Wirtualna Polska Holding S.A.
Annual Report 2012

2012ANNUALREPORTA yeAr of deliverySUCCESS IS DOING 
WHAT’S RIGHT, EVEN 
WHEN IT’S NOT EASY.

on the coveR - the pluto lnG plAnt (burrup peninsula, Western Australia) delivers safe and reliable production in 2012:

  It took many people and a significant amount 
of hard work to deliver Pluto LNG. However, 
when you are committed to safety, reliability 
and doing what’s right, the outcome is very 
rewarding.

  Delivering Pluto wasn’t easy and the road to 
first gas was not without its challenges. But 
at Woodside, we pride ourselves on turning 
challenges into new opportunities.

  The start-up of production at Pluto and 
delivery of the first cargo in 2012 were 
defining moments in Woodside’s history, 
reflecting our world-class capability and 
expertise. 

  The ingenuity and capability demonstrated at 
Pluto has been rewarded with high reliability 
and on-going strong performance. In 2012 
Pluto was also recognised at a state and 
national level, receiving the WA Engineering 
Excellence Award and the Sir William Hudson 
Award – Australia’s top engineering honour.

About this RepoRt

RepoRt objectives

This 2012 Annual Report is a summary of Woodside’s operations, 
activities and financial position as at 31 December 2012. 

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 2012 unless otherwise stated. All dollar 
figures are expressed in US 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.

ii   Woodside Petroleum Ltd. |  2012 Annual Report

This report meets our compliance and governance requirements, 
and is designed to provide easy to read information on how 
Woodside performed in 2012 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.

ouR 2012 sustAinAble 
development RepoRt
This report is a summary of Woodside’s 
sustainability approach, actions and performance 
for the 12 month period ending 31 December 2012.

This report will be available in March 2013.

We have partnered with Green 
Reports tm in an initiative that ensures 
communications minimise environmental 
impact and creates a more sustainable 
future for the community.

scs-coc-004440

About Woodside

Woodside is Australia’s largest independent oil and gas 
company, with a proud history of safe and reliable operations 
spanning decades. 

As the largest operator of oil and gas in Australia, Woodside 
produces around 900,000 barrels of oil equivalent each day 
from a portfolio of facilities which we operate on behalf of some 
of the world’s major oil and gas companies. 

We have been operating our landmark Australian project, the 
North West Shelf, for 28 years and it remains one of the world’s 
premier liquefied natural gas (LNG) facilities. 

With the successful start-up of the Pluto LNG Plant in 2012, 
Woodside now operates six of the seven LNG processing trains 
in Australia, helping to meet the demand for cleaner energy 
from our pipeline customers in Australia and LNG customers in 
the Asia Pacific region and beyond. 

Woodside also operates four oil floating production storage and 
offloading (FPSO) vessels in the Exmouth Basin, North West 
Shelf and Timor Sea.

Woodside’s international assets include deepwater production 
facilities in the Gulf of Mexico plus acreage in the USA, Brazil, 
Peru, Republic of Korea and the Canary Islands. In 2012 we 
expanded our international presence through conditional 
agreements to take equity in the Leviathan gas field in offshore 
Israel and exploration acreage in offshore Myanmar.

We strive for excellence in our safety and environmental 
performance and continue to strengthen our relationships  
with customers, co-venturers, governments and communities  
to ensure we are a partner of choice. 

We do what’s right, even when it’s not easy

At Woodside, we take pride in our company’s history of  
great achievement. We are also proud of the way in which 
we embrace the opportunities of the future and strive for 
continuous improvement.

This commitment to ongoing improvement underpins the 
Woodside Compass, which was established in 2012 as part  
of a company-wide review of our organisational effectiveness  
and workplace culture. 

The Woodside Compass sets out our values, guides us on our 
mission to deliver superior shareholder returns and directs us 
towards our vision of becoming a global leader in upstream oil  
and gas. 

our values
 Integrity

 Respect

 Working sustainably

 Working together

 Discipline 

 Excellence

our mission

To deliver superior shareholder 
returns.

our vision

Our aim is to be a global 
leader in upstream oil and gas. 

our strategic direction 

In support of our mission, 
our strategy comprises three 
main elements: 

 Maximising our core 

business; 

 Leveraging our capabilities; 

and 

 Growing our portfolio. 

 Further information on the Woodside Compass is available  
on our website www.woodside.com.au

Woodside’s capabilities cover the value chain from seismic 
through to sales.

Marine seismic surveys are critical in 
identifying prospective geological strata lying 
beneath the ocean. In 2012, we completed 
our largest ever seismic survey in the Outer 
Canning Basin, offshore Western Australia. 

 Read about this technology in our 
Exploration review on page 18.

During 2012, Woodside drilled a total of six 
exploration wells in the Dampier sub-basin, 
Republic of Korea and Gulf of Mexico.

 Turn to our Exploration review on 
page 18 for further information.

Prior to any development, Woodside 
undertakes community-wide consultation and 
extensive environmental studies. The Browse 
Joint Venture has commissioned the most 
comprehensive study to date of humpback 
whales off the Kimberley coast. 

 See page 30 for more about 
the proposed Browse LNG 
Development.

The North Rankin Redevelopment (NR2) 
Project continued to progress in 2012, with 
the successful installation of the North 
Rankin B topsides. The redevelopment will 
recover remaining low pressure gas from 
the North Rankin and Perseus gas fields.
 To read more about NR2, go to 
page 25. 

In 2012 Woodside achieved a number 
of key milestones in the delivery of the 
Pluto LNG Project. First gas entered the 
LNG processing train on 22 March, first 
production of LNG was achieved on  
29 April and the first LNG cargo departed 
on 12 May.

 Find out more about Pluto LNG on 
page 26.

In 2012, the North West Shelf (NWS) Project 
delivered its 3500th LNG cargo and the 3000th 
LNG cargo to Japan, and our LNG trading 
and shipping business continued to grow. In 
addition to the NWS fleet we now have an 
integrated fleet of three ships operating for 
Pluto LNG with a new vessel due in 2013.

 To read more about our shipping 
business, go to the LNG Marketing 
Report on page 15.

For 28 years the NWS Project has been 
Western Australia’s largest producer of 
domestic gas. The Karratha Gas Plant 
facilities include two domestic gas trains 
that supply the majority of Western 
Australia’s total domestic gas production.
 See page 24 for more about the 
NWS Project.

Woodside Petroleum Ltd.  |  About Woodside   iii

OUR AREAS OF ACTIVITY

2012 - A YEAR OF DELIVERY

CONTENTS

Dili

16

8

15

Darwin

NORTHERN 
TERRITORY

Broome

11
1
1

4

12
2
3

2
13
13

5

9

Karratha

Exmouth

WESTERN 
AUSTRALIA

Perth

9

66

710
7
14

*  North Rankin B platform is scheduled to start-up in 2013.

** Woodside signed a sale and purchase agreement with Santos on  

21 December 2012 to sell the company’s 8.2% interest in the Santos 
operated Mutineer-Exeter oil project with effect from 1 July 2012.

Canary 
Islands

Beijing

Republic of Korea

Israel

Seoul

Tokyo

Myanmar

Dili

Houston

Gulf of Mexico

Peru

Brazil

 Woodside offices and representative offices

 International production and/or exploration

 Israel and Myanmar subject to conditions

iv   Woodside Petroleum Ltd.  |  2012 Annual Report

Woodside Petroleum Ltd.  |  2012 Annual Report   1

RECORD PRODUCTION, 

SALES REVENUE AND PROFIT 

UNDERPINNED BY PLUTO LNG.

RECORD ANNUAL USD DIVIDEND 

OF 130 CPS, FULLY FRANKED.

SAFE AND SUCCESSFUL START-

UP OF PLUTO LNG WITH FIRST  

CARGO TRANSPORTED IN MAY.

EARLY VALUE FROM THE 

BROWSE GAS ASSET, ADDING  

$2 BILLION IN CASH TO OUR BALANCE 

SHEET THROUGH THE SALE OF A MINORITY 

PORTION OF OUR EQUITY.

IMPROVEMENT IN SAFETY 

PERFORMANCE  WITH OUR TOTAL 

RECORDABLE CASE FREQUENCY 

DECREASING FROM 4.78 TO 4.50 PER 

MILLION HOURS WORKED.

THE 3500TH LNG CARGO AND 

THE 3000TH LNG CARGO TO JAPAN 

FROM THE NORTH WEST SHELF, WHICH 

CONTINUES TO PERFORM STRONGLY.

A SUCCESSFUL INSTALLATION OF 

THE NORTH RANKIN B TOPSIDES, 

WITH THE ANTICIPATED START-UP OF THE 

NORTH RANKIN REDEVELOPMENT IN 2013.

.

.

.

D

E

R

E

V

I

L

E

POSITIVE RESULTS FROM OUR 

REVISED GROWTH STRATEGY 

BY CAPTURING NEW VALUE-ADDING 

OPPORTUNITIES. IN-PRINCIPLE 

MYANMAR WERE ENTERED INTO.D

AGREEMENTS TO PARTICIPATE IN THE 

WORLD-CLASS LEVIATHAN GAS FIELD 

AND EXPLORATION OPPORTUNITIES IN 

ii

iii

iii

iv

2

4

6

8

10

11

12

13

14

16

18

20

21

24

26

28

30

32

34

36

38

52

53

67

137

138

138

139

139

139

140

140

141

142

Overview 

About this report 

About Woodside 

Mission, vision, values and strategy 

Our areas of activity 

Performance summary 

Chairman’s report  

Chief Executive Officer’s report  

Chief Financial Officer’s report  

Our people 

Our health, safety and security 

Community engagement 

Environmental report 

LNG market report 

Reserves statement  

Exploration review 

Risk management 

Woodside Executives 

Business reviews  

North West Shelf 

Pluto LNG 

Australia Oil 

Browse LNG 

Sunrise LNG 

International 

Governance  

Board of Directors 

Corporate governance statement  

Directors’ report 

Remuneration report  

2012 Financial report  

Financial report contents 

Shareholder information  

Shareholder statistics 

Share registry: enquiries  

Investor relations: enquiries   

Business directory  

Key announcements 2012  

Events calendar 2013  

Units, conversion factors  

Glossary  

Index

2012 summary charts 

10 year comparative data summary  143

Information available online

You can find out more about Woodside 

online at www.woodside.com.au 

In this report, we have indicated where 

additional information is available online 

like this 

.

Our producing assets (operated)Approximate location1Angel platform (NWS)135 km north-west of Karratha2Goodwyn A platform (NWS)3North Rankin A and B platforms* (NWS)4Okha FPSO (NWS)5Karratha Gas Plant (NWS)28 km north-west of Karratha6Ngujima-Yin FPSO (Vincent oil)45 km north-west of Exmouth7Nganhurra FPSO (Enfield oil)40 km north-west of Exmouth8Northern Endeavour FPSO  (Laminaria-Corallina oil)550 km north-west of Darwin9Pluto LNG Plant and  platform (Pluto LNG)27 km north-west of Karratha 180 km north-west of KarrathaOur producing assets (non-operated)10Stybarrow Venture MV16 FPSO (Stybarrow oil)50 km north-west of Exmouth11MODEC Venture II FPSO  (Mutineer-Exeter oil**)147 km north of KarrathaOur projects12North Rankin Redevelopment (NWS)135 km north-west of Karratha13Greater Western Flank Phase 1 (NWS)130 km north-west of KarrathaOur developments14Laverda oil50 km north-west of Exmouth15Browse LNG425 km north of Broome16Sunrise LNG150 km south-east of Timor-Leste and 450 km north-west of DarwinWoodside offices and representative offices 
 
 
 
 
 
 
 
 
OUR AREAS OF ACTIVITY

2012 - A YEAR OF DELIVERY

CONTENTS

Dili

16

8

Darwin

NORTHERN 

TERRITORY

12

2

3

11

1

1

4

9

2

13

13

5

9

Karratha

66

710

7

14

Exmouth

15

Broome

WESTERN 

AUSTRALIA

Perth

Canary 

Islands

Beijing

Republic of Korea

Israel

Seoul

Tokyo

Myanmar

Dili

Houston

Gulf of Mexico

Peru

Brazil

 Woodside offices and representative offices

 International production and/or exploration

 Israel and Myanmar subject to conditions

RECORD PRODUCTION, 
SALES REVENUE AND PROFIT 
UNDERPINNED BY PLUTO LNG.

.
.
.

RECORD ANNUAL USD DIVIDEND 
OF 130 CPS, FULLY FRANKED.

EARLY VALUE FROM THE 
BROWSE GAS ASSET, ADDING  
$2 BILLION IN CASH TO OUR BALANCE 
SHEET THROUGH THE SALE OF A MINORITY 
PORTION OF OUR EQUITY.

SAFE AND SUCCESSFUL START-
UP OF PLUTO LNG WITH FIRST  
CARGO TRANSPORTED IN MAY.

IMPROVEMENT IN SAFETY 
PERFORMANCE  WITH OUR TOTAL 
RECORDABLE CASE FREQUENCY 
DECREASING FROM 4.78 TO 4.50 PER 
MILLION HOURS WORKED.

D
E
R
E
V
I
L
E
MYANMAR WERE ENTERED INTO.D

POSITIVE RESULTS FROM OUR 
REVISED GROWTH STRATEGY 
BY CAPTURING NEW VALUE-ADDING 
OPPORTUNITIES. IN-PRINCIPLE 
AGREEMENTS TO PARTICIPATE IN THE 
WORLD-CLASS LEVIATHAN GAS FIELD 
AND EXPLORATION OPPORTUNITIES IN 

THE 3500TH LNG CARGO AND 
THE 3000TH LNG CARGO TO JAPAN 
FROM THE NORTH WEST SHELF, WHICH 
CONTINUES TO PERFORM STRONGLY.

A SUCCESSFUL INSTALLATION OF 
THE NORTH RANKIN B TOPSIDES, 
WITH THE ANTICIPATED START-UP OF THE 
NORTH RANKIN REDEVELOPMENT IN 2013.

Overview 
About this report 
About Woodside 
Mission, vision, values and strategy 
Our areas of activity 
Performance summary 
Chairman’s report  
Chief Executive Officer’s report  
Chief Financial Officer’s report  
Our people 
Our health, safety and security 
Community engagement 
Environmental report 
LNG market report 
Reserves statement  
Exploration review 
Risk management 
Woodside Executives 

Business reviews  
North West Shelf 
Pluto LNG 
Australia Oil 
Browse LNG 
Sunrise LNG 
International 

Governance  
Board of Directors 
Corporate governance statement  
Directors’ report 
Remuneration report  

2012 Financial report  
Financial report contents 

ii
iii
iii
iv
2
4
6
8
10
11
12
13
14
16
18
20
21

24
26
28
30
32
34

36
38
52
53

67

Shareholder information  
137
Shareholder statistics 
138
Share registry: enquiries  
138
Investor relations: enquiries   
139
Business directory  
139
Key announcements 2012  
139
Events calendar 2013  
140
Units, conversion factors  
140
Glossary  
141
Index
142
2012 summary charts 
10 year comparative data summary  143

Information available online

You can find out more about Woodside 
online at www.woodside.com.au 

In this report, we have indicated where 
additional information is available online 
like this 

.

iv   Woodside Petroleum Ltd.  |  2012 Annual Report

Woodside Petroleum Ltd.  |  2012 Annual Report   1

 
 
 
 
 
 
 
 
 
peRfoRmAnce summARy

2012 was a year of record achievement underpinned by Pluto 
LNG start-up and ongoing reliability of the foundation business.

With effect from 1 January 2010 Woodside adopted a US dollar functional currency. All figures in this report are in US dollars unless otherwise stated.  
Where appropriate, comparative financial information prior to 2010 in this Annual Report has been converted from Australian dollars to US dollars using  
the relevant historical exchange rate.

 Additional financial details can be found on page 8 and 67 of this report.

production up 31%

sales revenue up 30%

Reported net profit 
after tax up 98%

dividends per share
(US cents per share) up 18%

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Record annual production 
was underpinned by the 
outstanding performance 
of Pluto LNG, together 
with ongoing reliability of 
the foundation business.

Record annual sales 
revenue was largely a 
result of record production 
and, to a lesser extent, 
continuing strong 
commodity prices.

Record reported net profit 
after tax was achieved 
primarily due to increased 
2012 production volume 
and the sale of a minority 
portion of Woodside’s 
Browse equity.

With the strong 2012 net 
profit after tax the Board has 
declared a record full-year 
USD dividend of 130 cps 
(interim dividend 65 cps,  
final dividend 65 cps).

underlying net profit after 
tax* up 25%  
(excluding non-recurring items)

operating cash flow  
up 55%

Return on equity,  
7.8 percentage points higher  
(including non-recurring items)

net debt down 62%

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The increased 2012 
production volume 
was the main driver for 
the record underlying 
net profit after tax.

Record operating cash 
flow was largely driven 
by increased receipts due 
to Pluto LNG start-up.

Return on equity of 19.7% 
increased primarily due to 
the partial equity sale of 
Browse. Underlying return on 
equity was 13.6% (excludes 
Browse equity sale to Japan 
Australia LNG (MIMI)).

The drop in net debt to 
$1.9 billion was attributed 
mainly to the partial 
equity sale of Browse 
and additional cash 
flow from Pluto LNG.

* Woodside’s Financial Report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS). The underlying (non-IFRS) 
profit is unaudited but is derived from audited accounts by removing the impact of non-recurring items from the reported (IFRS) audited profit. Woodside believes 
the non-IFRS profit reflects a more meaningful measure of the company’s underlying performance. 

 Additional 2012 summary charts can be found on page 142 of this report.

2   Woodside Petroleum Ltd. |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
highlights for the year

Pluto LNG

safe and successful 
start-up, with superior 
performance and high 
reliability achieved.

31%

increase in annual 
production to a record of 
84.9 million barrels of oil 
equivalent (MMboe).

98%

increase in reported  
net profit to a record 
$2,983 million.

55%

increase in operating 
cash flow to a record 
$3,475 million.

safety - tRcf improved by 6%

Results for the year

1

30%

increase in sales revenue  
to a record $6,223 million. 

1  Operating revenue of  

$6,348 million includes  
$125 million for LNG  
processing services.

18%

increase in final 
dividend to 65 cps.

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4.95

4.50

4.78

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The TRCF has improved over the 
last two years, assisted by an 
ongoing focus on safety programs 
such as the ‘Our Safety Culture’ 
campaign. 

For further information refer to 

our Health, Safety and Security 
section on page 11.

2012

2011 % Change

Reported net profit after tax

($ million) 2,983 1,507

Sales revenue 

($ million) 6,223 4,802

Cash flow from operating activities

($ million) 3,475 2,242

Earnings per share 

Total recordable case frequency

5 year total shareholder return2

10 year total shareholder return2

Production 

Proved reserves 

(cents)

(TRCF)

(TSR, %)

(TSR, %)

(MMboe)

366

4.50

(0.3)

21.7

84.9

190

4.78

4.6

20.9

64.6

(MMboe) 1,231 1,292

Proved plus Probable reserves 

(MMboe) 1,544 1,610

97.9

29.6

55.0

92.6

5.9

n.m.3

3.8

31.4

(4.7)

(4.1)

Contingent resources 

(MMboe) 1,745 2,137

(18.3)

2  Source: Bloomberg, TSR is the compounded annual return over the specified period.
3   n.m. - not meaningful

indexed ten year performance

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600

brent oil price
Woodside (Wpl)
AsX All ordinaries index 

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31/12/2012

Over the past ten years Woodside has outperformed the ASX All Ordinaries 
Index (values are indexed to base 100 from 31 December 2002). 

1 September 2004 NWS Train 4 start-up.

2 April 2005 Pluto gas discovery.

3 July 2007 Pluto FID.

4 Global financial crisis impact.

5 September - October 2008 NWS Train 5, Angel start-up.

6 March 2009 recovery in commodity prices.

7 June 2011 Pluto Train 1 delay.

8 February 2012 global uncertainty in the oil market 

and subsequent over correction.

9 April 2012 Pluto LNG production.

10 Re-emergence of European debt crisis.

11 September 2012 sale of Browse equity completed.

12 October and December 2012 in-principle agreement 

to farm-in two blocks; offshore Myanmar PSC.
13 December 2012 in-principle agreement to acquire 
30% participating interest in petroleum licenses 
covering the Leviathan gas field, offshore Israel. 

Woodside Petroleum Ltd.  |  performance summary    3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
chAiRmAn’s RepoRt

In order to deliver superior shareholder 
returns, we are committed to optimising 
our producing assets and commercialising 
value-adding growth opportunities.

Record financial results

At a time when there is still much 
uncertainty in global markets, Woodside 
experienced a significant uplift in its 
financial performance in 2012, largely 
due to the successful start-up of Pluto – 
Australia’s third producing LNG plant.

The 2012 reported net profit after tax  
was a record at $2,983 million. Underlying 
net profit after tax rose to $2,061 million,  
a 25% increase on the 2011 figure.

Woodside declared a final 2012 dividend 
of 65 cents per share, following the 
interim dividend of 65 cents per share. 
The 2012 annual dividend totalled 130 
cents per share – the highest achieved  
in the company’s history. 

During the year the Board announced a 
dividend policy in which the company will 
aim to maintain a minimum payout ratio of 
50% of underlying net profit after tax.

operational performance – from 
strength to strength

In April 2012 Woodside celebrated a 
major milestone in the company’s history 
with the safe start-up of the Pluto LNG 
Plant. Production reliability from the 
plant since start-up has exceeded all 
expectations, resulting in a step-change 
to the company’s production levels.

The strong performance of Pluto 
is testament to Woodside’s LNG 
capabilities, with the company 
having built and run six of the seven 
operating LNG trains in Australia. 

which will access five trillion cubic feet  
of undeveloped gas. 

As part of this project, the massive North 
Rankin B offshore platform and topsides 
were installed alongside the North Rankin A 
platform. The size of the topsides made 
installation technically challenging, but the 
team successfully achieved an installation 
record in open water, both in height and 
weight. Hook-up and commissioning 
activities are underway for a planned start-
up in 2013. 

The next phase of development at the 
NWS, the Greater Western Flank Project, 
also made progress during 2012 with the 
completion of Phase 1 drilling activities.

strategic direction to meet global 
demand

Despite some slowing of economic 
growth in China during the year, demand 
for LNG from the Asia Pacific region is 
forecast to grow by more than 90 million 
tonnes per annum between 2012 and 
2020. This is equivalent to the output of 
about 20 new LNG trains. Australian LNG 
projects are expected to satisfy much 
of this demand, if we are able to remain 
competitive. 

Japan is still forecast to be the world’s 
largest LNG importer by 2025, with 
demand from other traditional importers 
remaining solid. Strong demand growth 
is also forecast to come from India and 
ASEAN economies, some of whom will 
transition from LNG exporters to new 
importers in the decade ahead.

Woodside also continues to optimise 
production from existing assets, with 
projects such as the North West Shelf’s 
(NWS) North Rankin Redevelopment 

Against this backdrop, Woodside has 
adopted a strategy of optimising its 
producing assets and commercialising  
its growth opportunities. 

michael chaney Ao 
Chairman

4   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONIn 2012 the company realised early value 
from Browse by selling a minority portion 
of its equity in the development to Japan 
Australia LNG (MIMI Browse) Pty Ltd 
(MIMI) for $2 billion. The sale clearly 
demonstrated the value of this world-
class resource and ongoing demand for 
premium LNG. 

The proposed development of Browse 
LNG near James Price Point remains 
under evaluation, with a final investment 
decision to be considered in the first half 
of 2013.

During the year we continued engagement 
with the Timor-Leste and Australian 
Governments on the Sunrise LNG 
Development. A series of technical 
workshops commenced to help build 
mutual understanding on the development; 
further engagement will occur in 2013.

Woodside’s strategy to leverage our core 
capabilities for global upstream growth 
began to take shape in 2012 with expected 
new country entries in Myanmar and Israel.

The company reached an in-principle 
agreement to acquire a participating 
interest in the petroleum licences 
containing the Leviathan gas field in Israel. 
The field is one of the largest recent 
gas discoveries worldwide and provides 
the opportunity for Woodside to play a 
key role in the potential development of 
a liquefied natural gas industry in that 
country.

Offers were also accepted for Woodside 
to acquire an interest in Production 
Sharing Contracts for two blocks in the 
Rakhine deepwater basin, located off 
the western coast of Myanmar. Once 
finalised, the transactions will enable 
Woodside to participate in exploration 
activities in this frontier basin. 

maintaining our competitive edge 

Australia is experiencing rapid growth 
in the oil and gas industry with more 
than $190 billion worth of developments 
underway across the country. This 
growth is occurring within an increasingly 
competitive global gas market, with new 
energy sources emerging, including in 
North America and East Africa. 

While we do not anticipate new global 
supply to fundamentally alter the market 
dynamics in the Asia Pacific, it is clear 
we are operating in a changing global 
environment. Therefore remaining 
competitive will be vital to Australia’s 
future as an LNG supplier.

While costs and development activity 
in the Australian oil and gas industry 
have skyrocketed in recent years, labour 
and capital productivity have remained 
stagnant. 

Australia was ranked 20th in the World 
Economic Forum’s 2012 productivity 
league table.

To put that into perspective, the Business 
Council of Australia has calculated that 
productivity on Australian resource projects 
is 30-35% lower than on comparable 
projects in the USA.

The real impact of poor productivity has 
been masked by high levels of investment 
and record terms of trade. But, as the 
resources investment boom reaches its 
peak, the productivity gap will be exposed.

To close this gap, we must address 
policy challenges around workforce 
mobility and flexibility and streamline 
regulation, particularly between State and 
Commonwealth approvals processes. 
We must also ensure efficient project 
management and embrace new 

technologies where appropriate, to 
optimise development outcomes.

board of directors changes

After ten years of service on Woodside’s 
Board of Directors, Dr Pierre Jungels 
retired in December 2012 and  
Mr Erich Fraunschiel will retire in February 
2013. Both directors have made a 
substantial contribution to the Board’s 
deliberations over the last decade –  
Dr Jungels with his wealth of experience 
in the international oil and gas industry and 
Mr Fraunschiel with his wide business 
experience and great financial acumen. 
The Board thanks them for their efforts.

Dr Sarah Ryan joined the Board in 
December as a non-executive director. 

In December Woodside also announced 
the appointment of Mr Frank Cooper to 
the board as a non-executive director 
effective 1 February 2013. We welcome 
both Dr Ryan and Mr Cooper to the Board.

Woodside’s strong performance in 2012 
is a testament to the strength of our 
people, led by Chief Executive Officer 
Peter Coleman. On behalf of the Board of 
Directors I thank them all for their ongoing 
efforts on behalf of the company.

michael chaney Ao 
20 February 2013

Woodside Petroleum Ltd.  |  Chairman’s Report   5

chief eXecutive officeR’s RepoRt

Outstanding performance of the Pluto LNG 
Plant since start-up, together with the ongoing 
reliability of the foundation business, delivered a 
step-change in production and revenue in 2012.

2012 Key peRfoRmAnce 
hiGhliGhts
 Record annual production and sales 

revenue.

futuRe objectives
 Improve health and safety outcomes, 

towards our goal of achieving global top 
quartile performance by 2017. 

 Safe start-up of Pluto LNG and better 
than expected production ramp-up. 

 Progress the North Rankin Redevelopment 
and Greater Western Flank Phase 1 Projects.

 Major projects to maximise value of  

our NWS assets progressed to budget 
and schedule.

 Consider a final investment decision (FID) 

on the Browse LNG Development.

 Continue work to progress Greater Enfield 

 Realisation of early value from our 

Area oil opportunities.

Browse assets through sale of a minority 
portion of Woodside’s equity in the 
proposed Browse LNG Development.

 Conditional acceptance of Woodside’s 
offer to purchase a 30% participating 
interest in permits covering the Leviathan 
gas field.

 Conditional acceptance of Woodside’s 

offers to purchase equity in two 
production sharing contracts offshore 
Myanmar.

 Progress front-end engineering and design 

work to develop the Xena gas field.

 Continue to build momentum on the 

Sunrise LNG Development.

 Finalise agreements to progress the 

Leviathan Development and Myanmar 
offshore exploration, in keeping with our 
drive to grow Woodside’s resource base. 

 Maximise performance of our core business 
and continue disciplined evaluation of new 
value-add opportunities.

peter coleman 
Chief Executive Officer and  
Managing Director 

production profile

total shareholder Return (tsR) 
performance against peers

our strategic direction

0
7.
3

9
.
3
4

4
.
1
3

3
.
1
4

9
.
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08

09

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11

12

Liquid (Oil plus Condensate)
Gas (LNG, LPG and Pipeline gas)

30

)

%
(
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0
1

-5

The successful Pluto ramp-up has 
contributed to a significant step 
forward in Woodside’s production 
capabilities.

6   Woodside Petroleum Ltd.  |  2012 Annual Report

ten year compound  
annual return

l
p
W

Grow portfolio

leverage capabilities

maximise core

e
u
a
V

l

Time

The excellent ten year TSR reflects the long-
term sustainability of our business relative 
to our peer group which includes: Anadarko, 
Apache, BG, CNOOC, Inpex, Marathon, 
Murphy, Pioneer, Repsol, Santos and Talisman.

Source: Bloomberg. TSR is the compounded annual 
return over the specified period.

Woodside aims to be a leader in upstream 
oil and gas by optimising our producing 
assets and commercialising our growth 
projects. We will also leverage our world-
class capabilities to capture new growth 
opportunities.

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
 
 
 
 
 
Looking back on our achievements 
over the past year, we can describe 
2012 as a year of delivery for Woodside 
against our revised strategic direction.

We strengthened our core business, 
delivering the first cargoes from Pluto 
LNG that contributed to record annual 
production and sales revenue. 

We delivered early value from our 
premium Browse assets, adding $2 billion 
in cash to our balance sheet through 
sale of a minority portion of our equity.

And we leveraged Woodside’s world-
class capabilities and disciplined 
approach by capturing potential growth 
opportunities in Israel and Myanmar. 

These achievements, and many more 
during 2012, occurred alongside 
a significant program of cultural 
change that we are confident will set 
Woodside up for long-term success. 

our compass for the future
In 2012, following a company-wide 
review of Woodside’s organisational 
effectiveness and workplace culture,  
we developed the Woodside Compass. 
The Compass guides us on our journey 
towards becoming a global leader in 
upstream oil and gas, by linking Woodside’s 
core values, vision, mission and strategic 
direction. It makes clear that our long-term 
success depends not only on the oil and 
gas we produce, but on doing what’s right.

To improve organisational effectiveness 
we streamlined reporting arrangements 
at senior levels and established the role 
of a Chief Operations Officer. A new 
Corporate Strategy and Planning Division 
and Technology Division were also created 
to support our revised strategic direction.

A focus on world-class safety 
performance
Woodside achieved an improvement in 
health and safety outcomes measured in 
terms of total recordable case frequency, 
but we must continue to strive for further 
improvements in this area in 2013. 

