Each
Woodside employee is required to ensure
potentially price-sensitive information
concerning Woodside is assessed with
reference to the Continuous disclosure
and Market Communications Policy
and associated guidelines as soon as
the employee becomes aware of the
information.
A copy of the Continuous disclosure and
Market Communications Policy is available
in the corporate governance section of
Woodside’s website.
5 Promoting Responsible and Ethical
Behaviour
5.1 Code of Conduct and
Whistleblower Policy
ASXCGC Recommendations 3.1, 3.3
Woodside has a Code of Conduct which
outlines Woodside’s commitment
to appropriate and ethical corporate
practices.
The Code of Conduct describes
Woodside’s mission, vision and values
together with the business principles
approved by the Board. it sets out the
principles, practices and standards
of personal and corporate behaviour
Woodside expects in daily business
activities. The Code of Conduct covers
matters such as compliance with laws
and regulations, responsibilities to
shareholders and the community, sound
employment practices, confidentiality,
privacy, conflicts of interest, giving and
accepting business courtesies and the
protection and proper use of Woodside’s
assets.
The Code of Conduct is available in
the corporate governance section of
Woodside’s website.
All directors, officers and employees
are required to comply with the Code of
Conduct. Senior managers are expected
to ensure that employees, contractors,
consultants, agents and partners
under their supervision are aware of
the Code and foster an environment
that encourages ethical behaviour and
compliance with the Code. Employees
are required to complete online Code of
Conduct training upon appointment and
thereafter annually.
Failure to comply with the Code
of Conduct is a serious breach
of Woodside’s policy and will be
investigated. Breaches will result in
disciplinary action ranging from a verbal
warning through to termination of
employment. All breaches are required to
be recorded and reported.
The Sustainable development Report,
which is available in the sustainable
development section of Woodside’s
website, provides further information on
the Code of Conduct.
directors and senior management are
required to provide annual certification
of their compliance with the Code of
Conduct and Securities dealing Policy. in
addition, all executives and key finance
managers complete a questionnaire
from the directors on a half-yearly basis
which includes questions on compliance
by the manager and all employees
and contractors within their area of
responsibility with the Code of Conduct,
Securities dealing Policy, Whistleblower
Policy, and Continuous disclosure and
Market Communications Policy. The
responses to the questionnaire, together
with a report on breaches of the Code
of Conduct and matters raised through
the Whistleblower helpline (refer below),
are considered by the Audit & Risk
Committee.
Woodside’s Whistleblower Policy
documents Woodside’s commitment to
maintaining an open working environment
in which employees and contractors are
able to report instances of unethical,
unlawful or undesirable conduct without
fear of intimidation or reprisal.
The purpose of the Whistleblower Policy
is to:
help detect and address unacceptable
conduct;
help provide employees and
contractors with a supportive working
environment in which they feel able to
raise issues of legitimate concern to
them and to Woodside;
provide an external confidential
helpline which can be used for
reporting unacceptable conduct; and
help protect people who report
unacceptable conduct in good faith.
A summary of the Whistleblower Policy
is available in the corporate governance
section of Woodside’s website.
5.2 Securities ownership and Dealing
ASXCGC Recommendations 3.2, 3.3, 8.3
Woodside’s Securities dealing Policy
applies to all directors, employees,
contractors, consultants and advisers.
This policy provides a brief summary
of the law on insider trading and other
relevant laws; sets out the restrictions on
dealing in securities by people who work
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for, or are associated with, Woodside; and
is intended to assist in maintaining market
confidence in the integrity of dealings in
the company’s securities. The policy is
aligned with recent amendments to the
ASx Listing Rules on trading policies and
associated ASx guidelines.
The policy prohibits directors and
employees from dealing in the company’s
securities when they are in possession
of price-sensitive information that is not
generally available to the market. it also
prohibits dealings by directors and certain
restricted employees during “black-out”
periods, including during the periods
between the end of the financial half-year
and the announcement of the half-year
results and the end of the financial
full-year and the announcement of the
full-year results.
directors are required to seek the
approval of the Chairman (or in the
case of the Chairman, the CEO) before
dealing in the company’s securities or
entering into any financial arrangement
by which Woodside securities are used
as collateral. Restricted employees are
required to notify their manager and
the General Counsel before dealing in
the company’s securities. in addition,
executives reporting directly to the CEO,
and the Company Secretaries, have
notification requirements in respect of
entering into any financial arrangement by
which Woodside securities are used as
collateral.
The Board has adopted a requirement
for non-executive directors to have a
minimum holding of 2,000 shares in
Woodside. Non-executive directors who
have less than the minimum holding are
required to direct 25% of their net fees
to the purchase of shares in Woodside
until the minimum holding requirement is
satisfied. This requirement does not apply
to non-executive directors that do not
receive their directors’ fees directly.
Non-executive directors (other than
directors who are both nominated
and employed by Shell) are eligible to
participate in Woodside’s non-executive
directors’ share plan. under the plan
a proportion of the director’s after tax
remuneration is applied to the purchase
of shares in Woodside. These shares are
acquired on market at market value at
predetermined intervals.
Any dealing in Woodside securities by
directors is notified to the ASx within five
business days of the dealing.
it is a condition of the Securities dealing
Policy that directors, and executives
participating in an equity-based incentive
plan, are prohibited from entering into any
transaction which would have the effect
of hedging or otherwise transferring to
any person the risk of any fluctuation in
the value of any unvested entitlement
in Woodside securities. This prohibition
is also contained in the terms of the
Executive incentive Plan.
A copy of the Securities dealing Policy
is available in the corporate governance
section of Woodside’s website.
5.3 Political Donations
The Board’s policy is not to donate
funds to any political party, politician or
candidate for public office in any country.
However, in certain circumstances
Woodside representatives may attend
a party-political function which charges
an attendance fee. Attendance at these
functions must be approved by the
relevant business unit manager, and a
register of attendances and the cost of
attending each function is maintained by
Woodside at a corporate level.
6 Risk Management and Internal
Control
6.1 Approach to Risk Management and
Internal Control
ASXCGC Recommendations 7.1, 7.4
The Board recognises that risk
management and internal compliance
and control are key elements of good
corporate governance.
Woodside’s Risk Management Policy
describes the manner in which Woodside:
identifies, assesses, monitors and
manages business risk;
identifies material changes to the
company’s risk profile; and
designs, implements and monitors
the effectiveness of the internal
compliance and control system.
A copy of the Risk Management Policy
is available in the corporate governance
section of Woodside’s website.
Woodside recognises that risk is
inherent to its business and effective
management of risk is vital to delivering
on its objectives, success and continued
growth. Woodside’s approach to risk
enhances opportunities, reduces threats
and sustains Woodside’s competitive
advantage. Woodside is committed
to managing all risk in a proactive and
effective manner.
The Woodside Group operates a
standardised enterprise-wide risk
management process that provides an
over-arching and consistent framework for
the identification, assessment, monitoring
and management of material business
risks. Woodside has an Enterprise
Risk function, separate to internal
Audit, and aligns its risk management
process with the international Standard
for risk management (iSO 31000 Risk
Management). Risks are identified,
assessed and ranked using a common
methodology. Where a risk is assessed as
material it is reported to and reviewed by
senior executives.
6.2 Risk Management Roles and
Responsibilities
ASXCGC Recommendations 7.2, 7.4
The Board is responsible for reviewing
and approving Woodside’s risk
management strategy, policy and key
risk parameters, including determining
the Group’s appetite for country risk and
major investment decisions.
The Board is also responsible for
satisfying itself that management has
developed and implemented a sound
system of risk management and internal
control. The Board has delegated
oversight of the Risk Management Policy,
including review of the effectiveness of
Woodside’s internal control system and
risk management process, to the Audit &
Risk Committee.
Management is responsible for
designing, implementing, reviewing
and providing assurance as to the
effectiveness of the Risk Management
Policy. This responsibility includes
developing business risk identification,
implementing appropriate risk treatment,
strategies and controls, monitoring
effectiveness of controls and reporting
on risk management capability and
performance. Within each major business
and functional area there is a designated
risk and assurance person, with specific
responsibilities designed to guide
compliance and reporting.
Every organisational unit has a risk
management section within its annual
business plan, and these plans are
discussed at regular performance reviews.
The Enterprise Risk function is
responsible for the risk management
process; risk management capability;
and providing reports to the Audit &
Risk Committee on the corporate risk
profile and the Group’s risk management
performance.
in 2010, both the Audit & Risk Committee
and the Board reviewed the overall risk
profile for the Group and received reports
from management on the effectiveness
of the Group’s management of its
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material business risks. The reported
risks considered Woodside’s health and
safety, financial, environmental, legal
and compliance, social and cultural,
reputational, and security exposure.
internal Audit is responsible for providing
an independent appraisal of the adequacy
and effectiveness of the Group’s risk
management and internal control system.
6.3 Internal Audit
internal Audit is independent of both
business management and of the
activities it reviews. internal Audit
provides assurance that the design
and operation of the Group’s risk
management and internal control system
is effective. A risk-based audit approach
is used to ensure that the higher risk
activities in each business unit are
targeted by the audit program. All audits
are conducted in a manner that conforms
to international auditing standards.
internal Audit has all necessary access
to management and information and is
staffed by industry professionals including
qualified accountants and engineers.
The Audit & Risk Committee oversees
and monitors internal Audit’s activities.
it approves the annual audit program
and receives reports from internal
Audit concerning the effectiveness of
internal control and risk management.
The Audit & Risk Committee approves
the appointment of the head of internal
Audit. The head of internal Audit is
jointly accountable to the Audit & Risk
Committee and the General Counsel.
The Committee members have access
to internal Audit without the presence
of other management. internal Audit has
unfettered access to the Audit & Risk
Committee and its chairman.
internal Audit and external audit are
separate and independent of each other.
6.4 CEo and CFo Assurance
ASXCGC Recommendations 7.3, 7.4
The Board receives regular reports on the
Group’s financial and operational results.
Before the adoption by the Board of
the 2010 half-year and full-year financial
statements, the Board received written
declarations from the CEO and the
CFO that the financial records of the
company have been properly maintained
in accordance with section 286 of the
Corporations Act, and the company’s
financial statements and notes comply
with accounting standards and give a true
and fair view of the consolidated entity’s
financial position and performance for the
financial period.
The CEO and the CFO have also stated
in writing to the Board that the statement
relating to the integrity of Woodside’s
financial statements is founded on a
sound system of risk management and
internal control and that the system
is operating effectively in all material
respects in relation to financial reporting
risks.
in addition, all executives and key finance
managers complete a questionnaire from
the directors on a half-yearly basis. The
questions relate to the financial position
of the company, market disclosure,
the application of company policies
and procedures (including the Risk
Management Policy), compliance with
external obligations and other governance
matters. This process assists the CEO
and the CFO in making the declarations to
the Board referred to above.
7 External Auditor Relationship
ASXCGC Recommendation 4.4
in accordance with Woodside’s
External Auditor Policy, the Audit & Risk
Committee oversees detailed External
Auditor Guidelines covering the terms
of engagement of Woodside’s external
auditor. The guidelines include provisions
directed to maintaining the independence
of the external auditor and assessing
whether the provision of any non-audit
services by the external auditor that
may be proposed is appropriate. Such
provisions are referenced to the Code
of Ethics published by the international
Federation of Accountants (iFAC).
The External Auditor Guidelines contain a
set of controls which address threats to
the independence of the external auditor
including, in particular, any threat which
may arise by reason of self-interest,
self-review, advocacy, familiarity or
intimidation.
The External Auditor Guidelines classify a
range of non-audit services which could
potentially be provided by the external
auditor as:
acceptable within limits;
requiring the approval of the CFO;
requiring the approval of the Audit &
Risk Committee; or
not acceptable.
The services considered not acceptable
for provision by the external auditor
include:
internal audit;
acquisition accounting due diligence
where the external auditor is also the
auditor of the other party;
transactional support for acquisitions
or divestments where the external
auditor is also the auditor of the other
party;
book-keeping and financial reporting
activities to the extent such activities
require decision-making ability and/or
posting entries to the ledger;
the design, implementation, operation
or supervision of information systems
and provision of systems integration
services;
independent expert reports;
financial risk management; and
taxation planning and taxation
transaction advice.
The External Auditor Guidelines require
rotation of the audit partner and audit
review partner at least every five
years and prohibit the reinvolvement
of a previous audit partner in the audit
service for two years following rotation.
in addition to incorporating safeguards
to ensure compliance with sections
324Ci and 324CK of the Corporations
Act in respect of employment of a
former partner of the audit firm or
member of the audit team as a director
or senior employee of Woodside, the
Guidelines also require assessment of the
significance of a potential threat to the
external auditor’s independence before
any employment of a former partner or
audit team member. Any employment of
a member of the audit team or a partner
of the audit firm also requires the approval
of the Audit & Risk Committee.
information on the procedures for the
selection and appointment of the external
auditor and for the rotation of external
audit engagement partners is available
in the corporate governance section of
Woodside’s website.
8 Diversity
New ASXCGC Recommendations 3.2,
3.3, 3.4, 3.5
Woodside recognises that a talented and
diverse workforce is a key competitive
advantage and our success is a reflection
of the quality and skills of our people.
To this end a key focus of leadership
at Woodside is the development of a
workplace climate that promotes diversity
as a key contributor to our business
success, including diversity in gender,
race and geographic location.
On 30 June 2010, the ASxCGC
introduced a number of new
recommendations in respect of diversity.
These changes apply to listed entities
for the financial year commencing on
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during 2010, Woodside continued to
meet its specific commitments under
its Reconciliation Action Plan to increase
indigenous participation at Woodside.
Woodside exceeded its commitment
to increase the number of permanent
indigenous employees and the number
of people participating in Woodside’s
indigenous Employment Pathways
Program. in 2010, Woodside appointed
a dedicated resource within its supply
chain function to improve opportunities
for indigenous participation through
contracting arrangements. A significant
number of Woodside employees
completed cultural awareness training
in 2010.
Further information regarding Woodside’s
commitment to diversity is available in
Woodside’s Sustainable development
Report which is available in the
sustainable development section of
Woodside’s website.
1 January 2011. Woodside has had
a policy on diversity since 2002. in
2010, Woodside updated its diversity
Policy to reflect the revised ASxCGC
Recommendations.
A copy of Woodside’s diversity Policy
is available in the corporate governance
section of Woodside’s website.
Woodside’s policy is to recruit and
manage on the basis of competence
and performance regardless of age,
nationality, race, gender, religious beliefs,
sexuality, physical ability or cultural
background.
Woodside aims to meet its ongoing
commitment to diversity by, among other
things:
respecting the unique attributes
that each individual brings to the
workplace and fostering an inclusive
and supportive culture;
providing diversity education and
training as well as undertaking
diversity initiatives and measuring
their effectiveness;
the Board reviewing Woodside’s
diversity strategy at least annually;
and
the Board annually reviewing the
measurable objectives it has set
for achieving improvement in the
diversity mix of Woodside and
the progress in achieving those
objectives.
in 2010, Woodside established a
framework for its ongoing diversity
initiatives. A number of actions were
developed to assist gender diversity
across the organisation, particularly at
senior executive levels and in under-
represented roles. These actions
included ensuring all employees in middle
management roles have formal career
development plans in place, developing
a formal mentoring program for female
employees at Woodside identified as
high talent, designing and implementing
a diversity awareness program across
the organisation, formally and regularly
engaging with employees on parental
leave, and providing suitable flexible
working arrangements for employees
returning from parental leave.
Since the introduction of these actions in
2010, the percentage of female attrition
has decreased in five functional areas of
Woodside. Additionally, the proportion
of female promotions in 2010 to middle
management and senior executive roles
was significantly higher than the existing
proportionate representation of women at
those levels.
Flexible working opportunities are
available to all Woodside employees, with
current uptake among female employees
being 17.3% and male employees 4.5%.
The measurable objectives adopted by
the Board in respect of developing gender
diversity for the 2011 financial year are set
out below. Woodside will report on the
progress in achieving these objectives in
its 2011 annual report:
Senior executives to review the career
development plans of female middle
management employees annually
to ensure their appropriateness in
developing and retaining Woodside’s
female talent;
Senior managers to meet or formally
contact women on parental leave at
least quarterly;
300 senior employees per annum
to attend Woodside’s diversity
awareness program;
Formal annual review of all part-time
work arrangements to ensure roles
are appropriate to maintain career
development;
Reduction in the rates of attrition in
female employees identified as high
talent, through a formal mentoring
program for female employees; and
Continued promotion of career
opportunities in the resource sector
including presentations at career
expositions, schools and universities
and other suitable forums.
table 2 - Woodside workforce gender profile
Female
Female %
Administration
Technical
Supervisory / Professional
Middle Management
Senior Management
total
Board Members
260
318
319
62
3
962
1
59.1
24.2
25.3
10.4
7.5
26.4
11
Male
180
996
942
533
37
2688
8
Male %
40.9
75.8
74.7
89.6
92.5
73.6
89
9 ASX Corporate Governance Council Recommendations Checklist
This table cross-references the ASxCGC Recommendations to the relevant sections of the Corporate Governance Statement and the
Remuneration Report.
ASX Corporate Governance Council Recommendations
Reference
Comply
Principle 1:
lay solid foundations for management and oversight
1.1
1.2
1.3
Companies should establish the functions reserved to the board and those delegated to senior
executives and disclose those functions.
Companies should disclose the process for evaluating the performance of senior executives.
Companies should provide the information indicated in Guide to Reporting on Principle 1.
Principle 2: Structure the board to add value
2.1
2.2
2.3
2.4
2.5
2.6
52
A majority of the board should be independent directors.
The chair should be an independent director.
The roles of chair and chief executive officer should not be exercised by the same individual.
The board should establish a nomination committee.
Companies should disclose the process for evaluating the performance of the board, its com-
mittees and individual directors.
Companies should provide the information indicated in Guide to Reporting on Principle 2.
2.1
Remuneration Report
2.1, 2.9, Remuneration
Report
2.2, 2.4
2.2, 2.3
2.2, 2.3
3.1, 3.3
2.9
2.2, 2.4, 2.6, 2.7, 2.9,
2.10, 3.1, 3.3
Principle 3: Promote ethical and responsible decision-making
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3.1
3.2
3.3
Companies should establish a code of conduct and disclose the code or summary of the code
as to:
• the practices necessary to maintain confidence in the company’s integrity
5.1
• the practices necessary to take into account their legal obligations and the reasonable expec-
tations of their stakeholders
• the responsibility and accountability of individuals for reporting and investigating reports of
unethical practices.
Companies should establish a policy concerning trading in company securities by directors,
senior executives and employees, and disclose the policy or a summary of that policy.
Companies should provide the information indicated in Guide to Reporting on Principle 3.
5.2
5.1,5.2
3.1, 3.2
3.1, 3.2
3.1, 3.2
3.1, 3.2, 7
4.2
4.2
4.1
4.1
6.1
6.2
Principle 4: Safeguard integrity in financial reporting
4.1
4.2
4.3
4.4
The board should establish an audit committee.
The audit committee should be structured so that it:
• consists only of non-executive directors
• consists of a majority of independent directors
• is chaired by an independent chair, who is not chair of the board
• has at least three members.
The audit committee should have a formal charter.
Companies should provide the information indicated in Guide to Reporting on Principle 4.
Principle 5: Make timely and balanced disclosure
5.1
5.2
Companies should establish written policies designed to ensure compliance with ASx Listing
Rule disclosure requirements and to ensure accountability at a senior executive level for that
compliance and disclose those policies or a summary of those policies.
Companies should provide the information indicated in Guide to Reporting on Principle 5.
Principle 6: Respect the rights of shareholders
6.1
6.2
Companies should design a communications policy for promoting effective communication with
shareholders and encouraging their participation at general meetings and disclose their policy or
a summary of that policy.
Companies should provide the information indicated in Guide to Reporting on Principle 6.
Principle 7: Recognise and manage risk
7.1
7.2
7.3
7.4
Companies should establish policies for the oversight and management of material business
risks and disclose a summary of those policies.
The board should require management to design and implement the risk management and
internal control system to manage the company’s material business risks and report to it on
whether those risks are being managed effectively. The board should disclose that management
has reported to it as to the effectiveness of the company’s management of its material business
risks.
The board should disclose whether it has received assurance from the chief executive officer (or
equivalent) and the chief financial officer (or equivalent) that the declaration provided in accor-
dance with section 295A of the Corporations Act is founded on a sound system of risk manage-
ment and internal control and that the system is operating effectively in all material respects in
relation to financial reporting risks.
Companies should provide the information indicated in Guide to Reporting on Principle 7.
Principle 8: Remunerate fairly and responsibly
8.1
8.2
8.3
The board should establish a remuneration committee.
Companies should clearly distinguish the structure of non-executive directors’ remuneration
from that of executive directors and senior executives.
Companies should provide the information indicated in Guide to Reporting on Principle 8.
6.4
6.1, 6.2, 6.4
3.1, 3.4
Remuneration Report
3.1, 3.4, 5.2
On 30 June 2010, the ASx Corporate Governance Council released amendments to the ASxCGC Recommendations which apply to
listed entities from 1 January 2011. Woodside has elected to early adopt the amendments and report on compliance in this Corporate
Governance Statement. This table cross-references the new ASxCGC Recommendations to the relevant sections of the Corporate
Governance Statement.
new ASX Corporate Governance Council Recommendations
(as amended on 30 June 2010)
Reference
Comply
Principle 3:
Promote ethical and responsible decision-making
3.2
3.3
3.4
Companies should establish a policy concerning diversity and disclose the policy or a summary
of that policy. The policy should include requirements for the board to establish measurable
objectives for achieving gender diversity and for the board to assess annually both the objectives
and progress in achieving them.
Companies should disclose in each annual report the measurable objectives for achieving
gender diversity set by the board in accordance with the diversity policy and progress towards
achieving them.
Companies should disclose in each annual report the proportion of women
employees in the whole organisation, women in senior executive positions and women on the
board.
Principle 8:
Remunerate fairly and responsibly
8.2
The remuneration committee should be structured so that it:
• consists of a majority of independent directors
• is chaired by an independent chair
• has at least three members.
8
8
8
3.1
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diRECTORS'
REPORT
The directors of Woodside Petroleum
Ltd present their report (including the
Remuneration Report) together with
the Financial Report of the consolidated
entity, being Woodside Petroleum Ltd
and its controlled entities, for the year
ended 31 december 2010.
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The directors of Woodside Petroleum
Ltd in office at any time during or since
the end of the 2010 financial year are
set out in Table 1 on page 47. Additional
information on the directors (including
qualifications and experience and
directorships of listed companies held by
the directors at anytime in the last three
years) is set out on pages 38 to 39.
The number of directors’ meetings held
(including meetings of committees of
the Board) and the number of meetings
attended by each of the directors of
Woodside Petroleum Ltd during the
financial year are shown in Table 1 on
page 47.
details of director and senior executive
remuneration is set out in the
Remuneration Report on pages 55 to 70.
The particulars of directors’ interests in
shares of the company as at the date of
this report are set out in Table 15 on
page 71.
Principal activities
The principal activities and operations of
the Group during the financial year were
hydrocarbon exploration, evaluation,
development, production and marketing.
Review of operations
A review of the operations of the
Woodside Group during the financial year
and the results of those operations are set
out on pages 1 to 37.
Significant changes in
state of affairs
The review of operations (pages 1 to
37) sets out a number of matters which
have had a significant effect on the state
of affairs of the consolidated entity.
Other than those matters, there were no
significant changes in the state of affairs
of the consolidated entity during the
financial year.
2010 of uS55 cents per ordinary share
(fully franked) payable on 6 April 2011.
A fully franked final dividend of A55 cents
(uS49 cents) per ordinary share was paid
to shareholders on 31 March 2010 in
respect of the year ended 31 december
2009. Together with the fully franked
interim dividend of uS50 cents per share
paid to shareholders on 23 September
2010, the total dividend paid during the
2010 year was uS99 cents per share
fully franked.
Woodside’s dividend reinvestment plan
operated during the year.
Company secretaries
Events subsequent to end
of financial year
The following individuals have acted as
company secretary during 2010:
Dividends
Since the reporting date, the directors
have declared a fully franked dividend
of uS55 cents (2009: A55 cents;
uS49 cents), payable on 6 April 2011.
The amount of this dividend will be
uS$431 million (2009: uS$383 million).
No provision has been made for this
dividend in the Financial Report as the
dividend was not declared or determined
by the directors on or before the end of
the financial year.
likely developments and expected
results
in general terms, the review of operations
of the Group gives an indication of likely
developments and the expected results
of the operations. in the opinion of
the directors, disclosure of any further
information would be likely to result in
unreasonable prejudice to the Group.
Environmental compliance
Woodside is subject to a range of
environmental legislation in Australia
and other countries in which it operates.
details of Woodside’s environmental
performance is provided on page 22 of
this Annual Report.
Robert J Cole
BSc, LLB (Hons) (ANU)
Executive Vice President Commercial,
General Counsel and Joint Company
Secretary
Mr Cole joined Woodside in 2006 after
14 years as a partner of international law
firm, Mallesons Stephen Jaques, the last
three years as partner in charge of the
Perth office. Mr Cole holds Bachelor of
Science and Bachelor of Laws degrees.
Frances M Kernot
BCom (Hons) (UWA), Grad. Dip. CSP,
CA, ACIS
Company Secretary
Ms Kernot joined Woodside in 2003.
She has 20 years experience in company
secretarial, compliance and financial
accounting roles. Ms Kernot holds a
Bachelor of Commerce degree and is
a Chartered Accountant and Chartered
Secretary. She is a member of the
Chartered Secretaries’ Legislation Review
Committee.
Other than as previously referred to in
the Annual Report, there were no other
significant changes in the nature of the
activities of the consolidated entity during
the year.
Through its Environment Policy,
Woodside plans and performs
activities so that adverse effects on the
environment are avoided or kept as low as
reasonably practicable.
Consolidated results
The consolidated operating profit
attributable to the company’s
shareholders after provision for income
tax and individually significant items was
$1,575 million ($1,474 million in 2009).
Woodside did not incur any environmental
fines or penalties during 2010.
Dividends
The directors have declared a final
dividend out of profits of the company in
respect of the year ended 31 december
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diRECTORS' REPORT:
REMuNERATiON REPORT
overview
This Remuneration Report forms part
of the directors’ Report for 2010 and
outlines the remuneration arrangements
for Woodside’s directors and senior
managers who have the authority and
responsibility for planning, directing and
controlling the activities of the Woodside
Group (Key Management Personnel). This
report has been audited by Ernst & Young.
Woodside’s Key Management Personnel
at any time during, or since the end of,
the 2010 financial year are:
non-Executive Directors
M A Chaney - (Chairman)
M A Cilento
E Fraunschiel
A Jamieson
P J M H Jungels
d i McEvoy
d Megat
i Robertson
Executives
Executive Director
d Voelte - (Managing director and Chief Executive Officer) (CEO)
Senior Managers
F Ahmed - (Executive Vice President development)
M Chatterji - (Executive Vice President and Chief Financial Officer)(1)
R Cole - (Executive Vice President Commercial, General Counsel and Joint Company Secretary)
L della Martina - (Executive Vice President Pluto)
K Gallagher - (Executive Vice President North West Shelf)(2)
E Howell - (Executive Vice President Health, Safety and Security)(3)
A Kantsler - (Executive Vice President Health, Safety and Security)(4)
P Moore - (Executive Vice President Exploration)(5)
V Santostefano - (Executive Vice President Production)
J Soine - (Executive Vice President international Oil and Gas)(6)
L Tremaine - (Executive Vice President and Chief Financial Officer)(7)
(1) On 31 december 2010 Mr Chatterji departed from Woodside.
(2) On 13 January 2010 Mr Gallagher became Key Management Personnel.
(3) On 1 May 2010 Ms Howell was appointed Executive Vice President Health, Safety and Security.
(4) On 2 July 2010 dr Kantsler departed from Woodside.
(5) On 27 October 2010 Mr Moore became Key Management Personnel.
(6) On 19 April 2010 Mr Soine became Key Management Personnel.
(7) On 1 January 2011 Mr Tremaine became Key Management Personnel.
The five most highly remunerated executives in the Woodside Group and the parent
entity in 2010 are included in the above table.
The Human Resources & Compensation Committee (Committee) assists the Board to determine appropriate remuneration policies
and structures for non-executive directors and executives. The role of the Committee is described in the Corporate Governance
Statement set out in this Annual Report. The following table contains a broad summary of the remuneration structure for the Key
Management Personnel. This structure and its elements are described in more detail in the Remuneration Report:
Summary of the remuneration structure for the Key Management Personnel
Element of
Remuneration
Fixed Annual Remuneration (FAR) (including superannuation)
non-Executive
Directors
CEo
Category of Key Management Personnel
Senior Managers
Salary
Fees
directors fees,
superannuation and
other allowances
(see page 61).
Variable Annual Reward (VAR)
Short-term incentive (STi)
Variable Pay Rights
Cash
Long-term incentive (LTi)
Variable Pay Rights
Retention Plans
Equity Based Pay
Rights
Woodside Employee
Equity Plan
General Employee Share Plans
Woodside Share
Purchase Plan
Salary, superannuation and other allowances
(see page 70).
Salary, superannuation and other allowances
(see page 70).
Variable pay rights awarded each year based on
individual performance against key performance
indicators and the company’s scorecard performance
which vest in either cash or shares at the Board’s
discretion after a three year service period from
allocation date (see page 60).
Variable pay rights awarded each year under the Executive
incentive Plan based on individual performance against
key performance indicators and the company’s scorecard
performance which vest in either cash or shares at the
Board’s discretion after a three year service period from
allocation date (see page 57).
Cash award each year based on individual
performance against key performance indicators and
the company’s scorecard performance (see page 60).
Cash award each year under the Executive incentive Plan
based on individual performance against key performance
indicators and the company’s scorecard performance
(see page 57).
Variable pay rights (including accelerated variable pay
rights) awarded which vest in either cash or shares at
the Board’s discretion based on shareholder return on
Woodside shares (see page 60).
Variable pay rights awarded each year under the Executive
incentive Plan which vest in either shares or cash at
the Board’s discretion based on shareholder return on
Woodside shares after three years (see page 58).
Grant of pay rights which vest in cash or shares at
the Board’s discretion with vesting linked to company
performance and/or retention (see page 58).
Grant of equity rights which vest in shares (subject to
limited exceptions) with vesting linked to retention
(see page 58).
Salary sacrifice to purchase Woodside shares with a
company matching component. Plan suspended in
April 2009 (see page 59).
Salary sacrifice to purchase Woodside shares with a
company matching component. Plan suspended in
April 2009 (see page 59).
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Reporting in United States Dollars
in this report the remuneration and
benefits reported have been presented
in uS dollars. This is consistent with
the change by Woodside in functional
currency from Australian dollars to
uS dollars from 1 January 2010.
Compensation for Australian-based
employees is paid in Australian dollars
and, for reporting purposes, converted
to uS dollars based on the average
exchange rate for the payment period.
Valuation of equity awards is converted
at the spot rate applying when the equity
award is granted. in order to derive
uS dollar comparatives between
2010 and 2009, the Australian dollar
compensation paid during the year ended
31 december 2009 was converted to
uS dollars at the average exchange rate
of uS$1:A$1.261, and the valuation of
equity awards to 31 december 2009
were converted to uS dollars at the spot
rate of uS$1:A$1.1193. The Australian
dollar compensation paid during the year
ended 31 december 2010 was converted
to uS dollars at the average exchange
rate of uS$1:A$1.090, and the valuation
of equity awards at 1 January 2010 was
converted to uS dollars at the spot rate of
uS$1:A$1.110. Quoted prices and volume
weighted average price of shares are
expressed in Australian dollars.
non-Executive Directors
Remuneration Policy
Woodside’s Remuneration Policy for
non-executive directors aims to attract,
retain, motivate and remunerate fairly and
responsibly having regard to:
the level of fees paid to non-executive
directors relative to other major
Australian companies;
the size and complexity of
Woodside’s operations; and
the responsibilities and work
requirements of Board members.
Fees paid to non-executive directors are
recommended by the Committee based
on advice from external remuneration
consultants (Mercer (Australia) Pty Ltd),
determined by the Board (subject to an
aggregate limit of A$3 million per financial
year approved by shareholders at the
2007 Annual General Meeting (AGM)).
The annual base Board fees were
increased with effect from 1 September
2010. There was no change to
Committee fees.
in 2008 the Board approved the
introduction of a minimum Woodside
Petroleum Ltd shareholding guideline
for non-executive directors. in 2010
the Board amended the guideline to
require non-executive directors to hold
a minimum holding of 2,000 Woodside
shares and non-executive directors who
have less than the minimum holding are
required to direct 25% of net (after tax)
fees to the purchase of Woodside shares
until the minimum holding requirement is
satisfied. The non-executive directors may
utilise the Non-Executive director Share
Plan (NEdSP) to acquire the shares on
market at market value. As the shares are
acquired with net fees the shares in the
NEdSP are not subject to any performance
conditions. This requirement does not
apply to non-executive directors that do
not receive their Board fees directly.
Remuneration structure
Non-executive director remuneration
consists of base fees, committee
fees, other payments for additional
services outside the scope of Board
and committee duties, and statutory
superannuation contributions or payments
in lieu (currently 9%). Non-executive
directors do not earn retirement benefits
other than superannuation and are not
entitled to any form of performance-linked
remuneration.
Table 1 on page 61 shows the annual
base Board and committee fees for non-
executive directors.
in addition to these fees, non-executive
directors are entitled to reimbursement
of reasonable travel, accommodation
and other expenses incurred attending
meetings of the Board, committees
or shareholders, or while engaged on
Woodside business. Non-executive
directors are not entitled to compensation
on termination of their directorships.
Board fees are not paid to the CEO, as
the time spent on Board work and the
responsibilities of Board membership
are considered in determining the
remuneration package provided as part of
his normal employment conditions.
The total remuneration paid to, or in
respect of, each non-executive director in
2010 is set out in Table 2 on page 61.
Executives
Remuneration Policy
Woodside’s Remuneration Policy aims to
reward executives fairly and responsibly
in accordance with the regional (and in
some instances, international) market and
ensure that Woodside:
provides competitive rewards that
attract, retain and motivate executives
of the highest calibre;
sets demanding levels of
performance which are clearly linked
to an executive’s remuneration;
structures remuneration at a level that
reflects the executive’s duties and
accountabilities;
benchmarks remuneration against
appropriate comparator groups;
aligns executive incentive rewards
with the creation of value for
shareholders; and
complies with applicable legal
requirements and appropriate
standards of governance.