When measured against global 
benchmarks, our health and safety 
performance falls short of expectations. 
To address this, in 2013 we will 
begin implementing measures to 
achieve global top quartile health 
and safety performance by 2017.

A step-change in production

The safe start-up and better than 
expected ramp-up of Pluto LNG in 
2012 cemented Woodside’s status as 
Australia’s leading LNG operator. 

Once again we achieved strong 
operational results at the North West 
Shelf Project, with delivery of the 
3500th LNG cargo testament to the 
capacity of this world-class asset. 

Consistent high reliability from Pluto during 
the year, combined with the ongoing 
strong performance of our foundation 
business, resulted in  production reaching 
84.9 MMboe for 2012. This was an 
increase of 31% on 2011 production 
and a new record for our company.

A strong balance sheet to fund 
growth
While our foundation oil and gas assets 
continued to deliver strong cash flows 
in 2012, Pluto generated $1.43 billion 
in revenue in the eight months since 
its first cargo. This took our total 2012 
sales revenue to a record figure of 
$6.22 billion (30% increase on 2011), 
and an underlying net profit of $2.06 
billion (25% increase on 2011).

This robust cash flow, combined 
with the sale of a minority portion of 
Woodside’s equity in the Browse LNG 
Development, strengthened our balance 
sheet in preparation for new growth 
opportunities while also returning value to 
shareholders through increased dividends. 

Growing our Australian portfolio
2012 was an important year for the 
proposed Browse LNG Development, 
with Shell increasing its equity and Japan 
Australia LNG (MIMI Browse) Pty Ltd 
(MIMI) purchasing a minority portion of 
Woodside’s equity. BHP Billiton Petroleum 
also announced its intention to sell its 
Browse equity share to PetroChina 
International Investment (Australia) Pty Ltd.

A disciplined evaluation to determine 
Browse LNG project costs and economics 
is nearing completion, with a FID to be 
considered in 1H 2013.

Woodside also progressed two oil 
developments during 2012. We began 
front-end engineering and design work for 
the Cimatti Development and continued 
evaluation of our Laverda field.

Woodside continued to broaden our 
dialogue with the Timor-Leste Government 
and other stakeholders on the proposed 
Sunrise LNG Development. 

capturing new value-creating 
opportunities 
Beyond Australia, Woodside announced 
two significant country entries with 
international partners during 2012. 

Our conditional farm-ins to two blocks 
in offshore Myanmar during 2012 
provide Woodside with entry into the 
prospective Rakhine Basin, where we 
can bring our deepwater capabilities 
into play and build new partnerships 
in a promising oil and gas province.

We reached an agreement in-principle 
to take a 30% participating interest in 
permits covering the Leviathan gas 
field offshore Israel, one of the biggest 
recent gas discoveries worldwide. The 
transaction, which remains subject to 
conditions including execution of fully 
termed agreements, completion of 
due diligence and necessary approvals, 
positions Woodside to benefit from Israel’s 
strongly growing domestic gas market, 
and play a key role in the potential future 
development of an LNG industry in Israel.

Finalising the Leviathan agreement 
will provide an immediate boost to 
Woodside’s contingent resource base. 
In addition, an increase to our developed 
reserves will occur with the start-up of the 
North Rankin Redevelopment Project. 

Growing sustainably
In line with our aspiration to be a partner 
of choice, during the year we continued 
to engage closely with the communities 
where we operate. This included meeting 
the majority of our Reconciliation 
Action Plan 2012 commitments.

Our people continued to show their 
personal dedication to the community 
with our employee volunteering rates 
well above most of our peers.

During the year we launched our three-
year gender diversity strategy. Pleasingly, 
we are already making headway in this 
area, improving our gender balance in 
our 2013 graduate intake and our senior 
management succession planning.

Our values-led, disciplined approach, 
combined with our world-class portfolio 
and capabilities, will enable Woodside to 
continue delivering superior shareholder 
returns into 2013 and beyond.

peter coleman 
20 February 2013

Woodside Petroleum Ltd.  |  chief executive officer’s Report   7

chief finAnciAl officeR’s RepoRt

Woodside delivered record financial performance 
in 2012, underpinned by the start-up of Pluto and 
continuing strong pricing. Our balance sheet is 
well positioned to support our future growth. 

Woodside delivered a record financial 
performance in 2012, reporting a net profit 
of $2.98 billion, or $2.06 billion on an 
underlying basis. 

underlying npAt versus reported npAt 1

$ million
underlying profit npAt 
(before non-recurring items)
Non-recurring items after tax
Pluto delay mitigation cost
Neptune impairment reversal
Browse equity sale 
Tax paid on sale of subsidiary

2012
2,061

2011
1,655

(27)

(165)

-

974

(25)

17

-

-

Reported profit

2,983

1,507

1 Woodside’s Financial Report complies with 
Australian Accounting Standards and International 
Financial Reporting Standards (IFRS). The 
underlying (non-IFRS) profit is unaudited but is 
derived from audited accounts by removing the 
impact of non-recurring items from the reported 
(IFRS) audited profit. Woodside believes the non-
IFRS profit reflects a more meaningful measure of 
the company’s underlying performance.

With the start-up of Pluto LNG in 2012 
and continued strong pricing, Woodside 
recorded its highest ever annual sales 
revenue of $6.22 billion.

Our 2012 financial results also benefited 
from a full year of production from the 
NWS oil facilities and improved production 
from the Vincent oil field, following infill 
development in 2011 and early 2012. This 
helped to offset field decline in our oil assets.

In 2012 we booked a $974 million gain on the 
sale of a minority share of our Browse equity.

The impact of Pluto LNG and the Browse 
equity sell down on the 2012 profit result is 
shown in the following tables.

pluto 2012 financial contribution

lawrie tremaine 
Executive Vice President and
Chief Financial Officer

2012 Key peRfoRmAnce 
hiGhliGhts
 Record annual sales revenue of  

$6.22 billion and underlying profit of 
$2.06 billion.

 Pluto start-up resulting in revenue  
of $1.43 billion and gross profit of 
$642 million.

 Browse partial equity sale proceeds of 
$2.06 billion and after tax profit impact 
of $974 million.

 Free cash flow positive: $3.63 billion 

compared to negative $1.29 billion in 2011.

 Re-established stable credit ratings.

Production
Revenue
Cost of sales
Gross profit

(MMboe)
($ million)
($ million)
($ million)

23.97
1,427
(785)
642

 Record full-year dividend to shareholders 
and establishment of a Dividend Policy.

futuRe objectives
 Value enhancement through effective 

investment decisions.

 Optimise capital management to 

support growth.

 Disciplined cost management. 

8   Woodside Petroleum Ltd.  |  2012 Annual Report

browse partial equity sale ($ million)
Sale proceeds
Cost base
Income tax
PRRT deferred tax write back
net profit after tax

2,060
(1,303)
(186)
403
974

strong commodity price, but a 
change to product mix
With the introduction of Pluto LNG 
volumes in 2012 and natural field decline 
of our oil assets, we have seen a 1% 

reduction in the average realised price for 
the combined products. Although product 
specific realised prices have increased 
from 2011, the higher gas concentration 
in the product mix has lowered the overall 
average price.

Average realised price table

Pipeline natural gas

NWS LNG

Pluto LNG

Condensate

LPG

2012

2011 variance

$/boe
26.69

$/boe
26.96 2

$/boe
(0.27)

77.85

67.46

10.39

54.90

104.47

113.28

-
98.913
76.55 3

-

5.56

36.73

(0.27)

(0.85)

Oil
Average realised prices 74.26

113.52 113.80

75.11

2  NWS pipeline natural gas revenue includes the 
revenue from a negotiated confidential settlement 
between the NWS Domestic Gas Joint Venture 
and Alinta Sales Pty Ltd following the conclusion 
of the restructure of Alinta Energy Limited.

3  Includes Ohanet Risk Sharing Contract sales.

effective capital management 
We invested $1.76 billion in our business 
activities in 2012, down from $3.83 billion  
in 2011. The 2012 spend comprises  
$1.50 billion in capital expenditure and 
$0.26 billion in exploration. 

This lower investment expenditure 
together with the cash flow now being 
generated by Pluto LNG, has enabled 
us to report a positive free cash flow 
this year, after several years of negative 
free cash flow due to the investment at 
Pluto. Consequently we have significantly 
reduced net debt at the end of 2012 from 
$5.06 billion to $1.92 billion.

The strengthening of the company’s 
financial profile contributed to the 
affirmation of our credit ratings  
(S&P: BBB+; Moody’s: Baa1) and a 
change in outlook to stable. 

free cash flow

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(

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3,636

4,000

3,000

2,000

1,000

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(1,000)

(668)

(2,000)

(3,000)

(4,000)

(3,225)

(837)

(1,291)

08

09

10

11

12

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
 
 
 
 
bridge chart of Woodside’s 2012 reported net profit after tax (npAt)

unit production costs

1,331

(29)

(961)

733

265

(111)

(477)

540

(59)

2,983

244

1,507

Revenue

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Woodside’s 2012 NPAT was higher than 2011 due to additional revenue associated from Pluto LNG 
and non recurring items including the partial equity sale of Browse, included in ‘other income’.

*  Price/ FX includes oil price, foreign exchange rates and hedging.
** Petroleum Resource Rent Tax.

We ended the year with available funds  
of $4.12 billion ($2.42 billion cash and 
$1.70 billion undrawn debt) which 
supports our future growth opportunities. 
Re-evalution of our funding position 
will occur in 2013, pending investment 
decisions on major projects. 

Our ability to access long-term facilities 
provides Woodside with the capacity to 
develop the best value opportunities in 
our portfolio - at the right time and at a 
competitive cost of funding.

Active portfolio management
Woodside has continued to actively 
manage its asset portfolio. Late in 2012 
Woodside agreed to divest its Mutineer- 
Exeter asset. In-principle agreements 
have also been achieved to farm-in to 
petroleum licences in offshore Israel 
and two Production Sharing Contracts in 
Myanmar. All of these agreements are 
expected to be finalised in 2013.

profit drivers (2012 versus 2011) 
The following summarises the main 
drivers of the 2012 profit result and is 
represented in the above bridge chart.

Revenue volumes – increased largely 
due to Pluto start-up ($1,427 million),  
a full year of NWS oil production  
($230 million) and higher production at 
Vincent ($129 million). This was partially 
offset by field decline in oil assets.

sales price – increase was mainly 
attributable to NWS LNG ($223 million).

cost of sales – increased by  
$961 million. The increase was largely 
driven by Pluto ($778 million) and higher 
production at NWS oil ($127 million) and  
at Vincent ($77 million).

other income – increased by $733 million. 
This was largely attributable to the Browse 
partial equity sale of $757 million1.

other expenses – decreased by  
$265 million. The decrease was largely 
the result of the impact of lower 
exploration and evaluation expense  
($195 million) and lower Pluto mitigation 
and pre-start-up costs ($218 million); 
partially offset by higher impairment 
charges ($160 million related to Laminaria-
Corallina, Pluto onshore expansion and  
the Panoramix wells).

net finance costs – increased by  
$111 million as a result of Pluto start-up 
whereby previously capitalised borrowing 
costs are now expensed.

income tax – increased by $477 million 
largely due to higher net profit before tax  
($232 million) along with Browse partial 
equity sale ($186 million).

petroleum Resource Rent tax – 
decreased by $540 million largely due to the 
partial equity sale of Browse ($403 million).

unit production costs rise 
(Australian dollars)2
Total gas production costs increased by 
A$158 million to A$343 million in 2012 
largely due to the introduction of Pluto 
LNG. On a unit basis, gas unit production 
costs increased from A$4.02/boe to 
A$5.03/boe due to higher start-up costs  
at the Pluto LNG facilities.

Total oil production costs increased by  
A$44 million to A$327 million. On a unit 
basis, oil unit production costs increased 
from A$16.88/boe to A$19.52/boe. The 
increase is primarily due to Vincent FPSO 
and related transition costs, and the 
impact of lower production due mainly to 

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19.52

16.88

14.01

11.46

3.35

3.37

4.02

5.03

4.19

11

12

10

09
Oil (A$/boe)
Total gas (A$/boe)
Gas (excluding Pluto (A$/boe)

Despite the increasing unit production costs, 
our oil assets delivered a combined EBIT of 
$948 million. We continue to look at bringing 
forward value on these assets through infill 
drilling or divestment. 

field decline at the Greater Enfield Area oil 
assets.

dividend policy
In August, the Board approved a Dividend 
Policy. Consistent with recent practice, 
Woodside will aim to maintain a minimum 
dividend payment payout ratio of 50% of 
net profit (excluding non-recurring items) 
expressed in US dollars. In determining 
the appropriate dividend payment, 
Woodside will consider, among other 
things, its development profile, available 
cash flow and funding requirements. 

 The full Dividend Policy can be found 
on our website.

sensitivities
For 2013, a $1 movement in the Brent  
oil price is expected to impact NPAT by 
$22 million and a $0.01 decrease in the 
AUD:USD exchange rate is expected to 
increase NPAT by $7 million.

outlook
Investment expenditure for 2013 is 
expected to be $2.6 billion, which is higher 
than previous guidance due to anticipated 
additional expenditures associated with 
the Leviathan and Myanmar opportunities. 
The expected investment expenditure 
amount comprises $2.1 billion capital plus  
$0.5 billion of exploration expenditure. 

This estimate does not yet include 
forecast project expenditure that would 
result from a final investment decision for 
the proposed Browse LNG Development.

1 Derived from sales proceeds of $2,060 less cost base of $1,303; pre-tax.

2 Unit production costs have been reported in Australian dollars as the majority of expenditure is incurred in 
this currency. See glossary on page 140 for the unit production cost definition.

lawrie tremaine 
20 February 2013

Woodside Petroleum Ltd.  |  chief financial officer’s Report   9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ouR people

Woodside understands that delivery of superior shareholder 
returns is dependent upon our ability to attract and retain an 
engaged, diverse and high performing workforce.

Above: Graduates take part in the annual 
‘Grad Day’ activities.

Woodside’s Graduate Development 
Program is a key component of the 
company’s strategy to build long-term 
capability. It is designed and implemented 
to attract and retain the best possible 
candidates.

2012 Key peRfoRmAnce 
hiGhliGhts
 Three-year Gender Diversity Strategy 

rolled out.

 Strong diversity focus with 50% of our 
2013 graduate intake being female.

 Progressed towards becoming a values-
led organisation through the roll-out 
of Our Values and Behaviours Guide 
and the introduction of values into key 
people processes.

 Converted 70% Indigenous pathways 

participants to full time jobs.

futuRe objectives
 Continue to embed Our Values and 

Behaviours into key people processes 
to support cultural change.

 Review and implement a revised 
leadership and management 
competency framework to enable 
continued development of capability.

 Implement a three-year Indigenous 
employment strategy to support our 
Reconciliation Action Plan (RAP). 

 Put in place a development program 

for high talent women and create a job 
design toolkit to support and increase 
flexible working.

number of employees and 
voluntary turnover #

9.4

8.5

indigenous employment

Contractors*
Pathways**
Employees - Permanent/Fixed

6.8

5.2

5.4

4
2
1
,
3

9
1
2
,
3

0
5
6
,
3

6
5
8
,
3

7
9
9
,
3

s
e
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y
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p
m
e

l

l

a
t
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T

08

09

10

11

12

)

(

%
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i
t
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r

r
e
v
o
n
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t
y
r
a
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V

l

5
7

4
6

2
4 9
8

9
4

8
5

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l

l

a
t
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T

3
8 3
2

6
3

2
3

08

09

10

11

12

building capability 
Woodside has maintained its focus on 
building the right level of capability in order 
to ensure we can resource for the long-
term. We continued to invest in our future 
capacity through apprentice, trainee and 
graduate programs. A total of 127 trainees 
and apprentices participated in technical 
skills development through the Woodside 
Training Academy in 2012, with 117 active 
at year-end. 

There were 53 graduates new to 
Woodside, with a total of 135 graduates 
on the three-year graduate program.

Woodside achieved excellent outcomes 
in 2012 with 91% of all trainees and 
apprentices converting to permanent 
employment at the conclusion of 
their traineeship or apprenticeship. 

In 2012, we continued to develop 
our leadership capability by offering 
development programs aimed at 
improving employee engagement.

Our Leadership Development 
curriculum programs were attended by 
864 company leaders. A further 710 
leaders attended workshops on Our 
Values and Behaviours, accountabilities 
and decision effectiveness.

developing a diverse workforce 
Woodside progressed well against its 
RAP commitments. We achieved the 
employment of 92 Indigenous people by 
the end of 2012, with our target number 
of 96 to be achieved in early 2013. The 
cumulative conversion rate since 2009 of 
70% of pathway participants transitioning 
to employment was also a positive result.

 For further information on our Diversity 
Policy and RAP commitments visit our 
website.

Woodside implemented a three-year 
Gender Diversity Strategy in 2012 which 
focuses on leadership, process and 
practice, education, government and 
community engagement to improve our 
ability to attract and retain skilled people.

#In 2012, reporting of voluntary turnover is based 
on global employee turnover rather than Australian 
employee voluntary turnover, resulting in minor 
changes to the ratios reported in prior years.

Woodside’s global voluntary turnover 
rate increased from 6.8% in 2011 to 
8.5% in 2012, attributed in part to the 
ongoing industry demand for talent. 

10   Woodside Petroleum Ltd.  |  our people

* No Indigenous contractors were employed in 2012 
as a result of start-up at Pluto LNG. 

**Indigenous pathways numbers include total number 
of participants who completed a pathway during the year. 

In 2012, the number of Indigenous employees 
(permanent / fixed) increased by 9.5% 
compared to 2011. The Indigenous Pathway 
participants increased by 17.2%. 

outlook 
Recognising that the industry demand 
for skilled talent remains competitive, 
Woodside will continue to focus on 
internal development and training 
of our people to ensure we have an 
engaged and capable workforce.

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
 
 
 
 
ouR heAlth, sAfety And secuRity

We will achieve our aspiration of ‘no-one gets hurt, no incidents’ 
by implementing our operating standards, reinforcing positive 
safety behaviours and continuous improvement.

2012 Key peRfoRmAnce 
hiGhliGhts
 Achieved a 6% improvement in the 
Total Recordable Case Frequency 
compared to 2011.

 As part of commitment to ‘Our 

Safety Culture’ initiative, workshops 
were held across Woodside, with 
6,000 participant packs distributed to 
employees and key contractors. 

 Assurance process implemented across 
Woodside to ensure compliance with 
our revised health and safety operating 
standards.

 Commenced implementation of a 

control program to address fraud and 
corruption risks, in accordance with the 
UK Anti-Bribery Act. 

futuRe objectives
 Achieve global top quartile health  
and safety performance by 2017.

 Implement targeted health and 

wellbeing interventions. 

 Embed the Woodside process safety 
framework and performance metrics

 Execute an enhanced health and safety 

service delivery model.

total recordable injury rate

OGP Top Quartile
Woodside

6

5

4

3

2

1

e
t
a
r
y
r
u
n

j

i

l

e
b
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l
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m

r
e
p

0
07 09 11 13 15 17

Total recordable injury rate (injuries only) for 
Woodside benchmarked against top quartile 
performance of the International Association 
of Oil and Gas Producers (OGP). Woodside 
is targeting significant improvement to 
achieve top quartile performance by 2017.

Health and safety is fundamental to 
Woodside’s licence to operate. 

We require everyone to contribute to 
building and sustaining a strong safety 
culture that delivers a healthy, safe 
and productive work environment. 

Woodside’s ‘Our Safety Culture’ 
framework, along with the Woodside 
Management System, defines our 
approach to ensuring the health and 
safety of our employees and contractors, 
and the integrity of our facilities. 

We have in place six Strategic 
Imperatives to help us achieve our 
aspiration of ‘no-one gets hurt, no 
incidents’. The Imperatives drive our 
yearly action plans and ensure our 
activities are appropriately targeted. 

 Information on these imperatives 
can be found on page 30 of the 2012 
Sustainable Development Report.

2012 performance   

The number of recordable injuries 
and illnesses decreased from 140 in 
2011 to 86. The total recordable case 
frequency (TRCF) dropped to 4.50 
in 2012, compared to 4.78 in 2011, 
representing a 6% improvement.

The number of high potential incidents 
decreased to 30, compared to 35 in 
the prior corresponding period. 

There were no work-related fatalities  
in 2012.

strengthening our safety culture

In 2012, we launched a company-
wide safety culture survey to provide 
an opportunity for our employees and 
key contractors to assess strengths 
and identify areas for development. 

The survey results are being used 
to strengthen ‘Our Safety Culture’ 
behaviours and to guide health and 
safety plans across the company. 

Further, to ensure compliance with 
operating standards and procedures, 
a company-wide assurance 
process was implemented. 

A total of five assurance reviews 
were conducted, with a compliance 
score of over 70% recorded. 

protecting people and facilities

In 2012 Woodside safely progressed 
the North Rankin Redevelopment and 
safely delivered the Pluto LNG facilities.

In 2012, Woodside completed a company-
wide fraud and corruption risk assessment 
and commenced implementation of a 
wide ranging control plan, which will 
prepare staff for the challenges that 
may arise as we broaden our portfolio.

We completed four company-wide 
crisis exercises, and 18 facility level 
two exercises, to test and develop our 
emergency management capabilities. 

In addition, major accident prevention and 
response capabilities remains a priority.  
As part of our Corporate Oil Spill Response 
Plan we participated in a number of oil spill 
response exercises during 2012.

outlook 

Woodside’s health and safety performs 
well when benchmarked against 
our Australian peers, however when 
compared against global benchmarks 
there is room for significant improvement.

In 2013, we will begin implementing 
measures to achieve global top quartile 
health and safety performance by 2017. 

In addition we will continue to work with 
key partners including state, federal and 
foreign governments to safely secure our 
operations in Australia and internationally. 

In line with our international expansion 
plans we will maintain our focus on 
progressing our international security, 
emergency management and anti-fraud 
and corruption processes. 

 Further information on Our People 
and our Health, Safety and Security is 
available on pages 28 to 33 of the 2012 
Sustainable Development Report.

Woodside Petroleum Ltd.  |  our health, safety and security   11

 
 
 
 
 
 
 
 
community enGAGement

The long-term relationships we have with the communities in which 
we operate are fundamental to maintaining our licence to operate. 

regional, state and national level, as well 
as investing in supporting communities 
internationally, with a particular emphasis 
on building capability and capacity. 

It is Woodside’s commitment that 
each of our operating locations has 
local community engagement and 
development programs. We recognise 
we are part of the community; we 
make commitments for the long-
term and therefore look after each 
other and our communities. 

An example of this commitment is 
the Woodside operated-Sunrise Joint 
Venture and its focus on supporting 
youth development and education, by 
building the capability and capacity of 
the next generation of Timorese. 

Our major national partners are Surf 
Life Saving Australia and Conservation 
Volunteers. These partners are 
delivering programs that support 
the health and wellbeing of coastal 
communities around Australia.

In addition we initiated a new collaborative 
program with the Royal Flying Doctor 
Service, the Lions Cancer Institute and 
Royalties for Regions to deliver the 
first free skin cancer screening service 
for people living and working in the 
Kimberley region of Western Australia.

our performance
Woodside is a member of the London 
Benchmarking Group (LBG) and uses 
its methodology to track, measure, 
benchmark and report on our social 
investment performance. Woodside has 
a social investment target of 0.5% profit 
before tax by 2015. Our direct voluntary 
social investment contribution* in 2012 
was A$9.5 million. This equates to 0.34% 
of a three-year averaged PBT (2010-2012). 

During 2012 we commissioned a 
corporate social investment review 
to determine whether key outcomes 
of our 2009-2012 social investment 
strategy had been achieved. 

the impact and outcomes achieved by 
community partners and their programs. 

 For further information on Woodside’s 
major social investment contributions 
and our Sustainable Communities 
Policy visit our website.

The Woodside-operated North West Shelf 
(NWS) Project also commissioned a separate 
review of its social investment programs in 
the Pilbara region of Western Australia.

Consistent with Woodside’s corporate 
social investment review, this NWS 
review also found stakeholders 
perceived social investment programs 
in the Pilbara to be highly regarded by 
the community. Key opportunities for 
improvement are to continue to consult 
with the community, to promote the social 
investment strategy and to investigate 
the effective long-term measurement of 
social investment program outcomes.

employee volunteering and 
engagement 
Our contribution to communities through 
social investment is complemented by 
our employee engagement and corporate 
volunteering program. The program is 
run in collaboration with Volunteering 
WA which offers participation in social 
programs and Conservation Volunteers 
which offers participation in environmental 
programs.

Our corporate volunteering program 
provides employees with the opportunity 
to contribute 12 hours of paid volunteering 
leave each year, to support community-
based organisations. 

outlook
In 2013, as our social investment strategy 
evolves, we expect to direct more 
investment towards one particular area  
of social need. 

In addition, we will refine our 
community engagement processes 
and policies to ensure they support 
the company’s licence to operate. 

The review outcomes were positive and 
opportunities for improvement were 
identified. An area of focus will be to 
improve communications regarding 

 Further information on our Community 
Engagement is available on pages 
14 to 27 of the 2012 Sustainable 
Development Report.

Above: Learning about science with the 
Scitech Aboriginal Education program.

Woodside is a proud supporter of Scitech’s 
Aboriginal Education Program. In 2012 the 
program won the Leading Edge Award for 
Visitor Experience at the Association of 
Science and Technology Centres, for its 
delivery of science outreach to Western 
Australia’s most remote communities.

2012 Key peRfoRmAnce 
hiGhliGhts
 We directly contributed A$9.5 million 
worth of social investment* to the 
communities in which we operate. 

 Our staff contributed 5,800 volunteering 

hours, valued at A$0.96 million.

 Our voluntary social investment 

contribution in 2012 equated to 0.34% 
of a three-year averaged profit before 
tax (2010 to 2012).

futuRe objectives
 Meet our target of contributing 0.5% 

profit before tax by 2015 to community 
programs, in order to ensure communities 
benefit from our activities.

our approach
Woodside’s strategic and integrated 
approach to corporate social investment 
is guided by our Sustainable Communities 
Policy. Our social investment strategy is 
based on a three tiered funding model 
with a theme of contributing to health 
and well-being on a personal, community 
and environmental level. Our focus 
is to contribute to communities at a 

* Includes cash value, in-kind and voluntary hours 
(Woodside share).

12   Woodside Petroleum Ltd.  |  community engagement

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONenviRonmentAl RepoRt

Our success depends on our ability to understand our current 
and future operating environments, the potential impacts of our 
activities and how we best manage and mitigate such impacts. 

2012 Key peRfoRmAnce 
hiGhliGhts
 No reportable or recordable environmental 
incidents from Pluto LNG commissioning 
and start-up activities.

 Environmental approvals received with 
minimal impact to activity schedule 
during the commencement of the new 
offshore regulatory regime. 

futuRe objectives
 Complete energy efficiency assessments 

at the Nganhurra floating production 
storage and offloading (FPSO) vessel,  
the Northern Endeavour FPSO and 
Goodwyn A Platform.

 Maintain a low level of environmental 

incidents.

flare gas and intensity  
(excludes commissioning)

9.5

9.6

9.3

0
1
3

3
4
3

7
2
3

0
5
1

6
2
1

6
1
1

8.0

7.5

6
4
72
1
2

9
7

5
6

08

09

10

11

12

Flared gas intensity (tonne/kilotonnes 
hydrocarbon production)
Total gas flared for operated ventures  
(kilotonnes)

Woodside portion of flaring (kilotonnes)

Flared gas intensity is measured as tonnes  
of gas flared per kilotonne of hydrocarbon 
produced (t/kt). The reduction in intensity 
continued in 2012 largely as a result of 
increased reliability and the implementation  
of flaring reduction measures.

environmental incidents

1
2

8

66

4

11

12

10

09

08
Six environmental incidents occurred in 2012. 
Since 2008 there has been a significant 
decline in the number of incidents.

our approach 
Woodside’s approach to environmental 
management is outlined in our 
Environment Policy and the mandatory 
environmental operating standards that 
apply to all facilities. The standards set 
compulsory environmental performance 
requirements through the life-cycle 
of our projects and operations.

 Information on Woodside’s 
Environment Policy can be  
found on our website.

excellent environmental 
performance
Woodside partners with leading 
research and education institutes to 
generate information that is critical to 
support decision making and ongoing 
monitoring of our operations. Woodside 
received the 2012 APPEA Environment 
Award, in recognition of Woodside’s 
collaborative research partnerships with 
the Australian Institute of Marine Science 
and the Western Australian Museum. 
The research has improved scientific and 
industry knowledge and improved the 
broader community’s understandings 
of biodiversity and ecological function in 
Western Australia’s tropical marine areas.

Woodside did not receive any 
environmental fines or penalties in  
relation to environmental incidents in 
2012. Six incidents were reported to 
regulators, in accordance with legal 
requirements. Of these, four resulted  
in no measurable environmental impact.  
The other two resulted in a loss of  
120 litres and 200 litres of hydraulic oil 
in separate incidents on two offshore 
facilities. 

As a result of flaring reduction initiatives, 
Woodside continued to reduce the 
flaring intensity of operational facilities, 
achieving a flaring rate of 7.5 t/kt 
(excludes flaring during commissioning). 
This is a decrease of flaring intensity of 
6.5% on 2011 and 22% since 2008. 

Woodside’s rate of flaring for all facilities, 
including those in commissioning, 
was 22.9 t/kt. These rates are due 
to commissioning flaring at both the 
Okha FPSO and Pluto LNG facilities. 

During the commissioning of new 
facilities, it is often necessary to flare 
higher rates of gas in order to maintain 
safety and integrity. Once fully operational, 
it is expected that these facilities will 
operate at significantly lower flaring rates, 
due to mitigation measures incorporated 
into the design of the facility. 

introduction of a carbon price 
Effective 1 July 2012, Woodside 
became liable for its carbon emissions 
under the Australian Government’s 
Clean Energy Legislation. For the full 
year 2012, a net expense of $17 million 
was recognised which reflects the cost 
of year-to-date emissions, net of all 
2012/13 carbon emission units granted 
by the Clean Energy Regulator.

browse
In November 2012, the Browse LNG 
Precinct near James Price Point, received 
environmental approval from the Western 
Australian Minister for Environment.  
In granting approval for the Precinct, the 
Minister set a number of strict conditions 
in order for any development to proceed. 

Further to this, the Browse LNG 
Development was declared a derived 
proposal by the Western Australian Minister 
for Environment in December 2012. 

The final environmental decision 
on the Precinct will be made by 
the Commonwealth Environment 
Minister. Woodside will then seek 
further environmental approval from 
the State and Commonwealth to 
construct and operate LNG processing 
facilities within the Precinct.