Executive remuneration is reviewed
annually having regard to individual and
business performance and relevant
comparative information.
Executive remuneration and company
performance
The Committee assists the Board to
strengthen the link between executive
remuneration and Woodside’s
performance. The details relating to the
linkages between executive remuneration
and company performance are provided
in the following sections.
There are a number of internal and
external factors relevant to Woodside’s
performance over the past five years. in
addition, the Board believes Woodside’s
performance is also attributable to
the ability to motivate and retain its
executives and the effectiveness of
the remuneration policies in place over
that time. Table 3 on page 61 shows
the key financial measures of company
performance over the past five years.
Remuneration structure
Woodside’s remuneration structure for
executives has several components:
Fixed Annual Reward (FAR) - the
‘not at risk’ component (unrelated to
performance) which includes base
salary, superannuation contribution
and other allowances such as motor
vehicle and health insurance. FAR
is determined on the basis of the
scope of the executive’s role and the
individual level of knowledge, skill and
experience;
Variable Annual Reward (VAR) -
the ‘at risk’ component (related to
performance) which is awarded under
the Executive incentive Plan and
comprises:
a short-term incentive; and
a long-term incentive.
Participation in Retention Plans -
Equity Based Pay Rights and the
Woodside Employee Equity Plan; and
Participation in General Employee
Share Plans - the Woodside Share
Purchase Plan.
Table 4 on page 62 sets out the allocation
of remuneration between FAR and VAR
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for Woodside’s executives assuming
achievement of target performance for
the short-term incentive and the annual
allocation value of the long-term incentive.
Participation in retention plans and
participation in general employee share
plans is not taken into account for the
calculation of the percentages shown in
the table.
Variable Annual Reward -
Executive Incentive Plan
The VAR component of executive
remuneration is based on a percentage
of an executive’s FAR. This percentage
is determined by the Board at the start
of the year with reference to market
comparator groups and the scope of the
executive’s role. For executives other
than the CEO and an executive based
in the uSA, VAR is delivered through
the Executive incentive Plan (EiP) (refer
below). The delivery of awards of VAR for
the CEO and the uSA based executive
are discussed separately below.
The EiP aims to reward executives for
meeting or exceeding their individual
performance targets, while at the same
time linking the reward to the creation
of long-term sustainable wealth for
shareholders.
VAR has two elements:
1. the short-term incentive (STi) award
(which links remuneration to short-
term performance) which is paid
two thirds in cash and one third in
an award of variable pay rights, the
vesting of which is dependent on
three years continuing service
(Time-tested VPRs); and
2. the long-term incentive (LTi) award
(which links remuneration to long-
term performance) which is paid
by a grant of variable pay rights, the
vesting of which is dependent on
service and total shareholder return
on Woodside shares relative to an
identified peer group (RTSR-tested
VPRs).
A variable pay right represents a right,
if all vesting conditions have been met,
to receive either cash or shares with
a value equivalent to the market value
of a Woodside share at the time of
vesting. The number of variable pay
rights awarded under the EiP for the
2010 performance year is calculated by
dividing the value of the award (which
is determined after the completion of
the performance year) by the volume
weighted average price (VWAP) of
Woodside shares for the month of
december 2010 (for performance years
up to and including the 2007 performance
year, the number of variable pay rights
awarded was determined by reference to
the VWAP of Woodside shares in the last
five trading days of the performance year).
The Board determines whether variable
pay rights are to be satisfied in cash or
shares at the time of vesting. if satisfied
in shares, the shares will be purchased on
market. if satisfied in cash, the amount
paid is based on the market value of
a Woodside share at the vesting date
calculated by reference to the VWAP of
Woodside shares in the five trading days
prior to the vesting date. No amount is
payable by the recipient executive on the
grant or vesting of a variable pay right.
The Board has power under the rules of
the EiP to terminate, suspend or amend
the EiP, and to alter the management
or administration of the EiP. Board
decisions about the operation of the EiP
are made on the recommendation of the
Committee.
Short-term incentive award
The award of the STi component is
determined by a scorecard which is set
and approved annually by the Board
(Scorecard), and individual performance.
The Scorecard for 2010 was based on
four fundamental measures:
safety – based on total recordable
case frequency;
production;
operating expenditure; and
Woodside’s one year total return
to shareholders, ranked within an
international peer group (STi Peer
Group). Total return to shareholders
is the growth in the value of shares
over the performance year, plus the
value of dividends, other distributions
paid out over that year (assuming that
dividends and other distributions are
reinvested in shares on the payment
date) and pro rata buybacks.
The STi Peer Group for the grant of the
2010 STi comprises Woodside and the
following companies:
Apache Corporation;
Anadarko Petroleum Corporation;
BG Group PLC;
CNOOC Limited;
inpex Corporation(1);
Marathon Oil Company;
Murphy Oil Corporation;
Pioneer Natural Resources Company;
Repsol YPF, S.A.;
Santos Ltd; and
Talisman Energy inc.
(1) inpex Corporation was added to the STi Peer Group
for 2010.
The financial measures for the Scorecard
were chosen because of the impact
they have on shareholder value. The
non-financial measure of safety was
chosen to align performance with
Woodside’s values and reputation. in
late 2010 the Board approved changes to
broaden the internal safety performance
measure applicable for 2011 to include
environmental factors and additional
safety factors.
The Board has the discretion to aggregate
executives into pool groups to ensure
a fair allocation of total STi between
executives. The total STi award available
for all participating executives is pooled in
each pool group by adding the target STi
value for each individual within the pool(s).
The Scorecard result (with a possible
value of between zero and two) is used
as a multiple to adjust the value of the
pool(s). The adjusted pool(s) are allocated
among the executives in that pool group
based on their individual performance
relative to other executives.
An executive’s performance during the
year is assessed against their individual
performance agreement, which is set at
the start of each year and includes key
performance indicators (KPis) relevant
to the executive’s areas of responsibility.
KPis may include the following:
financial (e.g. revenue, operating
costs, earnings before interest
and tax, return on average capital
employed, lifting costs, drilling costs);
operational (e.g. production volumes,
project progress);
health and safety (e.g. total recordable
case frequency, high potential incident
frequency);
environment (e.g. greenhouse gas
emissions, flared gas); and
human resources (e.g. voluntary
turnover).
These KPis are chosen because they
align individual performance with the
achievement of Woodside’s business plan
and objectives.
The executive receives a performance
rating based upon an assessment of
their performance against their individual
performance agreement in accordance
with the annual performance review
process. This assessment is conducted
by the CEO and approved by the
Committee. This rating is then used to
determine entitlement to the STi award.
The performance assessment for the
CEO is conducted by the Board.
The STi award for a performance year
is paid two thirds in cash and one third
in an award of Time-tested VPRs. Time-
tested VPRs require that the executive’s
employment not be terminated with cause,
or by resignation for three years after
allocation. Time-tested VPRs may vest
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prior to the expiry of the three years upon
a change of control event, or on the death
or total and permanent disablement of the
executive. Time-tested VPRs granted will
also vest upon redundancy, retirement or
the cessation of an employment contract.
There are no further performance
conditions for vesting of Time-tested VPRs.
long-term incentive award
The LTi award for the 2010 performance
year is granted in the form of variable
pay rights, the vesting of which is linked
to service and total shareholder return
(RTSR-tested VPRs).
The vesting of RTSR-tested VPRs is
conditional on a satisfactory ranking of
Woodside’s relative total shareholder
return (RTSR), as calculated under the
EiP rules, over a three or four-year period
in comparison with an international peer
group (LTi Peer Group). The LTi Peer
Group(1) for the grant of RTSR-tested
VPRs for the 2010 performance year
compares Woodside to the following
companies:
Apache Corporation;
Anadarko Petroleum Corporation;
BG Group PLC;
CNOOC Limited;
inpex Corporation;
Marathon Oil Company;
Murphy Oil Corporation;
Pioneer Natural Resources Company;
Repsol YPF, S.A.;
Santos Ltd; and
Talisman Energy inc.
(1) As a consequence of the merger between Petro-
Canada and Suncor Energy inc. in August 2009,
Petro-Canada was deleted from the Peer Group for
the purposes of LTi awards made in March 2008 and
February 2009, leaving 10 comparator companies.
For the 2009 and 2010 Performance Year, inpex
Corporation has been added to the LTi Peer Group.
For the 2006 performance year, the
LTi component was paid in the form
of variable pay rights linked to total
shareholder return (TSR) on Woodside
shares as against a hurdle rate set by the
Board (TSR-tested VPRs). The TSR-
tested VPRs vested when the Woodside
TSR, as calculated under the EiP rules,
achieved the hurdle set by the Board for
a continuous 30-day period following the
third anniversary of the allocation date.
in respect of the award made in regard
to the 2006 performance year the hurdle
rate for TSR-tested VPRs was 11.5% p.a.
The TSR-tested VPRs granted in respect
of the 2006 performance year vested on
16 April 2010. details of the terms and
conditions are shown in Table 12 on
page 66.
For the 2007 and subsequent
performance years, the Board changed
the performance measure to the total
shareholder return relative to the LTi
Peer Group. This measure was chosen
because it aligns performance with
achieving increased value to shareholders
relative to a peer group. The RTSR is
calculated in accordance with the EiP
rules on the third anniversary of the
allocation of these RTSR-tested VPRs.
The outcome of the test is measured
against the schedule shown in Table 5 on
page 62. if no RTSR-tested VPRs vest
at this time (because Woodside has not
performed at or above the 50th percentile
of the LTi Peer Group), the RTSR test is
re-applied on the fourth anniversary of the
allocation date. if no RTSR-tested VPRs
vest on the fourth anniversary, all VPRs
for that performance year lapse.
RTSR-tested VPRs require that the
executive’s employment not be terminated
with cause, or by resignation, for three years
after allocation.
RTSR-tested VPRs may vest prior to the
satisfaction of the vesting conditions upon
a change of control event, or on the death
or total and permanent disablement of
the executive. in the event of retirement,
redundancy or the cessation of an
employment contract of a participant
RTSR-tested VPRs continue in the plan
and are subject to the normal vesting.
A summary of the terms and conditions
for the variable pay rights awarded under
the EiP are in Table 12 on page 66.
Summaries of executives’ interests in
Time-tested VPRs, TSR-tested VPRs and
RTSR-tested VPRs are in Tables 13a and
13c on pages 68 to 69.
Retention Plans
Equity Based Pay Rights
As part of a retention strategy for senior
executives, some executives participate in
equity based retention plans (Pay Rights
Plan) under which eligible executives are
granted pay rights (PRs). A PR entitles the
participant to an award of cash or shares
on vesting.
The amount of the award under the Pay
Rights Plan is determined by the Board.
Participating executives receive an
allocation of PRs under the applicable Pay
Rights Plan. The number of PRs granted is
determined by dividing the amount of the
award by the five-day volume weighted
average price of a Woodside share at a
specified pricing date. Participants do not
make any payment in respect of the PRs
at grant nor at vesting.
The condition for award of PRs is
outstanding individual performance, as
assessed by the CEO by reference to the
demonstrated capacity of the executive to
contribute to the generation of sustainable
value for shareholders.
The primary intention of the allocation of
PRs in March 2007 (Pay Rights Plan 1)
was to provide a retention mechanism.
PRs awarded under the retention plan in
November 2007 (Pay Rights Plan 2) require
Woodside’s relative total shareholder
return for the performance year
immediately preceding the specified
vesting date to be at or above the 50th
percentile of the STi Peer Group (refer
to short-term incentives above) before
vesting can occur. The purpose of the Pay
Rights Plan 2 was to retain the executives
and to align them to shareholder value.
One third of the PRs under each Pay
Rights Plan will vest on each of the first,
second and third anniversaries of the
allocation date if the vesting condition
is satisfied on those dates. Entitlement
to PRs is lost if a participating executive
resigns or is terminated with cause before
the due date for vesting. Vesting of PRs
is also conditional on maintenance of
acceptable individual performance. All
PRs will immediately vest in the event of
a change of control or upon the death or
total and permanent disablement of the
executive.
The Board will determine whether PRs
are to be satisfied in cash or in Woodside
shares at the time of vesting. if satisfied
in shares, the shares will be purchased on
market. if satisfied in cash, the amount
will be based on the five-day VWAP of a
Woodside share at the vesting date.
Table 7 on page 62 provides a summary
of the terms and conditions for PRs
under the Pay Rights Plans and Table
13b on page 69 provides a summary of
executives’ interests in PRs.
Woodside Employee Equity Plan
in July 2009 Woodside introduced the
Woodside Petroleum Ltd 2009 – 2012
Employee Equity Plan (EEP) which
is available to all Australian-based
employees including executives, other
than the CEO. The EEP is intended
to provide a retention mechanism for
participating employees as well as provide
an opportunity to share in the growth of
the company. As the objective of the EEP
is primarily retention, the Equity Rights
(ERs) are a form of remuneration that is
not dependent on individual performance
or Woodside’s performance. Participants
do not make any payment in respect of
the ERs at grant nor at vesting.
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Eligible participants receive a one-off
allocation of ERs. Each ER entitles
the participant to receive a Woodside
share on the vesting date of 1 August
2012. ERs may vest prior to 1 August
2012 on a change of control or, at the
discretion of the CEO, limited to the
following circumstances: redundancy,
death, termination due to medical illness
or capacity or total and permanent
disablement of a participating employee.
An employee whose employment is
terminated by resignation, retirement,
cessation of an employment contract or
for cause prior to 31 July 2012 will forfeit
all of their ERs.
Shares will either be issued by Woodside
or acquired on market to satisfy vesting
ER entitlements. The number of ERs that
vest may be adjusted for any interruptions
to an employee’s service. Eligible
participants who are on an international
assignment may receive a cash amount
subject to Board discretion.
Participants in the EEP cannot dispose
of or otherwise deal with an ER and do
not receive any dividends or have voting
rights in respect of an ER. Allocations of
ERs to participants will be adjusted in the
event of Woodside making a bonus issue
of shares or upon reconstruction of the
company’s share capital.
As a consequence of the renounceable
rights issue by Woodside in december
2009, the Board resolved to issue
additional ERs under the EEP to maintain
the value of the ERs held by participating
employees (including executives) against
Woodside shares. An additional allocation
of ERs was made to each participant
in March 2010. The same terms and
conditions which apply to existing ERs
apply to these additional ERs.
Table 8 on page 63 provides a summary
of executives’ interests in ERs under
the EEP.
General Employee Share Plans
Woodside Share Purchase Plan
in April 2007 Woodside introduced the
Woodside Share Purchase Plan (WSPP)
which was available to all Australian-
based employees, including executives,
up to March 2009. The plan was
suspended in April 2009 due to changes
in tax legislation. The WSPP provided
eligible employees with an opportunity to
acquire Woodside shares and to share in
the growth of the company. The WSPP
year was based on a 1 July to 30 June
period (WSPP Year).
Participants in the WSPP elected to
sacrifice an amount of salary, and this
amount was applied by the WSPP Trustee
to purchase Woodside shares on market.
The maximum amount that could be
salary sacrificed in the 2008/09 WSPP
Year was A$12,000 and the minimum
was A$3,000. Woodside provided funds
to the WSPP Trustee to buy additional
Woodside shares (matching shares)
on market at a fixed ratio to the shares
purchased with sacrificed funds
(in the 2008/09 WSPP Year the ratio
was one and a half matching shares for
one purchased with sacrificed funds;
in the 2007/08 WSPP Year the ratio
was one for one).
All shares purchased under the WSPP
are held in trust. To become finally
entitled to the matching shares funded
by Woodside, a participant must remain
a Woodside employee for a three-year
qualification period. Participants cannot
dispose of shares purchased with
sacrificed funds within this three-year
qualification period unless they cease
employment with Woodside (in which
case they become entitled to deal with
the shares purchased with sacrificed
funds, but lose their entitlement to
matching shares). After the three-year
qualification period participants may elect
to have their WSPP shares retained in
the trust for up to a further seven years,
provided they remain in the employment
of Woodside.
Participants receive any dividends paid
on shares held in the trust, have voting
rights, may participate in any rights issues
and receive any bonus issues.
The matching shares were a form of
remuneration that was not dependent on
the employees’ individual performance
or Woodside’s performance as it was
intended to align eligible employees to
shareholder value.
Table 10 on page 64 provides a summary
of executives’ interests in shares under
the WSPP. Executives were entitled to
participate in the 1 for 12 renounceable
rights issue announced in december
2009 in respect of their shareholdings
under the WSPP. Table 10 does not
include any shares which were acquired
by executives in 2010 pursuant to the
rights issue.
United States Executive
during the year, an executive based in
the united States was appointed as Key
Management Personnel and the following
describes the variable incentive plans
impacting united States executives. in the
united States the executive is rewarded
for meeting or exceeding the individual
performance targets, while at the same
time linking the reward to the creation
of long-term sustainable wealth for
shareholders.
The executive in the united States
participates in two variable incentive
plans:
1. the short-term incentive plan, which is
called Performance Based Pay (PBP),
links remuneration to short-term
performance; and
2. the long-term incentive (LTi) plan
which links remuneration to long-term
performance.
The award of the PBP is determined by
a scorecard which is set and approved
annually by the Woodside Energy (uSA)
inc (WEuSA) Board and individual
performance. The WEuSA scorecard is
based on three measures:
safety;
production; and
operating cost.
The financial and production measures
for the scorecard were chosen because
of the impact they have on shareholder
value. The non-financial measure of safety
was chosen to align performance with
Woodside’s values and reputation.
The relevant performance period for PBP
commences on 1 January and ends on
31 december of each calendar year. The
PBP grant date for each performance year
is 1 January.
The total PBP available for the
participating executive is based on the
outcome of the WEuSA scorecard
performance and the individual’s
performance. The STi award percentage
may range from 0% to a maximum of
150% of the executive’s Fixed Annual
Reward.
Performance during the year is assessed
against the individual performance
agreement, which is set at the start
of each year and includes KPis relevant
to the executive’s areas of responsibility.
KPis may include the following:
financial (e.g. revenue, operating
costs, earnings before interest
and tax, return on average capital
employed, lifting costs, drilling costs);
operational (e.g. production volumes,
project progress);
health and safety (e.g. total recordable
case frequency, high potential incident
frequency);
environment (e.g. greenhouse gas
emissions, flared gas); and
human resources (e.g. voluntary
turnover).
These KPis are chosen because they
align individual performance with the
achievement of Woodside’s business plan
and objectives.
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The executive receives a performance
rating based upon an assessment of
performance against the individual
performance agreement in accordance
with the annual performance review
process. This assessment is conducted
by the CEO. This rating is then used in
conjunction with the WEuSA scorecard
outcome to determine the PBP outcome
for the relevant performance year which is
paid in cash prior to March 30 of the year
following the performance year.
The executive also participates in the
WEuSA Long Term incentive (LTi) plan.
Awards are made on an annual basis on
1 January. The LTi component of the
uS executive’s remuneration is based
on a percentage of an executive’s Fixed
Annual Reward, which is called the LTi
Variable Pay Percentage. This percentage
is determined by the WEuSA Board with
reference to market comparator groups
and the scope of the executive’s role.
The outcome of the award may range
from zero to two times the LTi Variable
Pay Percentage, subject to performance
against the scorecard. The maximum LTi
award for the executive is 170% of the
executive’s Fixed Annual Reward. The
long-term incentive awards vest wholly as
cash subject to the scorecard outcome for
the relevant performance period.
The WEuSA LTi plan is based on
a scorecard with the following four
measures:
safety;
production;
operating cost; and
exploration success.
Each of safety, production and operating
cost are weighted at 20% and are
assessed against the approved scorecard
after the completion of the performance
year. Exploration success is weighted
at 40% and is assessed against the
scorecard target over a three-year
performance period.
The current WEuSA LTi plan came into
effect on 1 January 2008. A summary of
the terms and conditions and the awards
made under the plan is shown in Table 6
on page 62.
Contracts for Executives
Each executive has a contract of
employment. Table 9 on page 63 contains
a summary of the key contractual
provisions of the contracts of employment
for the executives.
termination Provisions
under each executive contract of
employment Woodside may choose to
terminate the contract immediately by
making a payment equal to the ‘Company
Notice Period’ of Fixed Annual Reward
in lieu of notice as shown in Table 9 on
page 63. in 2009 the Board determined to
amend new executive contracts to ensure
that any payments made in the event
of a company initiated termination of an
executive contract would be consistent
with the Corporations Amendment
(Improving Accountability on Termination
Payments) Act 2009.
CEo Remuneration
The remuneration of the CEO is governed
by his contract of employment.
in 2010, two independent remuneration
consultants, Mercer (Australia) Pty Ltd
and PricewaterhouseCoopers, were
engaged to undertake a review of the
CEO remuneration in accordance with
Woodside’s Remuneration Policy. Each
of the consultant’s full reports was
provided to the Committee. The CEO’s
remuneration has remained unchanged
since 2008. From the time when the
Executive incentive Plan (EiP) was
introduced until the end of the 2007
performance year, the CEO received
the variable annual remuneration (VAR)
component of his annual remuneration
through participation in the EiP.
As part of its 2008 annual review of the
CEO’s remuneration, the Board resolved
to restructure the VAR component of
the CEO’s remuneration package. As the
revised VAR structure for the CEO does
not align with the structure applicable
to other executives under the EiP, the
CEO has not participated in the EiP for
any performance year after the 2007
performance year. The CEO remains
entitled to all variable pay rights (VPRs)
awarded to him under the EiP in respect
of performance years up to and including
the 2007 performance year.
For the 2010 performance year the CEO’s
remuneration is comprised of:
one third Fixed Annual Remuneration
(FAR); and
two thirds VAR of which 50% is a
short-term incentive component
(STi) and 50% is long-term incentive
component (LTi).
Short-term Incentive
STi is allocated as two-thirds cash and
one-third Time-tested VPRs. Time-
tested VPRs have the same terms and
conditions as those awarded under
the EiP.
The grant of a STi award to the CEO is
determined by the EiP Scorecard and
individual performance as determined
by the Board. For the 2010 performance
year the CEO is entitled to receive a STi
calculated and treated in all respects
(including performance conditions,
hurdles and timing), as if it was an
entitlement arising under the EiP – except
for the STi/LTi allocation referred to
above.
The performance of the CEO is reviewed
by the Board against the following factors:
setting and pursuing the growth
agenda;
achieving effective execution;
building enterprise and organisational
capacity;
enhancing culture and reputation; and
ensuring shareholder focus.
long-term Incentive
in 2008, 50% of the CEO’s anticipated
LTi VAR allocation (A$1,312,500)(1) for
performance years 2008, 2009 and
2010 (normally allocated in the year
following the performance year) was
brought forward and allocated in 2008
(Accelerated LTi). The Accelerated LTi
is subject to the RTSR-test as for the
2008 VPR allocation under the EiP as
described in Table 12 on page 66. This
change was made to ensure retention of
the CEO’s services and in recognition of
the inability of the CEO to influence the
RTSR performance of Woodside (and
the consequential value of unvested LTi
entitlements) after his departure.
The remaining LTi VAR entitlement
for the 2010 performance year (being
the assessed entitlement for the 2010
performance year, less the value of the
Accelerated LTi for that performance
year) (LTi VAR Balance) will be allocated
in February 2011 and will be subject
to RTSR testing in February 2014.
The vesting conditions for these LTi
VAR Balance allocations reflect those
contained in the EiP. A summary of the
terms and conditions of the CEO’s VAR
for 2010 is contained in Table 11a and
Table 11b on page 65.
For the performance year ending
31 december 2011 the CEO will be
entitled to an amount of LTi VAR to
be satisfied by the allocation of RTSR-
tested VPRs with the same vesting and
performance conditions as if they were
allocated under the EiP, calculated in the
way as described under the EiP section
above and in accordance with the targets
set out in Table 4 on page 62.
(1) The uS$ equivalent of A$1,312,500 converted at
the spot rate of uS$1:A$1.1193 is uS$1,172,588
(2009: uS$1,172,588).
Securities Dealing Policy
Woodside’s Securities dealing Policy
prohibits executives who participate in
an equity-based executive incentive plan,
from entering into any transaction which
would have the effect of hedging (or
otherwise transferring to any other person
the risk of any fluctuation in the value of
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any unvested entitlement in Woodside
securities). directors proposing to enter
into arrangements to limit the economic
risk of a vested holding in Woodside
securities must obtain the approval of
the Chairman (or, where the notifying
executive is the Chairman, the CEO)
prior to entering into the arrangement,
and immediately provide details of the
arrangements entered into. Executives
who report directly to the CEO, and the
Company Secretary/ies, must submit
a completed compliance certificate in
respect of arrangements to limit the
economic risk of a vested holding in
Woodside securities to their direct
manager and then to the General Counsel
for acknowledgement. Adherence to
this policy by executives is monitored
by six monthly directors’ questionnaires
to management. Further information on
Woodside’s Securities dealing Policy is
provided in section 5.2 of the Corporate
Governance Statement on page 49.
2010 remuneration details
Table 14 on page 70 summarises the
remuneration both paid and payable to the
executives for the 2010 performance year,
including the VAR allocation. The value of
the Scorecard for 2010 was 0.9 out of a
maximum possible result of 2.
The total potential amount of the STi
pool for 2010 ranged from a minimum of
$0 up to a maximum of A$29,641,832.
The actual STi pool for 2010 was
A$13,338,825 for 91 participants
(including the executives).
table 1 - Annual base Board and committee fees for non-executive directors
Position
Chairman of the Board(1)
Non-executive directors(2)
Committee Chairman
Committee Member
(1) inclusive of committee work.
(2) Board fees paid to non-executive directors, other than the Chairman.
Board
Audit & Risk
Committee
A$
625,000(4)
190,000(4)
A$
Human
Resources &
Compensation
Committee
A$
Sustainability
Committee
nominations
Committee
A$
50,000(3)
25,000(3)
30,000(3)
20,000(3)
30,000(3)
20,000(3)
(3) Annual fee from 1 July 2008.
(4) Annual fee from 1 September 2010.
table 2 - total remuneration paid to non-executive directors in 2010 and 2009(1)
Short–term
Cash salary & fees
Salaries, fees
and allowances
nEDSP(2)
$
3,964
8,107
$
551,928
468,067
201,813
174,494
234,390
194,368
213,477
168,623
270,842
233,877
221,902
182,467
229,975
186,458
204,978
172,947
non-executive
director
M A Chaney
M A Cilento
E Fraunschiel
A Jamieson
P J M H Jungels
d i McEvoy
d Megat
i Robertson(4)
Year
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
Cash
bonuses
Short-term
incentive/
bonus(3)
$
non-monetary
Benefits &
allowances
$
Prescribed
benefits
Directors’
retiring
allowance(3)
$
Post employment
Pension
super
Company
contributions to
superannuation
$
49,674
42,126
18,163
15,705
15,583
17,493
13,072
16,422
(1) The total remuneration for 2009 was converted at the average exchange rate of
uS$1:A$1.261 and the 2010 total remuneration was converted at the average
exchange rate of uS$1:A$1.090.
(2) Relates to participation in the NEdSP in 2009 when salary sacrifice was available to
non-executive directors.
(3) Non-executive directors are not entitled to cash bonuses nor directors’ retiring
allowance.
(4) Board fees for directors who are both nominated and employed by the Shell Group are
paid directly to their employing company, not the individual.
table 3 - Woodside five-year performance
Year Ended 31 December
Net Profit After Tax (uS$ million)
Earnings Per Share (uS cents)(1)
dividends Per Share (uS cents)
Production (MMboe)
Share closing price ($A) (last trading day of the year)
3 Year rolling TSR (%)(3)
Relative TSR(4) (1 year)
2010
1,575
204
105
72.7
42.56
14.53
4th Quartile
2009
1,474
210
95
80.9
47.20
56.86
1st Quartile
2008
1,546
225(2)
100
81.3
36.70
0.98
2nd Quartile
2007
864
128(2)
91
70.6
50.39
41.25
2nd Quartile
2006
1,075
163(2)
98
67.9
38.11
42.55
2nd Quartile
(1) Basic and diluted earnings per share from total operations.
(2) Earnings per share have been restated with an adjustment factor of 1.0047 as a result of the fully underwritten accelerated
renounceable entitlement offer announced on 14 december 2009
(3) This calculation is annualised and measured in Australian dollars. The significant change in the three year rolling TSR
percentage for 2008 is due to the impact of the economic downturn.
(4) As discussed under the STi component of EiP on page 57.
A$
Nil
Nil
total
$
601,602
510,193
219,976
190,199
249,973
211,861
213,477
168,623
270,842
237,841
234,974
198,889
229,975
194,565
204,978
172,947
table 4 - Allocation of remuneration between Fixed and Variable Annual Reward
Position
CEO
Executives
not at Risk
Fixed Annual Reward
At Risk
Variable Annual Reward
33.3%
45-50%
STi
33.3%
30-33%
LTi
33.3%
20-22%
table 5 - Vesting schedule for RtSR-tested VPRs
Woodside RtSR percentile position within Peer Group
Less than 50th percentile
Equal to 50th percentile
Equal to 75th percentile
Equal to 100th percentile
Vesting between these percentile points is on a pro rata basis.
Vesting of RtSR-tested VPRs
no vesting
50% vest
100% vest
150% vest (i.e. 50% uplift for topping LTi Peer Group)
62
table 6 - Summary of terms and conditions for WEUSA ltI plans
terms and Conditions
2010 ltI Allocation
2009 ltI Allocation
2008 ltI Allocation
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P
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m
L
t
d
l
Grant date
Performance condition
for vesting
Reason for performance condition
|
2
0
1
0
A
n
n
u
a
l
R
e
p
o
r
t
Vesting date(1)
Lapse before
Vesting date
Percentage vested
Percentage forfeited
1 January 2010
Assessed against the LTi
scorecard
See above under
“united States Executive”
31 december 2012
if employment is terminated
for cause or by resignation all
unvested LTi will lapse
1 January 2009
1 January 2008
Assessed against the LTi scorecard
See above under “united States Executive”
31 december 2011
31 december 2010
if employment is terminated for cause or by resignation all
unvested LTi will lapse
None
None
None
None
60%(2)
40%
(1) Provision is made for accelerated vesting in certain events such as total and permanent disability, death or a change in control of Woodside.
(2) For the 2008 LTi allocation a payment of $204,000 will be made in February 2011.
table 7 - Summary of terms and conditions for PRs under equity-based retention plans
terms and Conditions
Pay Rights Plan 1
Allocation date
Pricing date
Grant date
Volume Weighted
Average Price
Performance condition
(for allocation)
15 March 2007
15 March 2007
15 March 2007
A$35.78
Pay Rights Plan 2
1 November 2007
1 November 2007
1 November 2007
A$49.25
Outstanding individual performance
Outstanding individual performance
Reason for performance
condition (allocation)
See above under “Executive
Remuneration Policy”
See above under “Executive Remuneration Policy”
Performance condition
(for vesting)
Maintenance of acceptable individual
performance over the period from
allocation date to vesting date. One third
of the PRs will vest on each of the first,
second and third anniversaries of the
allocation date.
Reason for performance
condition (vesting)
See above under “Executive
Remuneration Policy”
Vesting date(1)
Lapse of PRs before
Vesting date
15 March 2008; 15 March 2009;
15 March 2010
if employment is terminated for cause
or by resignation all unvested PRs
will lapse.
Maintenance of acceptable individual performance over
the period from allocation date to vesting date.
Minimum level of company RTSR performance at
or above 50th percentile of the Peer Group over the
preceding year.
One third of the PRs will vest on each of the first,
second and third anniversaries of 15 March 2008,
subject to satisfactory performance.
See above under “Executive Remuneration Policy”
15 March 2009; 15 March 2010; 15 March 2011
if employment is terminated for cause or by resignation
all unvested PRs will lapse.
(1) Provision is made for accelerated vesting in certain events such as total and permanent disability, death or a change in control of Woodside.
table 8 - Summary of executives’ interests in Equity Rights under the EEP
name
Grant date
number of Equity
Rights granted
F Ahmed
M Chatterji(3)
R Cole
L della Martina
E Howell
K. Gallagher
A Kantsler(2)
P Moore
V Santostefano
31 October 2009
30 April 2010
31 October 2009
30 April 2010
31 October 2009
30 April 2010
31 October 2009
30 April 2010
31 October 2009
30 April 2010
31 October 2009
30 April 2010
31 October 2009
30 April 2010
31 October 2009
30 April 2010
31 October 2009
30 April 2010
4,350
36
4,350
36
4,350
36
4,350
36
4,350
36
4,350
36
4,350
36
4,350
36
4,350
36
number of Equity
Rights which have
lapsed/forfeited
Nil
Nil
4,350
36
Nil
number of Equity
Rights which have
vested during 2010
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
4,350
36
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Fair Value of
Equity Rights(1)
$39.81
$39.83
$39.81
$39.83
$39.81
$39.83
$39.81
$39.83
$39.81
$39.83
$39.81
$39.83
$39.81
$39.83
$39.81
$39.83
$39.81
$39.83
(1) The fair value of Equity Rights as at their date of grant has been determined by reference to the share price at acquisition. The fair value of Equity Rights is amortised over the vesting
period, such that ‘Total remuneration’ includes a portion of the fair value of unvested equity compensation during the year. The amount included as remuneration is not related to or
indicative of the benefit (if any) that individual executives may ultimately realise should these equity instruments vest.
(2) dr Kantsler departed from Woodside on 2 July 2010.
(3) Mr Chatterji departed from Woodside on 31 december 2010.
table 9 - Summary of contractual provisions for executives
name
Employing company
Contract duration
d Voelte(1)(2)
Woodside Petroleum Ltd
Woodside Energy Ltd
F Ahmed
Woodside Energy Ltd
M Chatterji
R Cole
Woodside Energy Ltd
L della Martina Woodside Energy Ltd
Woodside Energy Ltd
K Gallagher
Woodside Energy Ltd
E Howell
A Kantsler(5)
Woodside Energy Ltd
P Moore
Woodside Energy Ltd
V Santostefano Woodside Energy Ltd
J Soine
L Tremaine
unlimited
Fixed Term Contract until 13 February 2012
Fixed Term Contract ended 31 december 2010
unlimited
unlimited
unlimited
unlimited
unlimited
unlimited
unlimited
Woodside Energy (uSA) inc unlimited
unlimited
Woodside Energy Ltd
termination notice
period company(3)(4)
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
termination notice
period executive(3)
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
(1) Other benefits: Mr Voelte’s employment in Australia may have adverse tax consequences for Mr Voelte and his wife in respect of his non-Australian income. Woodside has agreed to
a limited “taxation equalisation” provision to compensate for this. Mr Voelte and his wife may claim reimbursement of tax paid or payable to the Australian Taxation Office for income
or gain in relation to certain disclosed investments in the uS to a maximum of uS$500,000 over the period of Mr Voelte’s employment.