Woodside carried out additional 
environmental studies in 2012, to further 
understand the terrestrial and marine 
environment in the Browse region. 

outlook
In 2013, we are focused on maintaining 
a low level of environmental incidents, 
as well as looking to significantly 
reduce our rates of flaring, as facilities 
currently undergoing commissioning 
transition to normal operations.

Woodside Petroleum Ltd.  |  environmental Report   13

lnG mARKet RepoRt

Woodside executives, including  
Chief Executive Officer Peter Coleman 
(second from left) and Senior Vice 
President Commercial and President 
Marketing Reinhardt Matisons  
(second from right), meet with  
Mr Yoichi Mukae, Managing Director- 
Office of Fossil Fuel (far left) and other 
executives from Kansai Electric. 

balanced supply/demand position until 
this is completed. Start-up delays may 
extend the period of supply tightness 
and underscore the value of Woodside’s 
uncommitted production from the North 
West Shelf (NWS) Project and Pluto LNG.

Australia is home to seven of the 13 
projects globally under construction and 
is destined to become the world’s largest 
supplier before the end of the decade. 

2025

the next wave of supply will 
include some new lnG exporting 
regions, but these will face 
challenges

Towards the end of the decade additional 
new supply is required to meet growth 
in demand and replace the decline in 
some legacy projects. Globally there 
are many proposed projects, both 
brownfield expansions and greenfield, 
that are competing to secure new long-
term sales beginning around 2020. 

During 2012, a final investment decision 
(FID) was taken on the first US LNG 
export project supported by domestic 
shale gas deposits. There are many other 
North American export projects currently 
proposed, but most are speculative at this 
stage. The proposals in the US are mainly 
based on brownfield re-development 
of existing re-gasification terminals. 

Canadian LNG projects are more aligned 
to typical greenfield developments in 
Australia in terms of cost structure and 
risk profiles. The general view is that US 

Global lnG supply and demand

500

a
p
t
m

0

2011

Operational projects
Projects under construction
Possible developments
WoodMackenzie demand (Nov 2012)
CERA demand: Global redesign (Oct 2012
FACTS demand (Oct 2012)

minimal new global lnG supply 
until 2016

Post-Fukushima the Asia Pacific market 
tightened and significant volumes of Atlantic 
supply are being diverted to Asian markets 
to meet demand. As a consequence spot 
LNG prices remain relatively high. There is 
very little new supply due on-line before the 
middle of the decade, and uncommitted 
volumes from operating projects in this 
period will be highly prized.

From 2016 to 2019 approximately  
90 mtpa of new LNG capacity currently 
under construction is expected to be 
phased into the market. The market is not 
expected to move back towards a more 

outlook for growth in global lnG 
demand remains strong
Global demand for LNG to 2025 is 
anticipated to continue to grow at an 
average of 4% to 5% a year, equating to 
an increase of about 200 mtpa (million 
tonnes per annum).* This is underpinned 
by an increasing role for gas in the 
primary energy mix, together with a 
growing list of countries that will import 
LNG. A recent trend in forecasts of LNG 
demand is the potential for greater use 
of LNG in transport, in particular long-
distance trucking and ship bunkering. 

The largest regional LNG market is Asia 
Pacific, representing approximately 
two-thirds of global trade, based around 
the core markets of Japan, Korea and 
Taiwan. Growth will be driven by the 
key markets of China and India, with 
a range of emerging import countries 
playing an increasingly important role. 
New LNG importing countries include 
Thailand, Indonesia and Malaysia, 
with Singapore to follow in 2013.

A key uncertainty remains the outlook 
for Japanese demand. Following a 
rapid increase in the wake of the 2011 
Fukushima nuclear incident, demand 
steadied in 2012. The recently elected 
Liberal Democratic Party Government has 
a more positive view on nuclear energy 
and supports restarting idled reactors 
once their safety has been confirmed. 
However, the future primary energy mix 
role of nuclear power generation for the 
country remains unclear. We will continue 
to monitor policy developments in 2013.

*Various consultants, including WoodMackenzie, 
FACTS Global Energy and Poten & Partners.

14   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONexports of LNG are expected to make 
up less than 10% of global supply by 
2025, compared to approximately 25% 
from Australia and 20% from Qatar.

East Africa is also emerging as a 
new supply region following recent 
large offshore gas discoveries, but 
will likely face a range of greenfield 
development risks and other 
country specific challenges.

long-term lnG pricing in Asia 
pacific is robust

The outcomes of recent price 
negotiations in Asia Pacific for 
existing supplies indicate that the 
long-term oil-linked price is relatively 
stable with average pricing indexed 
to 85-90% of oil price movements. 
Woodside anticipates prices will remain 
predominantly oil-linked at close to the 
current level to support investment 
in new greenfield supply projects.

US brownfield projects have given rise 
to some alternative pricing mechanisms, 
with some sales linked to the Henry Hub 
natural gas benchmark plus a terminal 
capacity charge and transportation costs. 
It is expected that Asian buyers will 
initially limit the amount of US supply in 
their portfolios, with its volatile alternative 
price index and exposure to different 
contractual risks. The influence on 
Asian pricing will ultimately depend on 
the proportion of Asian sales captured 
by US LNG and the extent to which 
US supplies become and remain the 
marginal supply choice for the region. 

Woodside has strong price 
protection for its long-term  
lnG sales

Woodside’s Sale and Purchase 
agreements (SPAs) typically provide for 
periodic price discussions over the term of 
the contract. The impact of price reviews 
and Price Out of Range negotiations is 
to recalibrate contract pricing to reflect 
market trends. Woodside staggers 
the timing of price reviews within its 
current portfolio of more than 18 long-
term SPAs to the extent possible. 

Between 2011 and 2014 the majority of 
Woodside’s equity volumes will be subject 
to some form of price renegotiation, 
which is expected to generate incremental 
value due to the tightness of the market 
and the benchmark contracts that will be 
used to calibrate prices during this period. 

Woodside’s equity lnG has 
doubled with the start-up of pluto

A key milestone was reached when Pluto 
LNG loaded its inaugural cargo in May. 
Better than forecast LNG production  
at Pluto also enabled higher than planned 
deliveries to key long-term customers and 
resulted in further sales of additional LNG 
cargoes into a high demand spot market. 

In 2012 Woodside delivered 39 cargoes 
from Pluto, compared to a total of  
247 cargoes from the NWS Project.

Pricing discussions are underway for 
Pluto, targeting similar market price 
outcomes as other relevant Australian 
benchmarks for deliveries of long-term 
volumes into Japan.

NWS LNG continues to be highly 
valued in the market, with the extension 
of a long-term contract and a strong 
outcome for a recent price review with 
Japanese customers. These have set a 
solid platform for new sales following 
the sanction of the Greater Western 
Flank Phase 1 offshore development.

Woodside actively marketing 
browse lnG

Woodside is actively engaged with a 
broad base of premium customers in 
Asia to secure Browse foundation sales 
to be in a position to consider a FID in 
2013. Sales into Japan and North Asia are 
underwritten through a joint marketing 
effort with Japan Australia LNG  
(MIMI Browse) Pty Ltd (MIMI), following 
the combined off-take and equity transfer 
deal announced in May. This effectively 
places approximately 3.3 mtpa of 
Browse volumes into the premium Asian 
market, with joint marketing affording 
us market priority. In other regions, 
Woodside is also progressing its own 
equity sales and these are at various 
stages of maturity to support a FID.

new developments will deliver an 
extended range of markets and 
customers

Woodside’s planned participation 
in the Leviathan field in the Eastern 
Mediterranean and its entry into 
Myanmar could lead to new LNG and 
domestic gas market opportunities. 
Woodside is preparing for timely 
engagement with relevant markets to 
underpin these proposed new supply 
projects. We will leverage our long-

term experience in both pipeline gas 
and LNG marketing, together with our 
customer relationships to introduce 
the new supply to the relevant markets 
and secure foundation customers. 

Woodside to expand its lnG 
trading and shipping business

Central to our success is Woodside’s LNG 
shipping position. Woodside manages an 
integrated fleet of three ships on behalf 
of Pluto and has utilised these ships 
for project deliveries and optimisation 
with other suppliers, end users and 
traders. Pluto took a major investment 
decision in 2012 to expand its fleet to 
include a dedicated long-term fourth 
ship via a time charter (commencing 
mid 2013). This will allow further fleet 
integration and materially reduce operating 
costs. The vessel will support term 
and spot sales from Pluto, including 
any potential trading opportunities.

focused on consolidation, 
optimisation and new opportunities

As the major Australian supplier, 
Woodside’s key strengths are its 
reputation for reliability, long-term 
relationships with key buyers, proximity 
to premium Asian markets, and the 
stable political and fiscal regime in 
which it operates. We monitor the 
changing market and will remain 
competitive in securing long-term 
and short-term sales opportunities. 

Woodside’s marketing efforts in 2013 
will be focused on the consolidation 
and optimisation of LNG sales from 
operating assets and also on generating 
revenue from other shipping and 
trading activities. Woodside’s recent 
developments represent an opportunity 
to expand into new markets and to extend 
the existing broad base of premium 
Asian customers. Woodside is ready to 
leverage its strong marketing position 
and capability to support its Australian 
and international growth plans.

Woodside Petroleum Ltd.  |  lnG market Report   15

ReseRves stAtement

The developed portion of Proved plus Probable reserves 
increased by 132% in 2012 due to the start-up of Pluto LNG.

2012 Key points
 Developed Proved plus Probable 

reserves increased 430.3 MMboe 
largely due to achieving first production 
from Pluto LNG.

 Net Contingent Resource in the  

Greater Browse region decreased by 
427.8 MMboe largely due to a positive 
revision at Calliance (+40.8 MMboe) and 
the sale of a minority portion of equity in 
the proposed Browse LNG Development 
(-468.8 MMboe).

 Net Contingent Resource in the Greater 
Pluto Region increased 36.1 MMboe 
due to discovery of the Ragnar gas field.

Woodside’s reserves(1) overview
Proved(2)
Developed Proved(3)
Proved plus Probable(4)

Developed Proved plus Probable
Contingent resources(5)

Key metrics
2012 reserves replacement ratio(6)
Organic 2012 reserves replacement ratio(7)

Three year reserves replacement ratio

Three year organic reserves replacement ratio
Reserves life(8)

Annual production(9)

Net acquisitions and divestments

MMboe

MMboe

MMboe

MMboe

MMboe

2012

2011

Change%

1,230.6

1,292.4

(4.8)

533.5

248.1

115.1

1,543.6

1,610.2

755.6

325.3

1,745.2

2,136.5

(4.1)

132.3

(18.3)

%

%

%

%

Years

MMboe

MMboe

proved

30

30

71

88

14

88.4

0.0

oil
MMbbl
51.4

12.7

0.0

0.0

proved plus 
probable
25

25

52

82

17

88.4

0.0

total
MMboe(14)
1,292.4

22.9

3.7

0.0

(16.8)

(88.4)

dry gas(10) condensate(11)

Bcf(12)
6,406

MMbbl(13)
117.2

59

18

0

(358)

6,125

(0.2)

0.5

0.0

(8.8)

108.8

47.3

1,230.6

proved reserves annual reconciliation by product*

Reserves at 31 December 2011

Revision of previous estimates(15)
Extensions and discoveries(16)

Acquisitions and divestments

Annual production

Reserves at 31 december 2012

best estimate contingent resources annual reconciliation by product*

Contingent resources at 31 December 2011

Transfer to reserves

Revision of previous estimates

Extensions and discoveries

Acquisitions and divestments

contingent resources at 31 december 2012

proved reserves summary by region*

project
Greater Pluto(17)
North West Shelf(18)
Greater Exmouth(19)
United States of America(20)
Other Australia(21)

Reserves

dry gas
Bcf
9,788

condensate
MMbbl
288.6

oil
MMbbl
130.7

total
MMboe
2,136.5

(7)

82

285

(2,312)

7,836

(0.2)

3.6

2.5

(63.2)

231.2

(3.7)

5.7

6.5

(5.1)

23.7

59.0

(0.0)

(468.8)

139.3

1,745.2

dry gas
Bcf
3,641

2,480

0

4

0

condensate
MMbbl
54.2

oil
MMbbl
0.0

54.6

0.0

0.0

0.0

19.8

21.7

3.9

1.8

total
MMboe
692.9

509.6

21.7

4.5

1.8

6,125

108.8

47.3

1,230.6

proved plus probable reserves summary by region* 

project
Greater Pluto

North West Shelf

Greater Exmouth

United States of America

Other Australia

Reserves

dry gas
Bcf
4,856

2,644

0

5

0

condensate
MMbbl
70.8

oil
MMbbl
0.0

60.1

0.0

0.0

0.0

31.4

53.2

6.7

4.6

total
MMboe
922.7

555.4

53.2

7.7

4.6

7,505

130.9

95.9

1,543.6

proved reserves*

s
e
v
r
e
s
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e
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e
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,
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3
2
,
1

533

377

331

264

248

08

09

10

11

12

Developed Proved reserves 
increased 285.4 MMboe 
by year-end, largely due to 
the successful start-up of 
Pluto LNG.

proved plus probable 
reserves*

l

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v
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756

495

444

354 325

08

09

10

11

12

Due to Pluto LNG start-up, 
developed Proved plus 
Probable reserves increased 
430.3 MMboe. 

*Small differences are due to rounding to first decimal place.

16   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
 
 
 
 
 
 
 
 
 
 
 
 
 
developed and undeveloped 
(proved plus probable reserves)

Developed
Greater Pluto undeveloped
NWS undeveloped
Other undeveloped

%
49.0
27.3 
22.6
1.1

As projects are brought into production, 
additional value is derived for the company. 
At year-end 2012, 49% of the Proved plus 
Probable reserves were categorised as 
developed, up from 20% in 2011.

best estimate contingent resources summary by region*

project
Greater Browse(22)
Greater Sunrise(23)

Greater Pluto

North West Shelf

Greater Exmouth

United States of America

Other Australia
Other International(24)

total

dry gas
Bcf
4,987

1,717

851

99

93

2

66

22

condensate
MMbbl
136.4

75.6

13.2

3.0

0.5

0.0

0.5

2.1

oil
MMbbl
0.0

0.0

0.0

21.4

103.1

1.8

8.4

4.5

total
MMboe
1,011.4

376.7

162.5

41.7

119.9

2.1

20.4

10.5

7,836

231.2

139.3

1,745.2

*Small differences are due to rounding to first decimal place.

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.

Governance and Assurance

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. On average, 
more than 95% of Woodside’s Proved 
Reserves have been externally verified by 
independent review over the past four years.

notes to the reserves statement

1 

2 

3 

4 

5 

‘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 11.9% of total Proved reserves, and 
11.8% 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.

‘Developed reserves’ are those reserves that are 
producible through currently existing completions 
and installed facilities for treatment, compression, 
transportation and delivery, using existing operating 
methods and standards.

‘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.

6 

7 

8 

9 

10 

11 

12 

13 

14 

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. 

The ‘organic annual reserves replacement 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.

The ‘reserves life’ is the total reserves (developed 
and undeveloped) divided by production during the 
year.

‘Annual production’ is the volume of dry gas, 
condensate and oil (see Notes 10 and 11) 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, reserves reported 
gross of downstream fuel and flare 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.

‘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.

15 

16 

‘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’ represent 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.

17  The ‘Greater Pluto’ region comprises the Greater 

Pluto Central, Inner, Ragnar and Claudius Hubs. 

18  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 NWS 
Proved dry gas reserves and 16% of NWS Proved 
condensate reserves.

19  The ‘Greater Exmouth’ region comprises Vincent, 

Enfield, Cimatti, Stybarrow-Eskdale and Greater 
Laverda fields

20  Woodside’s resources in the United States of 

America include the Neptune and PowerPlay fields. 

21 

22 

‘Other Australia’ includes the Mutineer-Exeter, 
Laminaria-Corallina and Argus fields.

‘Greater Browse’ comprises the Brecknock, Calliance 
and Torosa fields. Woodside completed the sale 
of a minority portion of the company’s equity in 
the proposed Browse LNG Development to Japan 
Australia LNG Pty Ltd. Net resources are subject to 
future unitisation outcomes.

23 

‘Greater Sunrise’ comprises the Sunrise and 
Troubadour fields.

24 

‘Other International’ includes fields in Brazil. 

Woodside Petroleum Ltd.  |  Reserves statement    17

eXploRAtion RevieW

In 2012, we pursued new international growth opportunities that 
align with our strategy and capabilities. These provide greater 
diversity and broader balance to our portfolio, positioning the 
company to deliver long-term value growth for shareholders.

2012 Key peRfoRmAnce 
hiGhliGhts
 Strengthened our portfolio with 

new permit entries in Australia and 
preliminary agreements for permit 
entries in Myanmar and Israel.

 Acquired Woodside’s largest ever 

seismic survey in the Outer Canning 
Basin, offshore Western Australia.

 Gas discovered at Ragnar-1A.

futuRe objectives
 In 2013 Woodside plans to drill up 

to eight wells offshore Australia and 
acquire seismic data in Australia, 
Myanmar and potentially Peru. 

 Test the prospectivity of the under-
explored Outer Canning Basin.

 Progress drilling in offshore Israel.

 Strengthen and mature our exploration 

portfolio.

exploration results 

In 2012, Woodside drilled six exploration 
wells, resulting in a gas discovery at 
Ragnar-1A in WA-430-P in the Carnarvon 
Basin. Three dry holes were drilled in 
Australia (Vucko-1, Banambu Deep-1 
and Ananke-1), one in the Republic of 
Korea (Jujak-1) and one in the Gulf of 
Mexico (Innsbruck-1). Exploration risk was 
managed by farming out equity in three 
Australian permits prior to drilling. This 
included farming out 35% equity in WA-
433-P to Sasol Petroleum, 40% equity 
in WA-389-P to BHP Billiton Petroleum, 
and 16.67% equity in WA-269-P to Japan 
Australia LNG. Exploration expenditure 
was lower in 2012 due to these farm-
out decisions and a planned slowdown 
in exploration drilling during a time of 
portfolio replenishment. 

portfolio renewal 
The 2012 exploration drilling results 
were disappointing, and reflect the need 
for Woodside to continue to rebuild 
and refocus its exploration portfolio. 
Consistent with this goal, in 2012 we 

acquired three new exploration permits 
in Australia and over 15,000km2 of new 
three dimensional (3D) seismic data, 
including Woodside’s largest ever seismic 
survey, to prepare for future exploration 
campaigns. This included the acquisition 
of the 11,530 km2 Curt 3D seismic survey 
in the Outer Canning area, where risks 
are high but prospect sizes are large. 
In addition, we substantially increased 
our international new ventures team, 
conducted regional studies and pursued 
new acreage. 

In line with our revised exploration 
strategy to re-balance our portfolio, we 
have shifted our emphasis from mature 
basins with a predominant focus on 
Australia, to a balance between mature, 
emerging and frontier basins in Australia 
and also internationally. In Myanmar, 
subject to final agreements and approvals, 
we will add two new exploration permits 
in the offshore Rakhine Basin. We are 
looking forward to working with our 
experienced local partners to mature  
this acreage by acquiring 3D seismic  
data in 2013. 

Woodside has significant acreage in prospective exploration areas

Woodside permits 
Woodside permits 

Woodside fields
Woodside fields

 WEL owned/participant  
 WEL owned/participant  
 2012 acquired permits 
 2012 acquired permits 

 Gas  
 Gas  
 Oil  
 Oil  

AC/P48

Argus

WA-275-P

Torosa

Brecknock
Calliance

WA-432-P

WA-429-P

WA-449-P

WA-397-P

WA-396-P

0

100

200

kilometres

Horizontal Datum: GDA 1994

WA-447-P

WA-466-P

WA-462-P

WA-464-P

WA-415-P

WA-416-P

WA-417-P

James Price Point

Derby

Broome

Banambu Deep-1
WA-389-P

WA-347-P

WA-348-P

WA-404-P

WA-465-P

WA-467-P

WA-473-P

WA-434-P

Ananke-1
WA-269-P

Pluto

NWS

WA-472-P

WA-451-P

Port Hedland

Vucko-1
WA-433-P

Ragnar-1
WA-430-P

WA-478-P

Karratha

Vincent / Enfield
Laverda

Exmouth

18   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION2012 exploration expenditure by category

2012 exploration expenditure by country

Drilling
Seismic
Studies and other

%
37
29
34

Drilling expenditure was reduced from the 
previous year due to fewer wells and cost 
savings from farm-outs. Expenditure on 
studies and data purchases was increased, 
associated with rebuilding the exploration 
portfolio. 

%
Australia
57
USA
13
International excluding USA 30

Australia remained the focus for exploration 
expenditure, but there was an increased 
emphasis on international ventures. 

Australian outlook 
In 2013, Woodside will resume its Australian exploration 
drilling with up to eight wells planned in Australia, subject to rig 
availability. Two to three wells target oil prospects in the Greater 
Exmouth Area; three are in support of our existing gas assets,  
and two wells are in pursuit of a new LNG hub in the Outer 
Canning Basin. 

Over 10,000 km2 of 3D seismic acquisition is planned in the 
Beagle Sub-Basin and in the North West Shelf Joint Venture  
area, which will allow for the maturation of drilling candidates  
for subsequent years.

international outlook 
In the deepwater Gulf of Mexico, Woodside will continue to 
mature our exploration portfolio and, subject to joint venture 
participation, expects to participate in drilling operations in 2013.

Conditional on final agreements and approvals, we plan to acquire 
3D seismic in Myanmar in 2013 over exploration permits A-6 
and AD-7, with options to drill exploration wells in subsequent 
exploration periods.

The in-principle agreement to acquire a 30% participating 
interest in the Leviathan field, offshore Israel, also provides the 
opportunity for Woodside to participate in an exploration well  
in 2014.

In Peru, Woodside has a 20%, non-operated interest in onshore 
block 108, which is currently under force majeure conditions. 
Once the force majeure conditions cease, the Joint Venture plans 
to acquire up to 800 km of 2D seismic. 

In the Canary Islands, Woodside holds a 30% interest in blocks 
1-9 operated by Repsol. Full rights to the permit activity have been 
reinstated following the issue of a Royal Decree on 16 March 
2012; however, the Royal Decree is currently the subject of legal 
proceedings initiated by third party interest groups.

In Israel as part of the Leviathan purchase agreement, which 
is also subject to final approvals, we have the opportunity to 
participate in an offshore exploration well, targeting a deep oil play.

Woodside will continue to use appropriate technology as we 
pursue opportunities that align with our strategy and capabilities. 
Woodside anticipates exploration expenditure will increase to 
around $480 million in 2013, up from $260 million in 2012.

2012 exploration drilling results
Six exploration wells were drilled during 2012, with a 190 m gross 
gas column encountered at Ragnar-1A, located approximately  
33 km north west of Laverda.

WA-430-p, Ragnar hub
Woodside 70% (operator)

Ragnar-1A was finalised during early 2012 with the well 
encountering gas within the objective Triassic Mungaroo 
Formation. The follow-up Gumbo prospect is planned to be  
drilled in WA-430-P in early 2013.

WA-433-p, Ragnar hub
Woodside 45% (operator)

Vucko-1 was drilled to test a Triassic fault block north-west of the 
Ragnar discovery; however, no hydrocarbons were encountered. 

WA-389-p, Greater pluto
Woodside 25% (operator)

Banambu Deep-1 was drilled to test an incised channel system 
within the Mungaroo Formation; however, no hydrocarbons were 
encountered. 

WA-269-p, Greater pluto, inner hub
Woodside 50% (operator)

Ananke-1 was drilled to test an Oxfordian stratigraphic trap; 
however, the well was unsuccessful. 

block 8/6-1n, ulleung basin, Republic of Korea
Woodside 50% (operator)

Jujak-1 was drilled as the first deepwater well in the frontier 
Ulleung Basin. The well explored a Miocene fan complex within 
a four way dip closure. The well found excellent reservoir at the 
objective section, but no hydrocarbons were encountered.

mississippi canyon block 993, Gulf of mexico
Woodside 15% (non-operator)

Innsbruck-1 tested an oil prospect to the south of the Gunflint 
discovery in the deepwater Gulf of Mexico. No commercial 
hydrocarbons were encountered.

Woodside Petroleum Ltd.  |  exploration Review   19

AC/P48

Argus

WA-275-P

Torosa

Brecknock

Calliance

WA-432-P

WA-429-P

WA-449-P

WA-397-P

WA-396-P

WA-447-P

WA-466-P

WA-462-P

WA-464-P

WA-415-P

WA-416-P

WA-417-P

James Price Point

Derby

Broome

Banambu Deep-1

WA-389-P

WA-347-P

WA-348-P

WA-404-P

WA-465-P

WA-467-P

WA-473-P

WA-434-P

Ananke-1

WA-269-P

Pluto

NWS

WA-472-P

WA-451-P

Port Hedland

Karratha

WA-478-P

Vucko-1

WA-433-P

Ragnar-1

WA-430-P

Vincent / Enfield

Laverda

Exmouth

RisK mAnAGement

We recognise that risk is inherent to our business and are 
committed to managing all risk in a proactive and effective manner. 

Active risk management 

Woodside’s risk management system

Woodside operates a standardised enterprise-wide system 
which provides an over-arching and consistent process 
for the recognition and management of material risk. 
Woodside’s risk management process is aligned to ISO 
31000, the international standard for risk management. 

Woodside’s Risk Management Policy outlines the 
principles which underpin our approach to risk. Our risk 
management operating standard is part of the Woodside 
management system and sets out clearly defined criteria 
to evaluate and report on material risk. We systematically 
assess the consequence of risks in areas such as: 

 health and safety;

 environmental;

 financial;

 legal and compliance;

 reputation and brand; and

 social and cultural impacts.

In the Woodside context, we routinely consider our oil and gas 
exploration, development and operational risks and continually 
seek to improve our risk management framework to more 
effectively manage these industry-wide risks. We also consider 
incidents and issues in the global energy industry to ensure 
that Woodside is responding appropriately to similar risks. 

Our most significant material risks, and how they are being 
managed, are summarised in the corporate risk profile. 
Operational and project risks are continuously reviewed and 
summarised in the corporate register for twice yearly review 
by the executive management team and the A&RC. These 
reviews consider the effectiveness of the actions taken 
by Woodside to manage risk. During 2012, an extensive 
review of Woodside’s risk categories was completed.

The success of our risk management system relies 
on our employees, at all levels, proactively identifying, 
managing, reviewing and reporting on risk.

 For information regarding Woodside’s identification and 
response to key sustainability risks and issues refer to pages 9, 
12 and 13 of the 2012 Sustainable Development Report.

Woodside’s approach to risk is focused on enhancing 
opportunities, reducing threats and sustaining our 
competitive advantage. Central to this is the consistent 
application of our process for the recognition and 
management of risks across Woodside’s business. 

Key roles and responsibilities 

The Board Audit and Risk Committee (A&RC) has oversight 
of the Risk Management Policy and is responsible 
for ensuring that management has developed and 
implemented a sound risk management system.

Management at all levels has responsibility for managing risk 
in their area of control. Support is provided to management 
by the Risk and Insurance function to ensure Woodside’s 
risk management operating standard is consistently 
and effectively applied throughout the business.

Risk professionals are embedded within the business units, 
functions and major projects to support management in the 
consistent application of the risk management process. 

The risk team maintains Woodside’s corporate risk profile 
and regularly reports to the A&RC on the effectiveness 
of the management of Woodside’s material risk.

 Further information on Woodside’s risk management roles 
and responsibilities can be found in the Corporate Governance 
Statement on pages 47 and 48. 

the risk management process 

n
o

i
t
a
t
l

u
s
n
o
c
d
n
a
n
o

i
t
a
c
i
n
u
m
m
o
c

establish the 
context

Risk assessment

Risk identification

Risk analysis

Risk evaluation 

Risk treatment 

t
r
o
p
e
r
d
n
a
w
e
i
v
e
r

,
r
o
t
i

n
o
m

The Woodside risk management process is outlined 
above. Effective communication and consultation is 
essential to ensuring appropriate identification, analysis, 
evaluation and treatment of risk.

20    Woodside Petroleum Ltd. |  Risk Management

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
 
 
 
 
 
 
Woodside eXecutives

a

d

g

b

e

h

c

f

i

a)

peter coleman 
chief executive officer and managing director   
BEng (Civil and Computing), MBA

Peter has 28 years experience in the global oil and 
gas industry, and was appointed Chief Executive 
Officer and Managing Director of Woodside 
upon joining the company in May 2011.

Peter began his career at Esso Australia (later to 
become part of the ExxonMobil group) following 
graduation from Monash University, and stayed 
with ExxonMobil until joining Woodside.

b)

Robert cole 
executive director and executive vice president, 
corporate and commercial 
BSc LLB (Hons) 

Robert joined Woodside in 2006 as General Counsel after 
a 21 year career with law firm Mallesons Stephen Jaques.

Robert was appointed to the Woodside Board in the role 
of Executive Director in early 2012. In this role, Robert 
is responsible for an array of corporate and commercial 
functions including legal and company secretariat, audit, 
commercial, corporate affairs, security and emergency 
management, health and safety, human resources and 
environment and heritage.

c)

lawrie tremaine 
executive vice president and chief financial officer 
BBus, FCPA

Lawrie has more than 20 years finance leadership 
experience in the resource and minerals processing industry. 

He joined Woodside in December 
2006 and transitioned into his 
current role as Executive Vice 
President and Chief Financial 
Officer in January 2011. In this 
role Lawrie is responsible for 
a range of functions including 
finance, investor relations, 
risk management, information 
technology and supply chain.

d)

vince santostefano 
chief operations officer 
BEng (Civil)

Vince has more than 33 
years experience in the oil 
and gas sector working 
across a range of disciplines 
including drilling, operations 
and structural/civil design. 

In his role as Executive Vice 
President Development, 
Robert is responsible for the 
delivery of onshore and offshore 
capital projects, in addition to 
drilling, subsea and reservoir 
management operations.

g)

dr michael hession 
senior vice president, browse 
BSc, MBA, PhD

Michael is Senior Vice President 
of the proposed Browse LNG 
Development, a position 
he has held since 2009. 

Michael is responsible for the  
safe and successful delivery of the 
Browse LNG Development, which 
Woodside operates on behalf 
of the Browse Joint Venture.

Vince joined Woodside in 1999 
and has worked in variety of 
roles, including Project Manager, 
Director of the Australian 
Business Unit and Executive 
Vice President Production. 

h)

dr Greg Roder 
executive vice president 
corporate strategy and 
planning 
BSc (Hons), PhD, MBL

In his current role as Chief 
Operations Officer, Vince 
oversees the producing Business 
Units and the Production Function 
covering the operations of all 
Woodside’s producing facilities.

Greg has over 25 years 
experience in energy resources, 
infrastructure investment, 
funds management, equity 
capital markets and operational 
asset management.

e)

dr peter moore  
executive vice president 
exploration  
BSc (Hons 1), PhD, MBA

Peter joined Woodside in 1998 
as the Geological Manager. 
He has since held a range 
of roles, including Head of 
Evaluation and Exploration 
Manager Gulf of Mexico.