(2) On 13 October 2010 Mr Voelte announced his intention to retire in the second half of 2011.
(3) Termination provisions – Woodside may choose to terminate the contract immediately by making a payment equal to the ‘Company Notice Period’ of FAR in lieu of notice. in the event
of termination for serious misconduct or other nominated circumstances, executives are not entitled to this termination payment.
(4) On termination of employment, executives will be entitled to the payment of any FAR calculated up to the termination date, any leave entitlement accrued at the termination date and
any payment or award permitted under the EiP Rules. Executives are restrained from certain activities for specified periods after termination of their employment in order to protect
Woodside’s interests.
(5) dr Kantsler departed Woodside on 2 July 2010.
63
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G
o
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r
n
a
n
c
e
table 10 - Summary of executives’ interests in shares under the WSPP(1)
name
d Voelte
F Ahmed(6)
M Chatterji
R Cole
64
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s
d
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P
e
t
r
o
e
u
m
L
t
d
l
|
2
0
1
0
A
n
n
u
a
l
R
e
p
o
r
t
L della Martina(5)
K Gallagher(7)
E Howell
A Kantsler
P Moore(7)
V Santostefano
J Soine(8)
WSPP year
2010
2009 WSPP(2)
2008 WSPP(3)
2007 WSPP(4)
2010
2009 WSPP(2)
2008 WSPP(3)
2010
2009 WSPP(2)
2008 WSPP(3)
2007 WSPP(4)
2010
2009 WSPP(2)
2008 WSPP(3)
2007 WSPP(4)
2010
2009 WSPP(2)
2008 WSPP(3)
2010
2010
2009 WSPP(2)
2008 WSPP(3)
2007 WSPP(4)
2010
2009 WSPP(2)
2008 WSPP(3)
2007 WSPP(4)
2010
2010
2009 WSPP(2)
2008 WSPP(3)
2007 WSPP(4)
2010
opening
balance
893
498
124
-
-
-
-
893
498
124
-
893
498
124
-
893
498
124
893
-
-
-
-
358
358
124
-
358
893
498
124
-
-
Shares purchased
under WSPP
-
158
173
62
-
-
-
-
158
173
62
-
158
173
62
-
158
173
-
-
-
-
-
-
-
117
62
-
-
158
173
62
-
Matching
shares
-
237
201
62
-
-
-
-
237
201
62
-
237
201
62
-
237
201
-
-
-
-
-
-
-
117
62
-
-
237
201
62
-
Shares
Vested
124
-
-
-
-
-
-
893
-
-
-
124
-
-
-
124
-
-
124
-
-
-
-
358
-
-
-
124
124
-
-
-
-
Closing
balance
769
893
498
124
-
-
-
-
893
498
124
769
893
498
124
769
893
498
769
-
-
-
-
-
358
358
124
234
769
893
498
124
-
(1) For a full summary of executives interests in shares see page 131.
(2) 2009 WSPP refers to the purchases made in 2009 for the 2008/09 Plan. The matching shares for the 2009 WSPP had a fair value of $31.46 and $34.49 per share respectively.
(3) 2008 WSPP refers to the plan for the 2008/09 Plan Year as well as the purchases made in 2008 for the 2007/08 Plan. The matching shares for the 2008 WSPP had a fair value of
$49.97, $56.16, $56.85 and $47.19 per share respectively.
(4) 2007 WSPP refers to the plan for the 2007/08 Plan Year granted in 2007. The matching shares for the 2007 WSPP had a fair value of $43.11 per share.
(5) Mr della Martina did not meet the definition of KMP under AASB 124 for the 2007 year. Previous years comparative figures are not shown.
(6) Mr Ahmed did not meet the definition of KMP under AASB 124 for the 2007 year. Previous years comparative figures are not shown.
(7) Mr Gallagher and Mr Moore did not meet the definition of KMP under AASB 124 for any years prior to 2010. Previous years comparative figures are not shown.
(8) Mr Soine was not eligible to participate in the WSPP as he is not located in Australia.
table 11a – Summary of terms and conditions of VPRs for the CEo’s 2009 and 2010 VAR Allocation
terms and Conditions
2010 VAR Allocation
2009 VAR Allocation
2010
StI time-tested VPRs
2010
ltI RtSR-tested VPRs
2009
StI time-tested VPRs
2009
ltI RtSR-tested VPRs
25 February 2011
31 december 2010
1 January 2010
A$42.78
5 March 2010
31 december 2009
1 January 2009
A$47.86
Allocation date
Pricing date
Grant date
Volume Weighted Average Price
Performance condition
(for allocation)
Reason for performance condition
(allocation)
Performance condition
(for vesting)
EiP Scorecard and individual
performance assessment
See above under "Short-term
incentive award"
Not applicable
Not applicable
Not applicable
if Woodside TSR
performance equals or
exceeds 50th Peer Group
percentile for relevant
period, VPRs vest on
sliding scale
Relative TSR is independent
of market conditions and
is considered a more
relevant measure of
management performance
in terms of value delivered
to shareholders over the
medium to long term
initial vesting
25 February 2014
if RTSR threshold
not achieved as at 25
February 2014 retest on
25 February 2015
EiP Scorecard and individual
performance assessment
See above under "Short-term
incentive award"
Not applicable
Not applicable
Not applicable
Not applicable
if Woodside TSR performance
equals or exceeds 50th Peer
Group percentile for relevant
period, VPRs vest on sliding
scale
Relative TSR is independent
of market conditions and is
considered a more relevant
measure of management
performance in terms of value
delivered to shareholders
over the medium to long term
5 March 2013(2)
initial vesting 5 March 2013
Not applicable
if RTSR threshold not achieved
as at 5 March 2013 retest on
5 March 2014
65
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a
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c
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Reason for performance condition
(vesting)
Not applicable
Vesting date(1)
25 February 2014(2)
Application of Retesting
Not applicable
Lapse of VPRs before
Vesting date
Lapse of VPRs if not vested
if employment terminated for cause or by resignation all
unvested VPRs will lapse
Not applicable
if threshold RTSR not
achieved on retest, RTSR
Tested VPRs will lapse
if employment terminated for cause or by resignation all
unvested VPRs will lapse
Not applicable
if threshold RTSR not
achieved on retest, RTSR
Tested VPRs will lapse
(1) Provision is made for accelerated vesting in certain events such as total and permanent disability, death or a change in control of Woodside.
(2) These awards will also vest as a result of the CEO’s retirement.
table 11b – Summary of terms and conditions of VPRs for the CEo’s 2008 VAR Allocation
terms and Conditions
2008 VAR Allocation
2008
StI time-tested VPRs
2008
ltI RtSR-tested VPRs
2008
Accelerated ltI
14 March 2008
31 december 2007
19 February 2008
A$48.25
27 February 2009
31 december 2008
1 January 2008
A$33.50
Allocation date
Pricing date
Grant date
Volume Weighted Average Price
Performance condition
(for allocation)
Reason for performance condition
(allocation)
Performance condition
(for vesting)
Reason for performance condition
(vesting)
EiP Scorecard and individual
performance assessment
See above under "Short-term
incentive award"
Not applicable
Not applicable
Vesting date(2)
27 February 2012(3)
Application of Retesting
Not applicable
Not applicable
Not applicable
if Woodside TSR performance equals or exceeds 50th Peer Group percentile for relevant
period, VPRs vest on sliding scale
Relative TSR is independent of market conditions and is considered a more relevant measure
of management performance in terms of value delivered to shareholders over the medium to
long term
initial vesting 27 February 2012
initial vesting 31 March 2011(1)
if RTSR threshold not achieved as at
27 February 2012, retest on
27 February 2013
if RTSR threshold not achieved as at
14 March 2011, retest on 14 March 2012
Lapse of VPRs before
Vesting date
if employment terminated for cause or by resignation all unvested
VPRs will lapse
if employment terminated for cause or by
resignation all unvested VPRs will lapse
Lapse of VPRs if not vested
Not applicable
if threshold RTSR not achieved on retest,
RTSR Tested VPRs will lapse
Accelerated LTi allocated in respect of the 2010
performance year will only vest where the CEO
remains employed with Woodside on 31 March
2011
if threshold RTSR not achieved Accelerated LTi
VPRs will lapse
(1) Vesting of the Accelerated LTi is also conditional on an RTSR-test in 2011 which is undertaken in the same way as under the EiP.
(2) Provision is made for accelerated vesting in certain events such as total and permanent disability, death or a change in control of Woodside.
(3) This award will also vest on the CEO’s retirement.
table 12 - Summary of terms and conditions for VPRs under the EIP
The following table summarises the terms and conditions of the VPRs awarded to the executives under the EiP for 2010, 2009, 2008, 2007, 2006.
terms and Conditions
2010
VPR Allocation
2009
VPR Allocation
StI time-tested
VPRs
ltI RtSR-tested
VPRs
StI time-tested
VPRs
ltI RtSR-tested
VPRs
StI time-tested
ltI RtSR-tested
StI time-tested
ltI RtSR-tested
StI time-tested
ltI tSR-tested
VPRs
VPRs
VPRs
VPRs
VPRs
VPRs
Allocation date
Pricing date
Grant date
Volume Weighted Average Price
Performance condition
(for allocation)
Reason for performance condition
(allocation)
66
25 February 2011
31 december 2010
1 January 2010
A$42.78
5 March 2010
31 december 2009
1 January 2009
A$47.86
Not applicable
Not applicable
EiP Scorecard and
individual performance
assessment
See above under
”Short-term
incentive award”
EiP Scorecard and
individual performance
assessment
See above under
”Short-term incentive
award”
Not applicable
Not applicable
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2
0
1
0
A
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u
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R
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t
Performance condition
(for vesting)
Not applicable
Reason for performance condition
(vesting)
Not applicable
Vesting date(2)
25 February 2014
Application of Retesting
Not applicable
Not applicable
Not applicable
5 March 2013
Not applicable
if Woodside TSR
performance equals
or exceeds 50th Peer
Group percentile for
relevant period, VPRs
vest on sliding scale
Relative TSR is
independent of market
conditions and is
considered a more
relevant measure
of management
performance in terms
of value delivered to
shareholders over the
medium to long term
initial vesting 25
February 2014
if RTSR threshold
not achieved as at 25
February 2014, retest
on 25 February 2015
if Woodside TSR
performance equals
or exceeds 50th Peer
Group percentile for
relevant period, VPRs
vest on sliding scale
Relative TSR is
independent of market
conditions and is
considered a more
relevant measure
of management
performance in terms
of value delivered to
shareholders over the
medium to long term
initial vesting
5 March 2013
if RTSR threshold not
achieved as at
5 March 2013, retest
on 5 March 2014
Lapse of VPRs before
Vesting date
Lapse of VPRs if not vested
if employment terminated for cause or by
resignation all unvested VPRs will lapse
Not applicable
if threshold RTSR not
achieved on retest,
RTSR-tested VPRs
will lapse
if employment terminated for cause or by
resignation all unvested VPRs will lapse
Not applicable
if threshold RTSR not
achieved on retest,
RTSR-tested VPRs will
lapse
(1) The Board set the TSR Hurdle Rate with reference to Woodside’s Cost of Equity Capital annually before VPRs were allocated.
(2) Provision is made for accelerated vesting in certain events such as total and permanent disability, death or a change in control of Woodside.
(3) For the 2006 performance year the Board considered individual circumstances in determining to vest the award in shares and/or cash on an individual by individual basis.
2008
VPR Allocation
27 February 2009
31 december 2008
1 January 2008
A$33.50
2007
VPR Allocation
14 March 2008
31 december 2007
1 January 2007
A$48.25
2006
VPR Allocation
15 March 2007
15 March 2007
1 January 2006
A$35.78
EiP Scorecard and
Not applicable
EiP Scorecard and
Not applicable
Woodside Economic Value Added (EVA) and
See above under
Not applicable
See above under
Not applicable
Woodside EVA was adopted as a measure
individual performance
assessment
”Short-term incentive
award”
individual performance
assessment
”Short-term incentive
award”
Not applicable
if Woodside TSR
Not applicable
if Woodside TSR
Not applicable
if compounded TSR of
Not applicable
Relative TSR is
Not applicable
Relative TSR adopted in
Not applicable
TSR was adopted
individual performance
of the value added by Woodside’s
operations during the relevant year, with a
view to linking executive remuneration to
value added for shareholders
The individual performance measure
assesses the contribution made by individual
executives, against pre-set individual
objectives aligned to Woodside’s strategic
plan, which has as its ultimate objective the
maximization of shareholder returns.
Woodside is equal to
or above TSR Hurdle
Rate of 11.5%pa(1) for
30 consecutive days
ending on testing date
because it is a widely
accepted measure of
shareholder wealth
creation over the
medium to long term
– initial approach was
to set an absolute TSR
benchmark percentage
initial vesting test as
at 16 March 2010 was
not satisfied
performance equals
or exceeds 50th Peer
Group percentile for
relevant period, VPRs
vest on sliding scale
2007 - is independent
of market conditions
and is considered a
more relevant measure
of management
performance in terms
of value delivered to
shareholders over the
medium to long term
achieved as at
14 March 2011, retest
on 14 March 2012
27 February 2012
initial vesting
14 March 2011
initial vesting test
9 April 2010(3)
27 February 2012
14 March 2011
Not applicable
if RTSR threshold not
Not applicable
if RTSR threshold not
Not applicable
Vested 16 April 2010(3)
if employment terminated for cause or by
if employment terminated for cause or by
if employment terminated for cause or by
resignation all unvested VPRs will lapse
resignation all unvested VPRs will lapse
resignation all unvested VPRs will lapse
Not applicable
if threshold RTSR not
Not applicable
if threshold RTSR not
Not applicable
Not applicable
achieved on retest,
RTSR-tested VPRs will
lapse
achieved on retest,
RTSR-tested VPRs
will lapse
performance equals
or exceeds 50th Peer
Group percentile for
relevant period, VPRs
vest on sliding scale
independent of market
conditions and is
considered a more
relevant measure
of management
performance in terms
of value delivered to
shareholders over the
medium to long term
achieved as at
27 February 2012,
retest on 27 February
2013
table 12 - Summary of terms and conditions for VPRs under the EIP
The following table summarises the terms and conditions of the VPRs awarded to the executives under the EiP for 2010, 2009, 2008, 2007, 2006.
terms and Conditions
Allocation date
Pricing date
Grant date
Volume Weighted Average Price
Performance condition
(for allocation)
(allocation)
2010
VPR Allocation
25 February 2011
31 december 2010
1 January 2010
A$42.78
2009
VPR Allocation
5 March 2010
31 december 2009
1 January 2009
A$47.86
Reason for performance condition
See above under
Not applicable
See above under
Not applicable
EiP Scorecard and
Not applicable
EiP Scorecard and
Not applicable
individual performance
assessment
”Short-term
incentive award”
individual performance
assessment
”Short-term incentive
award”
StI time-tested
ltI RtSR-tested
StI time-tested
ltI RtSR-tested
VPRs
VPRs
VPRs
VPRs
StI time-tested
VPRs
ltI RtSR-tested
VPRs
StI time-tested
VPRs
ltI RtSR-tested
VPRs
StI time-tested
VPRs
ltI tSR-tested
VPRs
2008
VPR Allocation
2007
VPR Allocation
2006
VPR Allocation
27 February 2009
31 december 2008
1 January 2008
A$33.50
14 March 2008
31 december 2007
1 January 2007
A$48.25
EiP Scorecard and
individual performance
assessment
See above under
”Short-term incentive
award”
Not applicable
Not applicable
EiP Scorecard and
individual performance
assessment
See above under
”Short-term incentive
award”
Not applicable
Not applicable
15 March 2007
15 March 2007
1 January 2006
A$35.78
Woodside Economic Value Added (EVA) and
individual performance
Woodside EVA was adopted as a measure
of the value added by Woodside’s
operations during the relevant year, with a
view to linking executive remuneration to
value added for shareholders
Performance condition
Not applicable
if Woodside TSR
Not applicable
if Woodside TSR
Not applicable
Reason for performance condition
Not applicable
Relative TSR is
Not applicable
Relative TSR is
Not applicable
(for vesting)
(vesting)
Vesting date(2)
25 February 2014
initial vesting 25
5 March 2013
27 February 2012
Application of Retesting
Not applicable
if RTSR threshold
Not applicable
if RTSR threshold not
Not applicable
performance equals
or exceeds 50th Peer
Group percentile for
relevant period, VPRs
vest on sliding scale
independent of market
conditions and is
considered a more
relevant measure
of management
performance in terms
of value delivered to
shareholders over the
medium to long term
February 2014
not achieved as at 25
February 2014, retest
on 25 February 2015
performance equals
or exceeds 50th Peer
Group percentile for
relevant period, VPRs
vest on sliding scale
independent of market
conditions and is
considered a more
relevant measure
of management
performance in terms
of value delivered to
shareholders over the
medium to long term
initial vesting
5 March 2013
achieved as at
5 March 2013, retest
on 5 March 2014
Not applicable
Not applicable
14 March 2011
Not applicable
if Woodside TSR
performance equals
or exceeds 50th Peer
Group percentile for
relevant period, VPRs
vest on sliding scale
Relative TSR is
independent of market
conditions and is
considered a more
relevant measure
of management
performance in terms
of value delivered to
shareholders over the
medium to long term
initial vesting
27 February 2012
if RTSR threshold not
achieved as at
27 February 2012,
retest on 27 February
2013
if Woodside TSR
performance equals
or exceeds 50th Peer
Group percentile for
relevant period, VPRs
vest on sliding scale
Relative TSR adopted in
2007 - is independent
of market conditions
and is considered a
more relevant measure
of management
performance in terms
of value delivered to
shareholders over the
medium to long term
initial vesting test
14 March 2011
if RTSR threshold not
achieved as at
14 March 2011, retest
on 14 March 2012
Lapse of VPRs before
Vesting date
if employment terminated for cause or by
if employment terminated for cause or by
resignation all unvested VPRs will lapse
resignation all unvested VPRs will lapse
Lapse of VPRs if not vested
Not applicable
if threshold RTSR not
Not applicable
if threshold RTSR not
achieved on retest,
RTSR-tested VPRs
will lapse
achieved on retest,
RTSR-tested VPRs will
lapse
(1) The Board set the TSR Hurdle Rate with reference to Woodside’s Cost of Equity Capital annually before VPRs were allocated.
(2) Provision is made for accelerated vesting in certain events such as total and permanent disability, death or a change in control of Woodside.
(3) For the 2006 performance year the Board considered individual circumstances in determining to vest the award in shares and/or cash on an individual by individual basis.
if employment terminated for cause or by
resignation all unvested VPRs will lapse
Not applicable
if employment terminated for cause or by
resignation all unvested VPRs will lapse
Not applicable
if threshold RTSR not
achieved on retest,
RTSR-tested VPRs will
lapse
if threshold RTSR not
achieved on retest,
RTSR-tested VPRs
will lapse
The individual performance measure
assesses the contribution made by individual
executives, against pre-set individual
objectives aligned to Woodside’s strategic
plan, which has as its ultimate objective the
maximization of shareholder returns.
Not applicable
67
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Not applicable
if compounded TSR of
Woodside is equal to
or above TSR Hurdle
Rate of 11.5%pa(1) for
30 consecutive days
ending on testing date
TSR was adopted
because it is a widely
accepted measure of
shareholder wealth
creation over the
medium to long term
– initial approach was
to set an absolute TSR
benchmark percentage
9 April 2010(3)
Not applicable
initial vesting test as
at 16 March 2010 was
not satisfied
Vested 16 April 2010(3)
if employment terminated for cause or by
resignation all unvested VPRs will lapse
Not applicable
Not applicable
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table 13a - Summary of the executives’ interests in time-tested VPRs(1)
name
Allocation date
Vesting date(2)
Awarded but
not vested
Vested in
2010
% of total
vested
d Voelte
F Ahmed(6)
M Chatterji(13)
R Cole
L della Martina(7)
K Gallagher(8)
E Howell(9)
A Kantsler(10)
P Moore(8)
V Santostefano(9)
March 2007(4)
March 2008
February 2009
december 2009(5)
december 2009(5)
december 2009(5)
March 2010
February 2011
February 2009
december 2009(5)
december 2009(5)
March 2010
February 2011
March 2007
March 2008
February 2009
december 2009(5)
december 2009(5)
december 2009(5)
March 2010
March 2007
March 2008
February 2009
december 2009(5)
december 2009(5)
december 2009(5)
March 2010
February 2011
March 2007
February 2009
december 2009(5)
december 2009(5)
december 2009(5)
March 2010
February 2011
March 2007
december 2009(5)
February 2011
March 2007
March 2008
February 2009
december 2009(5)
december 2009(5)
december 2009(5)
March 2010
February 2011
March 2007
March 2008
February 2009
december 2009(5)
december 2009(5)
december 2009(5)
March 2010
March 2007
december 2009(5)
February 2011
March 2007
March 2008
February 2009
december 2009(5)
december 2009(5)
december 2009(5)
March 2010
February 2011
April 2010
March 2011
February 2012
April 2010
March 2011
February 2012
March 2013
February 2014
February 2012
March 2011
February 2012
March 2013
February 2014
April 2010
december 2010
december 2010
April 2010
december 2010
december 2010
december 2010
April 2010
March 2011
February 2012
April 2010
March 2011
February 2012
March 2013
February 2014
April 2010
February 2012
April 2010
March 2011
February 2012
March 2013
February 2014
April 2010
April 2010
February 2014
April 2010
March 2011
February 2012
April 2010
March 2011
February 2012
March 2013
February 2014
April 2010
July 2010
July 2010
April 2010
July 2010
July 2010
July 2010
April 2010
April 2010
February 2014
April 2010
March 2011
February 2012
April 2010
March 2011
February 2012
March 2013
February 2014
20,122(11)
100
167(11)
100
5,517(12)
4,313
7,450
46(12)
36
62
7,535
1,370(11)
100
100
100
100
100
100
100
100
11(11)
100
1,718(12)
100
14(12)
100
788
7
525
100
100
100
4
100
1,650(11)
2,542
4,273
14(11)
21
35
5,763
907(12)
8(12)
1,327
100
100
100
100
100
100
100
100
100
100
11
100
16,513
28,209
137
234
31,445
21,719
3,245
8
27
3,692
2,415
1,756
4,543
15
38
4,599
4,302
2,916
14
24
2,950
2,753
3,319
1,905
3,110
16
26
4,192
2,867
2,018
1,669
2,910
14
24
3,786
2,286
Fair value(3)(11) of VPRs by performance year
2010
2009
2008
2007
30.07
40.87
42.86
30.07
40.87
30.07
40.87
40.87
30.07
40.87
30.07
40.87
30.07
40.87
39.81
39.92
41.86
41.86
39.81
39.92
39.81
39.92
39.81
39.92
39.81
39.92
39.81
39.92
39.81
39.92
29.57
38.32
29.57
38.32
29.57
29.57
38.32
29.57
38.32
38.32
29.57
38.32
29.57
38.32
29.57
38.32
2006
30.92
41.89
30.92
41.89
30.92
41.89
30.92
41.89
30.92
41.89
30.92
41.89
30.92
41.89
30.92
41.89
30.92
41.89
(1) For valuation purposes all VPRs are treated as if
they will be equity settled, with the exception of Mr
Ahmed’s 2008 VPRs which are to be settled in cash as
a result of his international secondment. This fair value
is recalculated at the end of every reporting period. in
2009 the fair value was $38.05.
(2) Vesting date and exercise date are the same. Vesting is
subject to satisfaction of vesting conditions.
(3) in accordance with the requirements of AASB 124
Related Party Disclosures, the fair value of rights as at
their date of grant has been determined by applying
the Binomial or Black Scholes option pricing technique
with the exception of Mr Ahmed as noted in (1). The
fair value of rights is amortised over the vesting period,
such that ‘Total remuneration’ includes a portion of
the fair value of unvested equity compensation during
the year. The amount included as remuneration is
not related to or indicative of the benefit (if any) that
individual executives may ultimately realise should
these equity instruments vest.
(4) incorporates a VPR allocation of A$900,000 in respect
of the 2006 performance year, awarded in addition to
the EiP entitlements.
(5) Additional allocation of VPRs to each tranche of granted
VPRs, following renounceable equity rights issue by the
company.
(6) Mr Ahmed was not within the definition of KMP under
AASB 124 for the 2006 and 2007 years. Previous years
comparative figures are not shown.
(7) Mr della Martina did not meet the definition of KMP
under AASB 124 for the 2006 and 2007 years. Previous
year’s comparative figures are not shown.
(8) Mr Gallagher and Mr Moore did not meet the definition
of KMP under AASB 124 for years prior to 2010.
Previous years comparative figures are not shown.
(9) Ms Howell and Mr Santostefano did not meet the
definition of KMP under AASB 124 for the 2006
financial year. Previous years comparative figures are
not shown.
(10) A total of 12,634 time-tested VPRs vested when
dr Kantsler departed Woodside on 2 July 2010.
(11) For the 2006 performance year VPRs (vested during
2010) management elected to settle 50% of their share
allocation in cash, with a fair value of $42.12.
(12) For the 2006 performance year VPRs ( vested during
2010) management elected to settle 100% of their
share allocation in cash, with a fair value of $42.12.
(13) A total of 19,396 time-tested VPRs vested when
Mr Chatterji departed Woodside on 31 december 2010.
table 13b - time-tested PRs(1)
name
Allocation date
Vesting date
Awarded
but not vested
2,030
17
R Cole
F Ahmed
M Chatterji
K Gallagher
L della Martina
November 2007
december 2009(3)
March 2007
december 2009(3)
March 2007
december 2009(3)
March 2007
december 2009(3)
March 2007
december 2009(3)
March 2007
december 2009(3)
March 2007
december 2009(3)
March 2007
december 2009(3)
March 2007
december 2009(3)
November 2007
december 2009(3)
table 13c - RtSR-tested and tSR-tested VPRs(1)
April 2010
March 2011
April 2010
March 2011
April 2010
April 2010
April 2010
April 2010
April 2010
April 2010
April 2010
April 2010
April 2010
April 2010
April 2010
April 2010
April 2010
April 2010
April 2010
April 2010
April 2010
April 2010
V Santostefano
A Kantsler
E Howell
P Moore
J Soine
name
Allocation date
Vesting date(2)(3)
Awarded
but not vested
d Voelte
F Ahmed(10)
M Chatterji
R Cole
L della Martina(11)
K Gallagher(12)
E Howell(13)
A Kantsler
P Moore(12)
V Santostefano(13)
March 2007(5)
March 2008
March 2008(6)
February 2009(7)
december 2009
december 2009
december 2009
december 2009
March 2010(8)
February 2011(9)
February 2009
december 2009
december 2009
March 2010
February 2011
March 2007
March 2008
February 2009
december 2009
december 2009
december 2009
March 2010
February 2011
March 2007
March 2008
February 2009
december 2009
december 2009
december 2009
March 2010
February 2011
March 2007
February 2009
december 2009
december 2009
december 2009
March 2010
February 2011
March 2007
december 2009
February 2011
March 2007
March 2008
February 2009
december 2009
december 2009
december 2009
March 2010
February 2011
March 2007
March 2008
February 2009
december 2009
december 2009
december 2009
March 2010
February 2011
March 2007
december 2009
February 2011
March 2007
March 2008
February 2009
december 2009
december 2009
december 2009
March 2010
February 2011
April 2010
March 2012
March 2011
February 2013
April 2010
March 2012
March 2011
February 2013
March 2014
February 2015
February 2013
March 2012
February 2013
March 2014
February 2015
April 2010
March 2012
February 2013
April 2010
March 2012
February 2013
March 2014
February 2015
April 2010
March 2012
February 2013
April 2010
March 2012
February 2013
March 2014
February 2015
April 2010
February 2013
April 2010
March 2012
February 2013
March 2014
February 2015
April 2010
April 2010
February 2015
April 2010
March 2012
February 2013
April 2010
March 2012
February 2013
March 2014
February 2015
April 2010
March 2012
February 2013
April 2010
March 2012
February 2013
March 2014
February 2015
April 2010
April 2010
February 2015
April 2010
March 2012
February 2013
April 2010
March 2012
February 2013
March 2014
February 2015
33,160
81,606
39,179
275
678
325
27,425
30,676
8,238
17
68
6,017
7,042
8,953
14,185
74
118
10,330
12,004
4,862
8,650
40
72
6,305
7,526
5,552
29
46
4,045
6,020
5,805
3,954
7,895
33
66
5,747
6,268
7,035
10,847
58
90
7,901
4,430
4,412
3,465
5,540
29
46
5,190
6,665
Vested
in 2010
2,030
17
8,756(7)
73(7)
4,004(6)
33(6)
3,725(7)
31(7)
3,725
31
4,843
40
6,520(6)
54(6)
1,861(7)
15(7)
3,446
29
1,015
8
Fair value
of PR(2)(4)(5)
42.12
0.75
42.12
0.75
29.68
41.89
29.68
41.89
29.68
41.89
29.68
41.89
29.68
41.89
29.68
41.89
29.68
41.89
29.68
41.89
42.12
42.12
Vested
in 2010
40,245(14)
% of total
vested
100
334(14)
100
11,034
92
100
100
2,741(14)
100
23(14)
100
3,437(15)
29(15)
1,577
13
1,051
100
100
100
100
100
9
100
3,300(14)
100
27(14)
100
1,814(15)
15(15)
2,654
100
100
100
22
100
(1) For valuation purposes all PRs are time-tested and are treated
as if they will be equity settled, with the following exceptions.
Mr Ahmed’s and Mr Soine’s PRs which are RTSR-tested and
are to be settled in cash, as a result of Mr Ahmed’s international
secondment and Mr Soine’s international employment. This
fair value is recalculated at the end of every reporting period. in
2009 the fair value was $27.14 for PR’s vesting in April 2010 and
$25.62 for PR’s vesting in March 2011.
(2) Reflects the fair values of the PRs post peer group modification.
(3) Additional allocation of VPRs to each tranche of granted VPRs,
following renounceable equity rights issue by the company.
(4) in accordance with the requirements of AASB 124 Related Party
Disclosures, the fair value of rights as at their date of grant has
been determined by applying the Binomial or Black Scholes
option pricing technique with the exception of Mr Ahmed and
Mr Soine as noted in (1). The fair value of rights is amortised
over the vesting period, such that ‘Total remuneration’ includes a
portion of the fair value of unvested equity compensation during
the year. The amount included as remuneration is not related to
or indicative of the benefit (if any) that individual executives may
ultimately realise should these equity instruments vest.
(5) For the 2006 performance year the Board considered individual
circumstances in determining to vest the award in shares and/or
cash on an individual by individual basis.
(6) For PRs vested during 2010, management elected to settle 50%
of their share allocation in cash, with a fair value of $42.12.
(7) For PRs vested during 2010, management elected to settle
100% of their share allocation in cash, with a fair value of $42.12.
Fair value(4)(14) of VPR post peer group modification
Performance year
2008
2009
2007
2010
2006
15.82
29.19
27.93
4.75
29.19
27.93
29.19
27.93
27.93
29.19
27.93
29.19
27.93
29.19
26.61
27.93
23.56
9.90
9.90
26.61
23.56
26.61
23.56
26.61
23.56
26.61
23.56
26.61
23.56
29.19
27.93
26.61
23.56
26.21
25.48
26.21
25.48
26.21
25.48
26.21
25.48
26.21
25.48
25.48
26.21
25.48
26.21
25.48
25.48
26.21
25.48
33.33
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15.82
33.33
15.82
33.33
15.82
33.33
15.82
33.33
15.82
33.33
15.82
33.33
15.82
33.33
15.82
33.33
(1) For valuation purposes all VPRs are treated as if they will
be equity settled, with the exception of Mr Ahmed’s 2008
VPRs which are to be settled in cash as a result of his
international secondment. Fair value is recalculated at the
end of every reporting period. in 2009 the fair value was
$22.52.
(2) Vesting date and exercise date are the same. Vesting is
subject to satisfaction of vesting conditions.
(3) Vesting date was 16 April 2010 in respect of March 2007
(5)
rights is amortised over the vesting period, such that ‘Total
remuneration’ includes a portion of the fair value of unvested
equity compensation during the year. The amount included
as remuneration is not related to or indicative of the benefit
(if any) that individual executives may ultimately realise
should these equity instruments vest.
incorporates a VPR allocation of $900,000 in respect of
the 2006 performance year, awarded in addition to the EiP
entitlements.
allocations, on 14 March 2011 or 14 March 2012 in respect
of March 2008 allocations, on 27 February 2012 or 27
February 2013 in respect of February 2009 allocations, on
5 March 2013 or 5 March 2014 in respect of March 2010
allocations and on 25 February 2014 or 25 February 2015 in
respect of February 2011 allocations.
in accordance with the requirements of AASB 124 Related
Party Disclosures, the fair value of rights as at their date
of grant has been determined by applying the Binomial
or Black Scholes option pricing technique with the
exception of Mr Ahmed as noted in (1). The fair value of
(4)
(6) Mr Voelte’s Accelerated LTis.
(7) This allocation represents the remaining 50% of Mr Voelte’s
2008 LTi VAR allocation (excludes the Accelerated LTi
VARs).
(8) This allocation represents the remaining 50% of Mr Voelte’s
2009 LTi VAR allocation (excludes the Accelerated LTi
VARs).
(9) This allocation represents the remaining 50% of Mr Voelte’s
2010 LTi VAR allocation (excludes the Accelerated LTi
VARs).
(10) Mr Ahmed did not meet the definition of KMP under
AASB 124 for the 2006 and 2007 years. Previous years
comparative figures are not shown.
(11) Mr della Martina did not meet the definition of KMP
under AASB 124 2006 and 2007 years. Previous year’s
comparative figures are not shown.
(12) Mr Gallagher and Mr Moore did not meet the definition
of KMP under the AASB 124 for the years prior to 2010.
Comparative figures are not shown.
(13) Ms Howell and Mr Santostefano did not meet the definition
of KMP under AASB 124 for the 2006 financial year.
Previous years comparative figures are not shown.
(14) For the 2006 performance year VPRs (vested during 2010)
management elected to settle 50% of their share allocation
in cash, with a fair value of $43.99.
(15) For the 2006 performance year VPRs ( vested during
2010) management elected to settle 100% of their share
allocation in cash, with a fair value of $43.99.
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e
diRECTORS' REPORT (CONTiNuEd)
Indemnification and insurance of
directors and officers
The company’s constitution requires the
company to indemnify each director,
secretary, executive officer or employee
of the company or its wholly-owned
subsidiaries against liabilities (to the
extent the company is not precluded by
law from doing so) incurred in or arising
out of the conduct of the business of the
company or the discharge of the duties
of any such person. The company has
entered into deeds of indemnity with
each of its directors, secretaries, certain
senior executives, and employees serving
as officers on wholly-owned or partly-
owned companies of Woodside in terms
of the indemnity provided under the
company’s constitution.
From time to time, Woodside engages
its external auditor, Ernst & Young, to
conduct non-statutory audit work and
provide other services in accordance with
Woodside's External Auditor Guidelines.
The terms of engagement include an
indemnity in favour of Ernst & Young:
against all losses, claims, costs,
expenses, actions, demands,
damages, liabilities or any proceedings
(liabilities) incurred by Ernst & Young
in respect of third party claims arising
from a breach by the Group under the
engagement terms; and
for all liabilities Ernst & Young has to
the Group or any third party as a result
of reliance on information provided by
the Group that is false, misleading or
incomplete.
The company has paid a premium
under a contract insuring each director,
officer, secretary and employee who is
concerned with the management of the
company or its subsidiaries against liability
incurred in that capacity. disclosure of the
nature of the liability covered by and the
amount of the premium payable for such
insurance is subject to a confidentiality
clause under the contract of insurance.
The company has not provided any
insurance for the external auditor of the
company or a body corporate related to
the external auditor.
non-audit services and auditor
independence declaration
details of the amounts paid or payable to
the external auditor of the company, Ernst
& Young, for audit and non-audit services
provided during the year are disclosed in
note 33 to the Financial Report.
Based on advice provided by the Audit
& Risk Committee, the directors are
satisfied that the provision of non-audit
services by the external auditor during
the financial year is compatible with the
general standard of independence for
auditors imposed by the Corporations Act
for the following reasons:
all non-audit services were provided
in accordance with Woodside’s
External Auditor Policy and External
Auditor Guidelines; and
all non-audit services were subject to
the corporate governance processes
adopted by the company and have
been reviewed by the Audit & Risk
Committee to ensure that they do not
affect the integrity or objectivity of the
auditor.
Further information on Woodside’s policy
in relation to the provision of non-audit
services by the auditor is set out in
section 7 of the Corporate Governance
Statement on page 50.
The auditor independence declaration,
as required under section 307C of the
Corporations Act, is set out on this page
and forms part of this report.
Proceedings on behalf of the
company
No proceedings have been brought
on behalf of the company, nor has any
application been made in respect of
the company under section 237 of the
Corporations Act.
Rounding of amounts
The amounts contained in this report
have been rounded to the nearest million
dollars under the option available to the
company under Australian Securities and
investments Commission Class Order
98/0100 dated 10 July 1998.
table 15 - Directors’ relevant interests
in Woodside shares as at date of
report.
Director
MA Chaney
dR Voelte
MA Cilento
E Fraunschiel
A Jamieson
PJMH Jungels
di McEvoy
d Megat
i Robertson
Relevant interest
in shares
20,000
87,421
613
81,930
3,000
9,205
7,702
1,197
-
Signed in accordance with a resolution of
the directors.
Michael Chaney, Ao
Chairman
21 February 2011
Don Voelte
Chief Executive Officer
21 February 2011
Auditor’s Independence Declaration
in relation to our audit of the Financial
Report of Woodside Petroleum Ltd for
the year ended 31 december 2010, to
the best of my knowledge and belief,
there have been no contraventions of the
auditor independence requirements of the
Corporations Act 2001 or any applicable
code of professional conduct.
Ernst & Young
G H Meyerowitz
Partner
Perth
21 February 2011
Liability limited by a scheme approved under
Professional Standards Legislation.
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2010 FinAnCiAL REPORT
Contents
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
1.
Summary of significant accounting policies
2. Operating segments
3.
4.
5.
Revenue and expenses
Taxes
Earnings per share
6. Dividends paid and proposed
7.
8.
9.
Cash and cash equivalents
Receivables
inventories
10. Other financial assets
11. Other assets
12. Exploration and evaluation assets
13. Oil and gas properties
14. Other plant and equipment
15. Payables
16.
interest-bearing liabilities
17. Tax payable
18. Other financial liabilities
19. Other liabilities
20. Provisions
21. Contributed equity
22. Other reserves
23. Retained earnings
24. Assets and liabilities of disposal group
classified as held for sale
25. Parent entity information
26. Financial and capital risk management
27. Expenditure commitments
28. Employee benefits
29. Key management personnel compensation
30. Events after the end of the reporting period
31. Related party disclosures
32. Contingent liabilities and contingent assets
33. Auditor remuneration
34. Joint ventures
35. Associated entities
36. Subsidiaries
37. Corporate information
Directors’ declaration
independent audit report
73
74
75
76
77
78
92
95
97
100
100
101
102
102
102
103
103
104
105
105
106
106
106
107
107
108
109
110
110
111
111
120
121
130
134
134
135
135
136
137
138
140
141
142
Consolidated income statement
For the year ended 31 December 2010
Revenue from sale of goods
Cost of sales
Gross profit
Other income
Other expenses
Profit before tax and net finance income/(costs)
Finance income
Finance costs
Profit before tax
Taxes
income tax expense
Petroleum Resource Rent Tax expense
Total taxes
Profit after tax
Profit attributable to
Equity holders of the parent
non-controlling interest
Profit for the year
Notes
3(a)
3(b)
3(c)
3(d)
3(e)
3(f)
4(a)
Basic and diluted earnings per share attributable to the equity holders of the parent (US cents)
5
The accompanying notes form part of the Financial Report.
2010
US$m
4,193
(1,669)
2,524
307
(575)
2,256
39
(21)
Restated
2009
US$m
3,487
(1,481)
2,006
9
288
2,303
6
(18)
2,274
2,291
(532)
(165)
(697)
(748)
(75)
(823)
1,577
1,468
1,575
2
1,577
204
1,474
(6)
1,468
210
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Consolidated statement of comprehensive income
For the year ended 31 December 2010
Profit for the year
Other comprehensive income
net foreign currency translation differences
net gain on hedge of net investment
74
income tax benefit/(expense)
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Cash flow hedges
Loss taken to equity
Transferred to income statement
income tax (expense)/benefit
net change in fair value of available-for-sale financial assets
income tax benefit/(expense)
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income attributable to
Equity holders of the parent
non-controlling interest
Total comprehensive income for the year
The accompanying notes form part of the Financial Report.
2010
US$m
Restated
2009
US$m
1,577
1,468
-
-
-
14
14
-
20
(6)
14
(4)
-
(4)
24
1,601
1,599
2
1,601
1,353
1,353
286
(82)
204
(10)
(23)
10
(23)
4
(4)
-
1,534
3,002
2,928
74
3,002
75
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Consolidated statement of financial position
As at 31 December 2010
Current assets
Cash and cash equivalents
Receivables
inventories
Other financial assets
Other assets
Assets of disposal group classified as held for sale
non-current assets classified as held for sale
Total current assets
Non-current assets
inventories
Other financial assets
Other assets
Exploration and evaluation assets
Oil and gas properties
Other plant and equipment
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Payables
interest-bearing liabilities
Tax payable
Other financial liabilities
Other liabilities
Liabilities directly associated with assets of disposal
group classified as held for sale
Provisions
Total current liabilities
Non-current liabilities
Payables
interest-bearing liabilities
Deferred tax liabilities
Other financial liabilities
Other liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
issued and fully paid shares
Shares reserved for employee share plans
Other reserves
Retained earnings
Equity attributable to equity holders of the parent
Non-controlling interest
Total equity
Notes
2010
US$m
Restated
2009
US$m
Restated(1)
1 January
2009
US$m
7(a)
8
9(a)
10(a)
11(a)
24
13
9(b)
10(b)
11(b)
12
13
14
4(d)
15(a)
16(a)
17
18(a)
19(a)
24
20
15(b)
16(b)
4(d)
18(b)
19(b)
20
21(a)
21(b)
22
23
963
439
118
11
48
-
-
1,579
39
111
36
1,801
16,517
72
41
18,617
20,196
1,234
403
35
18
13
-
137
1,840
35
4,512
1,333
5
174
611
6,670
8,510
11,686
5,036
(57)
971
5,141
11,091
595
11,686
1,207
503
109
-
65
525
10
2,419
43
117
2
1,158
13,857
82
75
15,334
17,753
1,186
-
198
28
17
37
113
1,579
-
4,939
1,330
-
186
451
6,906
8,485
9,268
3,705
(78)
846
4,339
8,812
456
9,268
98
368
74
31
13
-
-
584
36
125
9
810
8,589
77
87
9,733
10,317
1,156
-
375
1
14
-
88
1,634
-
2,044
767
3
201
878
3,893
5,527
4,790
1,957
(113)
(650)
3,439
4,633
157
4,790
(1) With effect from 1 January 2010, the directors of Woodside Petroleum Ltd determined that the functional currency of the company and all its subsidiaries is US dollars.
Consistent with the change in functional currency, Woodside Petroleum Ltd has elected to change its presentation currency from Australian dollars to US dollars. As such, in
accordance with AASB 101.39, a third consolidated statement of financial position and notes to the restated amounts have been presented.
The accompanying notes form part of the Financial Report.
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Consolidated statement of cash flows
For the year ended 31 December 2010
Cash flows from/(used in) operating activities
Profit after tax for the year
Adjustments for:
non-cash items
Depreciation and amortisation
impairment loss
Unrealised foreign exchange loss/(gain)
Gain on sale of exploration and evaluation assets
Gain on sale of assets of disposal group held for sale
Gain on sale of fixed assets
(Gain)/loss on derivative financial instruments
Change in fair value of embedded derivatives
net finance (income)/costs
Tax expense
Other
Changes in assets and liabilities
Decrease/(increase) in trade and other receivables
increase in inventories
increase in provisions
Decrease/(increase) in other assets and liabilities
Decrease in trade and other payables
Cash generated from operations
Amounts received from employees relating to employee share plans
Purchases of shares relating to employee share plans
interest received
Dividends received
interest paid
income tax paid
Petroleum Resource Rent Tax paid
Payments for restorations
Net cash from operating activities
Cash flows from/(used in) investing activities
Payments for capital and exploration expenditure
Proceeds from sale of exploration and evaluation assets
Proceeds from sale of assets of disposal group held for sale
Proceeds from sale of oil and gas properties
Net cash used in investing activities
Cash flows from/(used in) financing activities
(Repayment of)/proceeds from borrowings
Proceeds from subsidiary shares issued to non-controlling interest
Proceeds from rights issues
Transactions costs on issue of shares
Proceeds from underwriters of Dividend Reinvestment Plan (DRP)
Dividends paid (net of DRP)
Dividends paid outside of DRP
Net cash from financing activities
Net (decrease)/increase in cash held
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on the balances of cash held in foreign currencies
Cash and cash equivalents at the end of the year
The accompanying notes form part of the Financial Report.
7(b)
Notes
2010
US$m
Restated
2009
US$m
1,577
1,468
782
98
13
(99)
(143)
-
(13)
(9)
(18)
697
37
67
(4)
49
21
(16)
3,039
21
-
40
6
(195)
(654)
(149)
(4)
2,104
(3,649)
65
643
-
(2,941)
(42)
137
1,078
(18)
-
-
(547)
608
(229)
1,203
(11)
963
793
107
(705)
-
-
(12)
47
1
12
823
(1)
(103)
(22)
9
(7)
(25)
2,385
42
(7)
4
4
(140)
(648)
(151)
(6)
1,483
(4,729)
20
-
1
(4,708)
2,844
225
1,156
(18)
294
(294)
-
4,207
982
98
123
1,203
Consolidated statement of changes in equity
For the year ended 31 December 2010
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
1. Summary of significant accounting policies
(a) Basis of preparation
The Financial Report is a general purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of
the Australian Accounting Standards Board.
The Financial Report has been prepared on a historical cost basis, except for derivative financial instruments and certain
other financial assets, which have been measured at fair value.
The Financial Report is presented in US dollars. The amounts contained in this report have been rounded to the nearest
million dollars under the option available to the Group under Australian Securities and investments Commission Class
Order 98/0100 dated 10 July 1998, unless otherwise stated.
The Financial Report was authorised for issue in accordance with a resolution of the directors on 21 February 2011.
The nature of the operations and principal activities of the Group are described in the Directors’ Report.
Apart from changes in accounting policies noted below, the accounting policies adopted are consistent with those
disclosed in the Annual Financial Report for the year ended 31 December 2009. Certain comparative information has
been reclassified to be presented on a consistent basis with the current year’s presentation.
78
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Changes in accounting policy and disclosures
The Group has adopted all the new and amended Australian Accounting Standards that were effective from
1 January 2010 including:
• AASB 3 Business Combinations (revised 2008)
The revised Standard introduces significant changes in the accounting for business combinations occurring after
1 January 2010. Changes affect the valuation of non-controlling interests, accounting for transaction costs, initial
recognition and subsequent measurement of a contingent consideration and business combinations achieved in
stages. These changes will impact the amount of goodwill recognised, reported results in the period that an acquisition
occurs and future reported results.
The change in the accounting policy was applied prospectively and did not have any impact on the financial position or
performance of the Group;
• AASB 127 Consolidated and Separate Financial Statements (revised 2008)
The revised Standard has resulted in changes in the Group’s accounting policies regarding loss of control of a
subsidiary. On loss of control of a subsidiary, the revised Standard requires that the Group derecognise all carrying
amounts of assets, liabilities and non-controlling interests. Any retained interest in the former subsidiary is recognised
at its fair value at the date that control is lost. A gain or loss, on the loss of control, is recognised in the income
statement.
The change in the accounting policy was applied prospectively and did not have any impact on the financial position or
performance of the Group;
• AASB 128 Investment in Associates
The revised Standard has resulted in changes in the Group’s accounting policies regarding loss of significant influence
of an associate. it requires that any retained investment in the former associate is recognised at its fair value at the
date that significant influence is lost. A gain or loss, on the loss of significant influence, is recognised in the income
statement.
The change in the accounting policy was applied prospectively and did not have any impact on the financial position or
performance of the Group; and
• AASB 131 Interests in Joint Ventures
The revised Standard has resulted in changes in the Group’s accounting policies regarding loss of joint control of a
jointly controlled entity. it requires that any retained interest in the former joint controlled entity is recognised at its
fair value at the date that joint control is lost. A gain or loss, on the loss of joint control, is recognised in the income
statement.
The change in the accounting policy was applied prospectively and did not have any impact on the financial position or
performance of the Group.
The Group has not elected to early adopt any other new or amended Standards or interpretations that are issued but
not yet effective.
79
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
1. Summary of significant accounting policies (continued)
(a) Basis of preparation (continued)
Change in functional and presentation currency
An entity’s functional currency is the currency of the primary economic environment in which the entity operates.
Woodside Petroleum Ltd has experienced a period of sustained growth in US dollar revenue streams and in the period
up to 31 December 2009 increased its US dollar debt levels significantly. Consequently, the company announced on
22 March 2010 that the directors had determined that the functional currency of the company and all its subsidiaries is
US dollars. The change in functional currency has been applied prospectively with effect from 1 January 2010 in accordance
with the requirements of the Accounting Standards.
Following the change in functional currency, Woodside Petroleum Ltd has elected to change its presentation currency from
Australian dollars to US dollars. The directors believe that changing the presentation currency to US dollars will enhance
comparability with its industry peer group, the majority of which report in US dollars. The change in presentation currency
represents a voluntary change in accounting policy, which has been applied retrospectively.
To give effect to the change in functional currency, the assets and liabilities of entities with an Australian dollar
functional currency at 31 December 2009 were converted into US dollars at a fixed exchange rate on 1 January 2010 of
US$1:A$1.1193 and the contributed equity, reserves and retained earnings were converted at applicable historical rates.
in order to derive US dollar comparatives (presentation currency), the Australian dollar functional currency assets and
liabilities at 31 December 2009 were converted at the spot rate of US$1:A$1.1193 on the reporting date; revenue and
expenses for the year ended 31 December 2009 were converted at the average exchange rate of US$1:A$1.261 for the
reporting period, or at the exchange rates ruling at the date of the transaction to the extent practicable, and equity balances
were converted at applicable historical rates.
The above stated procedures resulted in a foreign currency translation reserve of US$594 million on 1 January 2009.
Earnings per share for 2009 has also been restated in US dollars to reflect the change in the presentation currency
(refer to note 5).
(b) Statement of compliance
The Financial Report complies with Australian Accounting Standards and international Financial Reporting Standards,
as issued by the international Accounting Standards Board.
(c) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group as at 31 December each year.
Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be
consolidated from the date at which control is transferred out of the Group.
Prior to 1 January 2010, the purchase method of accounting was adopted. Subsequent to 1 January 2010, the
acquisition method has been adopted. At acquisition, the assets, liabilities and contingent liabilities of a subsidiary are
measured at their fair values. Any excess of the cost of acquisition over the fair values of the identifiable net assets
acquired is recognised as goodwill.
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using
consistent accounting policies. All intercompany balances and transactions, including unrealised profits and losses
arising from intra-group transactions, have been eliminated in full.
A change in ownership of a subsidiary that does not result in a loss of control is accounted for as an equity transaction.
On loss of control of a subsidiary, all carrying amounts of assets, liabilities and non-controlling interests are
derecognised. Any retained interest in the subsidiary is remeasured to its fair value and a gain or loss is recognised in
the income statement.
investments in subsidiaries are carried at cost less impairment charges in the separate financial statements of the
parent company. Dividends received from subsidiaries are recorded as other income in the separate income statement
of the parent company and do not impact the recorded cost of investment. The parent company will assess whether
any indicators of impairment of the carrying amount of the investment in the subsidiary exist. Where such indicators
exist, to the extent that the carrying amount of the investment exceeds its recoverable amount, an impairment loss
is recognised.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
1. Summary of significant accounting policies (continued)
(c) Basis of consolidation (continued)
non-controlling interests are allocated their share of the net profit after tax in the consolidated income statement, their
share of other comprehensive income, net of tax in the consolidated statement of comprehensive income and are
presented within equity in the consolidated statement of financial position, separately from parent shareholders’ equity.
(d) Revenue
Revenue is recognised and measured at the fair value of consideration received or receivable to the extent that it is
probable that the economic benefits will flow to the Group and the revenue can be reliably measured.
80
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Revenue earned from the sale of oil, gas and condensate produced is recognised when the risks and rewards of
ownership of the products are transferred to the customer. This policy is applied to the Group’s different operating
arrangements as follows:
•
•
•
•
revenue earned under a lease or licence conferring ownership rights to production, in which the Group has
a working interest with other producers, is recognised in earnings on the basis of the Group’s interest in the
relevant lease or licence (entitlements method). Revenue is not reduced for royalties and other taxes payable from
production, except where royalties are payable in kind;
revenue from take or pay contracts is recognised in earnings when the product has been drawn by the customer or
recorded as unearned revenue when not drawn by the customer;
revenue earned under a risk service contract is recognised when the Group has a legally enforceable entitlement to
the proceeds; and
revenue earned under a production service contract is recognised on the basis of the Group’s share of oil, gas or
condensate allocated to the contractor party or parties under the contract.
Interest revenue
interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating
the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
Dividend revenue
Dividend revenue is recognised when the Group’s right to receive payment is established.
(e) Exploration and evaluation
Expenditure on exploration and evaluation is accounted for in accordance with the area of interest method. The Group’s
application of the accounting policy for the cost of exploring and of evaluating discoveries is closely aligned to the US
GAAP-based successful efforts method.
Exploration licence acquisition costs are capitalised and subject to half-yearly impairment testing.
All exploration and evaluation expenditure, including general permit activity, geological and geophysical costs and new
venture activity costs, is expensed as incurred except where:
•
the expenditure relates to an exploration discovery that, at the reporting date, has not been recognised as an area of
interest, as an assessment of the existence or otherwise of economically recoverable reserves is not yet complete;
or
• an area of interest is recognised and it is expected that the expenditure will be recouped through successful
exploitation of the area of interest, or alternatively, by its sale.
The costs of drilling exploration wells are initially capitalised pending the results of the well. Costs are expensed where
the well does not result in the successful discovery of economically recoverable hydrocarbons and the recognition of an
area of interest. Areas of interest are recognised at the field level. Subsequent to the recognition of an area of interest,
all further evaluation costs relating to that area of interest are capitalised.
Each potential or recognised area of interest is reviewed half-yearly to determine whether economic quantities of
reserves have been found, or whether further exploration and evaluation work is underway or planned to support the
continued carry forward of capitalised costs.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
1. Summary of significant accounting policies (continued)
(e) Exploration and evaluation (continued)
Upon approval for the commercial development of an area of interest, accumulated expenditure for the area of interest
is transferred to oil and gas properties.
The recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful
development and commercial exploitation, or alternatively, sale of the respective areas of interest.
Where a potential impairment is indicated, assessment is performed for each area of interest to which the exploration
and evaluation expenditure is attributed. To the extent that capitalised expenditure is not expected to be recovered it is
charged to the income statement.
in the statement of cash flows, those cash flows associated with capitalised exploration and evaluation expenditure
are classified as cash flows used in investing activities. Exploration and evaluation expenditure expensed is classified as
cash flows used in operating activities.
(f) Oil and gas properties
Oil and gas properties are stated at cost less accumulated depreciation and impairment charges. Oil and gas properties
include construction, installation or completion of production and infrastructure facilities such as pipelines and
platforms, capitalised borrowing costs, transferred exploration and evaluation assets, development wells and the cost of
dismantling and restoration.
Subsequent capital costs, including major maintenance, are included in the asset’s carrying amount only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can
be measured reliably. Otherwise costs are charged to the income statement during the financial year in which they
are incurred.
(g) Other plant and equipment
Other plant and equipment is stated at cost less accumulated depreciation and any impairment charges.
(h) Depreciation and amortisation
Oil and gas properties and other plant and equipment are depreciated to their estimated residual values at rates based
on their expected useful lives. The major categories of assets are depreciated as follows:
Category
Method
Estimated useful
lives (years)
Oil and gas properties
Land
Buildings
not depreciated
Straight-line over useful life
Transferred exploration and evaluation assets
and offshore plant and equipment
Units of production basis over Proved plus
Probable reserves
Onshore plant and equipment
Straight-line over the lesser of useful life and the
life of Proved plus Probable reserves
Marine vessels and carriers
Other plant and equipment
Straight-line over useful life
Straight-line over useful life
-
40
5-50
5-50
10-40
5-15
81
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
1. Summary of significant accounting policies (continued)
(i)
Impairment of assets
The carrying amounts of all assets, other than inventory, financial assets and deferred tax assets, are reviewed
half-yearly to determine whether there is an indication of an impairment loss. if any such indication exists, the asset’s
recoverable amount is estimated.
The recoverable amount of an asset is determined as the higher of its value in use and fair value less cost to sell. Value in
use is determined by estimating future cash flows after taking into account the risks specific to the asset and discounting
them to its present value using a pre-tax discount rate that reflects current market assessment of the time value of money.
For any asset that does not generate largely independent cash flows, the recoverable amount is determined for the
cash generating unit to which the asset belongs. if the carrying amount of an asset (or cash generating unit) exceeds its
recoverable amount, the asset (or cash generating unit) is written down. Generally, the Group evaluates its oil and gas
properties on a field-by-field basis.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased
to the revised estimate of its recoverable amount, but only to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
(j) Non-current assets and disposal groups held for sale and discontinued operations
non-current assets and disposal groups that are expected to be recovered primarily through a sale transaction rather
than through continuing use are classified as held for sale and measured at the lower of their carrying amounts and fair
values less cost to sell. They are not depreciated or amortised. To be classified as held for sale, an asset or a disposal
group must be available for immediate sale in its present condition and its sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write-down of the asset to its fair value less cost to
sell. impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are
recognised in the income statement. Gains are not recognised in excess of any cumulative impairment loss.
(k) Derivative financial instruments and hedge accounting
From time to time, the Group uses derivative financial instruments such as swaps, options, futures and forward
contracts to hedge its risks associated with commodity price, interest rate and foreign currency fluctuations.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair values in line with market fluctuations. The unrealised gain or loss on remeasurement is
immediately recognised in the income statement, except where hedge accounting applies.
The fair values of derivative financial instruments that are traded on an active market are based on quoted market prices
at the reporting date. The fair values of financial instruments not traded on an active market are determined using a
valuation technique based on cash flows discounted to present value using current market interest rates.
Hedge accounting
When a derivative is designated as a hedge for accounting purposes, the relationship between the derivative and the
hedged item is documented, as is its risk management objective and strategy for undertaking the hedge transaction.
Also documented is the assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that
are used in hedging transactions have been, and will continue to be, highly effective in offsetting changes in fair values
or cash flows of hedged items.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
1. Summary of significant accounting policies (continued)
(k) Derivative financial instruments and hedge accounting (continued)
For the purposes of hedge accounting, hedges are classified and accounted for as follows:
Hedge type and risk
Accounting treatment
Fair value hedge
Exposure to changes in the fair value of
a recognised asset, liability or committed
transaction
Cash flow hedge
Changes in fair value of derivatives that are designated and qualified as fair
value hedges are recorded in the income statement, together with any
changes in the fair value of the hedged risk that are attributable to the asset,
liability or committed transaction.
83
83
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Exposure to variability in cash flows
associated with a highly probable
forecasted transaction or a committed
foreign currency transaction
The effective portion of changes in the fair value of derivatives is recognised
in other comprehensive income and in the hedging reserve in equity. The
gain or loss relating to any ineffective portion is recognised in the income
statement immediately.
Hedge of net investment
Exposure to changes in the net assets of
foreign operations from foreign exchange
movements
Amounts accumulated in equity are taken to the income statement in the
periods when the hedged item affects income, for instance, when the
forecast sale that is hedged takes place.
The accounting treatment is substantially similar to a cash flow hedge.
Gains or losses accumulated in the hedge of net investment reserve
in equity are taken to the income statement on disposal of the foreign
operation.
Hedge accounting is discontinued when the hedging instrument expires, is sold or terminated, or when a hedge
no longer meets the criteria for hedge accounting. At that point in time, any cumulative gain or loss on the hedging
instrument recognised in equity remains in equity until the forecasted transaction occurs.
if the forecast transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is
transferred to the income statement.
Embedded derivatives
Derivatives embedded in the Group’s contracts, that change the nature of a host contract’s risk and are not clearly
and closely related to the host contract, are initially recognised at fair value on the date the contract is entered into.
Subsequent fair value movements of the derivative are recognised in the income statement.
(l)
Provision for restoration
The Group records the present value of the estimated cost of legal and constructive obligations to restore operating
locations in the period in which the obligation arises. The nature of restoration activities includes the removal of facilities,
abandonment of wells and restoration of affected areas.
A restoration provision is recognised and updated at different stages of the development and construction of a facility
and then reviewed on an annual basis. When the liability is initially recorded, the estimated cost is capitalised by
increasing the carrying amount of the related exploration and evaluation assets or oil and gas properties. Over time, the
liability is increased for the change in the present value based on a pre-tax discount rate appropriate to the risks inherent
in the liability. The unwinding of the discount is recorded as an accretion charge within finance costs. The carrying
amount capitalised in oil and gas properties is depreciated over the useful life of the related asset (refer to note 1(h)).
Costs incurred that relate to an existing condition caused by past operations and do not have a future economic benefit
are expensed.
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
1. Summary of significant accounting policies (continued)
(m) Joint ventures
The Group’s interests in jointly controlled assets are accounted for by recognising its proportionate share in assets and
liabilities from joint ventures, except where as operator, Woodside takes on the role as independent contractor. in these
instances, receivables and payables relating to jointly controlled operations are brought to account on a gross basis.
Joint venture expenses and the Group’s entitlement to production are recognised on a pro-rata basis according to the
Group’s joint venture interest.
investments in jointly controlled entities, where the Group has significant influence, but not control, are accounted for
using the equity method of accounting. Under the equity method, the cost of the investment is adjusted by the post-
acquisition changes in the Group’s share of the net assets of the venture.
On loss of joint control in a jointly controlled entity, any retained interest in the former entity is recognised at its fair
value at the date that joint control is lost. A gain or loss, on loss of joint control, is recognised in the income statement.
(n) Borrowing costs
Borrowing costs incurred for the acquisition or construction of qualifying assets are capitalised during the period of time
that is required to complete and prepare the asset for its intended use or sale. Assets are considered to be qualifying
assets when this period of time is substantial (greater than 12 months).
The interest rate used to determine the amount of borrowing costs to be capitalised is the weighted average effective
interest rate applicable to the Group’s outstanding borrowings during the year.
(o)
Foreign currency
The functional and presentation currency of Woodside Petroleum Ltd and all its subsidiaries is US dollars.
Translation of foreign currency transactions
Transactions in foreign currencies are initially recorded in the functional currency of the transacting entity at the
exchange rates ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies at
the reporting date are translated at the rates of exchange ruling at that date. Exchange differences in the consolidated
financial statements are taken to the income statement, with the exception of differences on foreign currency
borrowings that provide an effective hedge against a net investment in subsidiaries which are taken directly to the
hedge of net investment reserve until the disposal of the net investment, at which time they are recognised in the
income statement.
Translation of the financial results of foreign operations for the comparative period
Prior to 1 January 2010, foreign entities and some Australian entities had a functional currency of Australian dollars as
a result of the economic environment in which they were operating. For the 2009 comparative balances, assets and
liabilities of these entities have been translated into the presentation currency of the Group (US dollars) at the rate of
exchange ruling at the reporting date. The income statements were translated at the average exchange rates for the
reporting period, or at the exchange rates ruling at the date of transactions. Exchange differences arising on translation
were taken to the foreign currency translation reserve in equity.
On disposal of a foreign operation, the proportionate share of exchange differences recognised in the foreign currency
translation reserve relating to that particular foreign operation is recognised in the income statement.
Hedge transactions
Derivatives and other financial instruments are used to hedge foreign exchange risk relating to certain transactions
(refer to note 1(k)).
notes to and forming part of the Financial Report
For the year ended 31 December 2010
1. Summary of significant accounting policies (continued)
(p)
Leases
The determination of whether an arrangement is or contains a lease, is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or
assets and the arrangement conveys a right to use the asset.
Assets held under leases that transfer to the Group substantially all the risks and rewards of ownership of the leased
asset are classified as finance leases. Finance leases are capitalised at the inception of the lease, at the lower of the fair
value of the leased asset and the present value of the minimum lease payments.
Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve
a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in the income
statement over the lease term.
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Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease assets are not capitalised and payments are recognised in the income statement as an expense
over the lease term. Lease incentives received are recognised in the income statement as an integral part of the
total lease expense.
(q) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and short-term deposits with
an original maturity of three months or less. Cash and cash equivalents are stated at face value in the statement of
financial position.
For the purposes of the statement of cash flows, cash and cash equivalents are reported net of outstanding
bank overdrafts.
(r)
Trade and other receivables
Trade and other receivables, including receivables from related parties, are initially recognised at fair value and
subsequently measured at amortised cost less an allowance for uncollectible amounts. Collectability and impairment
are assessed on a regular basis. Subsequent recoveries of amounts previously written off are credited against other
expenses in the income statement.
(s)
Inventories
inventories include hydrocarbon stocks, consumable supplies and maintenance spares. inventories are valued at the
lower of cost and net realisable value. Cost is determined on a weighted average basis and includes direct costs and an
appropriate portion of fixed and variable production overheads where applicable. inventories determined to be obsolete
or damaged are written down to net realisable value.
(t)
Investments
investments are classified as either available-for-sale or held for trading and are initially recognised at fair value plus, in
the case of investments not held for trading, any directly attributable transaction costs.
After initial recognition investments are carried at fair value. Changes in the fair value of available-for-sale investments
are recognised as a separate component of equity until the investment is sold, collected or otherwise disposed of, or
until the investment is determined to be impaired, at which time the cumulative change in fair value previously reported
in equity is included in the income statement. Changes in the fair value of held for trading investments are recognised in
the income statement.
For investments that are actively traded in organised financial markets, fair value is determined by reference to stock
exchange quoted market bid prices at the close of business on the reporting date. Where investments are not actively
traded, fair value is established by using other market accepted valuation techniques.
(u)
Investments in associates
The Group’s investments in its associates are accounted for using the equity method of accounting in the consolidated
financial statements. An associate is an entity in which the Group has significant influence and is neither a subsidiary
nor a joint venture.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
1. Summary of significant accounting policies (continued)
(u)
Investments in associates (continued)
The financial statements of associates, prepared for the same reporting period as the Group and applying consistent
accounting policies, are used by the Group to apply the equity method. The investment in the associate is carried in the
consolidated statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of
the associate less any impairment. The income statement reflects the Group’s share of the associate’s after tax profit or
loss from operations.
Where there has been a change recognised directly in the associate’s equity, the Group recognises its share of any
changes and discloses this, where applicable, in the consolidated statement of changes in equity.
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On loss of significant influence of an associate, any retained investment in the former associate is recognised at its fair
value. A gain or loss, on loss of significant influence, is recognised in the income statement.
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(v) Employee provisions
Provision is made for employee benefits accumulated as a result of employees rendering services up to the end of the
reporting period. These benefits include wages, salaries, annual leave and long service leave.
Liabilities in respect of employees’ services rendered that are not due to be settled within one year after the end of the
period in which the employees render the related services are recognised in the statement of financial position. These
liabilities are measured at the present value of the estimated future cash outflow to be made to the employees using
the projected unit credit method. in determining the present value of the estimated future cash outflow, consideration is
given to expected future wage and salary levels, experience of employee departures and periods of service. Estimated
future payments are discounted using appropriate discount rates. Liabilities due to be settled within one year after the
end of the period in which the employees render the related services are measured at the amount due to be paid.