Peter was appointed to the role 
of Executive Vice President 
Exploration in March 2009, 
which sees him responsible for 
all of Woodside’s exploration 
efforts worldwide. 

f)

dr Robert edwardes 
executive vice president 
development 
BSc (Eng), PhD

Robert has 35 years of resources 
industry experience spanning the full 
breadth of operations and projects, 
including HSE and operations 
integrity, production technology, 
development planning and delivery 
of major capital projects.

His role of Executive Vice 
President Corporate Strategy and 
Planning sees Greg responsible 
for setting and coordinating 
Woodside’s growth path in line 
with the agreed strategic themes 
the company is pursuing. 

i)

feisal Ahmed 
executive vice president 
technology 
BSc Mechanical Engineering

Feisal has more than 36 years 
global oil and gas experience 
in exploration, development, 
production, gas marketing and new 
business development, including 
25 years with ExxonMobil.

In his role as Executive Vice 
President Technology, he is 
responsible for the development 
of distinctive technologies to 
facilitate new growth opportunities 
and enhancement of technical 
capabilities across the company. 
His prior roles were Executive 
Vice President Development 
and Senior Vice President 
Middle East and Africa.

Woodside Petroleum Ltd.  |  Woodside executives   21

THE NORTH RANKIN REDEVELOPMENT

in April 2012, the north Rankin 
Redevelopment (nR2) project 
successfully installed the north 
Rankin b topsides on the platform’s 
substructure.

  the 260 m long heerema H-851 
barge, the largest oil and gas 
industry transport barge in the 
world, was used to transport and 
install the topsides.

  the topsides, weighing more than  

24,000 tonnes and positioned 
100 m from the north Rankin A 
production facility, were installed 
using the float-over method. 

  significant challenges were 
overcome by the nR2 team 
to safely deliver this result. 
Accomplishing  this milestone 
was not easy. it required detailed 
analysis, disciplined planning, 
extensive risk analysis, rigorous 
attention to detail and above all – 
teamwork. 

22   Woodside Petroleum Ltd.  |  2012 Annual Report

vwaWE BELIEVE INNOVATION MEANS TURNING CHALLENGES INTO  NEW OPPORTUNITIESOVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
The successful use of the float-over method 
at North Rankin B to install the 24,000 tonne 
topsides, set an installation record for both 
height and weight in open water. 

pages 24 to 35 provide an overview of  Woodside’s business units.

Woodside Petroleum Ltd.  23

NORTH WEST SHELF 

The Karratha Gas Plant is one of 
the most advanced integrated gas 
production systems in the world. The 
facility includes five LNG processing 
trains, two domestic gas trains, six 
condensate stabilisation units, three 
LPG fractionation units as well as 
storage and loading facilities for LNG, 
LPG and condensate.

futuRe objectives
 Safe start-up of NRB platform.

 LNG Train 2 refurbishment. 

 Acquire new seismic data to refresh 

exploration portfolio.

nWs key metrics (Woodside share)

Sales revenue 

($ million)

3,300

2,989

2012

2011

Net gas 
production 
Net liquids 
production
Proved plus 
Probable 
reserves

(MMboe)

36.7

37.8

(MMbbl)

10.8

8.9

(MMboe)

555.4

581.2

the execution of significant 
development milestones including 
the safe installation of the 
north Rankin b (nRb) topsides 
demonstrates Woodside’s 
capability as a leading operator 
and is paving the way for the 
north West shelf (nWs) project 
to deliver strong performance 
for decades to come.

north West shelf project

Interest

NWS Venture

Domestic Gas JV

16.67%

50.00%*

Incremental Pipeline JV

16.67%*

China LNG JV

CWLH (crude oil)

12.50%

33.33%

Operator Woodside
Facilities

North Rankin A platform

Goodwyn A platform 

Angel platform

Okha FPSO

Karratha Gas Plant
Offshore facilities ~135 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 2012 Woodside’s average share of 
pipeline gas production was approximately 
45%. Woodside’s exact share of domestic 
gas production depends on the quantities and 
aggregate rate of production.

24   Woodside Petroleum Ltd.  |  2012 Annual Report

2012 Key peRfoRmAnce 
hiGhliGhts
 Delivery of the 3500th LNG cargo and 

3000th LNG cargo to Japan.

 Record revenue and profit for the 

project. 

 Safe installation of the 24,000 tonne 

NRB topsides.

nWs contribution to Woodside's  
total production (mmboe)

NWS gas and condensate
NWS oil
Woodside other

%
52
4
44

During 2012 the NWS operations 
continued to provide the majority of 
Woodside’s production.

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONIn 2012, the NWS Project achieved two major cargo milestones. 
In August, the 3500th LNG cargo was loaded from the Karratha 
Gas Plant (KGP) and in November the 3000th LNG cargo was 
delivered to Japan. 

These milestones reinforce the long standing relationships the 
NWS Project has with its customers in the Asia Pacific region. 
These achievements demonstrate our reputation as a major LNG 
exporter, where safety, reliability and strong performance are 
fundamentals. 

As operator, Woodside has been instrumental in establishing 
and maintaining that reputation, and today we are developing 
a new generation of projects on the back of that success. 

Since 2008 the NWS Project has committed more than A$9 billion 
in reserves and infrastructure development, including the North 
Rankin Redevelopment, North West Shelf Oil Redevelopment 
and more recently the Greater Western Flank Phase 1 Project. 

Woodside continues to enhance the value of the NWS Project 
through our strategic objectives of operational excellence, 
and seeking opportunities to extend the NWS business.

operational excellence

Strong performance from the KGP and offshore 
facilities has led to record revenue and profit.

The NWS Project continues to underpin Woodside’s  
financial performance, delivering a record profit of $1.6 billion  
(2011 $1.4 billion) and contributing approximately 53% of 
Woodside’s sales revenue during the year.

In 2012, Woodside’s share of production from the NWS 
Project was 47.5 million barrels of oil equivalent (boe). 

We are focused on capacity utilisation to maximise performance 
from reservoir to market and are continuing to implement our 
Reliability Improvement Plan. 

The annual May shutdown was one of the largest at KGP 
with more than 1,500 people on site. The shutdown 
was successfully completed without a recordable safety 
incident. The scope of work included routine and integrity 
maintenance and aligned the LNG Train 4 shutdown with 
the refurbishment of the Trunkline Onshore Terminal 1. 

Woodside delivered 247 cargoes of LNG in 2012, of which 
18 were sold on the spot market. Woodside’s share of total 
LNG sales volumes for 2012 is 2.41 million tonnes. 

Pipeline gas production continued to meet customer demand in 
2012 with 100% reliable delivery of 13.78 MMboe to customers 
in Western Australia.

The Okha Floating Production Storage Offloading (FPSO) 
vessel completed its first full year of production in 2012, with a 
focus on safely completing project commissioning and closing 
out the NWS Oil Redevelopment Project. Commissioning 
of the gas export systems in addition to flareless operation 
was achieved. The Okha FPSO produced 10.3 MMbbl 
compared to a planned volume of 9.1 MMbbl (100% share).

extending the nWs business

nRb topsides set installation record
The North Rankin Redevelopment Project is a major undertaking 
on a global scale and one of the most complex developments 

Woodside has undertaken. At year-end the Project’s overall 
progress was 98% and it remains on budget and is scheduled  
for start-up in 2013. 

In February the piling of the NRB jacket was completed and 
the production and pedestrian bridges connecting North 
Rankin A and North Rankin B platforms were installed. 

The 24,000 tonne topsides were placed on the jacket in April 
2012 and set an installation record, for both height and weight 
in open water. Following the installation of the topsides, hook 
up and commissioning activities commenced. The NRB 
permanent living quarters were finished in May 2012. 

The North Rankin Redevelopment Project will recover low 
pressure gas from the North Rankin and Perseus gas fields and 
is expected to cost approximately A$5 billion (A$840 million 
Woodside share).

Greater Western flank (GWf) phase 1 progresses
During 2012, the GWF Phase 1 Project awarded major contracts 
and continued fabrication work. At year-end overall progress  
was 41%. 

Progress on engineering, fabrication and delivery activities is in 
line with scheduled project start-up in early 2016. 

The Ocean America drill rig completed the GH reservoir drilling 
activities in December 2012 and well heads were installed. 

The GWF Phase 1 Project represents the next major development 
for the NWS Project. It will develop the Goodwyn GH and 
Tidepole fields, via a subsea tie-back to the existing Goodwyn 
A Platform. The total investment for the GWF Phase 1 Project 
is approximately A$2.5 billion (A$425 million Woodside share). 

further tie-backs and exploration planned
We are advancing the development of Persephone field on  
the Eastern Flank of the NWS acreage as a potential tie-back  
to North Rankin and are looking at subsequent Greater Western 
Flank phases. 

The NWS Project will continue exploration in 2013, acquiring 
seismic data to provide future drilling opportunities. Additionally, 
Woodside plans to drill the Goodwyn North exploration well 
during 2013.

outlook

Maintaining safe and reliable production has been Woodside’s 
focus for the past 28 years and remains key to sustaining our 
exceptional return on invested capital. 

We will continue to strive for operational excellence and invest 
in our infrastructure in order to maintain our world class assets. 
Major refurbishment will continue at the KGP with refurbishment 
of LNG Train 2 (deferred from 2012) and the Domestic Gas Plant. 
The KGP will also execute significant projects on fractionation 
unit 2 and complete an upgrade of our quality measurement 
equipment. The NWS Project will aim to maximise production 
and return on invested capital within these constraints.

A number of shutdowns will be required in 2013 to integrate the 
NRB platform into the NWS system. 

We will continue to develop reserves and maintain supply 
deliverability from the NWS to extend the life of the project. 

Woodside Petroleum Ltd.  |  north West shelf   25

PLUTO LNG

Woodside representatives with the West 
Australian Minister for Environment, 
Circle of Elders representatives, 
Murujuga Aboriginal Corporation (MAC)
representatives and the Pilot Ranger team.

The MAC, sponsored by Pluto LNG, 
has implemented a Pilot Ranger Project 
to care for the Burrup Peninsula. The 
Rangers are working co-operatively 
with the departments of Environment 
and Conservation and Indigenous 
Affairs to share their long-term vision 
for managing the area. 

pluto key metrics (Woodside share)

2012

2011

($ million)

1,427

(MMboe)

22.0

(MMbbl)

1.9

-

-

-

(MMboe)

922.7

950.2

Operating 
revenue 
Net gas 
production 
Net liquids 
production
Proved plus 
Probable 
reserves

pluto lnG utilisation 2012

100

e
g
a
t
n
e
c
r
e
P

0

May Jun

Jul Aug Sep Oct Nov

Dec

2012

Actual utilisation
Target utilisation

Target utilisation for the Pluto LNG Train 
was based on the start-up performance of 
North West Shelf LNG trains 4 and 5. Actual 
utilisation exceeded the target for each month 
in 2012, as shown in the graph.

pluto lnG

Interest*

WA-34-L
WA-350-P
WA-404-P

90% 
90%
100%

Operator
Location

Woodside
Pluto and Xena fields, 190 km  
north-west of Karratha, WA

Water depth 400 - 1,000 metres
Greater Pluto 
Proved + 
Probable 
Reserves^

4,856 Bcf dry gas, 
70.8 MMbbl condensate

*  As a result of organisational changes, permits 

have been reassigned to the Exploration 
business unit. 

^  Woodside share.

pluto lnG contribution to Woodside's 
total production (mmboe)

Pluto LNG
Pluto condensate
Rest of business

%
26
2
72

During 2012 Pluto LNG contributed  
24 MMboe to full-year production.

first production from pluto lnG 
marked the beginning of a new 
era for Woodside enabling the 
company to continue to build 
on its previous experience and 
enhance its specialist capabilities.

2012 peRfoRmAnce 
hiGhliGhts
 Safe and successful start-up of  

Pluto LNG.

 Better than forecast ramp-up, 

contributing 24 MMboe to full year 
production.

 39 LNG cargoes delivered and sold to 

customers.

 Strong performance underpinning 
Woodside’s full year revenue and  
cash flow.

futuRe objectives 
 Add fourth vessel to the Pluto LNG fleet.

 Finalise ancillary site project work and 

commissioning activities.

 Focus on steady state production and 

continued reliability.

 Progress development of Xena gas field.

 Target improved LNG train performance.

26   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONsafe start-up and production in 2012

During the first half of 2012, Pluto LNG safely achieved start-up, 
commenced LNG and condensate production and loaded its  
first LNG cargo.

Commissioning was substantially completed in 2012 with some 
activities remaining in 2013.

Achieving these milestones, particularly first production, marked 
the beginning of a new era for Woodside enabling the company 
to continue to build on its previous experience and enhance its 
specialist capabilities.

Under the A$34 million Pluto LNG Conservation Agreement  
with the Australian Government, Woodside currently supports 
three projects. One of these projects is the Pilot Ranger Project, 
which currently employs eight local Indigenous people to manage 
country. To date Woodside has invested over A$7 million of 
Conservation Agreement funding in local community projects, 
tracking well on overall spend for the ten year period of the 
agreement. 

Additionally, Woodside is the only resource company in the Pilbara 
that has an office in Roebourne, with permanent employees 
working closely with the local community.

strong production performance

Superior performance and high reliability in the ramp-up phase of 
Pluto LNG contributed to two upward revisions of 2012 production 
guidance. In 2012 Pluto contributed 24 MMboe to full year 
production.

A total of 2.15 million tonnes of LNG was delivered in the second 
half of 2012 (100% project). 

This production performance resulted in 39 cargoes of LNG being 
delivered to customers. Of those 39 cargoes delivered during 
2012, seven cargoes were sold at prices higher than the normal 
contracted pricing formula.

financial contribution

The Woodside share of LNG revenue resulting from the strong 
production performance from Pluto LNG was $1,164 million  
for 2012. Revenue from condensate sales also contributed  
$138 million to Woodside’s revenue.

 Further information on Woodside’s engagement with the 
Indigenous community, including the Pluto LNG Conservation 
Agreement, is available on pages 24 and 25 of the 2012 
Sustainable Development Report. 

pluto lnG expansion opportunities

In 2012 exploration continued in the Ragnar Hub, located 
south-west of the Pluto field. The Ragnar-1 well (WA-430-P) 
successfully intersected gas over a gross interval of 190 metres. 
Vucko-1, Banambu Deep-1 and Ananke-1 (WA-389-P and  
WA-269-P) were drilled and were unsuccessful.

Woodside completed a 25% farm-down in WA-433-P to Sasol. 
Woodside maintained a high equity position (45%) in addition  
to holding operatorship of the permit. The equity holding in  
WA-433-P is now Woodside 45%, Sasol 35% and Mitsui 20%.

Woodside decided to pause its drilling program to allow for 
evaluation of well results and to rebuild the exploration portfolio. 
Woodside continues to pursue Pluto LNG expansion opportunities.

safety culture delivers positive results

outlook

There were no significant personal injuries during the Pluto LNG 
start-up campaign, reflecting Woodside’s strong safety culture.

Woodside will continue to identify opportunities to enhance 
production levels and efficiency.

During start-up, focus remained on integrity and process 
safety. A proactive monitoring program was undertaken by the 
engineering, operations and maintenance teams, allowing for 
early identification and resolution of commissioning issues.

The first significant planned maintenance shutdown is scheduled 
for the first half of 2013 as part of normal operation cycles.  
The planned shutdown also presents an opportunity to efficiently 
resolve any outstanding commissioning activities.

In 2013, a fourth LNG tanker will be added to the Pluto LNG fleet, 
allowing for greater capacity to meet customer needs and to take 
advantage of the demand outlook in the LNG spot market. 

Basis of Design work for the Xena gas field was completed in 
2012 and planning is underway to enter front-end engineering  
and design in 2013.

Approximately 19.24 million hours were worked in 2012 compared 
with 29.26 million hours in 2011, representing a reduction 
in activity levels of 34% as a result of construction reaching 
completion in early 2012.

continued support for indigenous Western Australians

Developing Pluto LNG on the Burrup Peninsula presented 
Woodside with a unique opportunity, not only to build a 
world-class LNG facility, but also to adopt a new approach to 
cultural heritage management and Indigenous participation and 
engagement. 

The goals and targets established for construction of Pluto LNG 
covered Indigenous training, employment and conservation and 
were purposefully set to create new benchmarks of achievement 
for the company in community contribution.

Woodside achieved these targets and, with the start-up of Pluto 
LNG, remains committed to building Indigenous participation 
outcomes.

Woodside Petroleum Ltd.  |  pluto lnG   27

AUSTRALIA OIL

Oil from Enfield is produced through 
five subsea wells connected to the 
floating production storage and 
offloading vessel, the Nganhurra. 
The vessel has a maximum storage 
capacity of about 900,000 barrels of oil.

in 2012 we achieved significant 
production milestones across 
our oil assets and continued to 
advance growth opportunities.

2012 peRfoRmAnce 
hiGhliGhts
 Record monthly production achieved for 

Vincent field in May 2012.

futuRe objectives 
 Successfully complete dry dock works 
for Ngujima-Yin FPSO to enhance asset 
reliability.

 Significant production milestones in 
August 2012 with the combined oil 
production from the Enfield and Vincent 
fields exceeding 100 MMbbls (100%). 

 Total Laminaria - Corallina production has 
exceeded 200 MMbbls (100%) since 
start-up.

 Successful Vincent Phase III infill well.

 Completed purchase and transition of 

Ngujima-Yin floating production storage 
and offloading (FPSO) facility from 
Maersk to Woodside.

 Continue work to progress Greater 

Enfield Area oil opportunities.

 Determine concept selection for Laverda.

 Progress Vincent Phase IV and Phase V 

infill well opportunities.

 Develop and endorse Laminaria-

Corallina ‘end of field life’ strategy.

 Drill the Minarelli (operated) and Rydal  

(non-operated) exploration wells.

Australia (non-nWs) 
contribution to Woodside’s 
total production (mmboe)

Australia oil (non-nWs) key 
metrics (Woodside share)

Sales revenue 

($ million) 1,545

1,677

2012

2011

Net gas 
production 
Net liquids 
production
Proved plus 
Probable 
reserves

(MMboe)

0.0

0.0

(MMbbl)

12.5

15.0

(MMboe)

57.8

70.2

Enfield
Laminaria-Corrallina 
Stybarrow
Mutineer–Exeter
Vincent
Woodside other

%
3
2
3
<1
7
85

28   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONSince start-up in 2006, Enfield has 
produced 68.9 MMbbls of oil with 2012 
production 4.6 MMbbls (2.8 MMbbls 
Woodside share).

laminaria - corallina oil field
Interest

The Enfield Development currently 
includes eight oil-production wells, eight 
water-injection wells and two gas-injection 
wells tied back to the Nganhurra FPSO.

Operator

Facilities

Location

In 2012 the Australian oil assets provided 
a significant financial contribution to 
Woodside’s revenue through the ability  
to attract a price premium for our 
products. 

Australia Oil generated $1,545 million 
in sales revenue at an average realised 
price greater than $120/bbl. Woodside 
achieved premiums to the Brent oil price 
benchmark for its heavy sweet crudes 
from the Greater Enfield area. These 
premiums are due to strong regional 
demand for diesel.

While unit operating costs increased, we 
continued to focus on the reliability and 
integrity of our assets to maximise value. 

vincent oil field
Interest
Operator
Facilities
Location

Water depth
Products
First production

WA-28-L
Woodside
Ngujima-Yin FPSO
45 km off the  
North West Cape, WA
350-400 metres
Crude oil
August 2008

Vincent has produced 37.1 MMbbls 
of oil since start-up in 2008, with 
2012 production of 10.1 MMbbls 
(6.0 MMbbls Woodside share).

The Vincent field performed well in 2012, 
with Vincent Phase III wells completed. 
In particular, the new VNB-H7 infill 
well has shown good deliverability. 

In May 2012 the Vincent oil field  
achieved the highest monthly volume of 
1.38 MMbbls (0.83 MMbbls Woodside 
share) since production began in 2008. 

The joint purchase of the Ngujima-Yin 
FPSO with our co-venturer Mitsui E&P 
Australia Pty Ltd occurred in late 2011. The 
final handover from Maersk to Woodside 
was completed on 30 September 2012. 

60%

enfield oil field
Interest
Operator
Facilities
Location

WA-28-L
Woodside
Nganhurra FPSO
~40 km off the  
North West Cape, WA
400  - 500 metres
Water depth
Products
Crude oil
First production July 2006

60%

Facilities

Location

During 2012, as a growth opportunity 
for Enfield, basis of design activities 
were completed for the Cimatti 
oil field and front-end engineering 
design studies commenced.

stybarrow oil field
Interest
Operator

WA-32-L
BHP Billiton

50%

Stybarrow Venture FPSO

~50 km off the  
North West Cape, WA
825 metres
Crude oil

Water depth
Products
First production November 2007

Stybarrow has produced 55.1 MMbbls 
of oil since start-up in 2007. Production 
in 2012 was 4.5 MMbbls (2.2 MMbbls 
Woodside share).

Facility reliability and availability remained 
strong through 2012.

In 2013 we will continue to assess high 
value exploration tie-back opportunities.

mutineer oil field
Interest
Operator
Facilities
Location

8.20%

WA-26-L; WA-27-L
Santos
MODEC Venture II FPSO
~147 km north of  
Karratha, WA
~165 metres
Crude oil

Water depth
Products
First production March 2005

Mutineer-Exeter has produced 57.5 
MMbbls of oil since start-up in 2005,  
and produced 1.8 MMbbls in 2012  
(0.1 MMbbls Woodside share).

Woodside signed a sale and purchase 
agreement with Santos on 21 December 
2012 to sell our entire 8.2% interest in 
the Santos operated Mutineer Exeter 
oil project with effect from 1 July 2012. 
Subject to the satisfaction or waiver of 
certain conditions, the agreement is 
expected to be completed in early 2013. 

Laminaria 
Corallina 
AC/L5
Woodside

59.90%*

66.67% 

Northern Endeavour FPSO

Timor Sea, 550 km  
north-west of Darwin
~340 metres
Crude oil
1999

Water depth
Products
First production

*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.

The Northern Endeavour FPSO achieved a 
significant milestone with total oil 
production exceeding 200 MMbbls from 
the Laminaria-Corallina fields since starting 
production in 1999. Production in 2012 was 
2.2 MMbbls (1.4 MMbbls Woodside share).

In 2013 we will optimise operating costs 
based on planning for end of field life.

laverda development 
Interest
Operator
Location

WA-36-R
Woodside
~50 km off the  
North West Cape, WA

Water depth

~800 metres

60%

Following successful appraisal, the 
Laverda development team has focused 
on field development, engineering and 
environmental studies in 2012 to underpin 
a concept selection decision.

outlook

Woodside will continue to improve the 
understanding of its oil reservoirs to look 
for infill opportunities to extend the life 
and value of its oil assets. In addition, we 
will evaluate tie-backs to existing facilities 
and, in-line with our strategy, advance 
value-adding growth opportunities.

Ongoing integrity and reliability 
improvements are planned for the  
Ngujima-Yin FPSO while off-station  
during 1H 2013. Oil production in 2013  
will be impacted by field decline and the  
Ngujima-Yin FPSO being off-station. 

Woodside Petroleum Ltd.  |  Australia oil   29

BROWSE LNG

Woodside has engaged senior 
Traditional Owners to complete 
detailed anthropological and 
archaeological surveys of the proposed 
Browse LNG Precinct. Traditional 
Owners are providing us with ongoing 
support by monitoring our approved 
site activities, to ensure we follow the 
correct cultural directions. 

the completion of a high quality 
front-end engineering and design 
(feed) along with the receipt and 
ongoing disciplined evaluation 
of tender bids has browse 
on track to consider a final 
investment decision in 1h 2013.

2012 peRfoRmAnce 
hiGhliGhts
 FEED studies completed.

 Tender bids for upstream and 

downstream infrastructure received  
and under evaluation.

futuRe objectives 
 Complete preparations to be in a 

position to consider a final investment 
decision (FID) in 1H 2013.

 Finalise project environmental and 

heritage approvals.

 State environmental approvals secured.

 Complete marketing activities for  

 Japan Australia LNG (MIMI Browse) Pty 
Ltd (MIMI) purchased a minority portion 
of Woodside’s equity in Browse LNG 
Development for $2 billion.

LNG offtake.

browse

Interest*

Operator
Location

34% 
34%
17%
17% 
60%

TR/5; R2; WA-30-R  
WA-31-R; WA-32-R  
WA-28-R; WA-29-R  
WA-275-P 

AC/RL8
Woodside
Offshore 425 km  
north of Broome, WA

Water depth 400 - 800 metres
Contingent 
Resources^
*  As a result of organisational changes, permits 

4,987 Bcf dry gas,  
136.4 MMbbl condensate

have been reassigned to the Exploration 
business unit.

^  Woodside share. Net resources are subject to 

unitisation outcomes.

location of Woodside’s permits in the browse area

Darwin

Argus

AC/RL8

Torosa

WA-30-R

R 2

TR/5

WA-32-R

WA-29-R

WA-275-P
WA-275-P

Brecknock

Calliance

WA-31-R

WA-28-R
WA-28-R

Woodside permits 

 WEL owned/participant 

Woodside fields

 Gas 

James Price Point

Derby

Broome

Wyndham

Kununurra

30   Woodside Petroleum Ltd.  |  2012 Annual Report

Port Hedland

Karratha

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
developing a world-class resource
Woodside is the operator of the Browse 
Joint Venture, which is seeking to 
commercialise the Brecknock, Calliance and 
Torosa fields in the Browse basin, located 
approximately 425 km north of Broome 
in Western Australia. The three fields 
collectively hold a world-class gas resource 
of approximately 15.5 Tcf and 417 million 
barrels of condensate (100% project). 

Under the proposed development, 
gas and liquids from the fields will 
be extracted using offshore facilities 
then brought to an onshore facility for 
processing at the Western Australian 
Government’s proposed multi-user 
Browse LNG Precinct, near James Price 
Point, about 60 km north of Broome. 

The planned onshore production and 
export facilities include three processing 
trains capable of processing 12 million 
tonnes of liquefied natural gas per annum, 
with a potential expansion capacity of up 
to 25 mtpa.  

In April 2012, variations to the Browse 
Basin retention leases were approved, 
which included extending the timetable 
for readiness for a FID to the 1H 2013. 

FEED studies were completed in 2012. 
Fully costed technical proposals from 
upstream FEED contractors were  
received during the first half of 2012  
while downstream bids were obtained  
in 2H 2012.

The contract assurance and commercial 
evaluation phase commenced in late  
2012 and is expected to be completed  
in 1H 2013. 

Woodside successfully completed 
the 2012 program of geotechnical and 
environmental studies at the Browse 
LNG Precinct at James Price Point. Some 
additional studies are planned for 2013 
to further inform work undertaken during 
FEED. Offshore, a seismic survey of the 
Torosa field was successfully completed 
in Q4 2012.

Several changes to the equity 
arrangements within the Browse Joint 
Venture occurred in 2012. Woodside sold 
a minority portion of its equity in Browse 
LNG Development to Japan Australia 
LNG (MIMI Browse) Pty Ltd (MIMI) which 
delivered early value, adding $2 billion in 
cash to our balance sheet.

Chevron sold its equity share in Browse 
to Shell Development Australia and BHP 
Billiton Petroleum announced its intention 
to sell its equity share to PetroChina 
International Investment (Australia) Pty Ltd. 

These equity changes are a positive 
endorsement of the value of the resource.

Woodside’s minority equity sale to MIMI 
in Q3 includes a sales and purchase 
agreement with MIMI for 1.5 million 
tonnes of LNG a year for 15 years from 
the Browse LNG Development, as well as 
a joint marketing agreement under which 
Woodside and MIMI will jointly market 
comingled LNG volumes to Japanese 
customers. Both parties were actively 
engaged with potential customers in Q4.

securing primary approvals
The Western Australian Environmental 
Protection Authority (EPA) recommended 
conditional approval of the State 
Government’s proposed LNG Precinct 
in July 2012. The Western Australian 
Environment Minister subsequently 
approved the Precinct and set the final 
environmental conditions for it to proceed. 
The Precinct requires approval from the 
Commonwealth Environment Minister, 
which is expected in 1H 2013.

In December 2012, the EPA and the 
WA Environment Minister approved 
Woodside’s proposal to build and operate 
a LNG processing facility and associated 
infrastructure within the Precinct.

The public review of the Browse 
LNG Development’s Draft Upstream 
Environmental Impact Statement (EIS) 
was completed and final information is 
expected to be submitted to regulators  
for approval in Q1 2013.

Heritage approvals are progressing and 
Woodside is working closely with senior 
Traditional Owners to identify and carefully 
manage Aboriginal culture and heritage 
at the site of the proposed Browse LNG 
Precinct.

World-class environmental research
In 2012, Woodside continued its program 
of environmental studies in the vicinity of 
the Browse LNG Precinct and offshore 
to better understand the surrounding 
environment and ensure any potential 
impacts from the proposed development 
can be mitigated.

As part of its environmental assessment 
of the marine environment, the Browse 
Joint Venture commissioned the most 
comprehensive study to date of humpback 
whales off the Kimberley coast. 

Between 2009 and 2012, various research 
methods have been employed to improve 
our understanding of this species 
including line transect vessel surveys, 
vessel-based behavioural surveys, photo 
identification, aerial transect surveys, sea 
noise loggers and satellite tagging.

This world-class program – one of 
Australia’s largest investments in whale 
research – provides Woodside and 

its Joint Venture participants a robust 
understanding of whale distribution, 
abundance and behaviour in the North 
West of WA. 

Woodside is committed to ensuring any 
potential impacts on the environment 
arising from the development of an LNG 
precinct on the Dampier Peninsula can be 
minimised and managed effectively.

 For further information on the economic, 
social and environmental impacts of the 
proposed Browse LNG Development 
refer to pages 26 and 27 of the 2012 
Sustainable Development Report.

our commitment to indigenous 
people
Under the Native Title Agreement 
between Woodside, the Western 
Australian Government and the 
Goolarabooloo Jabirr Jabirr claim group, 
Woodside will aim to meet a target 
whereby at least 300 Indigenous people 
are to be employed during construction 
of the onshore facilities with at least 15% 
of the workforce being Indigenous during 
normal operations.

Throughout the year, more than 100 
Indigenous people were involved in 
training and up-skilling programs and 
pathways or employed directly on Browse 
by Woodside and its contractors. Most of 
those involved were from the Kimberley 
and included people engaged as Traditional 
Owner environmental/heritage monitors. 
A number of Indigenous businesses in 
the Kimberley also provided products and 
services to the development.