(w) Share-based payments
Equity-settled transactions
The Group provides benefits to its employees (including key management personnel) in the form of share-based
payments whereby employees render services for shares (equity-settled transactions). The cost of equity-settled
transactions with employees is measured by reference to the fair values of the equity instruments at the date at which
they are granted. The fair value is determined by using a Binomial or Black-Scholes option pricing technique combined
with a Monte Carlo simulation methodology, where relevant. The cost of equity-settled transactions is recognised,
together with a corresponding increase in equity, over the period in which the vesting conditions are fulfilled (the vesting
period), ending on the date on which the relevant employees become fully entitled to the awards (the vesting date).
At each subsequent reporting date until vesting, the cumulative charge to the income statement is the result of:
•
•
the grant date fair value of the award;
the current best estimate of the number of awards that will vest, taking into account the likelihood of
employee turnover; and
•
the expired portion of the vesting period.
The charge to the income statement for the year is the cumulative amount, as calculated above, less the amounts
charged in the previous years. There is a corresponding entry to equity.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than
were originally anticipated.
An additional expense is recognised for any modification that increases the total fair value of the share-based payment
arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.
if an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation and any expense not
yet recognised for the award is recognised immediately.
Shares in the Group reacquired on-market are classified and disclosed as reserved shares and deducted from equity
(refer to note 1(ac)). no gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation
of the Group’s own equity instruments.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
1. Summary of significant accounting policies (continued)
(w) Share-based payments (continued)
Cash-settled transactions
The Group provides benefits to employees who have been on international assignment or secondment at any time
during the vesting period in the form of cash-settled share-based payments. Employees render services in exchange for
cash, the amounts of which are determined by reference to the price of the shares of Woodside Petroleum Ltd.
The ultimate cost of these cash-settled share-based payments will be equal to the actual cash paid to the employees
which will be the fair value at settlement date. The cumulative cost recognised until settlement is held as a liability. All
changes in the liability are recognised in the income statement for the year.
The fair value of the liability is determined, initially and at each reporting date until it is settled, by using a Binomial or
Black-Scholes option pricing technique combined with a Monte Carlo simulation methodology, where relevant.
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(x) Retirement benefits
All employees of the Group’s Australian entities are entitled to benefits under the Group’s superannuation plan due to
retirement, disability or death. The Group has a defined benefit component and a defined contribution component within
the plan. The defined benefit section of the plan is closed to new members.
The defined benefit component provides defined lump sum benefits based on years of service and final average salary.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit actuarial
valuation method. A liability or asset in respect of the defined benefit component of the superannuation plan is
recognised in the statement of financial position and is measured at the present value of the defined benefit obligation
at the reporting date less the fair value of the superannuation fund’s assets at that date. The defined benefit obligation
includes actuarial estimates of future variables such as employee turnover and the plan’s rate of return.
The cost of the defined benefit component is charged to the income statement systematically over the employee’s
service life.
Gains and losses arising from changes in actuarial estimates are recognised immediately as income or expense in the
income statement.
The defined contribution component receives fixed contributions from Group companies and the Group’s legal or
constructive obligation is limited to these contributions. Contributions to the defined contribution fund are recognised
as an expense as incurred.
(y) Financial liabilities
Borrowings are initially recognised at fair value less transaction costs. Borrowings are subsequently carried at amortised
cost, except for those designated in a fair value hedge relationship as described previously. Any difference between
the proceeds received and the redemption amount is recognised in the income statement over the period of the
borrowings using the effective interest method.
Trade and other payables are carried at amortised cost when goods and services are received, whether or not billed to
the Group, prior to the end of the financial year.
Dividends payable are recognised when declared by the Group.
(z)
Tax
Income tax
income tax expense on the profit or loss for the year comprises current and deferred tax expense.
Current tax expense is the expected tax payable on the taxable income for the year and any adjustment to tax payable
in respect of previous years.
Temporary differences arise between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. Deferred tax expense is determined based on changes in temporary differences.
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
1. Summary of significant accounting policies (continued)
(z)
Tax (continued)
Deferred tax liabilities are recognised for taxable temporary differences. Deferred tax assets are recognised for
deductible temporary differences, unused tax losses and unused tax credits only if it is probable that sufficient future
taxable income will be available to utilise those temporary differences and losses. Such deferred tax liabilities and
assets are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than
in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit or loss nor
the accounting profit or from investments in subsidiaries, associates and interests in joint ventures, to the extent that
the Group is able to control the reversal of the temporary difference and the temporary difference is not expected to
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantially
enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
Current and deferred tax expenses are recognised in the income statement, except to the extent that they relate to
items recognised directly in equity, in which case they are recognised in equity.
Petroleum Resource Rent Tax (PRRT)
PRRT is considered, for accounting purposes, to be a tax based on income. Accordingly, current and deferred PRRT
expense is measured and disclosed on the same basis as income tax.
Tax consolidation
The parent and its wholly owned Australian controlled entities have elected to enter into tax consolidation, with
Woodside Petroleum Ltd as the head entity of the tax consolidated group.
The tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the
members of the tax consolidated group are recognised in the separate financial statements of the members of the tax
consolidated group, using the stand alone approach.
(aa) Goods and Services Tax (GST)
Revenue, expenses and assets are recognised net of GST except where the GST incurred on a purchase of goods
and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense item.
The net amount of GST recoverable from or payable to the taxation authority is included as part of receivables or
payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising
from investing and financing activities that is recoverable from, or payable to the taxation authority is classified as an
operating cash flow.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
1. Summary of significant accounting policies (continued)
(ab) Royalties and excise duty
Royalties and excise duty under existing regimes are considered to be production based taxes and are therefore
accrued on the basis of the Group’s entitlement to physical production.
(ac)
Issued capital
Ordinary shares are classified as equity and recorded at the value of consideration received. The cost of issuing shares
is shown in share capital as a deduction, net of tax, from the proceeds.
Reserved shares
The Group’s own equity instruments, which are reacquired for later use in employee share-based payment
arrangements (reserved shares), are deducted from equity. no gain or loss is recognised in the income statement on
the purchase, sale, issue or cancellation of the Group’s own equity instruments.
(ad) Critical accounting estimates, assumptions and judgements
in applying the Group’s accounting policies, management continually evaluates judgements, estimates and assumptions
based on experience and other factors including expectations of future events that may have an impact on the Group.
All judgements, estimates and assumptions made are believed to be reasonable based on the most current set of
circumstances available to management. Actual results may differ from those judgements, estimates and assumptions.
Significant judgements, estimates and assumptions made by management in the preparation of these financial
statements are outlined below.
Critical accounting estimates and assumptions
Impairment of assets
in determining the recoverable amount of assets, in the absence of quoted market prices, estimates are made
regarding the present value of future cash flows. For oil and gas properties, expected future cash flow estimation is
based on reserves, future production profiles, commodity prices and costs.
Restoration obligations
The Group estimates the future removal costs of offshore oil and gas platforms, production facilities, wells and pipelines
at different stages of the development and construction of assets or facilities. in most instances, removal of assets
occurs many years into the future. This requires judgemental assumptions regarding removal date, future environmental
legislation, the extent of reclamation activities required, the engineering methodology for estimating cost, future
removal technologies in determining the removal cost, and liability specific discount rates to determine the present
value of these cash flows. For more detail regarding the policy in respect of provision for restoration refer to note 1(l).
Reserve estimates
Estimation of reported recoverable quantities of Proven and Probable reserves include judgemental assumptions
regarding commodity prices, exchange rates, discount rates, and production and transportation costs for future cash
flows. it also requires interpretation of complex geological and geophysical models in order to make an assessment of
the size, shape, depth and quality of reservoirs, and their anticipated recoveries. The economic, geological and technical
factors used to estimate reserves may change from period to period.
Changes in reported reserves can impact assets’ carrying amounts, provision for restoration and recognition of
deferred tax assets due to changes in expected future cash flows. Reserves are integral to the amount of depreciation,
amortisation and impairment charged to the income statement. Reserve estimates are prepared in accordance
with Woodside’s Hydrocarbon Resource inventory Management Process and guidelines prepared by the Society of
Petroleum Engineers.
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
1. Summary of significant accounting policies (continued)
(ad) Critical accounting estimates, assumptions and judgements (continued)
Critical judgements in applying the Group’s accounting policies
Exploration and evaluation
The Group’s accounting policy for exploration and evaluation assets is set out in note 1(e). The application of this policy
requires management to make certain estimates and assumptions as to future events and circumstances, in particular,
the assessment of whether economic quantities of reserves have been found. Any such estimates and assumptions
may change as new information becomes available. if, after having capitalised expenditure under the policy, the Group
concludes that it is unlikely to recover the expenditure by future exploitation or sale, then the relevant capitalised
amount will be written off to the income statement.
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United States of America deferred tax asset
The Group has recognised a net deferred tax asset in respect of tax losses and temporary differences associated with
its operations in the United States of America. in accordance with the recognition criteria outlined in AASB 112 Income
Taxes, the Group has exercised its judgement in deciding that it is probable that sufficient future taxable income will be
available to utilise the deferred tax assets.
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
1. Summary of significant accounting policies (continued)
(ae) New and amended Accounting Standards and Interpretations issued but not yet effective
The following new Standards have a potential impact on the Financial Report but have an effective date after the
financial reporting date.
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Summary
AASB 9 includes requirements for the classification and
measurement for financial assets and financial liabilities
and the recognition and derecognition requirements for
financial instruments. This standard is a result of the first
part of Phase i of the iASB's project to replace iAS 39
Financial Instruments: Recognition and Measurement
(AASB 139 Financial Instruments: Recognition and
Measurement).
This Standard makes amendments to several Australian
Accounting Standards and interpretations. These
amendments arise from the issuance of AASB 9
Financial Instruments that sets out requirements for the
classification and measurement of financial assets. This
Standard is applied when AASB 9 is applied.
The revised Standard simplifies the definition of a related
party, clarifying its intended meaning and eliminating
inconsistencies from the definition. A partial exemption
is also provided from the disclosure requirements for
government related entities. Changes to the revised
Standard apply retrospectively.
This Standard makes amendments to several Australian
Accounting Standards and interpretations. These
amendments principally arise from editorial corrections
made by the iASB and the AASB.
This Standard makes amendments to several Australian
Accounting Standards. The amendments are a
consequence of the Annual improvements Project.
The principal amendments to the Standard set out the
requirements for measurement of non-controlling interests,
transition requirements for contingent consideration from
a business combination that occurred before the effective
date of the revised AASB 3 Business Combinations (2008)
and transition requirements for amendments arising from
AASB 127 Consolidated and Separate Financial Statements.
This Standard makes amendments to several
Australian Accounting Standards and interpretation.
These amendments are a consequence of the Annual
improvements Project.
This Standard makes amendments to several Australian
Accounting Standards and interpretations. These
amendments principally arise from editorial corrections
made by the iASB and the AASB.
Title
AASB 9 Financial Instruments
Application date
of the Standard
1 January 2013
AASB 2009-11 Amendments to Australian
Accounting Standards - arising from
AASB 9
[AASBs 1, 3, 4, 5, 7, 101, 102, 108, 112, 118,
121, 127, 128, 131, 132, 136, 139, 1023 &
1038 and Interpretations 10 & 12]
1 January 2013
AASB 124 Related Party Disclosures
(revised)
1 January 2011
AASB 2009-12 Amendments to Australian
Accounting Standards
[AASBs 5, 8, 108, 110, 112, 119, 133, 137,
139, 1023 & 1031 and Interpretations 2, 4,
16, 1039 & 1052]
AASB 2010-3 Amendments to Australian
Accounting Standards arising from the
Annual Improvements Project
[AASB 3, AASB 7, AASB 121, AASB 128,
AASB 131, AASB 132 & AASB 139]
1 January 2011
1 July 2010
1 January 2011
1 January 2011
AASB 2010-4 Further Amendments to
Australian Accounting Standards arising
from the Annual Improvements Project
[AASB 1, AASB 7, AASB 101 & AASB 134
and Interpretation 13]
AASB 2010-5 Amendments to Australian
Accounting Standards
[AASB 1, 3, 4, 5, 101, 107, 112, 118, 119,
121, 132, 133, 134, 137, 139, 140, 1023 &
1038 and Interpretations 112, 115, 127, 132
& 1042]
AASB 2010-7 Amendments to Australian
Accounting Standards arising from AASB 9
(December 2010)
[AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118,
120, 121, 127, 128, 131, 132, 136, 137, 139,
1023 & 1038 and Interpretations 2, 5, 10,
12, 19 &127]
1 January 2013
This Standard makes amendments to several Australian
Accounting Standards and interpretation. These
amendments arise from the issuance of AASB 9 Financial
Instruments as issued in December 2010.
The potential effect of these Standards is yet to be fully determined. However, it is not expected that the new
Standards will significantly affect the Group’s financial position.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
2. Operating segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the executive
management team (the chief operating decision makers) in assessing performance and in determining the allocation of
resources. The following operating segments are identified by management based on the nature and geographical location of
the business or venture.
North West Shelf Business Unit
Exploration, evaluation, development, production and sale of liquefied natural gas, pipeline natural gas, condensate, liquefied
petroleum gas and crude oil from the north West Shelf ventures.
Australia Business Unit
Exploration, evaluation, development, production and sale of crude oil, condensate, liquefied petroleum gas and pipeline
natural gas in assigned permit areas including Laminaria, Mutineer–Exeter, Enfield, Vincent, Otway and Stybarrow ventures.
Pluto Business Unit
Exploration, evaluation and development of liquefied natural gas in assigned permit areas.
Browse Business Unit
Exploration, evaluation and development of liquefied natural gas in assigned permit areas.
United States Business Unit
Exploration, evaluation, development, production and sale of pipeline natural gas, condensate and crude oil in assigned
permit areas.
Other
This segment comprises the activities undertaken by all other Business Units.
no operating segments have been aggregated to form the above reportable operating segments.
Performance monitoring and evaluation
Management monitors the operating results of the Business Units separately for the purpose of making decisions about
resource allocation and performance assessment. The performance of operating segments is evaluated based on profit before
tax and net finance costs (profit before tax and interest) and is measured in accordance with the Group’s accounting policies.
Financing requirements, finance income, finance costs and taxes are managed at a Group level. Unallocated items comprise
non-segmental items of revenue and expenses and associated assets and liabilities not allocated to operating segments as
they are not considered part of the core operations of any segment.
92
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
3. Revenue and expenses
(a) Revenue from sale of goods
Liquefied natural gas
north West Shelf
Pipeline natural gas
north West Shelf
Otway
United States of America
Condensate
north West Shelf
Otway
Ohanet
United States of America
Oil
north West Shelf
Laminaria
Mutineer–Exeter
Enfield(1)
Vincent(1)
Stybarrow(1)
United States of America
Liquefied petroleum gas
north West Shelf
Otway
Ohanet
Total revenue from sale of goods
(b) Cost of sales
Cost of production
Production costs
Royalties and excise
insurance
inventory movement
Shipping and direct sales costs
Oil and gas properties depreciation and amortisation
Land and buildings
Transferred exploration and evaluation
Plant and equipment
Marine vessels and carriers
Total cost of sales
Gross profit
2010
US$m
Restated
2009
US$m
1,310
292
17(2)
31
340
704
4(2)
33
3
744
333
205
8
496
372
165
83
1,662
110
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22
137
4,193
(430)
(419)
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7
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(53)
(7)
(29)
(696)
(6)
(738)
(1,669)
2,524
769
305
73
43
421
557
14
33
5
609
283
225
20
385
238
345
76
1,572
75
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22
116
3,487
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(276)
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4
(683)
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(694)
(5)
(739)
(1,481)
2,006
(1) 2010 figures include a crude oil hedging loss of US$14 million (2009: hedging gain of US$19 million), resulting from settlement of Greater Exmouth Area Zero Cost
Collars. Refer to note 26(f) for further detail.
(2) Reduction in revenue due to the sale of Woodside’s interest in the Otway Gas Project. Refer to note 24 for further detail.
96
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
3. Revenue and expenses (continued)
(c) Other income
Other fees and recoveries
Share of associates’ net profit
Gain on sale of exploration and evaluation assets
Gain on sale of assets of disposal group held for sale
Gain on sale of fixed assets
Change in fair value of embedded derivatives
Gain/(loss) on derivative financial instruments
net defined benefit plan gain
Total other income
(d) Other expenses
Exploration and evaluation
Exploration
Amortisation of licence acquisition costs
Evaluation
Total exploration and evaluation
Other costs
Depreciation of other plant and equipment
Exchange loss on cash balances
Other exchange (loss)/gain
General, administrative and other costs
impairment of oil and gas properties
impairment of exploration and evaluation assets
impairment of other assets
Total other costs
Total other expenses
Profit before tax and net finance income/(costs)
(e)
Finance income
interest
Total finance income
(f)
Finance costs
Unwinding of present value discount (accretion)
Other finance costs
Total finance costs
Profit before tax
2010
US$m
Restated
2009
US$m
37
4
99
143
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9
13
2
307
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39
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288
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2,291
(1) As part of the Group’s regular review of assets whose values may be impaired, a charge of US$92 million was recognised in relation to the neptune oil field in
the Gulf of Mexico (which is part of the United States Business Unit segment) following an assessment of the expected ultimate reserve recovery. As a result
of the impairment, deferred tax assets of US$40 million are no longer expected to be realised by the Group and were recognised as a charge to income tax
expense, refer to note 4(a). The recoverable amount for the cash-generating unit was determined based on a value in use calculation. The real pre-tax discount
rate applied to the cash-generating unit was 11%.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
4.
Taxes
(a)
Tax expense comprises
income tax
Current tax expense
Over provided in prior years
Deferred tax expense related to the movements in deferred tax balances
Write-downs of deferred tax assets
impact of conversion to US dollar functional currency
PRRT
Current tax expense
Under provided in prior years
Deferred tax expense related to the movements in deferred tax balances
impact of conversion to US dollar functional currency
Total tax expense reported in the income statement
(b) Reconciliation of tax expense to prima facie tax payable
Profit before tax
PRRT expense
Profit after PRRT expense
Tax expense calculated at 30%
Tax effect of items which are non-deductible/(assessable)
Sale of assets
Research and development
Other
Foreign expenditure not brought to account
Tax rate differential on non-Australian income
Over provided in prior years
Write-downs of deferred tax assets
impact of conversion to USD functional currency
Foreign exchange impact on tax expense
PRRT expense
Tax expense
2010
US$m
Restated
2009
US$m
545
(4)
80
40
(129)
532
96
1
(25)
93
165
697
2,274
(165)
2,109
633
(65)
(10)
9
53
3
(4)
40
(129)
2
165
697
431
(18)
299
36
-
748
152
7
(84)
-
75
823
2,291
(75)
2,216
665
-
(5)
(6)
74
2
(18)
36
-
-
75
823
The tax rate used in the above reconciliation is that applied to resident companies pursuant to the income tax statutes in
force in Australia as at the reporting date. There has been no change in the corporate tax rate when compared with the
previous reporting year.
(c) Tax recognised directly in equity
Deferred tax
(9)
73
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
4. Taxes (continued)
(d) Deferred tax
2010
Deferred tax assets
Arising from temporary
differences and tax losses
Foreign jurisdiction
Domestic jurisdiction
Deferred tax liabilities
Arising from temporary differences
Exploration and evaluation assets
Oil and gas properties
Financial instruments
Other liabilities
Provisions
Other
Assets classified as held for sale
Arising from PRRT
2009 (Restated)
Deferred tax assets
Arising from temporary
differences and tax losses
Foreign jurisdiction
Domestic jurisdiction
Deferred tax liabilities
Arising from temporary differences
Exploration and evaluation assets
Oil and gas properties
Financial instruments
Other liabilities
Provisions
Other
Assets classified as held for sale
Arising from PRRT
At
1 January
Charged/
(credited)
to income
statement
Charged/
(credited)
to equity
Acquisition/
(disposal)
Other
movements
At
31 December
US$m
US$m
US$m
US$m
US$m
US$m
51
24
75
263
487
216
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(158)
23
56
677
1,330
87
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87
155
546
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5
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767
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(5)
(45)
148
76
3
(4)
(45)
(66)
-
57
169
(36)
22
(14)
57
(197)
184
25
199
43
-
(84)
227
-
-
-
-
-
6
-
-
(1)
-
-
5
-
-
-
-
-
83
-
-
(10)
-
-
73
-
-
-
-
-
-
-
-
-
(56)
17
(39)
-
-
-
-
-
-
-
-
-
-
-
-
-
11
11
(1)
(15)
(111)
-
-
(5)
-
-
(132)
-
2
2(1)
51
138
14
(60)
(88)
(15)
56
167
263(1)
11
30
41
410
548
114
(238)
(203)
(49)
-
751
1,333
51
24
75
263
487
216
(234)
(158)
23
56
677
1,330
(1) Amounts related to foreign exchange differences arising from the change in presentation currency.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
4. Taxes (continued)
(e) Unrecognised deferred tax assets
Tax losses not recognised
Revenue
Capital
Tax credits not recognised
Temporary differences associated with investments
(f)
Tax losses
2010
US$m
Restated
2009
US$m
195
112
-
3
310
113
99
14
2
228
At the reporting date the Group has unused (recognised and not recognised) tax losses and credits of
US$1,010 million (2009: US$818 million) that are available for offset against future taxable profits.
A deferred tax asset in respect of tax losses of US$22 million (2009: US$50 million) has been recognised because it is
probable that sufficient future taxable profit will be available for use against such losses.
no deferred tax asset has been recognised in respect of the remaining tax losses and credits due to the uncertainty of
future profit streams.
There are no carried forward tax credits available in 2010 (2009: US$14 million).
(g) Tax consolidation
The parent and its wholly-owned Australian controlled entities have elected to enter tax consolidation, with
Woodside Petroleum Ltd as the head entity of the tax consolidated group. The members of the tax consolidated
group are identified at note 36(a).
Entities within the tax consolidated group have entered into a tax funding arrangement and a tax sharing agreement
with the head entity. Under the terms of the tax funding arrangement, Woodside Petroleum Ltd and each of the entities
in the tax consolidated group have agreed to make a tax equivalent payment to or from the head entity calculated on
a stand alone basis based on the current tax liability or current tax asset of the entity. Such amounts are reflected in
amounts receivable from, or payable to, other entities in the tax consolidated group.
The tax sharing agreement entered into between members of the tax consolidated group provides for the
determination of the allocation of income tax liabilities between the entities, should the head entity default on its tax
payment obligations. no amounts have been recognised in the financial statements in respect of this agreement as
payment of any amounts under the tax sharing agreement is considered remote.
99
99
i
i
W
W
o
o
o
o
d
d
s
s
d
d
e
e
P
P
e
e
t
t
r
r
o
o
e
e
u
u
m
m
L
L
t
t
d
d
l
l
|
|
2
2
0
0
1
1
0
0
F
F
n
n
a
a
n
n
c
c
a
a
i
i
i
i
l
l
R
R
e
e
p
p
o
o
r
r
t
t
notes to and forming part of the Financial Report
For the year ended 31 December 2010
5. Earnings per share
Profit attributable to equity holders of the parent (US$m)
Weighted average number of shares on issue
Basic and diluted earnings per share (US cents)(2)
2010
2009
1,575
773,388,154
204
1,474(1)
703,310,697
210(1)
(1) The Group has made a voluntary change in accounting policy that, as outlined in note 1(a), resulted in a restatement of profit attributable to equity holders of the parent
and earnings per share.
(2) Earnings per share is calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares
outstanding during the year. The weighted average number of shares makes allowance for shares reserved for employee share plans. Diluted earnings per share is not
significantly different from basic earnings per share.
Prior year earnings per share has been adjusted by a factor of 1.0002 reflecting the retail portion of the fully underwritten
accelerated renounceable entitlement offer. On 14 December 2009, the Group announced a fully underwritten 1 for 12
accelerated renounceable entitlement offer at a price of A$42.10 per share, which included institutional and retail portions.
Details of the shares issued are outlined in note 21(c).
There have been no transactions involving ordinary shares between the reporting date and the date of completion of this
Financial Report.
100
100
i
i
W
W
o
o
o
o
d
d
s
s
d
d
e
e
P
P
e
e
t
t
r
r
o
o
e
e
u
u
m
m
L
L
t
t
d
d
l
l
6. Dividends paid and proposed
|
|
2
2
0
0
1
1
0
0
A
A
n
n
n
n
u
u
a
a
l
l
R
R
e
e
p
p
o
o
r
r
t
t
(a) Dividends paid during the financial year(1)
Prior year fully franked final dividend US$0.49 (A$0.55), paid 31 March 2010
(2009: US$0.35 (A$0.55), paid 6 April 2009)
Current year fully franked interim dividend US$0.50, paid 23 September 2010
(2009: US$0.46 cents (A$0.55), paid 5 October 2009)
(b) Dividend declared (not recorded as a liability)(1)
Fully franked final dividend US$0.55,to be paid 6 April 2011
(2009: US$0.49 (A$0.55), paid 31 March 2010)
Dividend per share in respect of financial year (US cents)
(1) Fully franked at 30.0% (2009: 30.0%).
2010
US$m
Restated
2009
US$m
383
390
773
431
105
247
327
574
383
95
notes to and forming part of the Financial Report
For the year ended 31 December 2010
6. Dividends paid and proposed (continued)
(c) Franking credit balance
Franking credits available for the subsequent financial year arising from
Franking account balance at 31 December
Current year income tax payable
Dividends declared
Franking account balance after payment of tax and dividends
7.
Cash and cash equivalents
(a)
Components of cash and cash equivalents
Cash at bank(1)
Money market deposits(2)
Total cash and cash equivalents
(1) Cash at bank earns on average 1.1% (2009: 1.2%).
2010
US$m
Restated
2009
US$m
2,752
2,133
6
(185)
2,573
110
(163)
2,080
101
101
Restated
2009
US$m
Restated
1 January
2009
US$m
2010
US$m
53
910
963
49
1,158
1,207
97
1
98
i
i
W
W
o
o
o
o
d
d
s
s
d
d
e
e
P
P
e
e
t
t
r
r
o
o
e
e
u
u
m
m
L
L
t
t
d
d
l
l
|
|
2
2
0
0
1
1
0
0
F
F
n
n
a
a
n
n
c
c
a
a
i
i
i
i
l
l
R
R
e
e
p
p
o
o
r
r
t
t
(2) Money market deposits are denominated in Australian dollars and US dollars with an average maturity of 13.1 days (2009: 2.1 days) and effective interest rates
of 0.15% to 5.21% (2009: 0.1% to 5.3%).
(b) Reconciliation to statement of cash flows
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:
Cash at bank
Money market deposits
Cash at bank attributable to disposal group held for sale (note 24)
2010
US$m
Restated
2009
US$m
53
910
963
-
963
49
1,158
1,207
(4)
1,203
notes to and forming part of the Financial Report
For the year ended 31 December 2010
8. Receivables
Trade receivables(1)
Other receivables (2)
Dividends receivable(3)
interest receivable(3)
102
102
(1) Denominated in a mixture of Australian dollars and US dollars, interest free and settlement terms between 7 and 30 days.
(2) Other receivables are interest-free with various maturities.
(3) Dividends and interest receivable are receivable within 30 days of period end.
9.
Inventories
i
i
W
W
o
o
o
o
d
d
s
s
d
d
e
e
P
P
e
e
t
t
r
r
o
o
e
e
u
u
m
m
L
L
t
t
d
d
l
l
|
|
2
2
0
0
1
1
0
0
A
A
n
n
n
n
u
u
a
a
l
l
R
R
e
e
p
p
o
o
r
r
t
t
(a)
Inventories (current)
Petroleum products (at cost)
Work in progress
Goods in transit
Finished stocks
Warehouse stores and materials (at cost)
(b)
Inventories (non-current)
Restated
2009
US$m
Restated
1 January
2009
US$m
293
206
3
1
503
214
152
2
-
368
2010
US$m
285
152
2
-
439
Restated
2009
US$m
Restated
1 January
2009
US$m
2010
US$m
1
4
61
52
118
1
4
49
55
109
1
3
33
37
74
Warehouse stores and materials (at cost)
39
43
36
10. Other financial assets
(a) Other financial assets (current)
Derivative instruments (at fair value)(1)
Cash held in reserve
(b) Other financial assets (non-current)
Other investments (available-for-sale)
Listed (at fair value)
Unlisted (at cost)
Cash held in reserve(2)
Derivative instruments (at fair value)(1)
Embedded derivatives (at fair value)(3)
(1) Details regarding derivative instruments are contained in note 26(f).
(2) Represents restricted cash associated with JBiC facility, refer to note 26(e).
(3) Embedded derivatives relate to sales contracts.
Restated
2009
US$m
Restated
1 January
2009
US$m
2010
US$m
9
2
11
6
6
30
15
54
111
-
-
-
9
6
30
18
54
117
31
-
31
4
4
30
37
50
125
103
103
i
i
W
W
o
o
o
o
d
d
s
s
d
d
e
e
P
P
e
e
t
t
r
r
o
o
e
e
u
u
m
m
L
L
t
t
d
d
l
l
|
|
2
2
0
0
1
1
0
0
F
F
n
n
a
a
n
n
c
c
a
a
i
i
i
i
l
l
R
R
e
e
p
p
o
o
r
r
t
t
notes to and forming part of the Financial Report
For the year ended 31 December 2010
11. Other assets
(a) Other assets (current)
Prepayments
Other
(b) Other assets (non-current)
Other
investment in associates
Development asset
12. Exploration and evaluation assets
(a) Reconciliations of the carrying amounts of exploration
and evaluation assets
Carrying amount at 1 January
Additions
Amortisation of licence acquisition costs
Expensed (previously capitalised)
impairment loss
Transferred exploration and evaluation
Currency translation differences
Carrying amount as at 31 December
(b) Carrying amounts of exploration and evaluation assets
Regions
Australia
Browse Basin
Carnarvon Basin
Bonaparte Basin
The Americas
Gulf of Mexico
Brazil
Asia
Korea
Africa
West Africa (Sierra Leone, Liberia)
north Africa (Algeria, Libya)
East Africa (Kenya)
Restated
2009
US$m
Restated
1 January
2009
US$m
2010
US$m
46
2
48
34
2
-
36
62
3
65
-
2
-
2
13
-
13
-
3
6
9
2010
US$m
Restated
2009
US$m
1,158
701
(24)
(10)
-
(24)
-
1,801
810
273
(35)
(3)
(81)
-
194
1,158
2010
US$m
Restated
2009
US$m
Restated
1 January
2009
US$m
740
699
127
207
26
2
-
-
-
581
274
108
172
23
-
-
-
-
1,801
1,158
364
129
72
162
4
-
3
75
1
810
notes to and forming part of the Financial Report
For the year ended 31 December 2010
13. Oil and gas properties
Year ended 31 December 2010
Carrying amount at 1 January 2010
Additions
104
104
Depreciation and amortisation
i
i
W
W
o
o
o
o
d
d
s
s
d
d
e
e
P
P
e
e
t
t
r
r
o
o
e
e
u
u
m
m
L
L
t
t
d
d
l
l
|
|
2
2
0
0
1
1
0
0
A
A
n
n
n
n
u
u
a
a
l
l
R
R
e
e
p
p
o
o
r
r
t
t
impairment loss
Completions and transfers
Currency translation differences
Carrying amount at 31 December 2010
At 31 December 2010
Historical cost
Accumulated depreciation and impairment
Net carrying amount
At 1 January 2009 (Restated)
Historical cost
Accumulated depreciation and impairment
net carrying amount
Year ended 31 December 2009 (Restated)
Carrying amount at 1 January 2009
Additions
Transfer to non-current assets held for sale(1)
Transfer to disposal group held for sale
Disposals at written down value
Depreciation and amortisation
impairment loss
Completions and transfers
Currency translation differences
Carrying amount at 31 December 2009
At 31 December 2009 (Restated)
Historical cost
Accumulated depreciation and impairment
net carrying amount
Land
and
buildings
Transferred
exploration
and
evaluation
Plant
and
equipment
Marine
vessels and
carriers
Projects
in
development
Total
US$m
US$m
US$m
US$m
US$m
US$m
376
-
(7)
-
(31)
-
338
573
(235)
338
385
(131)
254
254
-
(10)
(32)
-
(1)
(3)
97
71
376
573
(197)
376
155
-
(29)
(9)
24
-
141
409
(268)
141
361
(157)
204
204
1
-
(49)
-
(39)
-
(6)
44
155
385
(230)
155
4,188
67
(696)
(88)
356
-
138
-
(6)
-
-
-
9,000
3,404
-
-
(325)
-
13,857
3,471
(738)
(97)
24
-
3,827
132
12,079
16,517
8,931
(5,104)
3,827
7,154
(2,898)
4,256
4,256
(554)
-
(410)
(3)
(694)
(17)
585
1,025
4,188
8,544
(4,356)
4,188
373
(241)
132
292
(178)
114
114
-
-
-
-
(5)
-
(3)
32
138
373
(235)
138
12,079
-
12,079
3,761
-
3,761
3,761
4,295
-
(14)
(5)
-
-
(673)
1,636
9,000
9,000
-
9,000
22,365
(5,848)
16,517
11,953
(3,364)
8,589
8,589
3,742(1)
(10)
(505)
(8)
(739)
(20)
-
2,808
13,857
18,875
(5,018)
13,857
(1)
impairment of assets attributable to non-current assets held for sale recognised in the income statement was US$3 million. immediately before the classification as
non-current assets held for sale, the recoverable amount was estimated based on fair value less cost to sell. The net carrying amount of the non-current assets was
US$13 million. As a result, an impairment loss of US$3 million was recognised to reduce the carrying amount to the recoverable amount.
Borrowing costs capitalised in oil and gas properties during the year were US$217 million (2009: US$162 million) at a weighted
average interest rate of 3.7% (2009: 4.2%).
notes to and forming part of the Financial Report
For the year ended 31 December 2010
14. Other plant and equipment
(a) Other plant and equipment
Plant and equipment
Less: Accumulated depreciation
Assets under construction
(b) Reconciliation of the carrying amounts of other plant and equipment at the
beginning and end of the financial year
Carrying amount at 1 January
Additions
Disposals at written down value
impairment loss
Completions and transfers
Depreciation and amortisation
Currency translation differences
Carrying amount at 31 December
15. Payables
(a) Payables (current)
Trade payables(1)
Other payables(1)
interest payable(2)
(b) Payables (non-current)
Loan payables(3)
(1) Trade and other payables are interest-free and normally settled on 30 day terms.