Since 2011, the humpback whale aerial 
survey program has incorporated an 
Indigenous training component which 
provides marine mammal observer 
training for Traditional Owners. Woodside 
was pleased that in 2012, one of these 
trainees was the first Indigenous person 
to take up a primary observer role in the 
annual aerial surveys.

outlook
LNG marketing activities will continue 
in 1H 2013 in line with Woodside’s joint 
marketing agreement with MIMI.

Woodside’s primary focus for 2013 will 
be on completing the work necessary to 
be in a position to consider a FID for the 
development.

The Browse Joint Venture aims to complete 
the substantial commercial and technical 
evaluation and assurance process for the 
Browse LNG Development in 1H 2013 in 
line with the Browse Basin retention lease 
conditions, which are founded on locating 
the development’s processing facilities at 
the State Government’s proposed LNG 
Precinct at James Price Point. 

Woodside Petroleum Ltd.  |  browse lnG   31

SUNRISE LNG

Ba Futuru students wearing their 
traditional dress.

Woodside has committed to supporting 
Ba Futuru (meaning ‘for the future’) 
which provides education and training 
programs in Timor-Leste.

Image courtesy of James Collins.

Woodside and the sunrise joint 
venture are actively engaging 
with both the timor-leste and 
Australian governments to 
achieve an aligned development 
outcome for Greater sunrise.

2012 peRfoRmAnce 
hiGhliGhts
 Productive technical workshops with 

the Timor-Leste Government.

 Active participation in a trilateral 
workshop with representatives 
from the Timor-Leste and Australian 
governments.

futuRe objectives 
 Deliver an aligned outcome for the 
development of Greater Sunrise. 

 Continue to build on our positive 
stakeholder relationships with 
the Australian and Timor-Leste 
governments and the broader 
community.

 Delivered positive social development 

 Deliver increased social development 

outcomes in Timor-Leste. 

outcomes in Timor-Leste. 

sunrise

Interest

Operator
Location

33.44%  
(unitised)

PSC JPDA 03-19;  
PSC JPDA 03-20;  
NT/RL2; NT/RL4
Woodside
Offshore 150 km south-east  
of Timor-Leste and 450 km 
north-west of Darwin, Australia 

Water depth Less than 100 metres to 
greater than 600 metres
1,717 Bcf dry gas,  
75.6 MMbbl condensate

Contingent 
Resources*
*Woodside share.

location of Woodside’s permits in the Greater sunrise area

Dili

Sunrise

 NT/RL 2

Troubadour

JPDA 03-20

JPDA 03-19

JPDA

Darwin

Woodside permits 

 WEL owned/participant 

Argus

Woodside fields

 Gas 

Torosa

Brecknock
100

Calliance
kilometres

0

200

Horizontal Datum: GDA 1994

32   Woodside Petroleum Ltd.  |  2012 Annual Report

Wyndham

Kununurra

James Price Point

Derby

Broome

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONThe Sunrise and Troubadour gas and condensate fields, 
collectively known as the Greater Sunrise fields, are located 
approximately 150 km south-east of Timor-Leste and 450 km 
north-west of Darwin, Northern Territory.

The fields were discovered in 1974 and hold a total contingent 
resource of 5.13 Tcf of dry gas and 225.9 million barrels of 
condensate. These volumes were independently certified in 2010 
and would add significantly to Woodside’s reserves should a 
positive final investment decision be achieved.

According to the International Unitisation Agreement, signed by 
Australia and Timor-Leste, approximately 20% of the Greater 
Sunrise fields are attributed to the Joint Petroleum Development 
Area which is jointly administered by the governments of Australia 
and Timor-Leste, with the remaining 80% attributed to Australia. 

The Sunrise Joint Venture undertook a detailed technical and 
commercial evaluation of three concepts, namely Floating LNG,  
a brownfield expansion of Darwin LNG and a greenfield gas  
plant located in Timor-Leste. 

Discussions are currently underway between Timor-Leste, 
Australia and the Sunrise Joint Venture to agree on a development 
concept for Greater Sunrise.

momentum in 2012

Following positive meetings with key Timor-Leste Government 
stakeholders in late 2011, Woodside’s CEO Peter Coleman met 
with the Timor-Leste Prime Minister Xanana Gusmao in Darwin in 
February 2012, to continue discussions and start working towards 
an aligned development outcome.

At the request of the Timor-Leste Government, the Sunrise Joint 
Venture provided a range of technical data to the Timor-Leste and 
Australia governments with regards to Greater Sunrise. Following 
the provision of technical data, further discussions were held 
in Timor-Leste in September and were followed by two joint 
technical workshops, the first in October in Timor-Leste and the 
second in November in Perth.

In December, the Sunrise Joint Venture participated in a 
workshop organised by the Australian and Timor-Leste Sunrise 
Commissioners regarding the Greater Sunrise development. The 
workshop allowed all parties to discuss a range of commercial, 
technical, legal and political matters related to the development.

Further discussions with both governments have been agreed 
and will occur in early 2013.

community development

Woodside is committed to continuing our program of meaningful 
social investment via long-term partnerships with the 
communities of Timor-Leste.

Woodside and the Sunrise Joint Venture’s social investment and 
sponsorship program focuses on:

 Developing capability.

 Supporting health and wellbeing.

 Connecting, engaging and building relationships with 

communities. 

The Sunrise Joint Venture places strong emphasis on supporting 
initiatives which help local organisations to develop skills and 
resources to deliver services that in turn develop capabilities and 
contribute to the health and wellbeing of communities.

Recent examples of social investment and sponsorship initiatives 
supported by Woodside and the Sunrise Joint Venture include:

 Instituto Catolico Para Formacao Professores (ICFP) Baucau 
Teachers College: the progression of Timorese ICFP tutors 
through the Australian Catholic University’s Master of Education 
program.

 Ba Futuru (‘For the Future’): a Timor-Leste Non Government 

Organisation, for the construction of a Childhood Development 
Centre and training initiative.

 Hiam Health: a Timor-Leste Non Government Organisation, to 
support and help develop their existing Family and Community 
Nutrition Garden’s initiative.

 Timor-Leste’s Rotary’s Youth Leadership Award 2012: 

sponsorship of event and presentation by Woodside’s staff.

 2012 Dili Marathon: Sponsorship of the National Marathon Team.

 1st International Congress of Geology in Timor-Leste: 

sponsorship of event.

At an appropriate time Woodside together with the Sunrise Joint 
Venture will work with the Timor-Leste Government and other 
industry partners to identify specific local content opportunities 
that help to create sustainable economic growth. 

 Further information on Community Engagement in Timor-Leste 
is available on page 17 of the 2012 Sustainable Development 
Report.

timor-leste professional development program

In 2012, Woodside launched the Timor-Leste Professional 
Development Program.

The pilot program commenced on 26 November and enables its 
five participants, who are currently studying at Australian-based 
universities, to gain valuable technical, business and career 
development skills over 12 weeks of vacation employment with 
Woodside. 

The program demonstrates Woodside’s commitment to 
professional development and capability building in the 
communities in which we operate and hold business interests. 

outlook

In 2013, Woodside looks to expand its level of engagement and 
work collaboratively with both the Timor-Leste and Australian 
governments. This will build a better understanding of the issues 
of importance to all parties and move towards a shared vision of 
the Greater Sunrise development.

Woodside believes there remains an opportunity to agree on  
a development which satisfies the requirements of all parties.  
The key to reaching this goal is regular, open and constructive 
dialogue between the parties.

Woodside plans to continue to build relationships and our 
understanding of issues concerning the communities of Timor-
Leste and further expand our program of meaningful social 
development.

Woodside Petroleum Ltd.  |  sunrise lnG   33

Dili

Sunrise

 NT/RL 2

Troubadour

JPDA 03-20

JPDA 03-19

JPDA

Darwin

Wyndham

Kununurra

Argus

Torosa

Brecknock

Calliance

James Price Point

Derby

Broome

INTERNATIONAL 

in 2012 we secured new 
international growth 
opportunities that align with 
our strategy and capabilities.

2012 peRfoRmAnce 
hiGhliGhts
 Reached an in-principle agreement to 
acquire a 30% participating interest in 
licences covering the Leviathan gas 
field, offshore Israel.

 Obtained in-principle agreements to 

farm-in to exploration blocks, offshore 
Myanmar (AD-7 and A-6).

 Increased production at Neptune via 

recompletion.

The semi-submersible drill rig, the  
Maersk Developer, mobilises to a drill 
location in the Gulf of Mexico. The 
Maersk Developer was used to drill 
the Innsbruck well in which Woodside 
participated during 2012 (refer to page 
19). Woodside continues to explore and 
expand its international portfolio.

futuRe objectives 
 Mature and drill high-graded Gulf of 
Mexico (GoM) exploration portfolio.

 Secure final approval for Leviathan 

transaction and progress development. 

 Secure final approval for farm-ins 
offshore Myanmar, begin seismic 
programs. 

 Drill the Panoramix-3 appraisal well in 

Brazil.

 Continue to assess new value-creating 

opportunities.

Gulf of mexico

Gulf of mexico key metrics 
(Woodside share)

international key metrics, excluding 
Gulf of mexico (Woodside share)

2012

2011

2012*

2011

Sales revenue 

($ million)

76

Net production 

(MMboe)

0.8

93

1.1

Sales revenue 

($ million)

Net production 

(MMboe)

0.0

0.0

Proved plus 
Probable 
reserves

(MMboe)

7.7

8.5

Proved plus 
Probable 
reserves

(MMboe)

0.0

43

1.8

0.0

*The Ohanet Risk Sharing Contract expired on 
27 October 2011. Consequently there was no 
production from this region in 2012.

Gulf of Mexico production
Woodside other

%
1
99 

During 2012 GoM operations contributed  
0.8 MMboe to Woodside’s production from 
gas, condensate and oil volumes.

34   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONneptune oil field

broadening the portfolio

AT 573-575; 
617; 618

WI 20%

NRI 17.5%

israel
Woodside 30% (non-operator)* 

Interest

Operator
Location

BHP Billiton
Atwater Valley, 220 km 
offshore Louisiana, USA
~ 2,000 metres
Oil and gas

Water depth
Products
First production 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. The Neptune field 
produced first oil in 2008. 

A successful recompletion and bottom 
hole pressure reduction campaign has 
reduced the effects of natural field 
decline. 

The near-term development plan for 
Neptune includes the drilling of one 
appraisal well.

power play oil field

Interest

GB 302

WI 20%

NRI 16.3%

Operator
Location

Anadarko
Garden Banks, 200 km 
offshore Louisiana, USA
700 metres
Water depth
Oil and gas
Products
First production June 2008

WI - Working interest , NRI - Net revenue interest

Power Play began production in 2008 as a 
subsea tieback to the deepwater Baldpate 
facility. During 2012, the current producing 
zone at the Power Play well continued to 
outperform expectations. Development 
work at Power Play confirmed flow rates 
of a higher zone. 

The near-term development plan for 
Power Play includes movement to 
the higher rate zone once the current 
producing zone is depleted, or suitable 
conditions exist.

outlook

In 2013, the operator plans to drill one 
appraisal well at Neptune as well as focus 
on reducing the effects of natural field 
decline for its GoM properties. 

Woodside anticipates participating in 
exploratory drilling operations in the 
deepwater GoM in 2013, subject to  
joint venture participation.

In December 2012 Woodside reached  
an in-principle agreement to acquire a  
30% participating interest in each of  
the 349/Rachel and 350/Amit petroleum 
licences which contain the Leviathan  
gas field offshore Israel. 

Leviathan is one of the largest recent 
gas discoveries worldwide, estimated 
to contain approximately 17 Tcf of 
recoverable natural gas.

The agreement positions Woodside to 
grow its portfolio in the emerging Eastern 
Mediterranean Basin, and play a key role 
in the potential development of Israel’s 
LNG industry.

Under the agreement Woodside will be 
the operator of any LNG development 
of the field, while Noble Energy will 
remain upstream operator. Noble Energy 
targets initial production to the domestic 
gas market in 2016. A pre-front-end 
engineering and design assessment for  
an LNG project is underway. 

The agreement is subject to various 
conditions and will allow Woodside 
to participate in further exploration 
opportunities in the Leviathan licences. 

myanmar
AD-7 Woodside 40% (non-operator)*  
A-6 Woodside 50% (non-operator)*

In late 2012 Woodside obtained in-
principle agreements to farm-in to two 
Production Sharing Contracts (PSCs) for 
blocks AD-7 and A-6 in the Rakhine Basin, 
located in the western offshore area  
of the Republic of the Union of Myanmar.

The Rakhine Basin is a prospective 
frontier exploration area that aligns with 
Woodside’s strong deepwater capabilities.

Woodside’s offer to take a 40% 
participating interest in the PSC covering 
block AD-7 was accepted by Daewoo 
International Corporation (Daewoo) 
in October 2012. Daewoo remains as 
operator of the PSC. 

The agreement provides the opportunity 
for Woodside and Daewoo to undertake 
a 3D seismic acquisition program in 2013. 
The transaction also provides the option 
to drill an exploration well in a subsequent 
exploration period.

In December 2012, MPRL E&P Pte Ltd 
(MPRL) accepted Woodside’s offer to take 
a 50% participating interest in the PSC 
covering block A-6. MPRL will remain 
operator of Block A-6 for the current term 
of the exploration period. 

The proposal provides the opportunity for 
Woodside and MRPL to undertake a 3D 
seismic survey program in the block and 
also provides an option for future drilling. 

The proposed agreement also provides 
Woodside and MPRL with the opportunity 
to participate jointly in future deepwater 
bid rounds.

other

brazil
Woodside holds a 12.5% interest in one 
concession agreement covering 314 km2 
in the Santos Basin of Brazil. Woodside 
continues to evaluate the Panoramix oil 
field. The Joint Venture is preparing to drill 
the Panoramix-3 appraisal well in 2013 and 
is considering a Vampira drill stem test.

canary islands
Woodside holds a 30% interest in blocks 
1-9 operated by Repsol. Full rights to 
the permit activity have been reinstated 
following the issue of a Royal Decree 
on 16 March 2012; however, the Royal 
Decree is currently the subject of legal 
proceedings initiated by third party interest 
groups.

peru
Woodside has a 20%, non-operated 
interest in onshore block 108, which is 
currently under force majeure conditions. 
Once force majeure conditions cease, the 
Joint Venture plans to acquire 800 km of 
2D seismic.

Republic of Korea
Jujak-1 was drilled as the first deepwater 
well in the frontier Ulleung Basin. The well 
explored a Miocene fan complex within 
a four way dip closure. The well found 
excellent reservoir at the objective section, 
but no hydrocarbons were encountered.

* Subject to conditions including execution of fully-termed agreements, completion of due diligence, and 
necessary government and other approvals.

Woodside Petroleum Ltd.  |  international   35

boARd of diRectoRs

a

b

c

d

e

a)

michael A chaney, Ao  
Chairman - BSc, MBA, Hon LLD (UWA), FAICD 
Director since November 2005,  
Chairman since July 2007
Independent: Yes
Age: 62 
Residence: Perth, Australia

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 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).

committee membership 
Chair of the Nominations Committee. 
Attends other Board committee meetings.

current directorships  
Chair: National Australia Bank Limited 
(director since 2004) and Gresham 
Partners Holdings Limited  
(director since 1985).
Chancellor: The University of Western 
Australia (since 2006).
Director: The Centre for Independent 
Studies Ltd (since 2000).
Member: JP Morgan International Council.

b)

peter j coleman  
CEO and Managing Director - BEng, MBA
Director since May 2011
Independent: No
Age: 52
Residence: Perth, Australia

experience
28 years experience with the 
ExxonMobil group in the global oil 
and gas business, culminating as Vice 
President Development Company, with 
responsibility for leading development 
and project work in the Asia Pacific.

committee membership
Attends Board committee meetings.

36   Woodside Petroleum Ltd.  |  2012 Annual Report

current directorships
Member: The University of Western 
Australia Business School Board (since 
2011) and the Executive Committee  
of the Australia Japan Business  
Co-operation Council (since 2011).
Commissioner: West Australian 
Football Commission (since 2012).

c)

Robert j cole 
Executive Director and Executive Vice President, 
Corporate and Commercial - BSc, LLB (Hons)
Director since February 2012
Independent: No 
Age: 50 
Residence: Perth, Australia

experience 
Joined Woodside as General Counsel 
in April 2006. Executive Vice President 
Corporate Centre and General Counsel 
(2008 to 2010). Executive Vice President 
Commercial and General Counsel (2010 
to 2012), until he was appointed to his 
current role of Executive Director. Prior 
to joining Woodside, Mr Cole had more 
than 21 years experience in corporate, 
energy and resources law, including three 
years as partner in charge of the Perth 
office of Mallesons Stephen Jaques.

committee membership  
Attends Board committee meetings.

current directorships 
Vice Chair: Australian Petroleum 
Production and Exploration Association 
(since 2011).  
Director: Committee for Perth (since 2011).

d)

melinda A cilento
BA, BEc (Hons), MEc
Director since December 2008
Independent: Yes
Age: 47
Residence: Melbourne, Australia

experience
Significant public and private sector
experience in economic analysis, 
policy development and advice. 
Deputy Chief Executive (2006 to 
2010) and Chief Economist

(2002 to 2010) of the Business Council of
Australia. Previously 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: Wesfarmers General Insurance
Limited (since 2010).
Co-chair: Reconciliation Australia (director
since 2010, co-chair since 2011).
Councillor: Victorian Division of the
Australian Institute of Company Directors.
Member: Advisory Panel of the Australian
Scholarships Foundation and Advisory
Council of the Global Foundation.

e)

frank c cooper1 
BCom, FCA
Director since February 2013
Independent: Yes
Age: 57
Residence: Perth, Australia

experience
More than 35 years experience in 
corporate tax, specialising in the 
mining, energy and utilities sector, 
including most recently as a partner 
of PricewaterhouseCoopers. Director 
of Alinta Infrastructure Limited 
and Alinta Funds Management 
Limited (2005 to 2006).

committee membership 
Member of the Audit & Risk, Human 
Resources & Compensation and
Nominations Committees.

current directorships
Chair: Insurance Commission of Western 
Australia, University of Western Australia 
Strategic Resources Committee and 
West Australian Football Commission.
Member: Senate of the University of 
Western Australia and State Health 
Research Adivisory Council.

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONf

g

h

i

j

f)

erich fraunschiel2
BCom (Hons)
Director since December 2002
Independent: Yes
Age: 67
Residence: Perth, Australia

h)

Andrew jamieson, obe
FREng, CEng, FIChemE
Director since February 2005
Independent: Yes
Age: 65
Residence: United Kingdom

experience 
More than 18 years experience 
in senior executive positions with 
Wesfarmers Limited, including 10 
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: WorleyParsons 
Limited (since 2003).

g)

christopher m haynes, obe
BSc, DPhil, CEng, FIMechE
Director since June 2011
Independent: Yes
Age: 65
Residence: United Kingdom

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 
Chair of the Human Resources 
& Compensation Committee. 
Member of the Sustainability and 
Nominations Committees.

current directorships 
Chair: Seven Energy International Limited 
(director since 2011, chair since 2012).
Director: Leif Hoegh & Co Ltd (since 2009) 
and Oxford Catalysts Group PLC  
(since 2010). 

experience
38 year career with Shell including as
Executive Vice President, Upstream
Major Projects within Shell’s Projects
and Technology Business, General
Manager of Shell’s operations in Syria and
a secondment as Managing Director of
Nigeria LNG Ltd. From 1999 to 2002
Dr Haynes was seconded to Woodside
as General Manager of the North West
Shelf Venture. Retired from Shell on
31 August 2011.

committee membership
Member of the Audit & Risk, 
Sustainability and
Nominations Committees.

current directorships
Director: WorleyParsons Limited
(since 2012).

i)

david i mcevoy
BSc (Physics), Grad Dip (Geophysics)
Director since September 2005
Independent: Yes
Age: 66
Residence: Sydney, Australia

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).
Directorships of other listed entities 
within the past three years: Acer Energy 
Limited (2002 to November 2012) and
Po Valley Energy Ltd (2004 to May 2012).

j)

sarah e Ryan
PhD (Petroleum and Geophysics), BSc 
(Geophysics) (Hons 1), BSc (Geology)
Director since December 2012
Independent: Yes
Age: 46
Residence: Sunshine Coast, Australia

experience
More than 20 years international 
experience in the oil and gas industry in 
various technical, operational and senior 
management positions, including 15 years 
with Schlumberger Limited. Dr Ryan 
also served as Chief Operating Officer 
of MTEM Ltd, an oilfield technology 
company. Dr Ryan is Director, Equity 
Investment at institutional investment 
firm Earnest Partners where she is 
responsible for research and portfolio 
management in the global energy sector. 

committee membership 
Member of the Audit & Risk, Sustainability 
and Nominations Committees.

current directorships 
Director: Aker Solutions ASA (since 2011).

NOT PICTURED

pierre jmh jungels, cbe
PhD (Geophysics and Hydraulics)
Dr Pierre Jungels retired with effect on  
7 December 2012 after ten years 
of service on Woodside’s Board 
of Directors. Dr Jungels served 
on a number of Woodside Board 
committees including the Human 
Resources & Compensation, Audit & 
Risk and Nominations Committees. 

1 Mr Cooper will be appointed Chair of the Audit & Risk Committee with effect from 28 February 2013, following Mr Fraunschiel’s retirement. 
2 Mr Fraunschiel will retire on 28 February 2013.

Woodside Petroleum Ltd.  |  board of directors   37

coRpoRAte GoveRnAnce stAtement

contents

corporate governance at Woodside  39

board of directors 

committees of the board 

shareholders 

promoting responsible and ethical 
behaviour  

Risk management and internal  
control 

external auditor relationship 

diversity 

39

43

45

46

47

48

49

AsX corporate Governance council 
recommendations checklist 

51

38   Woodside Petroleum Ltd.  |  2012 Annual Report

WE BELIEVE hIgh standards of goVErnancE and transparEncy arE EssEntIaL.OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION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 2012 year and to the 
date of this report, it has complied with 
all the ASXCGC Recommendations. A 
checklist cross-referencing the ASXCGC 
Recommendations to the relevant 
sections of this statement and the 
Remuneration Report is provided on  
page 51.

 Information on Woodside’s governance 
framework is also provided in the 
corporate governance section of 
Woodside’s website.

The website 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 
business and affairs of the Company are 
to be managed by or under the direction 
of 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;

Woodside corporate Governance model

Shareholders

Board

n
o
i
t
a
g
e
e
D

l

A
c
c
o
u
n
t
a
b

i
l
i
t
y

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

Woodside Petroleum Ltd.  |  corporate Governance statement   39

 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.

 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, the CEO and the 
Executive Director and Executive Vice 
President, Corporate and Commercial. 
Mr Erich Fraunschiel will retire with 
effect on 28 February 2013, reducing 
the number of non-executive directors to 
seven. Details of the directors, including 
their qualifications, experience, date of 
appointment and independent status, are 
set out on pages 36 and 37.

40   Woodside Petroleum Ltd.  |  2012 Annual Report

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 and the Executive Director and 
Executive Vice President, Corporate 
and Commercial bring an additional 
perspective to the Board through a 
thorough understanding of Woodside’s 
business. The directors on the Board 
represent a diverse range of nationalities 
and backgrounds. Dr Sarah Ryan was 
appointed as a non-executive director 
effective 6 December 2012, increasing the 
number of women on the Board to two. 
The Board recognises that there is still a 
gender imbalance, and that an opportunity 
exists to address this upon future 
retirements of non-executive directors.

The Constitution provides that the 
company is not to have more than ten, nor 
less than three, 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 36), 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;

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 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 change 
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 
eight of the ten directors are independent. 
The directors that are not considered 
independent are Mr Peter Coleman and 
Mr Robert Cole as they are both executive 
directors and members of management.

Dr Christopher Haynes and Dr Andrew 
Jamieson were nominated to the 
Woodside Board by Shell and were both 
previously executives of Shell. Dr Haynes 
and Dr Jamieson retired from Shell 
on 31 August 2011 and 30 June 2009 
respectively and continue to serve on the 
Woodside Board.

The Board is satisfied that Dr Haynes 
and Dr Jamieson have no continuing 
association with Shell that would 
interfere with their independent exercise 
of judgement, and that each is an 
independent director.

Mr Fraunschiel and Dr Haynes serve 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 
2012 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 and  
Dr Haynes remain 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 36 and 37.

Four of the non-executive directors have 
been employed by Woodside in the 
past and a significant period of time has 
elapsed since they ceased employment. 
Dr Haynes and Dr Jamieson were both 
seconded to Woodside as General 
Manager of the North West Shelf Venture 
from 1999 to 2002 and from 1997 to 1999 
respectively. Dr Ryan was employed by 
Woodside as a member of the North 
West Shelf petroleum production team 
from 1993 to 1996. 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
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. 
The Board does not currently consider 
that there are any existing or projected 
competency 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 ten 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:

 honesty and integrity;

 the ability to exercise sound business 

judgement;

 appropriate experience and professional 

qualifications;

 absence of conflicts of interest or other 
legal impediments to serving on the 
Board;

Woodside Petroleum Ltd.  |  corporate Governance statement   41

 willingness to devote the required time; 

and

 availability to attend Board and 

committee meetings.

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 are available in the corporate 
governance section of Woodside’s 
website.

In December 2012, Mr Fraunschiel 
and Dr Jungels had both served ten 
years on the Board. Dr Jungels retired 
with effect on 7 December 2012 and 
Mr Fraunschiel will retire with effect 
on 28 February 2013. During the year, 
the Board directly engaged executive 
recruitment specialists, to conduct an 
extensive search for suitable candidates 
for the Board. The search culminated in 
the appointment by the Board of  
Dr Ryan with effect on 6 December 2012 
and Mr Frank Cooper with effect on  
1 February 2013. Mr Cole was appointed 
to the Board as an executive director, 
effective 23 February 2012. Prior to 
his appointment as a director, Mr Cole 
worked for Woodside in senior executive 
roles since 2006, most recently as 
Executive Vice President Commercial.

2.7 directors’ retirement and  
re-election
ASXCGC Recommendation 2.6

With the exception of the Managing 
Director, directors must retire at the third 
AGM following their election or most 
recent re-election. At least one 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).

42   Woodside Petroleum Ltd.  |  2012 Annual Report

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.

The Remuneration Report on pages 53 
to 65 discloses the process for evaluating 
the performance of senior executives, 
including the CEO. In 2012, 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. 

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 
53 to 65. 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 2013 AGM.

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION2.12 board meetings
During the year ended 31 December 
2012, 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 45.

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;

that Board procedures are complied 
with and that governance matters are 
addressed. During 2012, Mr Cole and  
Ms Frances Kernot resigned as Company 
Secretaries following their appointment 
to other roles at Woodside. Woodside’s 
General Counsel Mr Michael Abbott and 
Senior Legal Counsel Mr Warren Baillie 
were appointed as Company Secretaries.

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, 8.2, 8.4

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:

 reports from the chairs of the 

committees on matters considered at 
committee meetings; and

 Audit & Risk Committee;

 Nominations Committee;

 minutes of previous committee 

 Human Resources & Compensation 

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 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 led 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 52 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 

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 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 45.

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 2012 
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.

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 45 which 
sets out their attendance at meetings. 
Their qualifications are listed on pages  
36 and 37.

Woodside Petroleum Ltd.  |  corporate Governance statement   43

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 2012 external audit;

 review of the independence and 

performance of the external auditor;

 review of significant accounting 

policies and practices, including with 
respect to the financial implications 
of the enactment of the Clean Energy 
Act 2011 (Cth) and the transition of 
the North West Shelf project into the 
Petroleum Resources Rent Tax regime;

 review of Internal Audit reports and 

approval of the 2013 Internal Audit plan;

 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; 

 reviewing and making 

recommendations to the Board on 
amendments to the committee’s 
charter, the Group Treasury Policy and 
the Risk Management 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 Executive Director and 
Executive Vice President, Corporate and 
Commercial, the CFO, the Group Financial 
Controller, the head of Internal Audit, the 
head of Corporate Risk and the head of 
Taxation are regular attendees at Audit 
& Risk Committee meetings. At each 
committee meeting, time is scheduled for 
the committee to meet with the external 
auditors without management present.

The Committee meets at least semi-
annually with Woodside’s internal 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.

44   Woodside Petroleum Ltd.  |  2012 Annual Report

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 45 sets out their 
attendance at committee meetings.

Key activities undertaken by the 
Nominations 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, approving the 
use of remuneration consultants to 
provide recommendations in respect 
of the remuneration of Woodside’s 
key management personnel and 
considering advice on the remuneration 
of Woodside’s key management 
personnel;

 review of the size and composition of 

 reviewing and making 

the Board;

 Board and CEO succession planning, 

including recommending that the Board 
appoint Mr Cole as Executive Director 
and Executive Vice President, Corporate 
and Commercial and Mr Cooper and  
Dr Ryan as non-executive directors;

 making recommendations to the Board 

regarding the directors seeking re-
election at the 2013 AGM; and

 approval of the process for the annual 

Board performance evaluation.

3.4 human Resources & 
compensation committee
ASXCGC Recommendations 8.1, 8.2, 8.4

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 45 which sets out their 
attendance at meetings.

Key activities undertaken by the Human 
Resources & Compensation Committee 
during the year included:

recommendations to the Board on 
amendments to the committee’s 
charter;

 reviewing the company’s recruitment 

and retention strategies;

 approval of the appointment and 

remuneration packages of executives 
reporting directly to the CEO (other than 
the Executive Director and Executive 
Vice President, Corporate  
and Commercial);

 monitoring progress against measurable 
objectives in respect of gender diversity; 
and

 reviewing and making 

recommendations to the Board on:

 remuneration for non-executive 

directors; 

 the remuneration of the CEO and the 
Executive Director and Executive Vice 
President, Corporate and Commercial;

 the criteria for the evaluation of the 

performance of the CEO;

 incentives payable to the CEO and 

the Executive Director and Executive 
Vice President, Corporate and 
Commercial;

 employee equity based plans; and

 the annual Remuneration Report.

Review of the 2012 performance of the 
CEO and executive succession planning 
was conducted by the Board. 

The Human Resources & Compensation 
Committee assists the Board to 
ensure that Woodside’s remuneration 
arrangements are equitable and consistent 
with the delivery of superior performance 
that is aligned to the creation of value 
for shareholders. To ensure it is fully 
informed when making remuneration 
decisions, the committee draws on 
services from a range of external sources, 
including remuneration consultants where 
appropriate. 

Woodside’s guidelines on the use 
of remuneration consultants set out 
requirements to ensure the independence 
of remuneration consultants from 

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONWoodside’s management, including the 
process for the selection of consultants 
and their terms of engagement. 
Remuneration consultants are engaged 
by, and report directly to, the committee. 
Further information on the activities of 
the Human Resources & Compensation 
Committee in relation to the use of 
remuneration consultants during 2012 is 
provided in the Remuneration Report on 
page 59.