(2) Details regarding interest-bearing liabilities are contained in note 26(e).
(3) Loan payable are unsecured, interest-free and have a repayment period of 10 years.
Restated
2009
US$m
Restated
1 January
2009
US$m
2010
US$m
160
(88)
72
-
72
82
1
-
-
-
(11)
-
72
163
(81)
82
-
82
77
2
(1)
(1)
(1)
(13)
19
82
128
(55)
73
4
77
105
105
i
i
W
W
o
o
o
o
d
d
s
s
d
d
e
e
P
P
e
e
t
t
r
r
o
o
e
e
u
u
m
m
L
L
t
t
d
d
l
l
|
|
2
2
0
0
1
1
0
0
F
F
n
n
a
a
n
n
c
c
a
a
i
i
i
i
l
l
R
R
e
e
p
p
o
o
r
r
t
t
Restated
2009
US$m
Restated
1 January
2009
US$m
2010
US$m
245
934
55
345
784
57
314
807
35
1,234
1,186
1,156
35
-
-
notes to and forming part of the Financial Report
For the year ended 31 December 2010
16.
Interest-bearing liabilities
(a)
Interest-bearing liabilities (current)(1)
Bonds
Debt facilities
106
106
(b)
Interest-bearing liabilities (non-current)(1)
i
i
W
W
o
o
o
o
d
d
s
s
d
d
e
e
P
P
e
e
t
t
r
r
o
o
e
e
u
u
m
m
L
L
t
t
d
d
l
l
|
|
2
2
0
0
1
1
0
0
A
A
n
n
n
n
u
u
a
a
l
l
R
R
e
e
p
p
o
o
r
r
t
t
Bonds
Debt facilities
(1) Details regarding interest-bearing liabilities are contained in note 26(e).
17. Tax payable
income tax payable
PRRT payable
18. Other financial liabilities
(a) Other financial liabilities (current)
Derivative instruments (at fair value)(1)
Other financial liability
(b) Other financial liabilities (non-current)
Derivative instruments (at fair value)(1)
Other financial liability
(1) Details regarding derivative instruments are contained in note 26(f).
Restated
2009
US$m
Restated
1 January
2009
US$m
-
-
-
-
-
-
2010
US$m
300
103
403
1,927
2,585
4,512
2,220
2,719
4,939
545
1,499
2,044
Restated
2009
US$m
Restated
1 January
2009
US$m
110
88
198
306
69
375
2010
US$m
6
29
35
Restated
2009
US$m
Restated
1 January
2009
US$m
2010
US$m
-
18
18
-
5
5
28
-
28
-
-
-
1
-
1
3
-
3
notes to and forming part of the Financial Report
For the year ended 31 December 2010
19. Other liabilities
(a) Other liabilities (current)
Unearned revenue
Gas purchase commitments
(b) Other liabilities (non-current)
Unearned revenue
Gas purchase commitments
Defined benefit superannuation plan
20. Provisions
At 1 January 2010
Change in provision
Unwinding of present value discount
Transferred to liabilities held for sale
Currency translation differences
At 31 December 2010
At 31 December 2010
Current
non-current
At 1 January 2009 (Restated)
Change in provision
Unwinding of present value discount
Transferred to liabilities held for sale
Currency translation differences
At 31 December 2009 (Restated)
At 1 January 2009 (Restated)
Current
non-current
At 31 December 2009 (Restated)
Current
non-current
Restated
2009
US$m
Restated
1 January
2009
US$m
2010
US$m
12
1
13
143
17
14
174
16
1
17
154
18
14
186
11
3
14
148
21
32
201
Restoration
of operating
locations(1)
Employee
benefits(2)
Other
Total
US$m
US$m
US$m
US$m
434
129
18
-
-
581
7
574
581
874
(625)
15
(22)
192
434
7
867
874
7
427
434
121
35
-
-
-
156
119
37
156
87
8
-
-
26
121
76
11
87
97
24
121
9
2
-
-
-
11
11
-
11
5
4
-
-
-
9
5
-
5
9
-
9
564
166
18
-
-
748
137
611
748
966
(613)
15
(22)
218
564
88
878
966
113
451
564
(1) Details regarding restoration of operating locations are contained in note 1(l) and 1(ad).
(2) Details regarding employee benefits are contained in note 1(v) and 28.
107
107
i
i
W
W
o
o
o
o
d
d
s
s
d
d
e
e
P
P
e
e
t
t
r
r
o
o
e
e
u
u
m
m
L
L
t
t
d
d
l
l
|
|
2
2
0
0
1
1
0
0
F
F
n
n
a
a
n
n
c
c
a
a
i
i
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
21. Contributed equity
Restated
2009
US$m
Restated
1 January
2009
US$m
2010
US$m
(a)
Issued and fully paid shares
783,401,631 (2009: 748,598,989) ordinary shares(1)
5,036
3,705
1,957
(b) Shares reserved for employee share plans
1,578,948 (2009: 2,965,835)(2) ordinary shares(3)
(57)
(78)
(113)
(1) All shares are a single class with equal rights to dividends, capital distributions and voting. The company does not have authorised capital nor par value in
respect of its issued shares.
(2) 2009 figure has been corrected to reflect the actual number of shares.
(3) information relating to the number of Woodside Petroleum Ltd shares reserved for employee share plans can be found in note 28(a) and (b).
2010
Shares
2009
Shares
2010
US$m
Restated
2009
US$m
(c) Movements in issued and fully paid shares
At 1 January
748,598,989
698,553,001
3,705
1,957
DRP underwriting agreement
Ordinary shares issued at A$36.25 (2008 final dividend)
Ordinary shares issued at A$48.48 (2009 interim dividend)
-
-
5,165,380
3,769,777
DRP
Ordinary shares issued at A$35.50 (2008 final dividend)
Ordinary shares issued at A$47.67 (2009 interim dividend)
Ordinary shares issued at A$45.42 (2009 final dividend)
Ordinary shares issued at A$42.49 (2010 interim dividend)
-
-
2,891,112
3,264,722
5,555,235
4,343,965
-
-
Rights issue
Ordinary shares issued at A$42.10
28,646,808
31,211,631
Share issue costs (net of tax)
At 31 December
783,401,631
748,598,989
-
-
-
-
121
133
1,078
(1)
5,036
134
160
141
182
-
-
1,156
(25)
3,705
108
108
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P
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e
e
u
u
m
m
L
L
t
t
d
d
l
l
|
|
2
2
0
0
1
1
0
0
A
A
n
n
n
n
u
u
a
a
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R
R
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
22. Other reserves
At 1 January 2010
Share-based payments
Cash flow hedges
net deferred loss recognised in equity
Loss recognised in revenue
Available-for-sale financial assets
net gain on hedge of net investment
Currency translation differences
At 31 December 2010
At 1 January 2009 (Restated)
Share-based payments
Cash flow hedges
net deferred loss recognised in equity
Gain recognised in revenue
Available-for-sale financial assets
net gain on hedge of net investment
Currency translation differences
At 31 December 2009 (Restated)
Nature and purpose of reserves
Employee benefits reserve
Employee
benefits
reserve
Foreign
currency
translation
reserve
Hedge of net
investment
reserve
Hedging
reserve
Investment
fair value
reserve
Total
US$m
US$m
US$m
US$m
US$m
US$m
91
101
-
-
-
-
-
192
49
42
-
-
-
-
-
91
679
-
-
-
-
-
-
679
(594)
-
-
-
-
-
1,273
679
96
-
-
-
-
14
-
110
(108)
-
-
-
-
204
-
96
(14)
-
-
14
-
-
-
-
9
-
(10)
(13)
-
-
-
(14)
(6)
-
-
-
(4)
-
-
(10)
(6)
-
-
-
-
-
-
(6)
846
101
-
14
(4)
14
-
971
(650)
42
(10)
(13)
-
204
1,273
846
Used to record share-based payments associated with the employee share plans.
Foreign currency translation reserve
Used to record foreign exchange differences arising from the translation of the financial statements of foreign entities from
their functional currency to the Group’s presentation currency.
Hedge of net investment reserve
Used to record gains and losses on hedges of net investments in foreign operations.
Hedging reserve
Used to record the effective portion of changes in the fair value of cash flow hedges.
Investment fair value reserve
Used to record changes in the fair value of the Group’s available-for-sale financial assets.
109
109
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u
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m
L
L
t
t
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d
l
l
|
|
2
2
0
0
1
1
0
0
F
F
n
n
a
a
n
n
c
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
23. Retained earnings
At 1 January
net profit for the year
Dividends
At 31 December
2010
US$m
4,339
1,575
(773)
5,141
Restated
2009
US$m
3,439
1,474
(574)
4,339
24. Assets and liabilities of disposal group classified as held for sale
110
110
(a) Details of disposal group held for sale
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l
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|
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2
2
0
0
1
1
0
0
A
A
n
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On 31 October 2009, Woodside Energy Ltd executed a Sale and Purchase Agreement to dispose of Woodside's
51.55% interest in the Otway project (disposal group), being Exploration Permits Vic/P43 and T/30P and
Production Licences Vic/L23, T/L2, T/L3 and T/34P, to Origin Energy Resources Ltd. The disposal group is
included in the Australia Business Unit segment. As at 31 December 2009, the sale remained subject to the
satisfaction of a number of Conditions Precedent including the assignment of third party contracts.
On 16 March 2010, all Conditions Precedent to the sale were satisfied enabling completion of the sale for
US$643 million in cash, resulting in a pre-tax gain of US$143 million. As the disposal group was sold prior to
31 December 2010, the assets and liabilities classified as part of a disposal group held for sale as at
31 December 2009 are no longer included in the statement of financial position.
(b) Assets and liabilities of disposal group held for sale
The major classes of assets and liabilities of the disposal group as at 31 December 2009 are as follows:
Assets
Cash and cash equivalents
Receivables
inventories
Oil and gas properties
Assets classified as held for sale
Liabilities
Payables
Provisions
Liabilities directly associated with assets classified as held for sale
Net assets attributable to disposal group held for sale
Restated
2009
US$m
(4)
25
2
502
525
(15)
(22)
(37)
488
notes to and forming part of the Financial Report
For the year ended 31 December 2010
25. Parent entity information
Information relating to Woodside Petroleum Ltd
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
issued and fully paid shares
Share reserved for employee share plans
Employee benefits reserve
Foreign currency translation reserve
Retained earnings
Total shareholders’ equity
Profit of the parent entity
Total comprehensive income of the parent entity
Guarantees
2010
US$m
Restated
2009
US$m
-
5,786
(176)
(373)
5,413
5,036
(57)
154
303
(23)
5,413
756
756
-
4,576
(398)
(583)
3,993
3,705
(78)
69
303
(6)
3,993
611
1,170
Woodside Petroleum Ltd and Woodside Energy Ltd (a subsidiary company) are parties to a Deed of Cross Guarantee as
disclosed in note 36(b). The effect of the Deed is that Woodside Petroleum Ltd has guaranteed to pay any deficiency in the
event of winding up of the subsidiary company under certain provisions of the Corporations Act 2001. The subsidiary company
has also given a similar guarantee in the event that Woodside Petroleum Ltd is wound up.
Woodside Petroleum Ltd has guaranteed the discharge by a subsidiary company of its financial obligations under debt facilities
disclosed in note 26(e).
26. Financial and capital risk management
(a) Financial risk management objectives and policies
The Group’s principal financial instruments, other than derivatives, comprise interest-bearing debt, cash and short-term
deposits. Other financial instruments include trade receivables and trade payables, which arise directly from operations.
Market (including foreign exchange, commodity price and interest rate risk), liquidity and credit risks arise in the normal
course of the Group’s business. Primary responsibility for identification and control of financial risk rests with a central
treasury department (Treasury) under directives approved by the Board.
The Group’s management of financial risk is aimed at ensuring net cash flows are sufficient to:
• meet all its financial commitments as and when they fall due;
• maintain the capacity to fund its committed project developments;
• pay a reasonable dividend; and
• maintain a long-term credit rating of not less than ‘investment grade’.
The Group monitors and tests its forecast financial position against these criteria and, in general, will undertake hedging
activity only when necessary to ensure that these objectives are achieved. Other circumstances that may lead to
hedging activities include the purchase of reserves and the underpinning of the economics of a new project.
it is, and has been throughout the period, the Group Treasury policy that no speculative trading in financial instruments
shall be undertaken. The Group’s forecast financial risk position with respect to key financial objectives and compliance
with Treasury policy is regularly reported to the Board. The Audit & Risk Committee oversees the internal auditor review
of the treasury function.
111
111
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m
L
L
t
t
d
d
l
l
|
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2
2
0
0
1
1
0
0
F
F
n
n
a
a
n
n
c
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a
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
26. Financial and capital risk management (continued)
(b) Market risk
(i)
Foreign exchange risk
Foreign exchange risk arises from future commitments, assets and liabilities that are denominated in a currency
that is not a functional currency of an entity.
Prior to 1 January 2010
The functional currency of most operations was Australian dollars. The Group was principally exposed to foreign
exchange risk on those financial instruments denominated in US dollars, held by entities with an Australian dollar
functional currency.
112
112
Subsequent to 1 January 2010
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L
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d
l
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|
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2
2
0
0
1
1
0
0
A
A
n
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p
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Woodside Petroleum Ltd has experienced a period of sustained growth in US dollar revenue streams and in the
period up to 31 December 2009 increased its US dollar debt levels significantly. Consequently, the directors have
determined that the functional currency of the company and all its subsidiaries is US dollars. As a result, currency
exposure relates to transactions and balances in currencies other than US dollars. The majority of the operations’
revenue is denominated in US dollars whereas the majority of operating expenditure and capital expenditure
is incurred in currencies other than US dollars (including Australian dollars). As a result most operations within
the Group are exposed to foreign currency risk arising from Australian dollars. Monetary items denominated in
currencies other than the functional currency are translated into US dollar equivalents and any associated gain or
loss is taken to the income statement.
Measuring the exposure to foreign exchange risk is achieved by regularly monitoring and performing sensitivity
analysis on the Group’s financial position. Currently there are no foreign exchange hedge programs in place. it is
the Group's policy not to enter into forward foreign currency contracts until a firm commitment is in place. Group
Treasury manages the purchase of foreign currency to meet operational requirements.
The following table shows financial instruments by currency. The Group is principally exposed to foreign exchange
risk on those financial instruments denominated in Australian dollars.
2010(1)
Restated(2)
2009
USD
AUD
Other
Total
USD
AUD
US$m US$m US$m US$m
US$m
US$m
Other
US$m
Total
US$m
910
329
108
1,347
361
4,849
23
5,233
44
110
14
168
866
-
-
866
9
-
-
9
42
104
-
146
963
439
122
1,524
1,269
4,953
23
6,245
38
314
82
434
332
4,738
28
5,098
1,155
167
29
1,351
659
-
-
659
14
22
6
42
195
252
-
447
1,207
503
117
1,827
1,186
4,990
28
6,204
Financial assets
Cash
Receivables
Other financial assets
Financial liabilities
Payables
interest-bearing liabilities(3)
Other financial liabilities
(1) Currency exposures exist in respect of balances denominated in currencies other than US dollars.
(2) Foreign exchange exposures for the comparative period were translated into US dollars for presentation purposes.
(3) Excludes deferred transaction costs.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
26. Financial and capital risk management (continued)
(b) Market risk (continued)
(i)
Foreign exchange risk (continued)
The following table summarises the sensitivity of the balance of financial instruments held at the reporting date to
movement in the exchange rate of the US dollar to the Australian dollar, with all other variables held constant. The
15% sensitivity is based on reasonably possible changes, over a financial year, using the observed range of actual
historical rates for the preceding five-year period, which has increased in volatility during the year.
Judgements of reasonably possible movements
US$:A$ +15% (2009:+10%)
US$:A$ -15% (2009:-10%)
Post tax profits
(decrease)/increase
Other comprehensive income
(decrease)/increase
2010(2)
US$m
(69)
81
Restated(1)
2009
US$m
230
(281)
2010(2)
US$m
-
-
Restated(1)
2009
US$m
70
(85)
(1) Prior to 1 January 2010, the sensitivity was related to financial instruments denominated in US dollars, held by entities with an Australian dollar functional
currency. 2009 figures have been translated into US dollars for presentation purposes following the change in presentation currency to US dollars.
(2) Subsequent to 1 January 2010, the sensitivity is related to financial instruments denominated in Australian dollars.
Prior to 1 January 2010, the sensitivity was related to financial instruments denominated in US dollars.
The sensitivities in 2009 have been translated into US dollars for presentation purposes following the change
in presentation currency to US dollars. The sensitivity of post tax profits in 2009 was due to a higher level of
US dollar financial liabilities at reporting date. The sensitivity of other comprehensive income in 2009 was due to a
certain amount of US dollar borrowings which were used as a hedge of net investment in the US dollar functional
currency entities.
Subsequent to 1 January 2010, the sensitivity is related to financial instruments denominated in Australian
dollars. A lower sensitivity of post tax profits in 2010 is due to lower Australian dollar financial instruments in 2010
compared to higher US dollar financial instruments in 2009.
(ii) Commodity price risk
The Group’s revenue is exposed to commodity price fluctuations, in particular oil and gas prices.
Group Treasury measures exposure to commodity price risk by monitoring and stress testing the Group’s forecast
financial position to sustained periods of low oil and gas prices. This analysis is regularly performed on the Group’s
portfolio and, as required, for discrete projects and acquisitions.
The Group’s oil commodity hedging program utilises financial instruments based on new York Mercantile
Exchange (nYMEX) West Texas intermediate (WTi) pricing. Refer to note 26(f) for details of the hedging
programs.
The existing financial instruments used to hedge against commodity price risk expired on 31 December 2010 and
no other hedging programs were placed or in place during 2010.
(iii)
Interest rate risk
interest rate risk is the risk that the Group’s financial position will be adversely affected by movements in interest
rates that will increase the cost of floating rate debt or opportunity losses that may arise on fixed rate debt in
a falling interest rate environment. Cash and short-term deposits are short term in nature and are therefore
monitored by Group Treasury to achieve the optimal outcome.
The Group’s main interest rate risk arises from long-term debt. Debt issued at floating rates expose the Group
to cash flow interest rate risk. The Group’s policy is to manage its interest rate risk by maintaining an appropriate
mix of fixed and floating rate debt. To manage the ratio of fixed rate debt to floating rate debt, the Group may
enter into interest rate swaps. Derivatives are entered into against specific rate exposures only, as disclosed in
note 26(f). no hedging programs were placed during 2010.
113
113
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u
u
m
m
L
L
t
t
d
d
l
l
|
|
2
2
0
0
1
1
0
0
F
F
n
n
a
a
n
n
c
c
a
a
i
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i
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l
l
R
R
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p
p
o
o
r
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t
t
114
114
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d
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P
P
e
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o
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u
u
m
m
L
L
t
t
d
d
l
l
|
|
2
2
0
0
1
1
0
0
A
A
n
n
n
n
u
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a
a
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R
R
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p
p
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
26. Financial and capital risk management (continued)
(b) Market risk (continued)
(iii)
Interest rate risk (continued)
At reporting date, the Group had the following mix of financial assets and liabilities exposed to various benchmark
interest rates that were not designated in cash flow hedges:
Financial assets
Other financial assets
Financial liabilities
interest-bearing liabilities(1)
(1) Excludes deferred transaction costs.
2010
US$m
Restated
2009
US$m
24
18
(2,600)
(2,740)
The following table summarises the sensitivity of the balance of financial instruments held at the reporting date,
following a movement to London interbank Offered Rate (LiBOR), with all other variables held constant. The
LiBOR +/- 1.5% sensitivity is based on reasonably possible changes, over a financial year, using the observed
range of actual historical rates for the preceding five-year period.
Judgements of reasonably possible movements
LiBOR +1.5% (2009: +1.5%)
LiBOR -1.5% (2009: -1.5%)
Post tax profits
(decrease)/increase
Other comprehensive income
(decrease)/increase
2010(2)
US$m
Restated(2)
2009
US$m
(8)
8
(11)
11
2010
US$m
-
-
Restated
2009
US$m
-
-
(2) Excludes impact of sensitivities on interest-bearing liabilities where borrowing costs are capitalised to qualifying assets.
The sensitivity is lower in 2010 than in 2009 due to the interest rate swap being one year closer to maturity
at the reporting date.
(c) Liquidity risk
Liquidity risk arises from financial liabilities of the Group and the Group’s subsequent ability to meet their obligations to
repay financial liabilities as and when they fall due.
The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet its financial
commitments in a timely and cost-effective manner.
Group Treasury continually reviews the Group’s liquidity position including cash flow forecasts to determine
the forecast liquidity position and maintain appropriate liquidity levels. Financial liabilities available to the Group are
disclosed in note 26(e). Refer to note 26(g) for details of the repayment obligations in respect of the amount of
facilities drawndown.
2010
Payables maturity analysis
Restated
2009
Payables maturity analysis
< 30 days 30-60 days > 60 days
Total
< 30 days 30-60 days > 60 days
Total
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Trade payables
Other payables
interest payable
Total payables
240
934
55
1,229
5
-
-
5
-
35
-
35
245
969
55
1,269
262
784
57
1,103
83
-
-
83
-
-
-
-
345
784
57
1,186
notes to and forming part of the Financial Report
For the year ended 31 December 2010
26. Financial and capital risk management (continued)
(d) Credit risk
Credit risk is the risk that a contracting entity will not complete its obligation under a financial instrument, resulting in
a financial loss to the Group. Credit risk arises from the financial assets of the Group, which comprise trade and other
receivables.
The Group manages its credit risk on trade receivables and financial instruments by predominantly dealing with
counterparties with a credit rating equal to or better than the Group. Customers who wish to trade on unsecured credit
terms are subject to credit verification procedures. Receivable balances are monitored on an ongoing basis. As a result
the Group’s exposure to bad debts is not significant. The Group’s maximum credit risk is limited to the carrying amount
of its financial assets. At the reporting date there were no significant concentrations of credit risk within the Group.
115
115
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m
L
L
t
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d
d
l
l
|
|
2
2
0
0
1
1
0
0
F
F
n
n
a
a
n
n
c
c
a
a
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R
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t
2010
Restated
2009
Receivables maturity analysis
Receivables maturity analysis(1)
< 30 days 30-60 days > 60 days
Total
< 30 days 30-60 days > 60 days
Total
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Trade receivables
Other receivables
Dividends receivable
interest receivable
Total receivables
285
151
2
-
438
-
1
-
-
1
(1) no significant receivables are past due at the reporting date.
(e)
Financing facilities
364-day revolving credit facilities
-
-
-
-
-
285
152
2
-
439
293
174
3
1
471
-
3
-
-
3
-
29
-
-
29
293
206
3
1
503
The Group has three dual currency (US and Australian dollars) 364-day revolving credit facilities totalling US$200 million.
interest rates are based on LiBOR and are fixed at the commencement of the drawdown period. interest is paid at
the end of the drawdown period. The 364-day revolving credit facilities are subject to various covenants and a negative
pledge restricting future secured borrowings, subject to a number of permitted lien exceptions. neither the covenants
nor the negative pledges have been breached at any time during the reporting year.
Bi-lateral loan facilities
The Group has 17 bi-lateral loan facilities, with 16 facilities totalling US$1,525 million and one facility totalling
EUR€78 million. Details of bi-lateral loan facilities at the reporting date are as follows:
Number of facilities
Term (years)
6
2
1
1
1
1
3
1
1
5
5
5
5
4
4
3
3
2
Currency
AUD, USD
Multiple
Multiple
USD
Multiple
AUD, USD
AUD, USD
USD
EUR
Extension option
Evergreen
Evergreen
Evergreen
not evergreen
Evergreen
Evergreen
Evergreen
Evergreen
not evergreen
interest rates are based on LiBOR and are fixed at the commencement of the drawdown period. The European
interbank Offered Rate (EURiBOR) is used for the Euro facility. interest is paid at the end of the drawdown period.
Evergreen facilities may be extended continually by a year subject to the bank’s agreement. The bi-lateral loan facilities
are subject to various covenants and a negative pledge restricting future secured borrowings, subject to a number of
permitted lien exceptions. neither the covenants nor the negative pledges have been breached at any time during the
reporting year.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
26. Financial and capital risk management (continued)
(e)
Financing facilities (continued)
Bonds
The Group has five unsecured bonds issued to ‘qualified institutional buyers’ in the United States of America
as defined in Rule 144A of the US Securities Act 1933. These bonds include:
• The 2011 US$300 million bond has a fixed rate coupon of 6.70% p.a. and matures on 1 August 2011;
• The 2013 US$250 million bond has a fixed rate coupon of 5.00% p.a. and matures on 15 november 2013;
• The 2014 US$400 million bond has a fixed rate coupon of 8.125% p.a. and matures on 1 March 2014;
116
116
• The 2014 US$700 million bond has a fixed rate coupon of 4.50% p.a. and matures on 10 november 2014; and
• The 2019 US$600 million bond has a fixed rate coupon of 8.75% p.a. and matures on 1 March 2019.
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1
1
0
0
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interest on the bonds is payable semi-annually in arrears. The bonds are subject to various covenants and
a negative pledge restricting future secured borrowings, subject to a number of permitted lien exceptions.
neither the covenants nor the negative pledges have been breached at any time during the reporting year.
Japan Bank for International Cooperation (JBIC) Facility
On 24 June 2008, the Group entered into a committed loan facility totalling US$1,500 million (JBiC Facility). The
JBiC Facility comprises a 15-year, US$1,000 million tranche with JBiC (JBiC Tranche), and a five-year, US$500
million commercial tranche with a syndicate of eight Australian and international banks arranged by The Bank of
Tokyo-Mitsubishi UFJ, Ltd (Commercial Tranche). There is a prepayment option for both the Commercial Tranche
and the JBiC Tranche. interest rates are based on LiBOR. interest is payable semi-annually in arrears on the JBiC
Tranche and with a choice of one, two, three, six, nine or twelve months in arrears on the Commercial Tranche.
Both tranches amortise on a straight-line basis, with equal instalments of principal due on each interest payment
date (every six months) starting on the earlier of 7 January 2012 or the first 7 January or 7 July to occur no less
than 180 days after the commercial start date of the Pluto Liquefied natural Gas (LnG) Project. Under the JBiC
Facility, 90% of the receivables from designated Pluto LnG Project Sale and Purchase Agreements, are secured
in favour of the lenders through a trust structure, with a required reserve amount of US$30 million. To the extent
that this reserve amount remains fully funded and no default notice or acceleration notice has been given, the
revenue from the Pluto LnG Project continues to flow directly to the Group from the trust account. The JBiC
Facility is subject to various covenants and a negative pledge restricting future secured borrowings, subject to a
number of permitted lien exceptions. neither the covenants nor the negative pledge has been breached at any
time during the reporting year.
Asian syndicated facility
On 8 December 2010, the Group executed a five-year US$1,100 million syndicated loan facility with 34 banks.
Funds from the loan were used to repay the US$1,100 million syndicated loan facility executed in May 2009.
Australia and new Zealand Banking Group Limited and The Bank of Tokyo-Mitsubishi UFJ, Ltd were joint-
mandated lead arrangers of the syndicated loan. The loan is composed of a US$550 million term facility (Facility
A) and a US$550 million revolving facility (Facility B). interest rates are based on LiBOR for both facilities and
are fixed at the commencement of the drawdown period. interest is paid at the end of the drawdown period.
The US$1,100 million under this loan was fully utilised on 15 December 2010. The syndicated loan is subject to
various covenants, including a negative pledge restricting future secured borrowings, subject to a number of
permitted lien exceptions. neither the covenants nor the negative pledge has been breached at any time during
the reporting year.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
26. Financial and capital risk management (continued)
(f) Hedging and derivatives
Commodity prices
The Group’s future revenue is exposed to commodity price fluctuations. The Group may enter into commodity price
derivative instruments to manage this exposure.
Instrument
Notional
volumes
Rate
Expiry
Hedge type
Crude oil
zero cost
collars
Sell
2,500,000 bbl
Receive
US$55 - 73.68/bbl
2010
Cash flow hedge - manages risk
from anticipated oil production
receipts from projects in the
Greater Exmouth Area. notional
volumes amount to approximately
19% of total anticipated
production from 2009 to 2010.
Fair value
2010
US$m
Restated
2009
US$m
-(1)
(28)
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(1) The existing financial instruments, used to manage commodity price fluctuations, expired on 31 December 2010. no hedging programs were placed during 2010.
Interest rates
|
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2
2
0
0
1
1
0
0
F
F
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The Group manages its exposure to interest rate risk by maintaining a mix of fixed rate and floating rate debt. in
general, the fixed rate debt and floating rate debt ratio is managed through an appropriate choice of debt instrument.
The Group may enter into interest rate swaps to manage the ratio of fixed rate debt to floating rate debt.
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Instrument
Notional
amount
interest
rate swaps
US$250
million
Rate
Expiry
Hedge type
Receive 5% fixed
2013
Pay LiBOR
less 0.10%
Fair value hedge in 2006 -
designated to swap the 2013
US$250 million bond from a fixed
rate to floating rate exposure.
De-designated as a fair value
hedge on 1 January 2007.
Fair value
2010
US$m
Restated
2009
US$m
24
18
notes to and forming part of the Financial Report
For the year ended 31 December 2010
26. Financial and capital risk management (continued)
(g) Maturity profile of interest-bearing liabilities
The maturity profile of the Group’s interest-bearing liabilities are as follows:
Due for payment in
1 year
or less
1-2 years
2-3 years
3-4 years
4-5 years More than
Total
5 years
US$m
US$m
US$m
US$m
US$m
US$m
US$m
(580)
(580)
(181)
(181)
(488)
(488)
(616)
(616)
(735)
(735)
(1,315)
(1,315)
(1,266)
(1,266)
(1,469)
(1,469)
(5,853)
(5,853)
(1,580)
(1,580)
(708)
(708)
(1,288)
(1,288)
(1,608)
(1,608)
(5,981)
(5,981)
118
118
interest-bearing liabilities(1)
2010
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2009 (Restated)
interest-bearing liabilities(1)
(1) Excludes deferred transaction costs.
|
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2
0
0
1
1
0
0
A
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The amounts disclosed in the tables above are the contractual undiscounted cash flows and hence will not necessarily
reconcile with the amounts disclosed in the consolidated statement of financial position.
(h)
Fair values
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
• Level 1 - the fair value is calculated using quoted prices in active markets;
• Level 2 - the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable
for the asset or liability; and
• Level 3 - the fair value is estimated using inputs for the asset or liability that are not based on observable
market data.
The fair values of financial instruments and the methods used to estimate their fair values are as follows:
2010
Restated
2009
Total
Quoted
market
price
(Level 1)
Valuation
technique -
market
observable
inputs
(Level 2)
Valuation
technique -
non-market
observable
inputs
(Level 3)
Quoted
market
price
(Level 1)
Valuation
technique -
market
observable
inputs
(Level 2)
Valuation
technique -
non-market
observable
inputs
(Level 3)
Total
US$m US$m
US$m US$m US$m
US$m
US$m US$m
Financial assets
Derivative instruments: current
Derivative instruments: non-current
Other investments (available-for-sale):
listed entity investments
Embedded derivatives
Financial liabilities
Derivative instruments: current
-
-
6
-
-
9
15
-
-
-
-
-
-
54
-
9
15
6
54
-
-
-
9
-
-
-
18
-
-
-
-
-
54(2)
-
18
9
54
(28)
-
(28)
(2) 2009 classification of embedded derivatives has been changed to reflect the correct valuation technique.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
26. Financial and capital risk management (continued)
(h)
Fair values (continued)
Quoted market price represents the fair value determined based on quoted prices on active markets as at the
reporting date.
The fair value of the listed equity instruments are based on quoted market prices and these financial instruments are
included in Level 1.
For financial instruments not quoted in active markets, the Group uses valuation techniques comparable to similar
instruments such as present value techniques for which market observable prices exist. Financial instruments that use
valuation techniques with only observable market inputs, that are not significant to the overall valuation, include interest
rate swaps, forward commodity contracts and embedded derivatives. These instruments are included in Level 2. in
circumstances where a valuation technique for these instruments is based on significant unobservable inputs, such
instruments are included in Level 3.
The fair values of receivables, payables, interest-bearing liabilities and other financial assets and liabilities which are not
measured at fair value approximate their carrying amounts.
Transfer between categories
There were no transfers between Level 1 and Level 2 during the year.
Reconciliation of Level 3 fair value movements
119
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2
2
0
0
1
1
0
0
F
F
n
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a
a
n
n
c
c
a
a
i
i
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i
l
l
At 1 January
Loss recognised in the income statement
At 31 December
Total loss stated in the above table for assets held at the end of the financial year
(i)
Capital management
2010
US$m
54
-
54
-
Restated
2009
US$m
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50
4
54
4
Group Treasury is responsible for the Group’s capital management including cash, debt and equity. Capital management
is undertaken to ensure that a secure, cost-effective and flexible supply of funds is available to meet the Group’s
operating and capital expenditure requirements. This involves the use of corporate forecasting models, which facilitates
analysis of the Group’s financial position including cash flow forecasts to determine the future capital management
requirements.
Group Treasury maintains a stable capital base from which the Group can pursue its growth aspirations, whilst
maintaining a flexible capital structure that allows access to a range of debt and equity markets to both draw upon and
repay capital. An example of the Group’s capital management is the activation of the Dividend Reinvestment Plan (DRP)
during a period of high capital expenditure.
The DRP was approved by shareholders at the Annual General Meeting in 2003 for activation as required to fund future
growth. The Group announced the activation of the DRP in December 2006 to manage capital requirements. The DRP
was activated with the 2006 final dividend and deactivated for the 2007 final dividend. The DRP was reactivated in 2008
and remains activated for the 2010 final dividend.
Group Treasury monitors a range of financial metrics, including gearing, and treasury policy breaches and exceptions.
The gearing ratio at the reporting date is 26% (2009: 30%).
notes to and forming part of the Financial Report
For the year ended 31 December 2010
27. Expenditure commitments
(a) Operating lease commitments
Rentals payable on non-cancellable operating leases, due
Within one year
After one year but not more than five years
Later than five years
2010
US$m
511
908
423
1,842
Restated
2009
US$m
569
1,351
494
2,414
120
120
The Group leases assets for operations including floating production, storage and off-take vessels, helicopters, supply
vessels, cranes, land, mobile offshore drilling units, office premises and computers.