The Chairman, the CEO, the head of the 
Corporate function and the head of the 
Human Resources function are regular 
attendees at the Human Resources & 
Compensation Committee meetings. 
The CEO was not present during any 
committee or Board agenda item where 
his remuneration was considered or 
discussed.

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 process safety 
performance, incidents and 
improvement plans;

 consideration of heritage and land 
access affecting the company and 
security and emergency management 
performance;

 monitoring Australian government 
policy development in respect of 
climate change and the enactment of 
the Clean Energy Act 2011 (Cth) and 
reviewing Woodside’s initiatives to 
reduce greenhouse gas emissions;

 review of delivery against Woodside’s 

Reconciliation Action Plan 
commitments;

 review of community relations activities 

and social investment themes and 
planned expenditure; 

 reviewing and making 

recommendations to the Board on 
amendments to the committee’s 
charter and sustainability-related Board 
policies, including the Environment 
Policy; and

 approval of the annual Sustainable 

Development Report.

 Further information on the activities 
of the Sustainability Committee 
will be provided in the Sustainable 
Development Report to be released 
in March 2013, which will be 
made available in the sustainable 
development section of Woodside’s 
website.

The Chairman, the CEO, the head of 
the Corporate function, the head of the 
Health and Safety function, the head of 
the Production function and the head 
of the Environment function are regular 
attendees at Sustainability Committee 
meetings.

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.

table 1. directors in office, committee membership and directors’ attendance at meetings during 2012

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

PJ Coleman

RJ Cole (3)

non-executive directors(4)

MA Chaney

MA Cilento

E Fraunschiel(5)

CM Haynes(6)

A Jamieson

PJMH Jungels(7)

DI McEvoy

SE Ryan (8)

legend:

  Current Chairman
  Current member
  Prior member

6

5

6

6

6

6

6

6

6

1

6

5

6

6

6

6

6

6

6

1

notes:

6

5

6

5

6

2

6

6

1

6

6

6

1

7

7

7

7

7

7

7

7

7

7

1

1

6

6

6

6

6

1

6

2

6

6

6

6

6

4

6

1

6

6

6

6

6

6

6

1

6

4

6

6

6

6

6

6

6

1

(1)  ‘Held’ indicates the number of meetings held during the period of each director’s tenure.
(2)  ‘Attended’ indicates the number of meetings attended by each director.
(3)   Mr Cole was appointed with effect on 23 February 2012.
(4)  Mr Frank Cooper was appointed a director with effect on 1 February 2013. He did not attend any meetings during 2012.
(5)  Mr Fraunschiel will retire with effect on 28 February 2013.
(6)  Dr Haynes ceased to be a member of the Human Resources & Compensation Committee on 7 December 2012.  

He became a member of the Audit & Risk Committee with effect on the same date.

(7)  Dr Jungels retired with effect on 7 December 2012.
(8)  Dr Ryan was appointed a director with effect on 6 December 2012.

Woodside Petroleum Ltd.  |  corporate Governance statement   45

Woodside’s Continuous Disclosure 
and Market Communications Policy 
encourages effective communication with 
the company’s 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 
briefings with institutional investors and 
analysts containing material information 
not previously released to the market, 
are webcast and made available on 
Woodside’s website.

Shareholders are notified in advance of 
the date of investor briefing webcasts. 
Presentation material from briefings or 
speeches containing material information 
not previously released is disclosed to the 
market via ASX and posted to the website.

The company produces a short form 
annual and half-year shareholder review. 
The Annual Report, the Sustainable 
Development Report and the short form 
shareholder reviews are available on the 
company’s website, or shareholders can 
elect to receive hard copies. Shareholders 
can elect to receive email notification 
when these reports are posted to the 
website. Shareholders can also receive 
email notification of Woodside’s ASX 
announcements and media releases. 

 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.

46   Woodside Petroleum Ltd.  |  2012 Annual Report

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 
the 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.

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. 

All of Woodside’s directors attended the 
company’s 2012 AGM and are expected 
to attend the 2013 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 and monitoring reporting 
processes and controls and setting 
guidelines for the release of information. 
The Disclosure Committee is comprised 
of senior executives. The Disclosure 
Committee reports at least annually 
to the Board on the performance of 
Woodside’s reporting processes and 
controls. Continuous disclosure matters 
are considered at each Board meeting.

The Board approves any announcement 
relating to the annual and half year 
financial reports and any other information 
for disclosure to the market that contains 
or relates to financial projections, 
statements as to future financial 
performance or changes to the policy 
or strategy of the company (taken as a 
whole).

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 

5 promoting responsible and 
ethical behaviour

5.1 code of conduct and 
Whistleblower policy
ASXCGC Recommendation 3.1

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 
and 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. Managers are expected to 
take reasonable steps to ensure that 
employees, contractors, consultants, 
agents and partners under their 
supervision are aware of the Code and to 
foster an environment that encourages 
ethical behaviour and compliance with 
the Code. Directors and 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 
may result in disciplinary action ranging 
from a formal warning through to 
termination of employment. All breaches 
are required to be recorded.

 The Sustainable Development Report, 
which will be released in March 2013 
and made available in the sustainable 
development section of Woodside’s 
website, provides further information 
on the Code of Conduct. 

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONDirectors and senior management are 
required to provide annual certification 
of their compliance with the Code of 
Conduct and the 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 managers and 
all employees and contractors within 
their area of responsibility with the 
Code of Conduct, the Securities Dealing 
Policy, the Whistleblower Policy and 
the 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 Recommendation 8.4

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 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 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. 

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
Woodside’s Code of Conduct prohibits 
donations to any political party, politician or 
candidate for public office in any country 
without prior Board approval. In certain 
circumstances Woodside representatives 
may attend a party-political function 
which charges an attendance fee without 
Board approval. Attendance at these 
functions must be approved by the head 
of the Government Affairs function, 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:

 provides a consistent process for the 
recognition and management of risks 
across Woodside’s business; and

 confers responsibility on Woodside 

staff at all levels to proactively identify, 
manage, review and report on risks 
relating to the objectives those staff are 
accountable for delivering.

 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 that effective 
management of risk is vital to delivering 
on its objectives, success and continued 
growth. Woodside is committed to 
managing all risk in a proactive and 
effective manner. Woodside’s approach 
to risk enhances opportunities, reduces 
threats and sustains Woodside’s 
competitive advantage. 

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 a Risk 
function, separate to Internal Audit, and 
aligns the company’s risk management 
process with the International Standard 
for risk management (ISO 31000 Risk 
Management). Risks are identified, 
assessed and prioritised using a 
common methodology. Assessed risk 
is escalated to increasingly senior levels 
of management based on corporate 
materiality thresholds.

Woodside Petroleum Ltd.  |  corporate Governance statement   47

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 promoting 
and applying the Risk Management Policy. 
This responsibility involves identifying 
and assessing business and operational 
risks, developing and implementing 
appropriate risk treatment strategies and 
controls, monitoring the effectiveness 
of risk controls and reporting on risk 
management capability and performance. 
Within each major business and functional 
area there is a designated senior risk role, 
with specific responsibilities to ensure 
appropriate application of Woodside’s risk 
management process and regular risk 
review 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 Risk function is responsible for 
Woodside’s risk management process, 
development of risk management 
capability, and providing risk management 
reports to the executive team and 
the Audit & Risk Committee on the 
corporate risk profile and the Group’s risk 
management performance.

In 2012, both the Audit & Risk Committee 
and the Board reviewed the risk profile 
for the Group and received reports from 
management on the effectiveness 
of the Group’s management of its 
material business risks. The reported 
risks considered Woodside’s health and 
safety, environmental, financial, legal 
and compliance, social and cultural and 
reputational exposures.

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 

48   Woodside Petroleum Ltd.  |  2012 Annual Report

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 or function 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 
and reviews Internal Audit’s performance. 
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 Executive Director and 
Executive Vice President, Corporate and 
Commercial. 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 2012 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

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION taxation planning and taxation 

 the Board annually reviewing the 

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

ASXCGC Recommendations 3.2, 3.3,  
3.4, 3.5

Woodside recognises that workforce 
diversity provides a key competitive 
advantage and our success is a reflection 
of the quality and skills of our people. To 
this end Woodside leadership continues to 
focus on the development of a workplace 
climate that promotes diversity as a key 
contributor to our business success.

 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; and

measurable objectives it has set for 
achieving improvement in the diversity 
mix of Woodside and the progress in 
achieving those objectives.

During 2012, Woodside continued to 
meet its specific commitments under 
its Reconciliation Action Plan (RAP) to 
increase Indigenous participation at 
Woodside. Woodside has increased 
Indigenous employment by over 188% 
since the RAP was adopted in 2010 and 
at the end of 2012 had 92 Indigenous 
employees, 54 people on Indigenous 
pathway programs and four Indigenous 
university students participating in 
Woodside’s cadetship program. Since 
2009, Woodside has successfully 
converted 70% of its Indigenous 
pathway participants to employment 
following completion of their training 
program and had 75 participants at 
its peak during the year. Woodside 
also significantly enhanced its support 
for the establishment or expansion 
of Indigenous businesses during the 
year, internally through its commercial 
contracting activities, as well as through 
its support of external programs operating 
in the Kimberley, the Pilbara and Perth. 
Woodside has already exceeded its target 
of more than 750 employees attending 
cultural awareness training and is now 
looking beyond that target and devising 
new programs to support Woodside’s 
Indigenous employees, such as formal 
mentoring and supervisor training.

Woodside continued to undertake 
initiatives in 2012 aimed at improving 
gender diversity across the organisation. 
A detailed review and analysis of gender 
diversity progress occurred at the 
end of 2011 with the aim of reducing 
female turnover and increasing female 
progression into senior roles. The 
review resulted in the development, 
communication and implementation in 
2012 of a three-year gender diversity 
strategy.

Key activities carried out in 2012 to 
support Woodside’s gender diversity 
strategy included improvements to the 
graduate program recruitment process 
which delivered a 40% increase in 
applications and an improved gender 
diversity balance outcome. A critical 
review of female talent conducted through 
an organisation-wide capability review 
resulted in improved gender balance in 
senior management succession planning. 
A review of remuneration demonstrated 
effective pay parity for males and females 
doing similar roles. 

During the year, Woodside strengthened 
its general recruitment processes to 
ensure gender diversity in candidate 

short-listing and on interview panels. 
These changes will be fully embedded in 
2013 and aim to deliver improved gender 
recruitment and promotion outcomes over 
time. 

During 2012, Woodside’s overall female 
representation remained stable at 26.7%. 
Women are represented at all levels within 
the organisation. In particular, female 
representation in middle and senior 
management roles remained steady at 
approximately 10% at the end of 2012. 

The focus in 2013 will continue to be on 
building a strong pipeline of female talent 
to fill senior roles in the future. To this 
end, a specific development program 
for high talent females and a job design 
toolkit will be developed and implemented 
to increase part-time and flexible 
working opportunities, support ongoing 
competency development and facilitate 
improved career progression. 

Table 2 on page 50 sets out Woodside’s 
2012 measurable objectives, as disclosed 
in the 2011 Annual Report, and progress 
made towards achieving those objectives. 

The 2013 measurable objectives 
agreed by the Board to improve gender 
diversity remain consistent with the 
2012 objectives, so that Woodside 
is able to measure and demonstrate 
cumulative progress. The 2013 diversity 
measurable objectives, set out below, 
will continue to be centred on the five 
themes of Leadership, Process and 
Practice, Education, Government and 
Community Engagement, and Metrics 
and Measurement established in 2012. 

2013 measurable objectives
 Achieve gender balance in Woodside’s 

graduate intake;

 Increase the percentage of women in 

senior management roles;

 Maintain remuneration equity between 
men and women in the same role at the 
same level; 

 Achieve female senior management 
turnover that is equal to or less than 
total senior management turnover;

 Achieve overall female turnover that 
is equal to or less than organisational 
turnover;

 Increase the overall percentage of 

females employed by Woodside; and

 Deliver diversity development 

programs, including Equal Employment 
Opportunity training, recruitment and 
promotion training and ‘Leading Diverse 
Teams’ programs.

Woodside will report on progress against 
these objectives in its 2013 Annual Report. 

Woodside Petroleum Ltd.  |  corporate Governance statement   49

table 2 - Woodside’s 2012 measurable diversity objectives

2012 measurable objectives

progress

Graduates
Achieve gender balance in Woodside’s 
graduate intake

senior management development
Increase the representation of women in 
senior management roles

executive development
Increase the number of senior women 
who are ready to move into executive 
leadership roles

Remuneration
Remuneration equity between men  
and women in the same role at the  
same level 

voluntary turnover
Female turnover levels no greater than 
organisation turnover levels

Attraction and retention
Increase overall percentage of women 
employed by Woodside

education and awareness
‘Leading Diverse Teams’ program rolled 
out to 300 managers

Changes to the 2012 graduate recruitment process resulted in a 40% increase in the total 
number of applicants and 50% overall female graduate intake representation, with 43%  
of the technical graduate intake being female. This represents a significant improvement 
from 2011.

Representation of females in middle and senior management roles remains stable at 
approximately 10%. Continued focus is required in this area which will be supported by  
2013 initiatives.

Woodside remains ahead of target for female succession into executive roles, having 
doubled the number of women ready to move into executive leadership roles through a 
critical review of talent in the bi-annual organisation wide capability review process.

In the annual remuneration review process there was a continued reduction in the average 
difference between men and women in the same role at the same level such that the gap is 
now negligible.

Although overall company turnover has increased, female turnover remains on par with 
overall organisational turnover at 8.5%.

The overall percentage of female employees remained stable at 26.7%, short of the target 
of 28%.

The leading diverse teams program continued to be delivered in 2012 and was reshaped to 
enable broader attendance. Attendance was lower than planned at 98 attendees. 

Equal Employment Opportunity (EEO) 
program rolled out to 150 managers

EEO training was attended by 47 employees, below the target of 150. There will be 
renewed focus on this in early 2013. 

Selection and promotion program rolled 
out to 100 managers

Selection and promotion process training was deferred to 2013. A practical ‘How to 
Interview’ guide, which includes tools to ensure any bias is removed from the selection 
process, is being finalised and will be rolled out in the first quarter of 2013. 

Woodside’s strong focus in 2012 on its Organisational Effectiveness program and 
supporting training for leaders and managers impacted on the roll-out and delivery of  
gender diversity training and development initiatives.

 Further information regarding Woodside’s commitment to diversity will be available in Woodside’s 2012 Sustainable Development 
Report which will be released in March 2013 and made available in the sustainable development section of Woodside’s website.

table 3 - Woodside workforce gender profile

female

female %

male

male %

Administration

Technical

Supervisory / Professional

Middle Management

Senior Management

total

Board Members

234

366

395

69

4

1,068

2

65.9

25.4

26.6

10.3

8.9

26.7

22.2

121

1,076

1,089

602

41

2,929

7

34.1

74.6

73.4

89.7

91.1

73.3

77.8

50   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION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.

2.1

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.

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 2: structure the board to add value 

2.1

2.2

2.3

2.4

2.5

2.6

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 committees and 
individual directors.

Companies should provide the information indicated in Guide to Reporting on Principle 2.

principle 3: promote ethical and responsible decision-making

3.1

3.2

3.3

3.4

3.5

Companies should establish a code of conduct and disclose the code or summary of the code as to:
 ƒ the practices necessary to maintain confidence in the company’s integrity
 ƒ the practices necessary to take into account their legal obligations and the reasonable expectations of their 

5.1

stakeholders

 ƒ the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

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 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.

Companies should provide the information indicated in the Guide to reporting on Principle 3.

8

8

8

8

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:
 ƒ consists only of non-executive directors
 ƒ consists of a majority of independent directors 
 ƒ is chaired by an independent chair, who is not chair of the board 
 ƒ 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

3.1, 3.2

3.1, 3.2

3.1, 3.2

3.1, 3.2, 7

4.2

4.2

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.

4.1

4.1

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 accordance with section 295A of the Corporations 
Act 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.

6.1

6.2

6.4 

Companies should provide the information indicated in Guide to Reporting on Principle 7.

6.1, 6.2, 6.4

principle 8: Remunerate fairly and responsibly

8.1

8.2

8.3

8.4

The board should establish a remuneration committee. 

The remuneration committee should be structured so that it:
 ƒ consists of a majority of independent directors
 ƒ is chaired by an independent chair
 ƒ has at least three members.
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.

3.1, 3.4

3.1, 3.4

Remuneration Report

3.1, 3.4, 5.2

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

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





































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Woodside Petroleum Ltd.  |  corporate Governance statement   51

diRectoRs’ RepoRt (includinG RemuneRAtion 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 2012.

directors

The directors of Woodside Petroleum Ltd 
in office at any time during or since the 
end of the 2012 financial year are set out 
in the Remuneration Report on page 55. 
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 36 and 37.

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 45.

Details of director and senior executive 
remuneration is set out in the 
Remuneration Report on pages 53 to 65.

The particulars of directors’ interests in 
shares of the company as at the date of 
this report are set out on page 66.

principal activities

The principal activities and operations of 
the Group during the financial year were 
hydrocarbon exploration, evaluation, 
development, production and marketing.

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.

consolidated results

The consolidated operating profit 
attributable to the company’s shareholders 
after provision for income tax was $2,983 
million ($1,507 million in 2011).

significant changes in state of 
affairs

The review of operations (pages 1 to 
35) 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.

events subsequent to end of 
financial year
dividends

Since the reporting date, the directors 
have declared a fully franked dividend of 
US65 cents (2011: US55 cents), payable 
on 3 April 2013. The amount of this 
dividend will be US$536 million (2011: 
US$443 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 13.

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.

Woodside did not incur any environmental 
fines or penalties during 2012.

Review of operations

dividends

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 35.

The directors have declared a final 
dividend out of profits of the company in 
respect of the year ended 31 December 
2012 of US65 cents per ordinary share 
(fully franked) payable on 3 April 2013.

A fully franked final dividend of US55 
cents per ordinary share was paid to 
shareholders on 4 April 2012 in respect 
of the year ended 31 December 2011. 
Together with the fully franked interim 
dividend of US65 cents per share paid to 
shareholders on 2 October 2012, the total 
dividend paid during the 2012 year was 
US120 cents per share fully franked.

Woodside’s dividend reinvestment plan 
operated during the year.

company secretaries

The following individuals have acted as 
company secretary during 2012:

michael Abbott
BJuris LLB, BA, MBA (UWA)
General Counsel and  
Joint Company Secretary

Mr Abbott joined Woodside in 2007 and 
was appointed to the role of General 
Counsel effective 23 February 2012. He 
was appointed Joint Company Secretary 
effective 3 May 2012. Mr Abbott holds 
Bachelor of Laws and Bachelor of Arts 
degrees and a Masters of Business 
Administration.

Warren baillie
LLB, BCom, Grad. Dip. CSP
Company Secretary

Warren Baillie joined Woodside in 2005 
and was appointed Company Secretary 
effective 1 February 2012. Mr Baillie 
holds Bachelor of Laws and Bachelor of 
Commerce degrees and is a solicitor and 
chartered secretary. He is a member of 
the National Board and WA State Council 
of Chartered Secretaries Australia. 

Robert cole
BSc, LLB (Hons) (ANU)
Executive Director and Executive Vice 
President, Corporate and Commercial

Mr Cole retired as a Joint Company 
Secretary effective 3 May 2012 following 
his appointment to the role of Executive 
Director and Executive Vice President, 
Corporate and Commercial effective  
23 February 2012.

frances Kernot
BCom (Hons) (UWA), Grad. Dip. CSP,
CA, ACIS
Company Secretary

Ms Kernot resigned as Company 
Secretary effective 29 February 2012 to 
take another role in the company. 

52   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONRemuneRAtion RepoRt (Audited)

contents

overview 

executive remuneration 

ceo remuneration 

General employee share plans 

contracts for Kmp executives 

non-executive directors 

human Resources &  
compensation committee  

securities dealing policy 

use of remuneration consultants 

Reporting notes 

54

55

57

58

58

58

59

59

59

59

summary index of tables

table  description

General 
1

Woodside five year performance

2

3

Allocation of executive remuneration between fixed and variable annual reward 

Summary of contractual provisions for KMP executives

ceo and senior executive Remuneration
4

Compensation of KMP executives’ for the year ended 31 December 2012 and 2011

variable Annual Rewards – executive incentive plan
5

Vesting schedule for RTSR-tested Variable Pay Rights awarded for the 2012 performance year

6

7

8

9

10

11

12

13

Vesting Schedule for RTSR-tested Variable Pay Rights awarded for the performance years 2008 - 2011

STA Peer Group and LTA Peer Group for performance years 2008 - 2011

LTA peer group 2012 performance year – International Oil and Gas Companies

Summary of terms and conditions of unvested RTSR-tested Variable Pay Rights 

Summary of terms and conditions of unvested deferred short-term award 

Summary of the KMP executives’ interests in Time-tested Variable Pay Rights 

Summary of KMP executives’ interests in Restricted Shares

Summary of the KMP executives’ interests in RTSR-tested Variable Pay Rights

Retention and General employee share plans
14

Summary of KMP executives’ interests in shares under the Woodside Share Purchase Plan

15

16

Summary of KMP executives’ interests in Equity Rights under the Woodside Employee Equity Plan

Summary of KMP executives’ interests in Equity Rights under the Woodside Equity Plan

non-executive directors
17

Annual base Board and committee fees for non-executive directors

18

Total remuneration paid to non-executive directors in 2012 and 2011

page

54

55

58

60

61

61

61

61

61

61

62

62

63

64

64

65

65

65

Woodside Petroleum Ltd.  |  Remuneration Report   53

overview

Details of the EIP are provided on pages 55 to 57 of this report.

Woodside’s remuneration philosophy is based on providing 
competitive rewards that attract, retain and motivate the highest 
calibre people to deliver superior performance that is aligned with 
the creation of value for shareholders. To achieve this Woodside 
ensures that the level and composition of remuneration is 
sufficient and reasonable; there is a clear relationship between 
Woodside and individual performance and remuneration; 
and the remuneration policy is openly communicated. 

The Human Resources & Compensation Committee (Committee) 
assists the Board in creating a strong linkage between executive 
remuneration and Woodside’s performance and the details 
of these linkages are provided in the following sections.

Woodside’s 2012 AGM was held on 2 May. The Remuneration 
Report for 2011 was adopted at the AGM with a clear majority of 
479,930,217 votes in favour of the motion (representing 96.4% of 
the votes received).

Review of executive incentive arrangements 

During 2012 the Committee undertook with the assistance of 
PricewaterhouseCoopers a review of the approach, framework 
and structure of the executive incentive arrangements to ensure 
ongoing alignment with Woodside’s strategic direction and values.

As a result of the review the Board approved a number of 
changes to the short and long-term incentives applicable to 
Woodside executives under the Executive Incentive Plan (EIP). 

In respect of the short-term incentive the Board has determined 
to award restricted shares instead of variable pay rights for 
the deferred portion of the short-term award. These are 
awards which have already been earned, a portion of which 
is taken in shares which are only time restricted and therefore 
the Board considers it reasonable for the executives to earn 
dividends on the shares during the restriction period. 

To enhance the alignment of the long-term award with company 
strategy and executive performance the Board has determined to:

 Extend the initial performance testing period from three years 

to four years;

 Remove the ability for greater than 100% of an award to vest;

 Change the approach to re-testing (while continuing to ensure 
that executives only benefit from re-testing if the company’s 
relative performance improves); 

 Use the “fair value”, as determined by the relevant accounting 
standards, to determine the number of performance tested 
variable pay rights to award to participants;

 Extend the international oil and gas peer group to 18 companies 

(including Woodside); and

 Introduce a second peer group, being the ASX top 50.

table 1 - Woodside five year performance

executive remuneration outcomes for 2012

Performance outcomes for 2012 for the Chief Executive 
Officer and the broad executive group, including Key 
Management Personnel (KMP) were as follows:

 The value of the short-term award (STA) scorecard for 2012 

was 1.27 out of a maximum possible result of 2.

 The total potential amount of the STA pool for 2012 ranged 

from a minimum of A$ nil to a maximum of A$30,943,948. The 
actual STA pool for 2012 was A$20,271,351 for 102 participants 
including the executive directors.

 One third of the STA for the 2012 performance year for current 
executives (A$6,757,117) will be deferred as an equity award,  
the vesting of which is dependent on three years continuous 
service.

 A long-term award (LTA) in respect of the 2012 performance 
year will be allocated in February 2013 to eligible participants.

Vested Awards during 2012:

 Time-tested Variable Pay Rights that were allocated in 2009 as 
deferred STA in respect of the 2008 performance year vested 
during 2012.

 The LTA awarded in 2009 was subject to performance testing 
during 2012 and as the 50th percentile of the peer group was 
attained 50% of the award vested and 50% of the award 
lapsed. 

 The LTA awarded in 2008 was subject to a second test in 2012 
and failed to satisfy the vesting requirements and as such the 
award lapsed.

In 2012, Woodside also made awards of equity rights 
under the Woodside Equity Plan to Key Management 
Personnel (KMP), excluding the Chief Executive Officer, 
Executive Director and Executive Vice President Corporate 
and Commercial and the non-executive directors. 

There were no individual retention arrangements for KMP entered 
into or vested in 2012.

executive remuneration and company performance

Whilst there are a number of internal and external factors relevant 
to Woodside’s performance, the Board believes Woodside’s 
performance is also attributable to the ability to motivate 
and retain its executives and, thus, the effectiveness of its 
remuneration policies. Table 1 below shows the key financial 
measures of company performance over the past five years.

year ended 31 december

Net Profit After Tax 
Earnings Per Share
Dividends Per Share 
Production

Share closing price (last 
trading day of the year)(5)

5 Year rolling TSR(2)
Relative TSR(3)

(US$ million)
(US cents)(1)
(US cents)
(MMboe)

(A$) 

(%)
(1 year)

2012

2,983
366
130
84.9

33.88

2011

1,507
190
110
64.6

30.62

2010

1,575
204
105
72.7

42.56

2009(4)

1,474
210
95
80.9

47.20

2008(4)

1,546
225
100
81.3

36.70

(0.33)
2nd Quartile

4.58
4th Quartile

12.11
4th Quartile

26.44
1st Quartile

19.65
2nd Quartile

(1)  Basic and diluted earnings per share from total operations.
(2) This calculation is annualised and measured in US dollars.
(3) As discussed under the STA component of EIP on page 55.
(4) Amounts were translated to US dollars using monthly average exchange rates.
(5) The share closing price (last trading day) for 2007 was A$50.39.

54   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONexecutives
executive directors
P Coleman - (Managing Director and Chief Executive Officer) (CEO)
R Cole (Executive Director and Executive Vice President, Corporate and Commercial)(1) 
senior executives
F Ahmed (Executive Vice President Technology)(2)
L Della Martina (Executive Vice President Pluto)(3)
R Edwardes (Executive Vice President Development)(4)
P Moore (Executive Vice President Exploration)
G Roder (Executive Vice President Corporate Strategy and Planning)
V Santostefano  (Chief Operations Officer)(5)
L Tremaine (Executive Vice President and Chief Financial Officer)

non-executive directors
M A Chaney (Chairman)
M A Cilento
F Cooper(6)
E Fraunschiel(7)
C M Haynes 
A Jamieson 
P J M H Jungels(8)
D I McEvoy
S Ryan(9)

(1)  On 23 February 2012 Mr Cole was appointed to the position of Executive Director and 

Executive Vice President, Corporate and Commercial. He previously held the position of 
Executive Vice President Commercial and General Counsel and Joint Company Secretary.

(2)  On 19 June 2012 Mr Ahmed was appointed to the position of Executive Vice President 
Technology. He previously held the position of Executive Vice President Development.

(3) On 10 May 2012 Mr Della Martina departed from Woodside.
(4) On 7 May 2012 Mr Edwardes joined Woodside and became key management personnel.

(5) On 1 May 2012 Mr Santostefano was appointed to the position of Chief Operations 
Officer. He previously held the position of Executive Vice President Production.

(6) Effective 1 February 2013 Mr Cooper was appointed a non-executive director of Woodside.
(7) On 28 February 2013 Mr  Fraunschiel will retire as a non-executive director of Woodside.
(8) On 7 December 2012 Dr Jungels retired as a non-executive director of Woodside.
(9) On 6 December 2012 Dr Ryan was appointed a non-executive director of Woodside.

executive remuneration

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; 

proportion of remuneration at risk

The target allocation of remuneration between fixed remuneration 
and VAR for Woodside’s executives is shown in Table 2 on this 
page. 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. 

table 2 - Allocation of executive remuneration between 
fixed and variable annual reward

position

not at risk

fixed Annual 
Reward

At risk

variable Annual Reward

stA

30%

ltA

40%

 aligns executive incentive rewards with the creation of value for 

ceo

30%

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 structure

Woodside’s remuneration structure for executives has several 
components:

 Fixed remuneration - the ‘not at risk’ component  which 

includes base salary, superannuation contribution and other 
allowances such as motor vehicle and health insurance. Fixed 
remuneration 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 EIP and 
comprises:

 Short-term award (detailed on page 56);

 Long-term award (detailed on page 56);

 Participation in general employee share plans; and

 Participation in retention plans from time to time.

executives

45%-50%

30%-33%

20%-22%

executive incentive plan

The short-term and long-term awards which are described in 
more detail below are delivered through the EIP. The EIP aims 
to reward executives for meeting or exceeding their individual 
performance targets, while at the same time linking their reward 
to the creation of long-term sustainable wealth for shareholders.

Under the EIP executives may receive a VAR which is based on a 
percentage of an executive’s fixed remuneration. This percentage 
is determined by the Board with reference to market comparator 
data and the scope of the executive’s role. 

VAR has two elements:

1.  The STA (which links remuneration to short-term performance) 

which is delivered two thirds in cash and one third as a 
deferred equity award the vesting of which is dependent on 
three years continuous service; and

2.  The LTA (which links remuneration to long-term performance) 
which is delivered as a grant of variable pay rights, the vesting 
of which is dependent on service and total shareholder return 
on Woodside shares relative to two identified peer groups 
(RTSR tested VPRs).

Woodside Petroleum Ltd.  |  Remuneration Report   55

short-term award 
The STA is determined by reference to both individual 
performance and a company scorecard which is set and approved 
annually by the Board (Scorecard). 

The Scorecard for 2012 was based on four equally weighted 
measures:
 safety and environmental factors;

 production;

 operating expenditure; and

 Woodside’s one year total return to shareholders, ranked against 
an international peer group (STA Peer Group, see Table 7 on 
page 61). 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 measures for the Scorecard were chosen because of the 
impact they have on shareholder value. The specific measurable 
targets related to each performance measure are approved by the 
Board at the commencement of the performance year.