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There are no restrictions placed upon the lessee by entering into these leases. Renewals are at the option of the
specific entity that holds the lease. Certain leases contain a clause enabling upward revision of the rental charge on
an annual basis based on the consumer price index. The Group made payments under operating leases of US$595
million during the year (2009: US$361 million). A portion of this amount relates to arrangements containing non-lease
elements, which are not practicable to separate.
|
|
2
2
0
0
1
1
0
0
A
A
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(b) Capital expenditure commitments
Expenditure contracted for but not provided for in the Financial Report, due
Within one year
After one year but not more than five years
Later than five years
(1) 2009 figures have been changed to reflect the correct amount.
(c) Other expenditure commitments
Other expenditure commitments predominantly for the future supply of services contracted
for but not provided for in the Financial Report, due
Within one year
After one year but not more than five years
Later than five years
(d)
Exploration commitments
Exploration expenditure obligations contracted for but not provided for in the Financial
Report, due
Within one year
After one year but not more than five years
Later than five years
By region
Australia
Browse Basin
Barrow Basin
Carnarvon Basin
Victoria
The Americas
Gulf of Mexico
Peru
Asia
Korea
743
23
3
769
102
169
3
274
178
199
1
378
47
-
276
-
9
-
46
378
1,469(1)
169(1)
4
1,642(1)
63
13
2
78
128
246
2
376
24
92
223
6
26
5
-
376
These obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations
of the Group.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
28. Employee benefits
(a) Woodside employee share plans
(i) Woodside employee share plan
During 2006, following a review of the Group’s total reward strategy across global operations, it was decided to
close the Woodside Employee Share Plan (WESP) with the last allocation being made to employees in August
2006. On announcement of closure, unrestricted possession (full entitlement) of these shares was provided
immediately to employees. Employees were required to repay or refinance WESP loans by 31 December 2009
and the plan was closed for repayments on 8 January 2010. The value of the outstanding loans as at 31 December
2009 was US$21 million. Before closing the WESP, the Group assessed incremental loan offer entitlements in
accordance with pre-established criteria based on remuneration levels.
Under the WESP, eligible employees were granted loans for the on-market purchase of shares in Woodside
Petroleum Ltd. The loans were interest-free, limited-recourse, were reduced by the application of dividends (after
taking into account employee liability for tax on those dividends) and were repayable upon the sale of shares or
termination of the employee.
WESP participants receive all of the rights of ordinary shareholders. Where the loan is repaid by the sale of
shares, any remaining surplus on sale is paid to the employee while any shortfall is borne by the Group.
Awards to employees under WESP are accounted for as share-based payments to employees for services
provided. The fair value of the benefit provided was estimated on issue using the Binomial option pricing model.
The following table illustrates the number and weighted average prices of shares reserved, acquired and
redeemed during the year under the WESP on behalf of employees.
2010
2009
Number of
shares
Weighted
average price(1) Cost
number of
shares
Weighted
average price(2)
Restated
Cost
(A$/share)
US$m
(A$/share)
US$m
At 1 January
1,082,538
Redemptions during the year
(1,082,538)
39.68
39.68
35
(40)
4,048,816
(2,966,278)
At 31 December
Less cumulative dividends applied
Shares reserved for employees
Shares eligible for unrestricted
possession
-
-
-
(5)(3)
1,082,538
-
-
-
1,082,538
1,082,538
23.31
17.34
39.68
21.03
39.68
75
(40)
35
(15)
20
35
(1) The weighted average share price for Woodside Petroleum Ltd during the year was A$43.59.
(2) The weighted average share price for Woodside Petroleum Ltd during the year was A$42.67.
(3) Represents foreign exchange differences on full settlement of outstanding loans.
121
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L
L
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|
|
2
2
0
0
1
1
0
0
F
F
n
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a
a
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a
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122
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2
0
0
1
1
0
0
A
A
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
28. Employee benefits (continued)
(a) Woodside employee share plans (continued)
(ii) Woodside share purchase plan
The Woodside Share Purchase Plan (WSPP) was introduced in April 2007 and was available to all employees,
including executives up to March 2009. The plan was suspended in April 2009 due to uncertainty regarding the
future operation of the plan created by proposed taxation legislation changes announced in the 2009 Federal
budget. The WSPP provided eligible employees with an opportunity to acquire Woodside shares and to share in
the growth of the company. The WSPP year was based on a 1 July to 30 June period (WSPP Year).
Participants in the WSPP elected to salary sacrifice an amount of base salary and this amount was applied by the
WSPP Trustee to purchase shares in Woodside Petroleum Ltd. Additional shares were granted (matching shares)
at a fixed annual ratio of the shares awarded for the salary sacrifice amount. in the 2008/09 WSPP Year, the ratio
was one for one and a half; the ratio for the 2007/08 WSPP Year was one for one. Conditions applied in order for
employees to become entitled to the matching shares.
Share acquisitions under the WSPP for the employee sacrificed amounts were made quarterly in arrears. The
shares were purchased by the Trustee on market by dividing the sacrificed amount by the volume weighted
average price paid for all the shares purchased for participating employees. The sacrificed amount is rounded
down to the nearest whole share. Any amount not used was carried forward and applied to the sacrificed amount
for the next quarter. Any balance at the end of the specified sacrifice period (normally 12 months) was paid to
the participant or carried over to the next sacrifice period if the employee elected to participate. if employment
ceased (for whatever reason) during a quarter or after the end of a quarter, but before any shares had been
purchased in respect of the quarter, no shares were transferred to the participant in relation to that quarter.
in order for the matching shares to beneficially vest to the participating employees in the WSPP, the employee
was required to hold shares purchased through the sacrificed amount for three years and remain employed at the
end of that qualification period.
Matching shares were purchased on a quarterly basis at the same time as the shares were purchased using the
employee’s sacrificed amount.
if employment ceased because of resignation or termination before the end of the three-year qualification period,
the participants forfeited their interests in any matching shares. Shares acquired using any sacrificed amount
were released to the participant.
The WSPP had 1,553 employees participating at 31 December 2010.
Matching shares acquired under the WSPP were accounted for as share-based payments to employees for
services provided and were measured at fair value, being the share price on acquisition date.
Grant date
Matching
shares acquired
Shares at
acquisition date
(A$/share)
Employee benefit
fair value
(US$/share)
2010
2009
January
March
- (1)
162,748
153,666
35.21
38.60
-
31.46
34.49
(1) no matching shares were acquired as the plan was suspended in April 2009.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
28. Employee benefits (continued)
(a) Woodside employee share plans (continued)
(iii) Woodside employee equity plan
in July 2009 Woodside introduced the Woodside Petroleum Ltd 2009 - 2012 Employee Equity Plan (EEP) which
is available to all employees including executives, other than the CEO. The EEP is intended to provide a retention
mechanism for participating employees as well as provide an opportunity to share in the growth of the company.
The Equity Rights (ERs) are a form of remuneration that is not dependent on employee's individual performance
or Woodside's performance. The EEP has 3,195 employees participating at 31 December 2010.
Eligible participants are entitled to receive an allocation of ERs. Each ER entitles the participants to receive a
Woodside share on vesting. The ERs will vest on 1 August 2012 (in the absence of any accelerating event,
including a change of control) if the employee is still employed by Woodside on 31 July 2012. An employee whose
employment is terminated by resignation, retirement or for cause prior to 31 July 2012 will forfeit all of their ERs.
Shares will either be issued by the company or acquired on market to satisfy vesting ER entitlements. The
number of ERs that vest may be adjusted for any interruptions to an employee's service. Participants in the EEP
cannot dispose of or otherwise deal with an ER and do not receive any dividends or have voting rights in respect
of an ER. Allocations of ERs to participants will be adjusted in the event of the company making a bonus issue of
shares or upon reconstruction of the company's share capital.
As a consequence of the renounceable rights issue by Woodside in December 2009, the Board resolved to issue
additional ERs under the EEP to maintain the value of the ERs held by participating employees. An additional
allocation of ERs was granted to each participant in early 2010. The same terms and conditions which apply to
existing ERs apply to these additional ERs.
The EEP is accounted for as a share-based payment to employees for services provided. The fair value of the
benefit provided is estimated using the Black-Scholes option pricing technique.
The number of equity rights and movements in each EEP offer are as follows:
2010
Grant date
On issue at
beginning of year
Granted during
the year
Vested during
the year
Forfeited/lapsed
during the year
On issue at
end of year
17 December 2010
24 September 2010
25 June 2010
30 April 2010
19 March 2010
30 December 2009
31 October 2009
-
-
-
-
-
219,143
5,928,896
6,148,039
192,851
237,995
329,274
43,113
264,930
-
13
1,068,176
-
-
-
(22)
-
(431)
(5,390)
(5,843)
-
(9,996)
(6,101)
(1,414)
(7,276)
(16,536)
(354,935)
(396,258)
192,851
227,999
323,173
41,677
257,654
202,176
5,568,584
6,814,114
2009
Grant date
On issue at
beginning of year
Granted during
the year
Vested during
the year
Forfeited/lapsed
during the year
On issue at
end of year
30 December 2009
31 October 2009
-
-
-
219,143
5,936,722
6,155,865
-
-
-
-
(7,826)
(7,826)
219,143
5,928,896
6,148,039
123
123
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L
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2
2
0
0
1
1
0
0
F
F
n
n
a
a
n
n
c
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a
a
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R
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t
notes to and forming part of the Financial Report
For the year ended 31 December 2010
28. Employee benefits (continued)
(a) Woodside employee share plans (continued)
(iii) Woodside employee equity plan (continued)
The following table lists the inputs to the Black-Scholes option pricing technique used for the years ended
31 December 2010 and 31 December 2009:
Valuation assumptions
Grant date
Vesting date
Share price at
grant date
(A$/share)
Employee benefit
fair value
(US$/ER)
Expected
dividend return
(%)
Expected life
(years)
17 December 2010
24 September 2010
25 June 2010
30 April 2010
19 March 2010
30 December 2009
31 October 2009
1 August 2012
1 August 2012
1 August 2012
1 August 2012
1 August 2012
1 August 2012
1 August 2012
43.17
44.48
43.28
45.40
46.73
47.35
47.70
40.81
40.51
35.71
39.83
40.53
39.68
39.81
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2.5
2.5
2.5
2.5
2.5
1.62
1.85
2.10
2.26
2.37
2.59
2.75
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(b) Executive share plans
The Executive incentive Plan (EiP) and Pay Rights (PR) Plans became effective 1 January 2005 and 15 March 2007
respectively. For further details regarding the EiP, PR Plans and the Group’s remuneration structure for the CEO and
senior executives refer to the Remuneration Report included in the 2010 Directors’ Report.
The following table illustrates the number and weighted average prices of shares reserved and acquired during the year
by the plan.
2010
2009
Number of
shares
Weighted
average price
(A$/share)
Cost
US$m
number of
shares
Weighted
average price
Restated
Cost
(A$/share)
US$m
Opening balance
Purchases during the year
650,650
-
Vested during the year
(147,406)
Shares reserved for executives
under EiP/PR
503,244
46.88
-
46.88
46.88
24
-
(6)
18
880,749
-
(230,099)
650,650
46.88
-
46.88
46.88
33
-
(9)
24
notes to and forming part of the Financial Report
For the year ended 31 December 2010
28. Employee benefits (continued)
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
28. Employee benefits (continued)
(c) Superannuation plan
Employees of the Group may be entitled to superannuation benefits on retirement, disability, death or withdrawal
under the Group’s Superannuation Plan. The Group has one funded plan with a defined benefit section and a defined
contribution section.
The defined benefit section of the plan is closed to new members. All new members receive accumulation only
benefits. The defined contribution section receives fixed contributions from Group companies and the Group’s legal or
constructive obligation is limited to these contributions.
Defined benefit superannuation plan
The Group has a legal obligation to settle defined benefit plan deficits, however, these do not need to be settled with an
immediate contribution or additional one-off contribution. Any defined benefit plan surplus may only be used to reduce
future contributions from the Group.
The present value of the defined benefit obligation has been determined using the projected unit credit method.
Employer contributions
Employer contributions to the defined benefit section of the plan are based on recommendations by the plan’s actuary.
Actuarial assessments are made at no more than yearly intervals and the last such assessment was made as at
31 December 2010.
Funding method
The objective of funding is to ensure that the benefit entitlements of members and other beneficiaries are fully funded
by the time they become payable. To achieve this objective, the actuary has adopted a method of funding benefits
known as the attained age normal method. This funding method seeks to have benefits funded by means of a total
contribution which is expected to be a constant percentage of members’ salaries over their working lifetimes.
Using the funding method described above, in October 2008 the actuary recommended that the payment of employer
contributions to the fund recommence. The Group recommenced contributions to the defined benefit section of the
plan based on actuary recommended contribution rates for the respective groups of employees from 1 november
2008. Total employer contributions paid by Group companies for the year ending 31 December 2010 were US$14 million
(2009: US$10 million).
Defined benefit plan liability included in the statement of financial position
Present value of the defined benefit obligation
Fair value of defined benefit plan assets
Net benefit liability - non-current
Defined benefit plan categories of plan assets
Cash
Australian equity
international equity
Fixed income
Property
Other
2010
US$m
Restated
2009
US$m
(160)
146
(14)
2010
%
10
28
27
14
11
10
100
(133)
119
(14)
2009
%
13
33
28
10
9
7
100
notes to and forming part of the Financial Report
For the year ended 31 December 2010
28. Employee benefits (continued)
(c) Superannuation plan (continued)
Defined benefit plan reconciliations
Reconciliation of the present value of the defined benefit obligation,
which is fully funded
At 1 January
Current service cost
interest on obligation
Actuarial gain
Plan participants’ contributions
Benefits, administrative expenses, premiums and tax paid
Currency translation differences
At 31 December
Reconciliation of the fair value of plan assets
At 1 January
Expected return on plan assets
Actuarial (loss)/gain
Employer contributions
Plan participants’ contributions
Benefits, administrative expenses, premiums and tax paid
Currency translation differences
At 31 December
Defined benefit plan amounts recognised in the income statement
Current service cost
interest on obligation
Expected return on plan assets
net actuarial loss/(gain)
Defined benefit plan expense/(gain)
(1) 2009 figures have been changed to reflect the correct amounts.
Defined benefit plan principal actuarial assumptions
2010
US$m
Restated
2009
US$m
(133)
(12)
(8)
3
(3)
11
(18)
(160)
119
9
(3)
14
3
(12)
16
146
9
15
(16)
3
11
(115)
(10)
(6)
17
(3)
17
(33)
(133)
83
7
7
10
3
(17)
26
119
10(1)
6(1)
(7)(1)
(10)(1)
(1)(1)
The principal actuarial assumptions used as at the reporting date for the purpose of calculating the present value of the
defined benefit obligation are as follows:
Discount rate – active members
Discount rate – pensioners
Expected rate of return on plan assets – active members
Expected rate of return on plan assets – pensioners
Expected salary increase rate
Financial year
2010
2009
5.60% p.a.
5.60% p.a.
7.00% p.a.
8.00% p.a.
5.00% p.a.
5.70% p.a.
5.70% p.a.
7.00% p.a.
8.00% p.a.
5.00% p.a.
The expected rate of return on plan assets is determined by weighting the expected long-term return for each asset
class by the benchmark allocation of assets to each class. The returns for each asset class are net of investment tax
and investment fees.
129
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
28. Employee benefits (continued)
(c) Superannuation plan (continued)
Defined benefit plan historical information
Present value of defined benefit obligation(1)
Fair value of plan assets
(Deficit)/surplus in plan
Experience adjustments (loss)/gain - plan assets
Experience adjustments (loss)/gain - plan liabilities
(1)
includes any provision for contribution tax on plan surplus or deficit.
(d) Employee benefits expense
Employee benefits
Defined contribution plan costs
Defined benefit plan expense/(gain)
130
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29. Key management personnel compensation
(a) Compensation of key management personnel
Key management personnel (KMP) compensation for the financial year is as follows:
Short-term employee benefits
Post employment benefits
Share-based payments
Long-term employee benefits
Termination/sign on benefits
(1) 2009 figures have been changed to reflect the correct amounts.
Financial year
Restated
2009
US$m
Restated
2008
US$m
Restated
2007
US$m
Restated
2006
US$m
(133)
119
(14)
7
4
(115)
83
(32)
(43)
(1)
(132)
152
20
(1)
(8)
(100)
138
38
9
(5)
2010
US$m
(160)
146
(14)
(3)
3
2010
US$m
143
14
11
168
Restated
2009
US$m
125
13
(1)
137
2010
US$
Restated(1)
2009
US$
12,063,581
11,090,010
530,391
7,728,173
236,644
86,583
405,351
3,918,261
-
114,992
20,645,372
15,528,614
notes to and forming part of the Financial Report
For the year ended 31 December 2010
29. Key management personnel compensation (continued)
(b) Key management personnel shareholdings
Details of shares held by KMP including their personally related entities(1) for the financial year are as follows:
2010
2009
Opening
holding(2) NEDSP(3)
Acquisition/
(disposal)(4)
Net
change -
other
Closing
holding
Opening
holding(2) nEDSP(3)
Acquisition/
(disposal)(4)
Closing
holding
Non-executive
directors
M A Chaney
E Fraunschiel
A Jamieson
P J M H Jungels
D i McEvoy
D Megat
i Robertson
M Cilento
Executives
D Voelte
M Chatterji(5)
R Cole
E Howell
20,000
75,626
3,000
9,205
6,933
1,042
-
-
133,588
32,673
8,904
10,765
A J Kantsler(6)
113,169
V Santostefano
12,357
L Della Martina
53,193
K Gallagher(7)
P Moore(7)
F Ahmed
J Soine(7)
B Donaghey(8)
8,346
11,259
2,500
-
-
226
-
-
-
155
-
113
-
-
-
-
-
-
-
-
-
-
-
-
6,078
-
-
769
-
-
500
(46,167)
-
-
-
-
-
-
-
-
-
20,000
81,930
3,000
9,205
7,702
1,197
-
613
87,421
(12,384)
20,289
-
4,499
7,400
-
-
13,403
18,165
20,000
75,626
3,000
8,973
2,564
597
-
-
69,902
12,950
4,505
5,893
19,764
132,933
-
113,138
7,489
-
6,141
(5,823)
-
-
-
-
-
-
-
-
19,846
53,193
14,487
5,436
2,500
-
3,946
44,959
2,500
27,528
-
-
-
232
-
445
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,369
-
-
-
20,000
75,626
3,000
9,205
6,933
1,042
-
-
63,686
133,588
19,723
32,673
4,399
8,904
4,872
10,765
31
113,169
8,411
12,357
8,234
53,193
-
2,500
5,508
33,036
(1) Personally related entities include a KMP's spouse, dependants or entities over which they have direct control or significant influence.
(2) Opening holding represents amounts carried forward in respect of KMP or amounts held by KMP who commenced during the year.
(3) Relates to participation in the non-Executive Directors’ Share Plan (nEDSP).
(4)
(5) Mr Chatterji departed Woodside on 31 December 2010.
(6) Mr Kantsler departed Woodside on 2 July 2010.
(7) Mr Gallagher, Mr Moore and Mr Soine did not meet the definition of KMP under AASB 124 for the 2009 financial year but are considered KMP for 2010.
includes awards vested during the year under the employee share plans and acquired and matching shares under the WSPP.
Prior year comparative figures are not shown.
(8) Ms Donaghey departed Woodside on 31 October 2009.
131
131
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
29. Key management personnel compensation (continued)
(c) Executives’ interests in variable pay rights (VPR) and pay rights (PR) and equity rights (ER)
VPR and PR holdings of key management personnel
2010
Name
At 1 January 2010 Allocated in 2010 Vested in 2010 Net change - other At 31 December 2010
261,184
65,059
32,508
27,827
40,816
25,536
27,043
24,139
15,069
23,092
2,046
58,870
17,901
10,940
9,975
13,700
9,012
7,031
6,959
6,424
9,745
-
(60,868)
(44,914)
(8,182)
(6,472)
(24,199)
(7,489)
(8,954)
(6,141)
(4,620)
(2,047)
(1,023)
-
(4,386)
-
-
(4,386)
-
-
-
-
-
-
259,186
33,660
35,266
31,330
25,931
27,059
25,120
24,957
16,873
30,790
1,023
D Voelte
M Chatterji(1)
R Cole
E Howell
A Kantsler(1)
V Santostefano
L Della Martina
K Gallagher(2)
P Moore(2)
F Ahmed
J Soine(2)
2009
name
At 1 January 2009 Allocated in 2009 Vested in 2009
net change - other At 31 December 2009
D Voelte
M Chatterji
R Cole
E Howell
A Kantsler
V Santostefano
L Della Martina
F Ahmed
B Donaghey
254,937
57,617
18,737
17,121
37,398
20,577
21,877
9,136
20,500
69,538
26,486
17,775
15,549
19,769
12,975
13,005
15,987
7,705
(63,291)
(19,044)
(4,004)
(4,843)
(16,351)
(8,016)
(7,839)
(2,031)
(5,508)
-
-
-
-
-
-
-
-
(22,697)(3)
261,184
65,059
32,508
27,827
40,816
25,536
27,043
23,092
-
(1) Mr Chatterji and Dr Kantsler’s RTSR-tested VPRs remain subject to the RTSR test.
(2) Mr Gallagher, Mr Moore and Mr Soine did not meet the definition of KMP under AASB 124 for the 2009 financial year but are considered KMP for 2010.
Prior year comparative figures are not shown.
(3) Ms Donaghey's PRs and VPRs were forfeited upon her departure on 31 October 2009.
132
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
29. Key management personnel compensation (continued)
(d) Summary of Executives’ interests in shares under the Woodside Share Purchase Plan (WSPP)
Name
Plan type
Opening
balance
Shares purchased
under WSPP
Matching
shares
Shares vested
in 2010
Closing
balance
D Voelte
M Chatterji(1)
R Cole
E Howell
A Kantsler(2)
V Santostefano
L Della Martina(3)
K Gallagher(4)
P Moore(4)
F Ahmed
J Soine (4)
B Donaghey5)
2010 WSPP
2009 WSPP
2008 WSPP
2007 WSPP
2010 WSPP
2009 WSPP
2008 WSPP
2007 WSPP
2010 WSPP
2009 WSPP
2008 WSPP
2007 WSPP
2010 WSPP
2009 WSPP
2008 WSPP
2007 WSPP
2010 WSPP
2009 WSPP
2008 WSPP
2007 WSPP
2010 WSPP
2009 WSPP
2008 WSPP
2007 WSPP
2010 WSPP
2009 WSPP
2008 WSPP
2010 WSPP
2010 WSPP
2010 WSPP
2009 WSPP
2010 WSPP
2010 WSPP
2009 WSPP
893
498
124
-
893
498
124
-
893
498
124
-
-
-
-
-
358
358
124
-
893
498
124
-
893
498
124
893
358
-
-
-
-
-
-
158
173
62
-
158
173
62
-
158
173
62
-
-
-
-
-
-
117
62
158
173
62
-
158
173
-
-
-
-
-
-
-
-
-
237
201
62
-
237
201
62
-
237
201
62
-
-
-
-
-
-
117
62
-
237
201
62
-
237
201
-
-
-
-
-
-
-
124
-
-
-
893
-
-
-
124
-
-
-
-
-
-
-
358
-
-
-
124
-
-
-
124
-
-
124
124
-
-
-
-
-
769
893
498
124
-
893
498
124
769
893
498
124
-
-
-
-
-
358
358
124
769
893
498
124
769
893
498
769
234
-
-
-
-
-
(1) Mr Chatterji departed Woodside on 31 December 2010.
(2) Mr Kantsler departed Woodside on 2 July 2010.
(3) Mr Della Martina did not meet the definition of KMP under AASB 124 for the 2007 financial year but is considered a KMP for 2008. Prior year comparative
figures are not shown.
(4) Mr Gallagher, Mr Moore and Mr Soine did not meet the definition of KMP under AASB 124 for previous years but did fall within the definition for 2010.
Prior year comparative figures are not shown.
(5) Ms Donaghey departed Woodside on 31 October 2009.
133
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0
0
F
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1
1
0
0
A
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
30. Events after the end of the reporting period
Dividends
Since the reporting date, the directors have declared a fully franked dividend of US$0.55 (2009: US$0.49), payable on
6 April 2011. The amount of this dividend will be US$431 million (2009: US$383 million). no provision has been made for this
dividend in the Financial Report as the dividend was not declared or determined by the directors on or before the end of the
financial year.
31. Related party disclosures
(a) Transactions with related parties
The following table provides the total amount of transactions that were entered into with related parties for the relevant
financial year:
Sales to
related parties
Purchases from
related parties
US$m
US$m
Outstanding
balances receivable
from/(payable to)
related parties
US$m
Entities with significant influence
over the Group
Royal Dutch Shell Group (Shell Group)
Shell Company of Australia Ltd
- purchases of goods
2010
2009 (Restated)
Other members of Shell Group
- purchases of services
2010
Other members of Shell Group
- sales of goods
2009 (Restated)
2010
2009 (Restated)
-
-
-
-
174
244
68
61
20
19
-
-
(3)
(6)
-
(1)
-
46
Shell Energy Holdings Australia Ltd is deemed a related party through its 24.3% (2009: 34.3%) interest of
190,119,364 ordinary shares (2009: 256,483,034 ordinary shares) in the shareholding of the Group. in november 2010,
Shell Energy Holdings Australia Ltd reduced its shareholding in Woodside Petroleum Ltd from 34.3% of issued
capital to 24.3%.
Solen Versicherungen AG (a wholly owned captive insurance company of the Royal Dutch Shell Group) participates
in the Group’s various operational and construction insurance programs. in 2010, the total paid by the Group to
Solen Versicherungen AG for its participation was US$3 million (2009: US$2 million).
The Group and Shell have common interests in joint ventures (refer to note 34(a)).
(b) Terms and conditions of transaction with related parties
Sales to and purchases from related parties are made in arm’s length transaction both at normal market prices and on
normal commercial terms. Applicable insurance premiums are negotiated at arm’s length with lead insurers via Woodside’s
insurance brokers with Solen Versicherungen AG following the terms set by the lead insurers.
Outstanding balances at year end are unsecured, interest-free and settlement occurs in cash.
no guarantees are provided or received for any related party receivables or payables.
no provision for doubtful debts has been recognised to any outstanding balances and no expense has been recognised
in respect of bad or doubtful debts due from related parties.
(c)
Transactions with directors
no transactions with directors occurred outside of their normal Board and committee duties in 2010 (2009: nil).
notes to and forming part of the Financial Report
For the year ended 31 December 2010
32. Contingent liabilities and contingent assets
(a) Contingent liabilities at the reporting date
not otherwise provided for in the Financial Report
Contingent liabilities(1)
Guarantees(2)
(b) Contingent assets at the reporting date
not otherwise accounted for in the Financial Report
Contingent assets relating to certain claims made or pending(3)
2010
US$m
Restated
2009
US$m
26
4
30
28
39
3
42
-
(1) Contingent liabilities relate predominately to actual or potential litigation of the Group for which amounts are reasonably estimated but the liability is not probable
and therefore the Group has not provided for such amounts in this Financial Report. Additionally, there are a number of other claims and possible claims that
have arisen in the course of business against entities in the Group, the outcome of which cannot be foreseen at present, and for which no amounts have been
included in the table above.
(2) The Group has issued guarantees relating to workers compensation liabilities.
(3) Contingent assets relate predominantly to claims receivable by the Group for which amounts are reasonably estimated but the receivable is not virtually certain
and therefore the Group has not provided for such amounts in the Financial Report.
33. Auditor remuneration
Amounts received or due and receivable by the auditors
of the company for
Audit and review of financial reports
Ernst & Young (Australia)
Audit
Special projects
Overseas Ernst & Young firms
non-audit services
Ernst & Young (Australia)
Other assurance/advisory services
Other services
Overseas Ernst & Young firms
Other assurance/advisory services
(1) Amount related to services provided in respect of the Group’s election to change the functional and presentation currency to US dollars.
135
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0
0
1
1
0
0
F
F
n
n
a
a
n
n
c
c
a
a
i
i
i
i
l
l
2010
US$’000
Restated
2009
US$’000
R
R
e
e
p
p
o
o
r
r
t
t
1,019
521(1)
390
1,930
519
33
55
607
766
-
378
1,144
536
23
-
559
136
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0
0
1
1
0
0
A
A
n
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a
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
34. Joint ventures
(a)
Joint venture interests
The Group's interests in joint venture assets as at 31 December 2010 is detailed below. Exploration, development
and production of hydrocarbons are the principal activities performed across these assets. Related party interests are
indicated where applicable (refer to note 31).
Joint venture assets
Australasia
Producing and Developing Assets
north West Shelf Joint Venture
Enfield and Vincent
Laminaria–Corallina
Mutineer–Exeter
Stybarrow
Pluto
Exploration and Evaluation Assets
Browse Basin
Carnarvon Basin
Bonaparte Basin
Middle East and Africa
Producing Assets
Ohanet
Exploration and Evaluation Assets
Canary islands
Libya
The Americas
Producing and Developing Assets
Gulf of Mexico
Exploration and Evaluation Assets
Gulf of Mexico
Brazil
Peru
Asia
Exploration and Evaluation Assets
Korea
Group interest %
Related party interest %
12.5 - 50.0
60.0
59.9 - 66.7
8.2
50.0
90.0
25.0 - 75.0
13.0 - 90.0
26.7 - 35.0
15.0
30.0
45.0
17.0 - 67.0
10.0 - 65.0
12.5
20.0
50.0
8.3 - 16.7
-
-
-
-
-
8.3 - 15.0
0.0 - 15.8
25.0 - 33.3
-
-
-
-
-
-
-
-
137
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2
0
0
1
1
0
0
F
F
n
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a
a
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
34. Joint ventures (continued)
(b)
Jointly controlled assets
The aggregate of the Group’s interest in all jointly controlled assets is as follows:
Current assets
Receivables
inventories
Other assets
Non-current assets
inventories
Other assets
Exploration and evaluation assets
Oil and gas properties
(1) 2009 amount has been changed to reflect the correct oil and gas properties balance.
(c) Commitments through jointly controlled assets
The aggregate of the Group’s commitments through jointly controlled assets is as follows:
Capital
Exploration and other commitments
(2) 2009 amount has been changed to correctly reflect the Group’s commitments.
(d)
Jointly controlled entities
interests in jointly controlled entities are as follows:
Entity
Principal activity
Country of
incorporation
north West Shelf Gas Pty Ltd
north West Shelf Liaison
Company Pty Ltd
north West Shelf Australia LnG Pty Ltd
Marketing services for venturers in the
sale of gas to the domestic market.
Liaison for venturers in the sale of LnG
to the Japanese market.
Marketing services for venturers in the
sale of LnG to international markets.
north West Shelf Shipping Service
Company Pty Ltd
LnG vessel fleet advisor.
Australia
Australia
Australia
Australia
2010
US$m
Restated
2009
US$m
25
41
11
77
13
2
1,481
8,940
10,436
10,513
2010
US$m
889
376
1,265
34
50
13
97
10
-
944
9,515(1)
10,469
10,566
Restated
2009
US$m
1,493(2)
274(2)
1,767(2)
Group interest %
2010
16.67
16.67
16.67
16.67
2009
16.67
16.67
16.67
16.67
These entities exist as integrated components of the overall north West Shelf Joint Venture structure and are held
proportionately with the other venturers. There have been no changes to the investment in these entities during
the year.
35. Associated entities
Entity
Pindan College Ltd(1)
Principal activity
Provision of academic and technical training in local
communities.
international Gas Transportation Company Ltd(2) LnG vessel fleet management.
Group interest %
2010
25.00
16.67
2009
25.00
16.67
(1) Pindan College Ltd (formerly known as Australian Technical College Pilbara Limited) was incorporated on 6 December 2006 and is limited by guarantee to a maximum
amount of A$1. Woodside is one of four members of the company, of which significant influence is present. The associate is incorporated in Australia.
(2) The associate is incorporated in Bermuda.
138
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1
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0
0
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notes to and forming part of the Financial Report
For the year ended 31 December 2010
36. Subsidiaries
(a) Subsidiaries
Name of entity
Parent entity
Woodside Petroleum Ltd
Subsidiaries
Woodside Energy Ltd
Woodside Energy Holdings Pty Ltd
Woodside Energy Holdings (USA), inc
Woodside insurance, inc
Woodside Energy (USA), inc
Gryphon Exploration Company
Gander, inc (formerly ATS, inc)
Woodside Offshore LLC
Woodside natural Gas, inc
Avila 8 LLC
Woodside Energy (Peru) Pty Ltd
Woodside Eastern Energy Pty Ltd
Woodside Energy (Algeria) Pty Ltd
Woodside Petroleum (nEDSP) Pty Ltd
Woodside Technical Services Pty Ltd
Metasource Pty Ltd
Woodside West Kimberley Energy Pty Ltd
Woodside Guangdong Shipping (One) Pty Ltd
Woodside Guangdong Shipping (Two) Pty Ltd
Woodside Mauritania investments Pty Ltd
Woodside Energy Holdings (UK) Pty Ltd
Woodside Energy (UK) Ltd
Woodside Energy iberia S.A.
Woodside Energy (n.A.) Ltd
Woodside Energy (Kenya) Pty Ltd
Woodside Energy (Carbon Capture) Pty Ltd
Woodside Energy (SL) Pty Ltd
Woodside West Africa Pty Ltd
Woodside Energy Technologies Pty Ltd
Woodside Energy (norway) Pty Ltd
Woodside Energy (M.E.) Pty Ltd
Woodside Energy Middle East and Africa Pty Ltd
Woodside Browse Pty Ltd
Woodside Burrup Pty Ltd
Pluto LnG Pty Ltd
Burrup Facilities Company Pty Ltd
Burrup Train 1 Pty Ltd
Woodside Energy Australia Asia Holdings Pte Ltd
WelCap insurance Pte Ltd
Woodside Energy (Korea) Pte Ltd
Woodside Energy Holdings (South America) Pty Ltd
Woodside Energia (Brasil) investimento em Exploração de Petróleo Ltda.