For the 2012 performance year Woodside exceeded its targets 
on three of the four equally weighted scorecard measures which 
resulted in an overall scorecard multiple of 1.27 out of a maximum 
of two. In summary:
 Production volume achieved for the 2012 year exceeded the 

production target falling within the upper 10% of the potential 
production range which resulted in a scorecard multiple of 1.8 
out of a maximum of two, weighted at 25%;

 Woodside achieved a better than budget performance on 

operating cost which resulted in a scorecard multiple of 1.49 
out of a maximum of two, weighted at 25%; 

 Woodside’s good day frequency measure for health safety 

and environment tracked below target. The resulting scorecard 
multiple was 0.4 out of a maximum of two, weighted at 25%; and

 Woodside achieved fourth place in the STA peer group of 12, 

which resulted in a scorecard multiple of 1.4 out of a maximum 
possible of two, weighted at 25%.

The total STA available for all participating executives is pooled in 
each pool group by adding the target STA 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 in that pool. Therefore 
the potential value of the STA for an individual executive is in part 
dependent on the performance rating of the other executives in 
the pool. 

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:
 health and safety (e.g. total recordable case frequency, high 

potential incident frequency);

 environment (e.g. greenhouse gas emissions, flared gas); 

 human resources (e.g. voluntary turnover);

 financial (e.g. revenue, operating costs, earnings before interest 
and tax, return on average capital employed, production costs, 
drilling costs); and

 operational (e.g. production volumes, project progress).

56   Woodside Petroleum Ltd.  |  2012 Annual Report

These KPIs are chosen because they align individual performance 
with the achievement of Woodside’s business plan and 
objectives.

Each executive receives a performance rating based upon the 
assessment of their performance and demonstrated values 
and behaviour. This assessment is conducted by the CEO and 
approved by the Committee. This rating is then used to determine 
the short-term award (if any). 

The short-term award for a performance year is delivered two 
thirds in cash and one third as deferred equity. For the 2012 
performance year the deferred equity component will be 
delivered in the form of restricted shares. Participants will receive 
any dividends paid on their restricted shares after they have 
been allocated. The deferred portion of STA made in respect of 
performance years 2008 to 2011 were delivered in the form of 
Time-tested VPRs. 

Generally, vesting of the deferred STA is subject to the executive’s 
employment not being terminated with cause, or by resignation 
for three years after allocation. The deferred STA may vest 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. 
Deferred STA granted will also generally vest upon redundancy, 
retirement or the cessation of a fixed term employment contract. 

There are no further performance conditions for vesting of 
deferred STA.

A summary of the terms of deferred STA awarded to key 
management personnel is provided in Table 10 on page 61. 
Details of restricted shares awarded to KMP are provided in Table 
12 on page 62. Details of Time-tested VPRs awarded for previous 
performance periods are provided in Table 11 on page 62. No 
amount is payable by the executives on the grant or vesting of 
either restricted shares or Time-tested VPRs.

long-term award (ltA) 2012
The LTA for the 2012 performance year is granted in the form of 
variable pay rights, the vesting of which is linked to service and 
total shareholder return. A variable pay right is a right to receive 
a fully paid ordinary share in Woodside, subject to satisfaction of 
vesting conditions. The number of variable pay rights awarded 
under the EIP for long-term award purposes for the 2012 
performance year is calculated by dividing the value of the award 
by the fair value of a variable pay right (as calculated in accordance 
with the relevant accounting standards).

The RTSR-tested VPRs are divided into two tranches which will 
each be subject to a separate relative total shareholder return 
(RTSR) performance hurdle tested over a four or five year period.

One tranche weighted at 33% will be tested against a comparator 
group that comprises the entities within the S&P/ASX 50 index 
at 7 December 2012. The other tranche, weighted at 67%, will 
be tested against an international group of oil and gas companies. 
The oil and gas companies used for the 2012 performance year 
are set out in Table 8 on page 61.

RTSR was chosen in order to ensure that Woodside’s Executives’ 
remuneration is aligned with the company’s performance in 
relation to the performance of peer companies. 

The RTSR in respect of Woodside and both peer groups is 
calculated by an external advisor in accordance with the EIP 
rules on the fourth 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 61. Any RTSR-tested VPRs 
which do not vest at this time are subject to a second RTSR test 
on the fifth anniversary of the allocation date, but further vesting 
in accordance with the schedule will only occur if Woodside 

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONachieves a superior RTSR ranking at the second test date. Any 
RTSR-tested VPRs that do not vest on the fifth anniversary lapse. 

RTSR-tested VPRs will lapse if the executive’s employment is 
terminated with cause, or by resignation, prior to vesting. 

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 a fixed term 
employment contract of a participant RTSR-tested VPRs continue 
in the plan and remain subject to the normal performance 
measures. 

long-term awards 2008 – 2011
The LTA for the performance years 2008 to 2011 inclusive was 
granted in the form of variable pay rights, the vesting of which is 
linked to service and total shareholder return. 

The vesting of the 2008 to 2011 RTSR-tested VPRs is conditional 
on a satisfactory ranking of Woodside’s RTSR, as calculated under 
the EIP rules, over a three or four year period in comparison with 
an international peer group. The international oil and gas LTA Peer 
Group for the grant of RTSR-tested VPRs for the performance 
years 2008 to 2011 is set out in Table 7 on page 61. 

The RTSR in respect of Woodside and the peer group is 
calculated by an external advisor 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 6 on page 61. If no RTSR-tested VPRs vested at 
the first test then the award is subject to a second RTSR test on 
the fourth anniversary of the allocation date. Any RTSR-tested 
VPRs that do not vest on the fourth anniversary lapse. 

RTSR-tested VPRs will lapse if the executive’s employment is 
terminated with cause, or by resignation, prior to vesting. 

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 a fixed term 
employment contract of a participant RTSR-tested VPRs continue 
in the plan and are subject to the normal vesting. 

variable pay rights
The Board has a discretion to satisfy variable pay rights that vest 
in cash rather than shares (although participants in the EIP cannot 
elect to receive one or the other). 

The shares used to satisfy vested variable pay rights may be 
acquired through on market purchase or by subscription. If the 
Board exercises its discretion to satisfy vested variable pay rights 
in cash, the cash amount will be based on the market value of a 
Woodside share at the vesting date calculated by reference to the 
Volume Weighted Average Price (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.

A summary of the terms and conditions of VPRs under each 
award made to executives under the EIP is provided in Table 9  
on page 61. A summary of executives’ interests in Time-tested 
VPRs and RTSR-tested VPRs are in Tables 11 and 13 on pages  
62 and 63.

ceo remuneration

Mr Coleman’s remuneration is governed by his contract of 
employment which, in summary, for 2012 is comprised of:
 30% fixed remuneration;

 30% short-term award component; and 

 40% long-term award component. 

short-term award
The grant of an STA to the CEO is determined by the Scorecard 
and individual performance as determined by the Board. The 
Scorecard and performance against the scorecard measures is 
described on page 56 of this report under the section related to 
executive Short-term Award.

Each year the Board determines and documents the factors which 
will be used to assess the annual performance of the CEO.

The individual performance of the CEO is reviewed by the Board 
against the following factors which were chosen because of their 
impact on shareholder value:
 setting and pursuing the growth agenda;

 achieving effective execution;

 building enterprise and organisational capacity;

 enhancing culture and reputation; and

 ensuring shareholder focus.

At the completion of the performance year each Board member 
contributes to the documented review of the CEO’s performance 
for that year. 

The STA for the CEO is calculated by multiplying the CEO’s fixed 
remuneration by the scorecard multiple and the CEO’s individual 
performance factor.

For the 2012 performance year, STA is allocated as two-thirds 
cash and one-third Restricted Shares. Restricted Shares have the 
same terms and conditions as those awarded to other executives 
under the EIP as described on pages 55 to 57. 

long-term award
The LTA entitlement for the 2012 performance year will be 
allocated in February 2013 and will be subject to Relative Total 
Shareholder Return (RTSR) testing in February 2017. The vesting 
conditions for the LTA allocation reflect those contained in the EIP 
as outlined on page 55 and summarised in Table 9 on page 61 in 
respect of the 2012 EIP allocation.

A summary of the CEO’s equity awards is provided in Tables 11 
to 13 on pages 62 and 63.

sign-on bonus
Mr Coleman was awarded a one-off sign on incentive with a 
grant date of 30 May 2011 to recognise certain rights he was 
giving up with his former employer. Woodside acquired 66,004 
Woodside Petroleum Ltd shares which are held in trust for Mr 
Coleman. The sign-on award was structured such that one third 
of these shares vest on each anniversary after the date of his 
appointment. In accordance with the award rules one third of 
the shares vested on 30 May 2012 being the first anniversary of 
Mr Coleman’s employment. The fair value of each of the shares 
awarded is USD$49.19. Any unvested entitlements will be 
forfeited if Mr Coleman’s employment is terminated for cause or 
by his resignation. There are no performance conditions attached 
to this award.

Woodside Petroleum Ltd.  |  Remuneration Report   57

General employee share plans

historical plans

Woodside has a history of providing employees with the 
opportunity to participate in ownership of shares in the Company. 
This has supported staff retention and alignment of employees 
with shareholder interests. As part of the strategy to attract, retain 
and motivate employees, the Board approved the introduction 
from November 2011 of a broad-based, long-term equity plan 
called the Woodside Equity Plan to recognise and reward the 
commitment of eligible employees.

Woodside equity plan

The Woodside Equity Plan (WEP) is available to all Australian 
based permanent employees including executives, other than the 
CEO and any executive director. Woodside’s intention is to enable 
eligible employees to build up a holding of equity in the Company 
as they progress through their career at Woodside. 

The number of equity rights (ERs) offered to each eligible 
employee is calculated with reference to salary and performance 
as assessed under the performance review process as described 
on page 56 under the heading Short-term Award. There are no 
further ongoing performance conditions upon allocation of each 
individual’s ERs. The linking of performance to an allocation allows 
Woodside to recognise and reward eligible employees for high 
performance. Participants do not make any payment in respect of 
the ERs at grant nor at vesting.

Eligible participants receive an allocation of ERs. Each ER entitles 
the participant to receive a Woodside share on the vesting date 
three years after the effective date. ERs may vest prior to the 
vesting date on a change of control or on a pro rata basis, at the 
discretion of the CEO, limited to the following circumstances; 
redundancy, retirement (after six months participation), death, 
termination due to medical illness or incapacity or total and 
permanent disablement of a participating employee. An employee 
whose employment is terminated by resignation or for cause prior 
to the vesting date will forfeit all of their ERs.

Participants in the WEP 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. 

Table 16 on page 65 provides a summary of KMP executives’ 
interests in ERs under the WEP. 

During 2012 the Woodside Employee Equity Plan 2009 – 2012 
and the Woodside Share Purchase Plan were formally ended. 
Details of the KMP executives’ participation in these plans are 
provided in Tables 14 and 15 on page 64.

contracts for Kmp executives 

Each KMP executive has a contract of employment. Table 3 
below contains a summary of the key contractual provisions of the 
contracts of employment for the KMP 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 3 below. Since 2009 
new executive contracts 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.

non-executive directors

Remuneration policy

Woodside’s Remuneration Policy for non-executive directors aims 
to attract, retain, motivate and to 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 
Human Resources & Compensation Committee based on advice 
from external remuneration consultants, Mercer Australia Pty Ltd 
(Mercer) and 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 and committee fees were increased 
with effect from 1 July 2012 in line with general movements in 
the comparator market as reported by Mercer. 

table 3 - summary of contractual provisions for Kmp executives
name
contract duration

employing company

termination notice  
period company(1)(2)

termination notice  
period executive(2)

P Coleman

F Ahmed

R Cole

L Della Martina(3)

R Edwardes

P Moore

G Roder

V Santostefano

L Tremaine

Woodside Petroleum Ltd

Unlimited

Woodside Energy Ltd

Woodside Energy Ltd

Fixed Term Contract until  
13 February 2015
Unlimited

Woodside Energy Ltd

Unlimited

Woodside Energy Ltd

Woodside Energy Ltd

Woodside Energy Ltd

Woodside Energy Ltd

Fixed Term Contract until  
6 May 2015
Unlimited

Fixed Term until 
31 August 2017
Unlimited

Woodside Energy Ltd

Unlimited

12 months

12 months

12 months

12 months

6 months

12 months

6 months

12 months

12 months

6 months

6 months

6 months

6 months

6 months

6 months

6 months

6 months

6 months

(1) Termination provisions – Woodside may choose to terminate the contract immediately by making a payment equal to the ‘Company Notice Period’ fixed remuneration in lieu of notice.  

In the event of termination for serious misconduct or other nominated circumstances, executives are not entitled to this termination payment.

(2) On termination of employment, executives will be entitled to the payment of any fixed remuneration 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. 

(3) Mr Della Martina departed Woodside on 10 May 2012.

58   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONThe Woodside Petroleum Ltd shareholding guideline for non-
executive directors requires non-executive directors to hold a 
minimum holding of 2,000 Woodside Petroleum Ltd 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 Directors’ 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 forfeiture 
conditions. 

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 17 on page 65 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 or other executive directors, 
as the time spent on Board work and the responsibilities of Board 
membership are considered in determining the remuneration 
package provided as part of the normal employment conditions. 

The total remuneration paid to, or in respect of, each non-
executive director in 2012 is set out in Table 18 on page 65.

human Resources & compensation committee

The Human Resources & Compensation Committee (Committee) 
assists the Board to determine appropriate remuneration policies 
and structures for non-executive directors and executives. Further 
information on the role of the Committee is described in the 
Corporate Governance Statement set out in this Annual Report at 
pages 44 to 45. 

securities dealing policy

Woodside’s Securities Dealing Policy prohibits executives 
who participate in an equity-based 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 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 
director 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 47.

In addition to the restrictions imposed under the Securities 
Dealing Policy, key management personnel are prohibited by law 
from hedging any of their unvested entitlements or any of their 
vested entitlements that remain subject to a holding lock.

use of remuneration consultants

The Committee directly engages external advisors to provide 
input to the process of reviewing non-executive director, 
executive director and executive remuneration.

Following a formal tender process the Committee engaged 
PricewaterhouseCoopers to undertake a review of the EIP in 
2012 and to provide recommendations to the Committee in 
regard to the alignment of the plan with the Woodside values 
and strategies. The reports and recommendations prepared by 
PricewaterhouseCoopers were provided directly to the Human 
Resources & Compensation Committee chairman. The fee for the 
provision of the recommendations was $320,000. A statement 
was provided by PricewaterhouseCoopers to the Committee 
that the recommendations had been prepared free of undue 
influence from KMP. The Committee had full oversight of the 
review process and therefore it, and the Board, were satisfied the 
recommendations made by PricewaterhouseCoopers were free 
from undue influence by KMP. PricewaterhouseCoopers provided 
other services to Woodside including provision of taxation advice, 
support for international assignee movements and general 
financial and business consulting which resulted in a total of 
$3,852,790 fees being paid by Woodside.

Mercer Consulting provided market data and a recommendation 
in regard to non-executive director fees in May 2012. Mercer 
Consulting also provided market data and a recommendation in 
November 2012 in relation to the remuneration of the CEO. In 
both cases, the market data reports and the recommendations 
were provided directly to the Committee chairman. The fee for 
the provision of the reports was A$55,728. Mercer Consulting 
provided a statement to the Committee that the reports had been 
prepared free of undue influence from KMP. The Committee 
had full oversight of the review process and therefore it, and the 
Board, were satisfied that the recommendations made by Mercer 
Consulting were free from undue influence by KMP. Woodside’s 
superannuation arrangements for all participating employees are 
provided through Woodside’s participation in the Mercer Master 
Trust. The total of fees paid by Woodside to Mercer in respect of 
services provided directly to Woodside during 2012 was $35,605.

Reporting notes

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 in 
functional currency of the company 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 applicable exchange rate at 
the date of payment. Valuation of equity awards is converted at 
the spot rate applying when the equity award is granted. 

RtsR fair values

During the year, a review of the RTSR valuation model was 
conducted to ensure it accurately reflected the EIP rules.  
This review concluded that the fair values for the RTSR tested 
VPR’s that were granted from 2007 to 2011 had been overstated. 
The revised fair values are reflected in Table 13 on page 63. 
The impact on total compensation of executives as reported for 
the year ended 31 December 2011 is an aggregate decrease of 
$236,333.

Woodside Petroleum Ltd.  |  Remuneration Report   59

table 4 - compensation of Kmp executives for the year ended 31 december 2012 and 2011(1)(2)

fixed Annual Reward

variable Annual Reward

short term

post employment

short term 

share based 
payments

executives

year

salaries, 
fees and 
allowances

benefits and 
allowances (inc 
non-monetary)(3)

company 
contributions to 
superannuation

short-term 

award (cash)(5) share plans(6)(13) termination 

benefits

total 
remuneration

performance 
related

P Coleman, Chief 
Executive Officer(7),(8)

F Ahmed, Executive 
Vice President 
Technology(4),(9)

R Cole, Executive 
Director and 
Executive Vice 
President Corporate 
and Commercial

R Edwardes, 
Executive 
Vice President 
Development(10)

P Moore, Executive 
Vice President 
Exploration

G Roder, Executive 
Vice President 
Corporate Strategy 
and Planning(11)

V Santostefano, 
Chief Operations 
Officer

L Tremaine, 
Executive Vice 
President and Chief 
Financial Officer

L Della Martina, 
Executive Vice 
President Pluto(12)

$

2,255,383

1,375,146

$

84,745

38,730

658,746

275,676

473,808

363,684

$

16,693

9,569

-

-

$

2,380,590

978,550

280,857

$

2,559,787

1,430,807

(139,313)

285,544

622,667

825,899

27,609

38,722

556,487

439,589

2012

2011

2012

2011

2012

2011

726,382

12,516

23,065

415,541

398,011

2012

509,534

366,898

36,714

330,317

75,884

2011

2012

2011

-

-

405,206

380,764

62,241

41,352

2012

738,321

48,779

2011

2012

2011

2012

114,680

631,571

544,433

593,264

25,281

19,827

13,003

21,657

-

88,927

83,643

59,761

10,301

129,549

110,784

49,938

-

-

181,211

183,111

245,583

216,825

270,387

48,785

-

-

616,037

362,194

489,505

389,325

319,626

291,218

2011

503,712

12,516

27,584

294,809

221,457

$

$

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

7,297,198

3,832,802

1,075,966

1,745,703

1,888,306

1,575,515

1,319,347

-

983,168

905,695

1,166,033

150,262

1,786,309

1,350,040

1,445,582

1,060,078

2012

2011

173,641

455,952

23,933

51,148

38,201

100,309

-

(492,083)

355,266

98,958

248,483

290,747

-

1,146,639

%

68

63

13

52

53

52

31

-

43

44

27

-

56

51

54

49

-

47

(1)  The Australian dollar compensation paid during the year ended 31 December 2012 
was converted to US dollars at the average exchange rate of US$1:A$0.96586, and 
valuation of equity awards at 1 January 2012 was converted to US dollars at the spot 
rate of US$1:A$0.97885. The Australian dollar compensation paid during the year 
ended 31 December 2011 was converted to US dollars at the average exchange rate of 
US$1:A$0.96834, and valuation of equity awards at 1 January 2011 was converted to 
US dollars at the spot rate of US$1:A$0.97585.

(2)  KMP Executives in 2011 who are no longer KMP Executives in 2012 have not been 

disclosed.

(3)  Reflects the value of allowances and benefits including but not limited to travel, motor 

vehicle and health insurance.

(4)  As a non-resident for Australian tax purposes Mr Ahmed has elected to receive a 

cash payment in lieu of all superannuation contributions, in accordance with the 
Superannuation Guarantee (Administration) Act 1992. The cash payment is subject to 
(PAYG) income tax and paid as part of his normal monthly salary. The amount is included 
in salaries, fees and allowances.

(5)  The amount represents the short-term incentive earned in the respective year, which is 

(6) 

actually paid in the following year.
‘Share plan’ incorporates all equity based plans. In accordance with the requirements 
of AASB 2 Share-based Payment, the fair value of rights as at their date of grant has 
been determined by applying the Black-Scholes option pricing technique or binomial 
valuation method combined with a Monte Carlo simulation with the exception of Mr 
Ahmed’s 2008 VPR’s which are to be settled in cash as a result of his international 
secondment.  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. 

(7)  Mr Coleman commenced with Woodside on 30 May 2011. 
(8)  On Mr Coleman’s commencement 66,004 Woodside Petroleum Limited shares were 

acquired and held in trust for Mr Coleman. Details were provided under the heading sign-
on bonus in the 2011 Remuneration Report. The proportionate fair value for the shares is 
included  in the Share-based Payments.

(9)  Mr Ahmed’s 2011 share-based payment amortisation expense was accelerated as his 
contract was due to expire on the 13 February 2012 and details of an extension had not 
been finalised at the time of reporting. Mr  Ahmed’s contract has since been extended 
to the 13 February 2015. The 2012 share-based payment amortisation expense has been 
adjusted accordingly.

(10)  Mr Edwardes commenced with Woodside on 7 May 2012.
(11)  On 27 October 2011 Mr Roder was appointed to KMP. Mr Roder was engaged as a third 
party contractor through Energy Resourcing Australia, he transferred to a Fixed Term 
contract on 1 September 2012.

(12)  On 10 May 2012  Mr Della Martina departed Woodside. The Australian dollar 

compensation paid for the period from 1 January 2012 to 10 May 2012 was converted to 
US dollars at the average exchange rate of US$1:A$0.95450.

(13)  2011 comparatives have been appropriately restated to reflect the revised fair values. 
The impact on total compensation of executives as reported for the year ended  
31 December 2011 is an aggregate decrease of $236,333.

60   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONeXecutive incentive plAn

table 5 - vesting schedule for RtsR-tested vpRs awarded for the 2012 performance year

Woodside RtsR percentile position within peer Group
Less than 50th percentile
Equal to 50th percentile
Equal to 75th percentile

Vesting between these percentile points is on a pro rata basis. 

vesting of RtsR-tested vpRs
no vesting
50% vest
100% vest

table 6 - vesting schedule for RtsR-tested vpRs awarded for the performance years 2008 to 2011

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. While a VPR generally only confers an entitlement to a single share on vesting (or its cash value), when greater than 100% 
vesting is achieved additional shares are allocated in respect of each RTSR-tested VPR to achieve the necessary uplift.

vesting of RtsR-tested vpRs
no vesting
50% vest
100% vest
150% vest (i.e. 50% uplift for topping LTA Peer Group)

table 7 - stA peer Group and ltA peer Group for 
performance years 2008 to 2011(1)

table 8 - ltA peer Group 2012 performance year – 
international oil and Gas 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
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 
LTA awards made in February 2009, leaving 10 comparator companies. For the 2009, 
2010 and 2011 Performance Years Inpex Corporation has been added to the LTA Peer 
Group. 

Apache Corporation
Anadarko Petroleum Corporation
BG Group PLC
ConocoPhillips
ENI S.p.A
Hess Corporation
Inpex Corporation
Marathon Oil Company
Murphy Oil Corporation
Oil Search Limited
Origin Energy Limited
Pioneer Natural Resources Company
Repsol YPF, S.A
Santos Ltd
Statoil ASA
Talisman Energy Inc
Tullow Oil PLC

table 9 - summary of terms and conditions of unvested RtsR tested vpRs

The following table summarises the terms and conditions of the RTSR tested VPRs awarded for performance years 2012, 2011, 2010  
and 2009.

terms and conditions

2012 vpR allocation

2011 vpR allocation

2010 vpR allocation

2009 vpR allocation

Allocation Date

22 February 2013

1 March 2012

25 February 2011

5 March 2010

Pricing Date

Grant Date

Allocation Price(4)

Vesting Date(1)

Retesting Date

7 December 2012

31 December 2011

31 December 2010

31 December 2009

1 January 2012

1 January 2011

1 January 2010

1 January 2009

A$19.65

A$31.93

A$42.78

A$47.86

22 February 2017

1 March 2015

25 February 2014

5 March 2013

22 February 2018(2)

1 March 2016(3)

25 February 2015(3)

5 March 2014(3)

(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)  Any VPRs that do not vest as a result of the first test will be re-tested based on a five year performance period. Retesting is not applicable in respect of Time-tested VPRs.
(3)  Retesting is applied to the RTSR tested VPRs if the RTSR threshold is not achieved at the vesting date.
(4)  For allocations made for the years prior to 2012, the allocation price was determined by calculating the Volume Weighted Average Price of Woodside shares for the trading days in the 

month of December of the respective performance year. For the 2012 performance year, the allocation price is the fair value of a variable pay right, as at 7 December 2012, as determined 
by the relevant accounting standard.

table 10 - summary of terms and conditions of unvested deferred stA

The following table summarises the terms and conditions of the deferred short-term award for performance years 2012, 2011, 2010  
and 2009.

terms and conditions

2012 allocation

2011 allocation

2010 allocation

2009 allocation

Deferral Instrument

Restricted Shares

Time-tested VPRs

Time-tested VPRs

Time-tested VPRs

Allocation Date

22 February 2013

1 March 2012

25 February 2011

5 March 2010

Pricing Date

Grant Date

Volume Weighted 
Average Price

Vesting Date(1)

31 December 2012

31 December 2011

31 December 2010

31 December 2009

1 January 2012

1 January 2011

1 January 2010

1 January 2009

A$34.09

A$31.93

A$42.78

A$47.86

22 February 2016

1 March 2015

25 February 2014

5 March 2013

(1)  Provision is made for accelerated vesting in certain events such as total and permanent disability, death or a change in control of Woodside.

Woodside Petroleum Ltd.  |  Remuneration Report   61

table 11 - summary of Kmp executives’ interests in time-tested vpRs(1) 

name

Allocation date vesting date(2) Awarded but 

March 2012

March 2015

14,791

not vested

P Coleman

F Ahmed

February 2009

February 2012

December 2009(4)

February 2012

March 2010

March 2013

February 2011

February 2014

March 2012

March 2015

R Cole

February 2009

February 2012

December 2009(4)

February 2012

March 2010

March 2013

February 2011

February 2014

March 2012

March 2015

P Moore(5)

February 2009

February 2012

December 2009(4)

February 2012

February 2011

February 2014

March 2012

March 2015

V Santostefano

February 2009

February 2012

December 2009(4)

February 2012

March 2010

March 2013

February 2011

February 2014

March 2012

March 2015

L Tremaine(6)

February 2009

February 2012

December 2009(4)

February 2012

March 2012

March 2015

L Della Martina(7)

February 2009

February 2012

December 2009(4)

February 2012

March 2010

March 2013

February 2011

February 2014

March 2012

March 2015

-

-

3,692

2,415

4,330

-

-

4,599

4,302

6,301
-
-
2,018

2,776
-
-
3,786

2,286

5,492
-
-
4,470
-
-
2,950

2,753

3,768

vested in  
2012

% of total 
vested

lapsed in  
2012

fair value(3) of vpRs by  
performance year

-
3,245

27
-
-
-
4,543

38
-
-
-
1,344

11
-
-
2,910

24
-
-
-
1,252

10
-
2,916

24
-
-
-

-
100

100
-
-
-
100

100
-
-
-
100

100
-
-
100

100
-
-
-
100

100
-
100

100
-
-
-

-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,950

2,753

3,768

38.87

31.26

31.26

29.57

38.32

38.87

39.81

39.92

29.57

38.32

38.87

39.81

39.92

38.32

38.87

39.81

39.92

29.57

38.32

38.87

39.81

39.92

38.87

39.81

39.92

29.57

38.32

38.87

(1)   For valuation purposes all VPRs are treated as if they will be equity settled, with the 

(4)  Additional allocation of VPRs to each tranche of granted VPRs, following renounceable 

exception of Mr Ahmed’s 2008 VPRs which are to be settled in cash as a result of his 
international secondment. This fair value for the cash settled awards is recalculated at 
the end of every reporting period. In 2011 the fair value of the 2008 cash settled VPRs 
was $31.26.

(2)  Vesting date and exercise date are the same. Vesting is subject to satisfaction of vesting 

(3) 

conditions.
In accordance with the requirements of AASB 2 Share-based Payment, 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.

equity rights issue by the company.

(5)  Mr Moore did not meet the definition of KMP under AASB 124 for years prior to 2010. 

Previous years comparative figures are not shown.

(6)  Mr Tremaine did not meet the definition of KMP under AASB 124 for years prior to 2011. 

Previous years comparative figures are not shown.

(7)  A total of 9,471 Time-tested VPRs with a value of A$316,331 were forfeited on Mr Della 

Martina’s departure on 10 May 2012.

table 12 - summary of Kmp executives’ interests in restricted shares(1) 

name

Allocation date

vesting date(1)

Awarded but 
not vested

vested in  
2012

% of total 
vested

lapsed in  
2012

value(2) of restricted shares  
by performance year

P Coleman

February 2013

February 2016

33,720

F Ahmed

February 2013

February 2016

R Cole

February 2013

February 2016

R Edwardes

February 2013

February 2016

P Moore

G Roder

February 2013

February 2016

February 2013

February 2016

V Santostefano February 2013

February 2016

L Tremaine

February 2013

February 2016

3,978

7,882

4,710

2,566

3,829

8,726

6,933

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

30.98

30.98

30.98

30.98

30.98

30.98

30.98

30.98

(1)  Vesting date and exercise date are the same. Vesting is subject to satisfaction of vesting conditions.
(2)  The modifications made to the EIP only affect awards made from the 2012 performance year onwards. The fair value of the awards allocated in February 2013 at the grant date based 

on the original plan rules was $28.22, the fair value at modification date under the original rules was $33.19 and the fair value at the modification date after the changes was $35.95. 
Accordingly, the value of the restricted shares is represented by the sum of the grant date fair value and the incremental benefit on modification date amounting to $2.76.