Woodside Finance Ltd
Woodside Petroleum Holdings Pty Ltd
Woodside Petroleum (Timor Sea 19) Pty Ltd
Woodside Petroleum (Timor Sea 20) Pty Ltd
Mermaid Sound Port and Marine Services Pty Ltd
Woodside Group Staff Superannuation Pty Ltd
Woodside Petroleum (northern Operations) Pty Ltd
Woodside Petroleum (W.A. Oil) Pty Ltd
Notes
Country of
incorporation
(1,2,3)
Australia
(2,3,4)
(2,4)
(4)
(4,6)
(4)
(4)
(4)
(4)
(4)
(4)
(2,4)
(2,4,7)
(2)
(2,4,7)
(2,4)
(2,4)
(2,4,7)
(2,4)
(2,4)
(2,4)
(2,4)
(4)
(4)
(4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(5)
(5)
(5)
(4)
(4)
(4)
(2,4)
(4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
Australia
Australia
USA
USA
USA
USA
USA
USA
USA
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
UK
Spain
UK
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Singapore
Singapore
Australia
Brazil
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
(1) Woodside Petroleum Ltd is the ultimate holding company and the head entity within the tax consolidated group.
(2) These companies were members of the tax consolidated group at 31 December 2010.
(3) Pursuant to ASiC Class Order 98/1418, relief has been granted to the controlled entity, Woodside Energy Ltd from the Corporations Act 2001 requirements for
preparation, audit and publication of accounts. As a condition of the Class Order, Woodside Petroleum Ltd and Woodside Energy Ltd are parties to a Deed of
Cross Guarantee.
(4) All subsidiaries are wholly owned except for those listed in note 5 below.
(5) Kansai Electric and Tokyo Gas each have 5% of the shares in these companies.
(6) This company was voluntarily dissolved on 12 February 2010.
(7) These companies were placed into voluntary liquidation on 6 September 2010.
notes to and forming part of the Financial Report
For the year ended 31 December 2010
36. Subsidiaries (continued)
(b) Deed of Cross Guarantee and closed group
Woodside Petroleum Ltd and Woodside Energy Ltd are parties to a Deed of Cross Guarantee under which each
company guarantees the debts of the other. By entering into the Deed, the entities have been granted relief from the
Corporations Act requirements for the preparation, audit and publication of accounts, pursuant to Australian Securities
and investment Commission (ASiC) Class Order 98/1418. The two entities represent a Closed Group for the purposes of
the Class Order.
The consolidated income statement and statement of financial position of the members of the Closed Group are set
out below.
Closed Group consolidated income statement
Profit before tax
Taxes
Profit after tax
Retained earnings at the beginning of the financial year
Dividends
Retained earnings at the end of the financial year
2010
US$m
1,964
(729)
1,235
3,917
(773)
4,379
Restated
2009
US$m
2,819
(925)
1,894
2,597
(574)
3,917
139
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2
0
0
1
1
0
0
F
F
n
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a
a
n
n
c
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a
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140
140
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m
L
L
t
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d
l
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|
|
2
2
0
0
1
1
0
0
A
A
n
n
n
n
u
u
a
a
l
l
R
R
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p
p
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t
notes to and forming part of the Financial Report
For the year ended 31 December 2010
36. Subsidiaries (continued)
(b) Deed of Cross Guarantee and Closed Group (continued)
Closed Group consolidated statement of financial position
Current assets
Cash and cash equivalents
Receivables
inventories
Other financial assets
Other assets
Assets of disposal group classified as held for sale
Total current assets
Non-current assets
Receivables
inventories
Other financial assets
Other assets
Exploration and evaluation assets
Oil and gas properties
Other plant and equipment
Total non-current assets
Total assets
Current liabilities
Payables
Tax payable
Other financial liabilities
Other liabilities
Liabilities directly associated with assets of disposal group classified as held for sale
Provisions
Total current liabilities
Non-current liabilities
Payables
Deferred tax liabilities
Other financial liabilities
Other liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
issued and fully paid shares
Shares reserved for employee share plans
Other reserves
Retained earnings
Total equity
2010
US$m
Restated
2009
US$m
31
435
116
2
(12)
-
572
-
18
11,788
34
577
4,858
71
17,346
17,918
1,253
32
41
13
-
130
1,469
4,927
813
6
174
447
6,367
7,836
10,082
5,036
(57)
724
4,379
10,082
(32)(1)
440
108
-
(5)
525
1,036
57
40
9,227
-
220
4,881
79
14,504
15,540
1,068
197
49
16
37
96
1,463
4,505
875
-
186
375
5,941
7,404
8,136
3,705
(78)
592
3,917
8,136
(1) Excess joint venture funds were put on deposit in interest-bearing accounts in Woodside Finance Ltd.
37. Corporate information
Woodside Petroleum Ltd is a company limited by shares incorporated and domiciled in Australia. its shares are publicly traded
on the Australian Securities Exchange.
Directors’ declaration
in accordance with a resolution of directors of Woodside Petroleum Ltd, we state that:
1.
in the opinion of the directors:
(a) the financial statements and notes thereto, and the disclosures included in the audited 2010 Remuneration Report, comply
with Australian Accounting Standards and the Corporations Act 2001;
(b) the financial statements and notes thereto give a true and fair view of the financial position of the Group as at
31 December 2010 and of the performance of the Group for the financial year ended 31 December 2010;
(c) the financial statements and notes also comply with international Financial Reporting Standards as disclosed in note 1(b);
(d) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and
payable; and
(e) there are reasonable grounds to believe that the members of the Closed Group identified in note 36 will be able to meet any
141
obligations or liabilities to which they are or may become subject to, by virtue of the Deed of Cross Guarantee.
2. This declaration has been made after receiving the declarations required to be made to the directors in accordance with section
295A of the Corporations Act 2001 for the year ended 31 December 2010.
For and on behalf of the Board
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Michael Chaney, AO
Chairman
Perth
21 February 2011
Don Voelte
Chief Executive Officer
independent audit report
Independent auditor's report to the members of Woodside Petroleum Ltd
Report on the Financial Report
We have audited the accompanying Financial Report of Woodside Petroleum Ltd, which comprises the consolidated statement of
financial position as at 31 December 2010, and the consolidated income statement, the consolidated statement of comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date,
a summary of significant accounting policies, other explanatory notes and the Directors’ Declaration of the consolidated entity
comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the Financial Report in accordance with
the Australian Accounting Standards (including the Australian Accounting interpretations) and the Corporations Act 2001. This
responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the Financial
Report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances. in note 1, the directors also state that the
Financial Report, comprising the financial statements and notes, complies with international Financial Reporting Standards as issued
by the international Accounting Standards Board.
142
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Auditor’s Responsibility
Our responsibility is to express an opinion on the Financial Report based on our audit. We conducted our audit in accordance with
Australian Auditing Standards and international Standards on Auditing. These Auditing Standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether
the Financial Report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Financial Report.
The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the
Financial Report, whether due to fraud or error. in making those risk assessments, we consider internal controls relevant to the
entity’s preparation and fair presentation of the Financial Report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the Financial Report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
in conducting our audit we have met the independence requirements of the Corporations Act 2001. We have given to the directors
of the company a written Auditor’s independence Declaration, a copy of which is included in the Directors’ Report. in addition to our
audit of the Financial Report, we were engaged to undertake the services disclosed in the notes to the financial statements.
The provision of these services has not impaired our independence.
Auditor’s Opinion
in our opinion:
1.
the Financial Report of Woodside Petroleum Ltd is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position at 31 December 2010 and of its performance for the
year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting interpretations) and the Corporations
Regulations 2001.
2. the Financial Report also complies with international Financial Reporting Standards as issued by the international Accounting
Standards Board.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 55 to 70 of the Directors’ Report for the year ended 31 December
2010. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on
our audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
in our opinion the Remuneration Report of Woodside Petroleum Ltd for the year ended 31 December 2010, complies with
section 300A of the Corporations Act 2001.
Ernst & Young
G H Meyerowitz, Partner
Perth, 21 February 2011
Liability limited by a scheme approved under Professional Standards Legislation.
SHAREHoLDER INFoRMATIoN
As at 11 February 2011
Number of shareholdings
There were 201,788 shareholders. All issued shares carry voting rights on a one for one basis.
Distribution of shareholdings
Size of shareholding
Number of holders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Unmarketable parcels
147,941
47,731
3,991
2,012
113
201,788
There were 2,116 members holding less than a marketable parcel of shares in the company.
Twenty largest shareholders
Shareholder
Shell Energy Holdings Australia Limited
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
National Nominees Limited
Citicorp Nominees Pty Limited
Cogent Nominees Pty Limited
J P Morgan Nominees Australia Limited
AMP Life Limited
UBS Wealth Management Australia Nominees Pty Ltd
Australian Foundation Investment Company Limited
Citicorp Nominees Pty Limited
Australian Reward Investment Alliance
Cogent Nominees Pty Limited
Queensland Investment Corporation
Perpetual Trustee Company Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
Argo Investments Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited - GSCo ECA
Tasman Asset Management Ltd
Number of
% of issued
shares
capital
55,285,894
93,391,808
27,191,852
42,212,120
565,319,957
783,401,631
7.06
11.92
3.47
5.39
72.16
100.00
Shares held
% of issued
capital
190,119,364
112,567,348
85,951,310
69,392,175
25,015,971
11,170,563
9,507,416
5,586,924
5,543,919
2,710,812
2,639,490
2,297,447
2,257,729
2,209,878
2,137,639
1,934,101
1,700,873
1,529,936
1,281,183
1,145,641
24.27
14.37
10.97
8.86
3.19
1.43
1.21
0.71
0.71
0.35
0.34
0.29
0.29
0.28
0.27
0.25
0.22
0.20
0.16
0.15
Total
536,699,719
68.51
Substantial shareholders as disclosed in substantial shareholder notices given to the company are as follows:
Shell Energy Holdings Australia Ltd
190,119,364
24.27
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Annual General Meeting
The 2011 AGM of Woodside Petroleum
Ltd will be held at 10 am (AWST)
on Wednesday, 20 April 2011 in the
Riverside Theatre, Level 2, Perth
Convention Exhibition Centre,
21 Mounts Bay Road, Perth, Western
Australia. Details of the business of
the meeting will be provided in the
AGM notice.
The AGM will be webcast live on the
internet. An archive version of the
webcast will be placed on the website
to enable the proceedings to be viewed
at a later time.
Copies of the Chairman’s and CEo’s
speeches will be available on the
company’s website
(www.woodside.com.au).
Share registry: enquiries
Investors seeking information about
their shareholdings should contact the
company’s share registry:
Computershare Investor
Services Pty Limited
Level 2, 45 St Georges Terrace
Perth, Western Australia 6000
Postal address: GPo Box D182
Perth, Western Australia 6840
Telephone: 1300 558 507 (within
Australia)
+61 3 9415 4632 (outside Australia)
Facsimile: +61 8 9323 2033
Email: web.queries@computershare.com.au
Website: www.investorcentre.com/wpl
The share registry can assist with
queries on share transfers, dividend
payments, the dividend reinvestment
plan, notification of tax file numbers
and changes of name, address or bank
account details.
Details of shareholdings can be
checked conveniently and simply by
visiting the share registry website at
www.investorcentre.com/wpl.
For security reasons you will need your
Security Reference Number (SRN) or
Holder Identification Number (HIN)
when communicating with the share
registry.
The share registry website allows
shareholders to make changes to
address and banking details online.
Dividend payments
Woodside declares its dividends in
US dollars as it is our functional and
presentation currency. Woodside pays
its dividend in Australian dollars unless
a shareholder’s registered address is in
the United Kingdom where they are paid
in UK pounds sterling, or in the United
States where they will receive their
dividend in US dollars.
Australian Securities Exchange
listing
Woodside Petroleum Ltd securities
are listed on the Australian Securities
Exchange (ASX) under the code WPL.
Shareholders who reside outside of the
United States can elect to receive their
dividend in US dollars. Shareholders
must make an election to alter their
dividend currency by the record date
for the dividend by contacting the
share registry on 1300 558 507 (within
Australia) or +61 3 9415 4632 (outside
Australia).
Shareholders may have their Australian
dollar dividends paid directly into any
bank or building society account within
Australia. Payments are electronically
credited on the dividend payment date
and confirmed by payment advice. To
request direct crediting of dividend
payments please contact the share
registry or visit the share registry
website
(www.investorcentre.com/wpl).
The history of dividends paid by the
company can be found on the company’s
website.
Dividend reinvestment plan
Shareholders with registered
addresses in Australia and New
Zealand can elect to participate in
Woodside’s dividend reinvestment plan
and have the dividends on some or all
of their shares automatically reinvested
in additional shares. Information on the
dividend reinvestment plan is available
on the company’s website. Election
forms are available from the company's
website or from the share registry.
Change of address or banking
details
Shareholders should immediately notify
the share registry of any change to
their address or banking arrangements
for dividends electronically credited to
a bank account. Changes can be made
online at the share registry website
(www.investorcentre.com/wpl).
Business directory
Registered office Perth
Woodside Petroleum Ltd
Woodside Plaza
240 St Georges Terrace
Perth, WA 6000
Share price information can be accessed
on the company’s website.
American Depositary Receipts
The Bank of New York Mellon
Corporation sponsors a level one
American Depositary Receipts (ADR)
program in the United States of
America. one Woodside share equals
one ADR and trades over the counter
under the symbol ‘WoPEY’.
ADR holders should deal directly
with the Bank of New York Mellon
Corporation on all matters related to
their ADRs.
Enquiries should be directed to:
The BNY Mellon Shareowner Services
P.o Box 358516
Pittsburgh, PA 15252-8516
USA Toll Free Number:
1-888-269-2377
Number for international callers:
+1 201-680-6825
Email: shrrelations@bnymellon.com
Website: www.adrbnymellon.com
Investor Relations: enquiries
Requests for specific information on
the company can be directed to
Investor Relations at:
Investor Relations
Woodside Petroleum Ltd
Woodside Plaza
240 St Georges Terrace,
Perth, WA 6000
Postal address: GPo Box D188
Perth, WA 6840
Telephone: +61 8 9348 4000
Facsimile: +61 8 9214 2777
Email: investor@woodside.com.au
Website: www.woodside.com.au
Houston (USA)
Woodside Energy (USA) Inc.
Sage Plaza
5151 San Felipe, Suite 1200
Houston, TX 77056, USA
Telephone: +61 8 9348 4000
Telephone: +1 713 401 0000
Postal address: GPo Box D188
Perth, WA 6840
Karratha
Burrup Peninsula, Karratha, WA 6714
Telephone: +61 8 9348 4000
Key announcements 2010
January
February
March
April
June
August
Woodside Browse marketing update
Gas encountered in Noblige Well
Woodside announces successful completion of retail bookbuild
Browse Joint Venture selects development concept
Browse enters basis of design phase
Woodside reports full year net profit of A$1,824 million
Sale of Otway Gas Project completed
Change in functional and presentation currency for financial reporting
Sunrise Joint Venture selects floating processing option
Appointment of Deputy Chief Financial Officer
Gas discovery at Alaric
Gas discovery at Larsen Deep
Woodside reports first half profit of US$901 million
September
Update on Browse LNG Development
October
November
Succession plan commenced for CEO
Woodside increases equity in Pluto Central Hub
Shell announcement on Woodside shareholdings
Gas discovery at Remy-1
December
Debt facility re-financing completed
Events calendar 2011
Key calendar dates for Woodside shareholders in 2011.
Please note dates are subject to review.
January
February
March
April
June
July
August
21
21
Fourth quarter 2010 report
2010 Full-Year result and final dividend announcement
24 Ex-Dividend date for final dividend
2
6
Record date for final dividend
Payment date for final dividend
18 AGM proxy returns close at 10.00 am (AWST)
19
First quarter 2011 report
20 Annual General Meeting
30 Woodside Half-Year end
19
Second quarter 2011 report
17
2011 Half-Year result and interim dividend announcement
TBA Ex-Dividend date for interim dividend
TBA Record date for interim dividend
September
TBA Payment date for interim dividend
October
21
Third quarter 2011 report
December
31 Woodside Year end
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CoNVERSIoN FACToRS
AND GLoSSARY
Glossary
$, $m
1H, 2H
Appraisal well
Basis of design
Brownfield
Condensate
Crude oil
CWLH
US dollars unless otherwise stated, millions of dollars
Halves of the calendar year (i.e. 1H is 1 January to 30 June, 2H is
1 July to 31 December)
Drilled to follow up a discovery and evaluate its commercial potential
Specification of owner's requirements
An exploration or development project located within an existing province
which can share infrastructure and management with an existing operation
Hydrocarbons, which are gaseous in a reservoir, but which condense to
form liquids as they rise to the surface
Oil that is produced from a reservoir after any associated gas has
been removed
Cossack Wanaea Lambert Hermes
Development well
Drilled for the purpose of recovering hydrocarbons
DRP
EEP
EIP
ER
FAR
FDP
Dividend reinvestment plan
Employee equity plan
Executive incentive plan
Equity rights
Fixed annual reward
Field development plan
8.9055
boe
1.000 boe
Front-end engineering
and design (FEED)
Preliminary design and cost and schedule confirmation before a final
investment decision
FID
FPSO
Final investment decision
Floating production storage and offloading vessel
1.000 boe
Gearing
Net debt divided by (net debt + equity)
Conversion factors
bbl
Bcf
boe
kPa
Mcf
barrel
billion cubic feet
barrel of oil equivalent
thousands of Pascals
thousand cubic feet
MMbbl million barrels
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MMboe million barrels of oil equivalent
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million tonnes per annum
psi
pounds per square inch
Product
Factor
Conversion
Factors*
Domestic Gas
1TJ
163.6 boe
Liquefied Natural
Gas (LNG)
1 tonne
Condensate
Oil
1 bbl
1 bbl
Liquefied Petroleum
Gas (LPG)
1 tonne
Gulf of Mexico Gas
1
MMBtu
8.1876
boe
0.1724
boe
* Minor changes to some conversion factors can
occur over time due to gradual changes in the
process stream
Greenfield
GWF
HPIF
Infill well
JV
KGP
KPI
LIBOR
LNG
LPG
Lifting costs
LTI
Net debt
NRA
NRB
NWS
PRRT
Q1, Q2, Q3, Q4
The development or exploration located outside the area of influence of
existing operations/infrastructure
Greater Western Flank
High potential incidents frequency rate (per million hours worked)
Drilled for the purpose of increasing production
Joint venture
Karratha Gas Plant
Key performance indicators
London Inter-Bank Offer Rate
Liquefied natural gas
Liquefied petroleum gas
Production costs (excluding insurance, third party gas and FPSO lease
costs) divided by production volume (MMboe)
Long-term incentive
Total debt less cash and cash equivalents
North Rankin A platform
North Rankin B platform
North West Shelf Project
Petroleum resources rent tax
Quarters of the calendar year (i.e. Q1 is 1 January to 31 March,
Q2 is 1 April to 30 June,Q3 is 1 July to 30 September, Q4 is 1 October
to 31 December)
Relative total shareholder return
RTSR
Return on Capital (ROC) Net operating profit after tax divided by average Oil and Gas Properties
Return on Equity (ROE) Net profit after tax divided by shareholder's equity
and Exploration and Evaluation Assets
STI
TLP
TRCF
TSR
VAR
VPR
VWAP
WSSP
WTI
Short-term incentive
Tension leg platform (floating production unit)
Total recordable case frequency (per million hours worked)
Total shareholder return
Variable annual reward
Variable pay rights
Volume weighted average price
Woodside share purchase plan
West Texas intermediate cushing spot (oil price)
QUICK REFERENCE
GUIDE
Angel
Australia Business Unit
Brazil
Browse
Browse LNG Precinct
Canary Islands
CEO remuneration
Cimatti
Committees of the Board
Contingent resources
Cossack Pioneer
Cryogenic Heat Exchangers
Darwin LNG
Diversity
Dividend
Emissions to air
Enfield
Environmental Excellence
Environmental incidents
Events calendar 2011
External auditor relationship
Flare gas and intensity
Floating LNG
Foundation Pluto LNG Project
Funding
Gearing
Global LNG demand
Goodwyn A
Graduates
Greater Exmouth
Greater Western Flank
Gulf of Mexico Shelf gas fields
Health and safety
HPIF (High potential incidents frequency
rate)
Income tax
Indigenous
James Price Point
Karratha Gas Plant
Korea
Laminaria¬–Corallina
Liberia
Libya EPSA III
Libya EPSA IV
Lifting costs
LNG Train 5
Long-term incentive award
Macondo
Maersk Developer
Maersk Ngujima-Yin
6, 31, 24
26, 27
21, 37
6, 7, 8, 15, 20, 32, 33
8, 32
37
55, 68, 69, 70
8, 21, 26
45
16, 17, 18, 32, 34
7, 22, 24
24
36
10, 51
5, 12, 54
22
7, 8, 21, 26, 27
22
1, 22
145
50
22
8, 35
1, 6, 8, 10, 12, 15,
28, 29, 30, 31
12
12, 223
14, 15
7, 24, 25
10
17, 21
7, 8, 25
36
5, 11, 19
5
13
7, 10, 30, 32
8, 23, 32, 33
1, 3, 5, 13, 24
7, 14, 21, 37
7, 13, 27
12, 13, 37
12, 13, 37
12, 13, 37
12, 13, 24, 146
24, 25
55, 57, 58, 60
9, 21, 36, 37
37
22, 27
Mission
MODEC Venture II FPSO
Montara
Mutineer–Exeter
Neptune
Net profit after tax
Nganhurra FPSO
North Rankin A
North Rankin B
North Rankin redevelopment project
North West Shelf Project
North West Shelf oil redevelopment project
Northern Endeavour
Ohanet
Okha FPSO
Otway Gas Plant
Petroleum Resource Rent Tax (PRRT)
Peru
Pluto expansion
Power Play
Production
Proved plus Probable reserves
Proved reserves
Reconciliation Action Plan
Remuneration report
Retention lease
Retention rates
Safety: contractor
Sales revenue
Securities Dealing Policy
Share plans
Share registry: enquiries
Shareholders: twenty largest
Shareholdings: distribution
Short-term incentive award
Sierra Leone
Stand together for safety
Strategy
Stybarrow
Stybarrow Venture FPSO
Sunrise
Timor–Leste
Total shareholder return
TRCF (total recordable case frequency)
United States
Values
Vision
1
7, 26
9
7, 26, 27
13, 36
4, 5, 12, 13
1, 7, 26
7, 24, 25
25
7, 8, 25
I, 1-3, 6, 8, 12, 24,
25
7, 24
7, 27
13, 37
24, 25
12, 13, 27
12, 13
37
7, 8, 20, 21, 31
37
4, 8, 19, 24, 25, 148
16, 17, 25, 27, 26,
37, 148
16, 17
10, 30, 51
55-70
15, 20, 32
10
11
4, 8, 25, 27, 36, 37,
148
48, 49, 60
55, 59
144
143
143
55, 57, 60
12, 13, 37
11
1
7, 2, 26
7, 26
8, 34, 35
34, 35
5, 9
5, 11
36, 148
1
1
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2010 SUMMARY CHARTS
PRODUCT vIEw
Investment
Gas and condensate*
oil*
Exploration and other
2010
2009
77% 82%
13% 11%
10% 7%
* Indicative only as some assets produce oil and gas
REGIONAL vIEw
Investment
Australia
United States
Rest of World
2010
2009
98% 96%
3%
1%
2%
<1%
As in prior years, the majority of Woodside’s 2010
capital expenditure was directed towards growing our
future LNG production.
148
In line with Woodside’s strategy to grow our LNG business the
regional split of expenditure continues to be based in Australia.
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Production
Natural gas*
oil
Condensate
* Includes LNG, LPG and pipeline gas
2010
2009
57% 54%
29% 32%
14% 14%
Production
Australia
United States
Rest of World
2010
2009
94% 93%
4%
3%
3%
3%
The weighting of natural gas and LNG production
increased in 2010.
Australia’s contribution to Woodside’s production continues to
grow, increasing from 93% to 94%.
Revenue
Natural gas*
oil
Condensate
* Includes LNG, LPG and pipeline gas
2010
2009
42% 37%
40% 45%
18% 18%
Revenue
Australia
United States
Rest of World
2010
2009
96% 95%
4%
1%
3%
1%
At 40% of total revenue, oil continues to be a solid contributor.
In line with Woodside's regional production, sales revenue
contributions from Australia grew from 95% to 96%.
Reserves (Proved plus Probable)
Reserves (Proved plus Probable)
Natural gas*
oil
Condensate
* Includes LNG, LPG and pipeline gas
2010
2009
84% 83%
8%
9%
7%
9%
Australia
United States
Rest of World
2010
2009
99% 99%
<1% <1%
<0.1% <0.1%
Natural gas continues to dominate Woodside's Proved plus
Probable reserves.
The regional split of Proved plus Probable reserves remained
constant with 2009 levels. Australia continued to be dominant.
10 yEAR COMPARATIvE DATA SUMMARy
year Ended 31 December
Profit and Loss ($million)(1)
Sales Revenues
Australia
Pipeline Gas
LNG & LPG
NWS Gas (Pipeline, LNG & LPG)
NWS oil / Condensate
Australia other
Gulf of Mexico
Algeria
Continuing operations
Mauritania
Total
EBITDAX(2)
EBITDA
EBIT(3)
Exploration & Evaluation
Depreciation & Amortisation
Finance Costs
Tax Expense
NPAT Before Significant Items(4)
NPAT
EPS (cents) Before Significant Items(4)(9)
EPS (cents)(9)
DPS (cents)(5)
Payout ratio (%) Before Significant Items
EBITDA/op Cash Flow (%)
Balance Sheet ($million)(1)
Total Assets
Debt
Net Debt
Shareholder Equity
Cash Flow and Capital Expenditure ($million)(1)
Cash Flow From
operations
Investing
Financing
Capital Expenditure
Exploration & Evaluation
oil and Gas Properties(10)
Ratios (%)
RoACE Before Significant Items(4)
RoACE After Significant Items
Return on Shareholders Funds Before Significant Items(4)
Return on Shareholders Funds After Significant Items
Gearing
volumes
Sales (million boe)
Australia
Pipeline Gas
LNG & LPG
NWS Gas (Pipeline, LNG & LPG)
NWS oil / Condensate
Australia other
Gulf of Mexico
Mauritania
Algeria
Total (million boe)
Production (million boe)
Australia
Pipeline
LNG & LPG
NWS Gas
NWS oil / Condensate
Australia other
Gulf of Mexico
Mauritania
Algeria
Total (million boe)(7)
Reserves (Proved plus Probable)
Gas (Tcf)
Condensate (MMbbl)
oil (MMbbl)
Other
Employees
Shares
2010
2009
2008
2007
2006
2005
2004(8)
(Restated)
2003
2002
2001
309
1,425
-
1,037
1,250
117
55
4,193
-
4,193
3,332
3,003
2,254
329
749
(18)
697
1,418
1,575
183
204
105
57
143
20,196
4,915
3,952
11,091
378
863
-
840
1,227
124
55
3,487
-
3,487
3,314
3,061
2,309
253
752
12
823
1,052
1,474
150
210
95
64
206
17,753
4,939
3,732
8,812
320
1,119
-
1,229
2,125
197
55
5,045
-
5,045
3,885
3,584
2,852
301
732
19
1,287
1,823
1,546
266
225
100
38
111
10,317
2,044
1,946
4,633
227
711
-
939
1,159
133
55
3,224
137
3,361
2,541
2,101
1,560
440
541
8
687
948
864
141
128
91
64
101
8,515
903
782
4,458
182
689
-
835
739
119
56
2,620
252
2,872
2,339
2,021
1,684
318
337
20
590
1,030
1,075
157
163
98
63
139
7,072
1,435
1,188
3,313
-
-
803
766
450
21
55
2,095
-
2,095
1,685
1,452
1,238
234
213
7
387
791
844
120
128
70
58
138
5,107
826
656
2,565
2,104
(2,941)
608
1,483
(4,708)
4,207
3,224
(3,892)
684
2,082
(1,700)
(522)
1,457
(1,432)
41
1,053
(1,152)
(352)
273
3,992
418
4,031
447
1,965
376
1,091
210
993
-
-
581
568
360
-
56
1,565
-
1,565
1,603
1,417
1,213
186
204
-
367
495
845
75
129
44
58
160
4,250
791
169
2,162
883
(69)
(259)
77
480
-
-
499
454
360
-
5
1,318
-
1,318
905
712
558
193
154
17
197
344
344
51
51
33
64
91
3,596
803
670
1,830
785
(484)
(273)
74
250
-
-
394
377
421
-
-
1,192
-
1,192
752
220
62
532
158
25
87
358
(50)
53
(7)
37
69
33
2,814
803
716
1,303
657
(397)
(263)
47
187
-
-
396
333
485
-
-
1,214
-
1,214
921
872
689
50
182
36
182
424
471
63
70
36
57
152
3,116
847
765
1,301
574
(420)
(217)
144
254
703
2,933
9.5%
10.5%
13.0%
14.2%
26.3%
14.8
24.0
-
13.2
15.7
2.2
-
2.3
72.2
14.8
24.6
-
13.3
15.5
2.2
-
2.3
72.7
10.5% 29.6% 18.8% 26.0% 26.8% 18.9% 13.8% 16.3% 22.1%
-1.5% 24.1%
17.2% 26.8% 26.8% 30.3% 15.0%
14.5% 25.9%
27.3% 18.8% 20.9% 33.8%
12.5%
-3.8% 36.2%
16.7% 33.4% 19.4% 32.5% 32.9% 39.1% 18.8%
37.0%
29.8% 29.6% 14.9% 26.4% 20.4%
37.1% 20.9% 31.5% 31.5%
7.2% 26.8% 35.5%
18.4
22.8
-
13.9
20.1
3.2
-
2.3
80.7
18.4
23.0
-
14.0
20.0
3.2
-
2.3
80.9
18.9
18.2
-
13.2
24.5
3.1
-
2.3
80.2
18.9
18.6
-
13.5
24.9
3.1
-
2.3
81.3
16.4
18.2
-
12.6
15.6
2.6
2.0
2.3
69.7
16.4
18.6
-
12.7
15.8
2.6
2.2
2.3
70.6
15.5
18.5
-
12.8
11.7
2.6
4.3
2.3
67.7
15.6
18.6
-
12.8
11.6
2.6
4.4
2.3
67.9
-
-
34.8
14.0
8.0
0.4
-
2.3
59.5
-
-
35.0
13.8
8.2
0.4
-
2.3
59.7
-
-
30.8
14.4
9.1
-
-
2.3
56.6
-
-
31.5
14.3
9.3
-
-
2.3
57.4
-
-
31.0
16.2
13.3
-
-
0.1
60.6
-
-
31.1
16.4
13.1
-
-
0.1
60.7
-
-
27.9
15.7
19.1
-
-
-
62.7
-
-
28.3
16.0
19.9
-
-
-
64.2
-
-
28.2
15.0
23.2
-
-
-
66.4
-
-
28.5
14.8
23.0
-
-
-
66.3
8.02
154.74
117.50
7.79
147.80
136.10
7.90
151.40
168.80
7.80
152.10
170.20
6.90
144.60
221.10
4.67
129.70
294.50
5.11
138.00
258.80
4.65
145.70
341.50
4.84
154.90
300.10
4.54
154.60
263.30
3,650
3,219
3,124
2,981
2,888
2,508
2,528
2,219
2,418
2,420
High (A$)
Low (A$)
Close (A$)
Number (000's)
No. Shareholders
Market Capitalisation (US$ equivalent at reporting date)
Market Capitalisation (AU$ equivalent at reporting date)
Finding Costs ($/boe) (3 year average)(6)(12)
Effective Income Tax Rate (%)
Net Debt/Total Market Cap (%)
49.28
40.56
42.56
783,402
201,134
33,745
33,342
6.12
25.2%
11.6%
53.87
31.19
47.20
56.66
34.81
50.39
15.05
70.51
11.50
26.81
12.38
36.70
666,667
748,599 698,553
67,523
141,035
175,257
4,635
17,717
31,567
8,253
25,637
35,334
5.71
0.75
3.35
33.7% 32.6% 35.8% 35.4% 31.4% 30.3% 36.4% 235.9%
11.8%
16.42
12.29
13.39
666,667
55,347
4,548
8,927
0.72
27.8%
9.0% 15.4% 16.8%
49.80
34.81
38.11
688,331 666,667
119,003
131,460
20,033
30,353
25,407
34,685
2.47
3.60
39.39
19.87
39.19
666,667
83,829
19,146
26,127
3.95
15.10
10.00
14.80
666,667
69,491
7,420
9,867
1.18
21.48
14.11
20.10
666,667
72,267
10,456
13,400
1.43
11.0%
2.6%
5.9%
3.4%
1.6%
1
2
3
4
5
6
7
8
9
The comparative financial information have been converted on a consistent basis in accordance with Note 1(a) to the Financial Report. Cash flow and capital expenditure have been
converted using a consistent approach adopted on conversion of expenses.
Includes Significant Items other than 2002 Successful Efforts and 2001 Gulf of Mexico write-off.
EBIT is calculated as a profit before income tax, PRRT and net finance costs.
Excludes Significant Items (2002 results restated to reflect effect of successful efforts policy from January 2002).
DPS for 2002 includes a 41.0 cents (AUD) dividend that was declared after 31 December 2002.
Finding cost for 2003 includes acquisitions of additional Scope for Recovery volumes.
From 2003, Woodside reports oil and condensate on a volumetric basis.
From 1 January 2005, Woodside prepares its financial statements in accordance with Australian equivalents to IFRS (AIFRS). To highlight the impact on previously reported data
information provided for 2004 has been restated. Information pre 1 January 2004 has not been adjusted for the effects of AIFRS.
Earnings per share (EPS) has been calculated using the following weighted average number of shares (2010: 773,388,154 / 2009: 703,310,697 / 2008: 685,179,496 /
2007: 671,447,950 / 2006: 657,178,947 / 2005: 655,150,640 / 2004: 653,790,795 / Pre 2004: 666,666,667).
10 2005 oil and Gas Properties capital expenditure includes acquisitions through business combinations of A$415M, relating to the acquisition of Gryphon Exploration Company.
11 From 2005 employee numbers do not include third party contractors. Previous years have included third party contractors.
12 Finding cost methodology has changed from 2004 to be in accordance with the FAS69/SEC industry standard.
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Annual report 2010
Head Office:
Woodside Petroleum Ltd
240 St Georges Terrace
Perth WA 6000 Australia
Postal Address:
GPo Box D188
Perth WA 6840 Australia
t: +61 8 9348 4000
f: +61 8 9214 2777
e: companyinfo@woodside.com.au
Visit us at
www.woodside.com.au
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