62   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONtable 13 - summary of Kmp executives’ interests in RtsR tested vpRs(1) 

name

Allocation date

vesting date 
(2),(3)

Awarded but not 
vested

vested in  
2012

% of total 
vested

lapsed in  
2012(4)

fair value(5),(9), (10)  
of vpRs

P Coleman

March 2012

March 2016

February 2013

February 2018

F Ahmed

March 2008

March 2012

December 2009

March 2012

February 2009

February 2012

December 2009

February 2012

March 2010

March 2014

February 2011

February 2015

March 2012

March 2016

February 2013

February 2018

R Cole

March 2008

March 2012

R Edwardes

P Moore(6)

December 2009

March 2012

February 2009

February 2012

December 2009

February 2012

March 2010

March 2014

February 2011

February 2015

March 2012

March 2016

February 2013

February 2018

February 2013

February 2018

March 2008

March 2012

December 2009

March 2012

February 2009

February 2012

December 2009

February 2012

February 2011

February 2015

March 2012

March 2016

February 2013

February 2018

G Roder

February 2013

February 2018

V Santostefano

March 2008

March 2012

December 2009

March 2012

February 2009

February 2012

December 2009

February 2012

March 2010

March 2014

February 2011

February 2015

March 2012

March 2016

February 2013

February 2018

L Tremaine(7)

March 2008

March 2012

December 2009

March 2012

February 2009

February 2012

December 2009

February 2012

March 2012

March 2016

February 2013

February 2018

L Della Martina(8)

March 2008

December 2009

March 2012

March 2012

February 2009

February 2012

December 2009

February 2012

March 2010

March 2014

February 2011

February 2015

March 2012

March 2016

51,769

150,665

-

-

-

-

6,017

7,042

9,768

16,503

-

-

-

-

6,305

7,526

10,661

19,430

11,923

-

-

-

-

4,412

6,264

10,788

5,774

-

-

-

-

5,190

6,665

9,293

18,259

-

-

-

-

7,564

14,631

-

-

-

-

4,045

6,020

8,500

-

-

-

-

4,119

34

-

-

-

-

-

-

4,325

36

-

-

-

-

-

-

-

1,208

10

-

-

-

-

-

-

2,770

23

-

-

-

-

-

-

1,126

10

-

-

-

-

2,776

23

-

-

-

-

-

-

-

50

50

-

-

-

-

-

-

50

50

-

-

-

-

-

-

-

50

50

-

-

-

-

-

-

50

50

-

-

-

-

-

-

50

50

-

-

-

-

50

50

-

-

-

-

-

2,050

17

4,119

34

-

-

-

-

4,862

40

4,325

36

-

-

-

-

-

1,541

13

1,208

10

-

-

-

-

3,465

29

2,770

23

-

-

-

-

1,422

12

1,126

9

-

-

3,481

29

2,776

23

4,045

6,020

8,500

21.36

15.90

0.21

0.21

7.44

7.46

14.82

20.02

21.36

15.90

14.36

22.94

19.08

25.53

14.82

20.02

21.36

15.90

15.90

14.36

22.94

19.08

25.53

20.02

21.36

15.90

15.90

14.36

22.94

19.08

25.53

14.82

20.02

21.36

15.90

14.36

22.94

19.08

25.53

21.36

15.90

14.36

22.94

19.08

25.53

14.82

20.02

21.36

(1)  For valuation purposes all VPRs are treated as if they will be equity settled, with the 
exception of Mr Ahmed’s 2007 and 2008 VPRs which are to be settled in cash as a 
result of his international secondment. The fair value for the cash settled awards is 
recalculated at the end of every reporting period. In 2011 the fair value of the 2007 
and 2008 cash settled VPR’s was $0.21, $7.44 and $7.46 respectively.

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.

(2)  Vesting date and exercise date are the same. Vesting is subject to satisfaction of 

(6)  Mr Moore did not meet the definition of KMP under the AASB 124 for the years prior 

vesting conditions.

to 2010. Comparative figures are not shown.

(3)  Vesting date is 14 March 2012 in respect of March 2008 allocations, on 27 February 

(7)  Mr Tremaine did not meet the definition of KMP under the AASB 124 for the years 

2012 in respect of February 2009 allocations, on 5 March 2013 or 5 March 2014 in 
respect of March 2010 allocations, 25 February 2014 or 25 February 2015 in respect 
of February 2011 allocations and 1 March 2015 or 1 March 2016 in respect of March 
2012 allocations. Vesting date is 22 February 2017 or 22 February 2018 in respect of 
March 2013 allocations.

(4)  The 2007 performance year RTSR-tested VPRs lapsed as they did not meet the vesting 
conditions. The VPRs lapsed on 14 March 2012 and the Share Price at that date was 
$35.59. For the 2008 performance year Woodside’s TSR was at the 50th Peer Group 
Percentile, therefore 50% RTSR-tested VPRs vested and 50% lapsed. The VPRs lapsed 
on 27 February 2012 and the Share Price at that date was $37.16.
In accordance with the requirements of AASB 2 Share-based Payment, 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 

(5) 

prior to 2011. Comparative figures are not shown.

(8)  A total of 18,565 RTSR-tested VPRs with a value of A$620,071 were forfeited on  

Mr Della Martina’s departure on 10 May 2012.

(9)  The modifications made to the EIP were made on the 7 December 2012 where 
the share price was A$34.22. The modification only affects awards made from 
the 2012 performance year onwards. The fair value of the awards allocated in 
February 2013 at the grant date based on the original plan rules was $15.90, the 
fair value at modification date under the original rules was $21.64 and the fair value 
at the modification date after the changes was $20.64. Accordingly, there was no 
incremental benefit from the modification.

(10)  A review of the RTSR valuation model was conducted to ensure it accurately reflects 
the EIP rules. Prior year fair values have been appropriately restated to reflect the 
modification.

Woodside Petroleum Ltd.  |  Remuneration Report   63

Retention And GeneRAl employee shARe plAns

table 14 - summary of Kmp executives’ interests in shares under the Wspp(1)(2)

name

R Cole

P Moore(7)

V Santostefano

L Della Martina(8)

Wspp  
year
2012

2011

2010

2009 WSPP(4)

2008 WSPP(5)

2007 WSPP(6)

2011

2010

2012

2011

2010

2009 WSPP(4)

2008 WSPP(5)

2007 WSPP(6)

2012

2011

2010

2009 WSPP(4)

2008 WSPP(5)

opening  
balance
395

shares purchased  
under Wspp
-

matching  
shares(3)
-

vested  
shares
395

lapsed /  
forfeited
-

closing  
balance
-

769

893

498

124

-

234

358

395

769

893

498

124

-

395

769

893

498

124

-

-

158

173

62

-

-

-

-

-

158

173

62

-

-

-

158

173

-

-

237

201

62

-

-

-

-

-

237

201

62

-

-

-

237

201

374

124

-

-

-

234

124

395

374

124

-

-

-

395

374

124

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

395

769

893

498

124

-

234

-

395

769

893

498

124

-

395

769

893

498

(1)  For a full summary of executives interests in shares see note 28b to the financial report on page 125.
(2)  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. Woodside provided funds 

to the WSPP Trustee to buy additional Woodside Shares (matching shares) on Market.

(3)  To become entitled to the matching shares funded by Woodside, the participant had to remain a Woodside employee for the three year qualification period.
(4)  2009 WSPP refers to the purchases made in 2009 for the 2008/09 Plan. The matching shares for the 2009 WSPP with a grant date of 2 Janaury 2009 had a fair value of $31.46 and a 

grant date of 1 April 2009 had a fair value of $34.49 per share.

(5)  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 with a grant date of  
3 March 2008 had a fair value of $49.97, with a grant date of 13 June 2008 had a fair value of $56.16 and with a grant date of 1 October 2008 has a fair value of  $47.19 per share.

(6)  2007 WSPP refers to the plan for the 2007/08 Plan Year granted in 2007. The matching shares for the 2007 WSPP with a grant date of 27 November 2007 had a fair value of  

$43.11 per share. 

(7)  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 Della Martina did not meet the definition of KMP under AASB 124 for the 2007 year. Previous years comparative figures are not shown.

table 15  - summary of Kmp executives’ interests in equity Rights under the eep(1)

name

Grant date

F Ahmed

R Cole

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

L Tremaine

31 October 2009

L Della Martina(3)

31 October 2009

number of equity 
Rights granted

number of equity 
Rights which have 
lapsed/forfeited

number of equity 
Rights which have 
vested during 2012

fair value of  
equity Rights(2)

4,350

36

4,350

36

4,350

36

4,350

36

4,350

4,350

-

-

-

-

-

-

-

-

-

4,350

4,350

36

4,350

36

4,350

36

4,350

36

4,350

-

39.81

39.83

39.81

39.83

39.81

39.83

39.81

39.83

39.81

39.81

(1)  Under the EEP eligibility participants received a one-off allocation of Equity Rights entitling the participant to receive a Woodside share on the vesting date. There were no 

performance conditions attached. Participants did not make any payment in respect of the Equity Rights at grant nor at vesting.

(2)  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 received upon vesting in August 2012.

(3)  A total of 4,350 Equity Rights with a value of A$145,390 were forfeited on Mr Della Martina’s departure on 10 May 2012.

64   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONtable 16 - summary of Kmp executives’ interests in equity Rights under the Wep

name

Grant date

R Cole
P Moore

V Santostefano

L Tremaine

L Della Martina(2)

30 November 2011
30 November 2011
1 October 2012
30 November 2011
1 October 2012
30 November 2011
1 October 2012
30 November 2011

number of equity 
Rights granted

number of equity 
Rights which have 
lapsed/forfeited

number of equity Rights 
which have vested during 
2012

fair value of equity 
Rights(1)

1,830
1,830
2,000
1,830
2,000
1,830
2,000
1,830

-
-
-
-
-
-
-
1,830

-
-
-
-
-
-
-
-

30.49
30.49
31.99
30.49
31.99
30.49
31.99
30.49

(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)  A total of 1,830 Equity Rights with a value of A$61,122 were forfeited on Mr Della Martina’s departure on 10 May 2012.

table 17 - Annual base board and committee fees for non-executive directors

position

board

Audit & Risk 
committee

human Resources 
& compensation 
committee

sustainability 
committee

nominations 
committee

Chairman of the Board(1)
Non-executive directors(2) 
Committee Chairman
Committee Member

A$

679,200(3)
206,500(3)
-
-

A$

-
-
54,400(3)
27,100(3) 

A$

-
-
46,000(3)
23,000(3)

A$

-
-
46,000(3)
23,000(3)

A$

-
-
Nil
Nil

Inclusive of committee work.

(1) 
(2)  Board fees paid to non-executive directors, other than the Chairman.
(3)  Annual fee from 1 July 2012.

table 18 - total remuneration paid to non-executive directors in 2012 and 2011(1)

M A Chaney

M A Cilento

F C Cooper(2)

E Fraunschiel(3)

C Haynes

A Jamieson 

P J M H Jungels(4)

D I McEvoy

S Ryan(5)

cash salary and fees

pension super

salaries, fees and 
allowances

company contributions 
to superannuation

$

689,698

659,941 

255,162 

242,889 

-

287,672 

274,592 

278,127

155,712 

302,898

278,700 

326,670

332,451 

282,702

264,111 

19,132

-

$

62,073

59,395 

22,965

21,860 

-

25,891

24,713 

-

 -   

-

 -   

-

 -   

25,444

23,770 

1,722

-

total

$

751,771

719,336 

278,127

264,749 

-

313,563

299,305 

278,127

155,712 

302,898

278,700 

326,670

332,451 

308,146

287,881 

20,854

-

2012

2011

2012

2011

2012

2012

2011

2012

2011

2012

2011

2012

2011

2012

2011

2012

2011

(1)  The total remuneration for 2011 was converted at the average exchange rate of US$1:A$0.96834 and the 2012 total remuneration was converted at the average exchange rate of 

US$1:A$0.96586.

(2)  Effective 1 February 2013 Mr Cooper was appointed a non-executive director of Woodside.
(3)  On 28 February 2013 Mr Fraunschiel will retire as a non-executive director of Woodside.
(4)  Dr Jungels retired on 7 December 2012. The Australian dollar compensation paid for the period from 1 January 2012 to 7 December 2012 was converted to US dollars at the average 

exchange rate of US$1:A$0.96659.

(5)  Dr Ryan was appointed to the Board on 6 December 2012. The Australian dollar compensation paid for the period from 6 December 2012 to 31 December 2012 was converted to 

US dollars at the average exchange rate of US$1:A$0.95543.

Woodside Petroleum Ltd. |  Remuneration Report   65

 
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 32 to the Financial Report.

Based on advice provided by the Audit 
& Risk Committee, the directors are 
satisfied that the provision of non-audit 

66   Woodside Petroleum Ltd.  |  2012 Annual Report

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 pages 48 to 49.

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.

directors’ relevant interests in 
Woodside shares as at date of report

director

Relevant interest in shares

MA Chaney 
RJ Cole1,2,3
PJ Coleman2,3
MA Cilento
F Cooper
E Fraunschiel
CM Haynes
A Jamieson
DI McEvoy
SE Ryan

20,000
28,502
55,004
2,086
-
81,930
1,333
4,235
8,040
-

(1)  Mr Cole holds 1,830 equity rights under the Woodside 
Equity Plan, on the terms and conditions summarised 
in the Remuneration Report on page 58.

(2)  Messrs Cole and Coleman hold variable pay rights 
under Woodside’s Executive Incentive Plan, details 
of which are set out in the Remuneration Report on 
pages 62 to 63. 

(3)  Messrs Cole and Coleman will be allocated restricted 
shares under Woodside’s Executive Incentive Plan on  
22 February 2013, as set out in the Remuneration 
Report on page 62.

Signed in accordance with a resolution of 
the directors.

m A chaney, Ao 
Chairman 
Perth, Western Australia

20 February 2013

p j coleman 
Chief Executive Officer and  
Managing Director 
Perth, Western Australia

20 February 2013

Auditor’s independence 
declaration to the directors of 
Woodside petroleum ltd

In relation to our audit of the financial 
report of Woodside Petroleum Ltd for 
the year ended 31 December 2012, 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

R j curtin 
Partner 
Perth, Western Australia

20 February 2013

Liability limited by a scheme approved under 
Professional Standards Legislation.

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION2012 FinanciaL REPORT

consolidated income statement 

consolidated statement of comprehensive income 

consolidated statement of financial position 

consolidated statement of cash flows 

consolidated statement of changes in equity 

notes to and forming part of the Financial Report

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.  Parent entity information 

25.  Financial and capital risk management 

26.  Expenditure commitments  

27.  Employee benefits 

28.  Key management personnel compensation 

29.  Events after the end of the reporting period 

30.  Related party disclosures 

31.  Contingent liabilities and contingent assets 

32.  Auditor remuneration  

33.  Joint ventures 

34.  Associated entities 

35.  Subsidiaries  

36.  Corporate information  

Directors’ declaration 

independent audit report 

68

69

70

71

72

73

86

89

91

94

94

95

95

95

96

96

97

98

99

99

100

100

100

101

101

102

103

104

104

104

113

114

124

128

128

129

129

130

131

132

134

135

136

Woodside Petroleum Ltd. |  Financial Report    67

Consolidated income statement

For the year ended 31 December 2012

Operating revenue

Cost of sales

Gross profit

Other income

Other expenses

Profit before tax and net finance costs

Finance income

Finance costs

Profit before tax

Petroleum Resource Rent Tax expense

Income tax expense

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)

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.

2012
US$m

6,348

(2,618)

3,730

830

(765)

3,795

8

(145)

3,658

523

(1,137)

3,044

2,983

61

3,044

366

2011
US$m

4,802

(1,657)

3,145

97

(1,030)

2,212

10

(36)

2,186

(17)

(660)

1,509

1,507

2

1,509

190

68   Woodside Petroleum Ltd.  |  2012 annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONConsolidated statement of comprehensive income

For the year ended 31 December 2012

Profit for the year 

Other comprehensive income

Net change in fair value of available-for-sale financial assets

Companies voluntarily liquidated 

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.

2012
US$m

2011
US$m

3,044

1,509

(2)

-

(2)

(3)

(16)

(19)

3,042

1,490

2,981

61

3,042

1,488

2

1,490

Woodside Petroleum Ltd.  |  Financial Report   69

Consolidated statement of financial position

As at 31 December 2012

notes

2012
US$m

2011
US$m

7(a)
8
9(a)
10(a)
11(a)

9(b)
10(b)
11(b)
12
13
14
4(c)

15(a)
16(a)
17
19(a)
20

15(b)
16(b)
4(c)
18
19(b)
20

21(a)
21(b)
22
23

2,422
574
241
32
20
3,289

7
64
3
1,120
19,375
60
892
21,521
24,810

829
575
647
24
290
2,365

196
3,765
1,368
7
165
1,117
6,618
8,983
15,827

6,547
(44)
859
7,786
15,148
679
15,827

41
669
195
16
93
1,014

18
86
3
2,235
19,289
62
524
22,217
23,231

1,214
770
74
27
327
2,412

215
4,332
1,825
6
181
991
7,550
9,962
13,269

5,880
(67)
1,063
5,782
12,658
611
13,269

current assets
Cash and cash equivalents
Receivables
Inventories
Other financial assets
Other assets
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 liabilities
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

The accompanying notes form part of the Financial Report.

70   Woodside Petroleum Ltd.  |  2012 annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONConsolidated statement of cash flows

For the year ended 31 December 2012

cash flows from/(used in) operating activities
Profit after tax for the year 
Adjustments for:
Non-cash items

Depreciation and amortisation
Impairment of exploration and evaluation assets
Impairment/(reversal) of oil and gas properties and other assets
Unrealised foreign exchange loss/(gain)
Gain on disposal of exploration and evaluation assets
Loss/(gain) on disposal of oil and gas properties
Gain on disposal of investments
Change in fair value of derivative financial instruments
Change in fair value of other financial instruments
Net finance costs
Tax expense
Exploration and evaluation written off
Other

Changes in assets and liabilities

Decrease/(increase) in trade and other receivables
Increase in inventories
(Decrease)/increase in provisions
Increase/(decrease) in other assets and liabilities
(Decrease)/increase in trade and other payables

Cash generated from operations
Purchases of shares and payments relating to employee share plans
Interest received
Dividends received
Interest paid
Income tax paid
Petroleum Resource Rent Tax paid
Payments for restoration
net cash from operating activities

cash flows from/(used in) investing activities
Payments for capital and exploration expenditure
Proceeds from disposal of investments
Proceeds from disposal of exploration and evaluation assets
Proceeds from disposal of oil and gas properties
net cash from/(used in) investing activities

cash flows from/(used in) financing activities
(Repayments of)/proceeds from borrowings
Contributions from non-controlling interests
Proceeds from underwriters of Dividend Reinvestment Plan (DRP)
Dividends paid (net of DRP)
Dividends paid outside of DRP
net cash (used in)/from financing activities

net increase/(decrease) 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

2012
US$m

2011
US$m

3,044

1,509

1,217
26
131
3
(762)
7
(2)
10
-
137
614
129
63

23
(38)
(66)
12
(6)
4,542
(11)
5
5
(198)
(604)
(260)
(4)
3,475

(1,914)
7
2,068
-
161

(772)
67
320
(325)
(542)
(1,252)

2,384
41
(3)
2,422

664
14
(17)
(3)
(7)
(5)
-
5
(12)
26
677
176
59

(175)
(63)
250
(45)
13
3,066
(10)
10
4
(200)
(496)
(132)
-
2,242

(3,584)
-
16
35
(3,533)

172
194
648
(652)
-
362

(929)
963
7
41

Woodside Petroleum Ltd.  |  Financial Report   71

 
Consolidated statement of changes in equity

For the year ended 31 December 2012

y
l
l

u
f
d
n
a
d
e
u
s
s
i

s
e
r
a
h
s
d
i
a
p

d
e
v
r
e
s
e
r
s
e
r
a
h
S

e
r
a
h
s
e
e
y
o
p
m
e
r
o
f

l

s
n
a
l
p

s
t
i
f
e
n
e
b
e
e
y
o
p
m
E

l

e
v
r
e
s
e
r

y
c
n
e
r
r
u
c
n
g
i
e
r
o
F

e
v
r
e
s
e
r
n
o
i
t
a
l
s
n
a
r
t

t
e
n
f
o
e
g
d
e
H

e
v
r
e
s
e
r

t
n
e
m
t
s
e
v
n

i

r
i
a
f

t
n
e
m
t
s
e
v
n

i

e
v
r
e
s
e
r
e
u
l
a
v

i

s
g
n
n
r
a
e
d
e
n
i
a
t
e
R

l

f
o
s
r
e
d
o
h
y
t
i
u
q
E

t
n
e
r
a
p
e
h
t

note 21 
(a)

note 21 
(b)

note 22 note 22 note 22 note 22 note 23

g
n

i
l
l

o
r
t
n
o
c
-
n
o
n

t
s
e
r
e
t
n

i

l
a
t
o
T

y
t
i
u
q
e

at 1 January 2012

5,880

(67)

303

663

110

(13)

5,782

12,658

611

13,269

US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m

Profit for the year

Other comprehensive income

Total comprehensive income for the year

Non-controlling interest
Dividend Reinvestment Plan
Shares issued
Employee share plan purchases
Employee share plan redemptions
Share-based payments
Dividends paid

-

-

-

-
431
236
-
-
-
-

at 31 December 2012

6,547

-

-

-

-
-
(236)
(11)
270
-
-

(44)

-

-

-

-
-
-
-
(270)
68
-

101

-

-

-

-
-
-
-
-
-
-

-

-

-

-
-
-
-
-
-
-

-

2,983

2,983

61

3,044

(2)

(2)

-
-
-
-
-
-
-

-

(2)

-

(2)

2,983

2,981

61

3,042

-
-
-
-
-
-
(979)

-
431
-
(11)
-
68
(979)

7
-
-
-
-
-
-

7
431
-
(11)
-
68
(979)

663

110

(15)

7,786

15,148

679

15,827

At 1 January 2011

5,036

(57)

192

679

110

(10)

5,141

11,091

595

11,686

Profit for the year
Other comprehensive income
Total comprehensive income for the year

Non-controlling interest
Dividend Reinvestment Plan
Shares issued
Employee share plan purchases
Employee share plan redemptions
Share-based payments
Dividends paid

-
-
-

-
844
-
-
-
-
-

At 31 December 2011

5,880

-
-
-

-
-
-
(10)
-
-
-

(67)

The accompanying notes form part of the Financial Report.

-
-
-

-
-
-
-
-
111
-

-
(16)
(16)

-
-
-
-
-
-
-

-
-
-

-
-
-
-
-
-
-

-
(3)
(3)

1,507
-
1,507

1,507
(19)
1,488

-
-
-
-
-
-
-

-
-
-
-
-
-
(866)

-
844
-
(10)
-
111
(866)

2
-
2

14
-
-
-
-
-
-

1,509
(19)
1,490

14
844
-
(10)
-
111
(866)

303

663

110

(13)

5,782

12,658

611

13,269

72   Woodside Petroleum Ltd.  |  2012 annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 20 February 2013. 

Woodside Petroleum Ltd is a for-profit entity. The nature of the operations and principal activities of the Group are 
described in the Directors’ Report.

Except as disclosed below, the accounting policies adopted are consistent with those disclosed in the Annual Financial 
Report for the year ended 31 December 2011. Certain comparative information has been reclassified to be presented on 
a consistent basis with the current year’s presentation.

Changes in accounting policy and disclosures

The Group has adopted all new and amended Australian Accounting Standards and Interpretations effective from 
1 January 2012 including:

•	 AASB 1054 Australian Additional Disclosures

•	 AASB 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project 

[AASB 1, AASB 5, AASB 101, AASB 107, AASB 108, AASB 121, AASB 128, AASB 132 & AASB 134 and Interpretations 
2, 112 & 113]

New and amended Standards and Interpretations did not result in any significant changes to the Group’s  
accounting policies.

The Group has not elected to early adopt any other new or amended Standards or Interpretations that are issued but  
not yet effective (refer Note 1(af)).

(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.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. 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.

Woodside Petroleum Ltd.  |  Financial Report   73

Notes to and forming part of the Financial ReportFor the year ended 31 December 20121.  Summary of significant accounting policies (continued)

(c)  Basis of consolidation (continued)

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.

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.

Product revenue

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;

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; and

•	

revenue earned from LNG processing services is recognised when the services are rendered.

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.

74   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION1.  Summary of significant accounting policies (continued)

(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.

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.

Woodside Petroleum Ltd.  |  Financial Report   75

Notes to and forming part of the Financial ReportFor the year ended 31 December 20121.  Summary of significant accounting policies (continued)

(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

-

24-40

5-50

5-50

10-40

5-15

(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 costs 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 impairment 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. 

76   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION1.  Summary of significant accounting policies (continued)

(k)  Derivative financial instruments and hedge accounting (continued)

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.

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.

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. 

Woodside Petroleum Ltd.  |  Financial Report   77

Notes to and forming part of the Financial ReportFor the year ended 31 December 20121.  Summary of significant accounting policies (continued)

(l) 

Provision for restoration (continued)

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.

(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 prior to 2010

Prior to 1 January 2010, certain entities within the Group had a functional currency of Australian dollars as a result of the 
economic environment in which they were operating. For the period prior to the date of change in functional currency 
assets and liabilities of these entities were translated into the presentation currency of the Group (US dollars) at the rate 
of exchange ruling at the respective reporting dates. 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.

Hedge transactions

Derivatives and other financial instruments are used to hedge foreign exchange risk relating to certain transactions  
(refer to Note 1(k)).

Disposal of foreign operations

On disposal of a foreign operation, the proportionate share of exchange differences recognised in the foreign currency 
translation reserve relating to the particular foreign operation is recognised in the income statement.

78   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION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.

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.

Woodside Petroleum Ltd.  |  Financial Report   79

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012 
1.  Summary of significant accounting policies (continued)

(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.

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.

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.

(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.

80   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION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.

(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.

Woodside Petroleum Ltd.  |  Financial Report   81

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012 
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. This is 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.

(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.

82   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION1.  Summary of significant accounting policies (continued)

(ad)  carbon emissions

Carbon emission units purchased for compliance purposes under the Australian Carbon Pricing Mechanism are 
recognised at cost as an intangible asset. Carbon emission units granted by the Australian Government are recognised 
at nominal value (nil value).

An emissions liability is recognised as a provision when actual emissions exceed the emission units granted by 
the Australian Government. Any provision recognised is measured at the value of purchased units held, with any 
excess measured at the current market value of carbon units at the reporting date. The movement in the provision is 
recognised in the income statement.

(ae)  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.

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.

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. 

Woodside Petroleum Ltd.  |  Financial Report   83

Notes to and forming part of the Financial ReportFor the year ended 31 December 20121.  Summary of significant accounting policies (continued)

(ae)  critical accounting estimates, assumptions and judgements (continued)

PRRT - North West Shelf Project 

The Group’s accounting policy for PRRT is set out in Note 1(z). The application of this policy to the North West Shelf 
Project as a result of its transition into the PRRT regime initially results in a deductible temporary difference which is 
available to offset against future taxable profits. An estimated deferred tax asset (refer Note 4(d)) in respect of this 
deductible temporary difference has not been recognised on the basis deductions from future augmentation of the 
deductible temporary difference will be sufficient to offset future taxable profit. Had an alternative approach been used 
to assess recovery of the deferred tax asset, whereby future augmentation was not included in the assessment, the 
estimated deferred tax asset would have been recognised, with a corresponding benefit to income tax expense.

It was determined that the approach adopted provides the most meaningful information on the implications of transition  
of the North West Shelf Project to the PRRT regime, whilst ensuring compliance with AASB 112 Income Taxes.

(af)  new and amended accounting Standards and interpretations issued but not yet effective

The following Standards and interpretations have recently been issued or amended but are not yet effective and have 
not been adopted by the Group as at the financial reporting date.

Title

AASB 9 Financial Instruments 

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]

AASB 10 Consolidated Financial 
Statements

AASB 11 Joint Arrangements

AASB 2011-7 Amendments to Australian 
Accounting Standards arising from the 
Consolidation and Joint Arrangements 
Standards 
[AASB 1, 2, 3, 5, 7, 9, 2009-11, 101, 107, 
112, 118, 121, 124, 132, 133, 136, 138, 139, 
1023 & 1038 and Interpretations 5, 9, 16 
& 17]

application date 
of the Standard

Periods 
beginning on or 
after 1 January 
2015

Periods 
beginning on or 
after 1 January 
2013

Summary

AASB 9 includes requirements for the classification and 
measurement of financial assets and financial liabilities 
and the recognition and derecognition requirements 
for financial instruments. This standard will be applied 
retrospectively.

This Standard adds the requirements for classifying and 
measuring financial liabilities to AASB 9. The Standard 
also makes amendments to several Australian Accounting 
Standards and Interpretations. These amendments arise 
from the issuance of AASB 9 Financial Instruments as 
issued in December 2010.

Periods 
beginning on or 
after 1 January 
2013

AASB 10 introduces a revised definition of control and 
establishes a single control model that applies to all 
entities. This Standard replaces AASB 127 Consolidated 
and Separate Financial Statements and Interpretation 112 
Consolidation - Special Purpose Entities and will be applied 
on a modified retrospective basis.

Periods 
beginning on or 
after 1 January 
2013

Periods 
beginning on or 
after 1 January 
2013

This Standard supersedes AASB 131 Interests in Joint 
Ventures and Interpretation 113 Jointly Controlled Entities - 
Non-Monetary Contributions by Venturers and establishes 
principles for the financial reporting by parties to a joint 
arrangement. Changes will be applied on a modified 
retrospective basis.

This Standard makes amendments to several Australian 
Accounting Standards and Interpretations arising from 
the issuance of the consolidation and joint arrangements 
Standards.

84   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION1.  Summary of significant accounting policies (continued)

(af)  new and amended accounting Standards and interpretations issued but not yet effective (continued)

AASB 12 Disclosures of Interests in Other 
Entities

AASB 13 Fair Value Measurement

AASB 2011-8 Amendments to Australian 
Accounting Standards arising from  
AASB 13  
[AASB 1, 2, 3, 4, 5, 7, 9, 2009-11, 2010-7, 
101, 102, 108, 110, 116, 117, 118, 119, 120, 
121, 128, 131, 132, 133, 134, 136, 138, 139, 
140, 141, 1004 and Interpretations 2, 4, 12, 
13, 14, 17, 19, 131 & 132]

AASB 119 Employee Benefits (revised)

Periods 
beginning on or 
after 1 January 
2013

Periods 
beginning on or 
after 1 January 
2013

Periods 
beginning on or 
after 1 January 
2013

Periods 
beginning on or 
after 1 January 
2013

AASB 2011-10 Amendments to Australian 
Accounting Standards arising from AASB 
119 (September 2011) 
[AASB 1, 8, 101, 124, 134, 1049 & 2011-8 
and Interpretation 14]

Periods 
beginning on or 
after 1 January 
2013

AASB 2011-4 Amendments to Australian 
Accounting Standards to Remove Individual 
Key Management Personnel Disclosure 
Requirements [AASB 124]

Periods 
beginning on or 
after 1 July 2013

This standard provides a single source of guidance for all 
disclosures relating to an entity’s interests in subsidiaries, 
joint arrangements, associates and unconsolidated 
structured entities.

This standard defines fair value and provides a single 
framework for measuring fair value when required by 
individual Standards. The requirements of AASB 13 will be 
applied prospectively.

This Standard makes amendments to several Australian 
Accounting Standards and Interpretations. These 
amendments principally arise from the issuance of  
AASB 13.

The revised Standard requires the immediate recognition 
of defined benefit costs, improves the presentation and 
disclosure requirements for defined benefit plans and 
requires the recognition of short-term and other long-term 
employee benefits to be based on the expected timing 
of settlement rather than employee entitlement. These 
revisions will be applied retrospectively.

This Standard makes amendments to several Australian 
Accounting Standards and Interpretations. These 
amendments principally arise from amendments to the 
revised employee benefits Standard.

This Standard removes the requirements to include 
individual key management personnel disclosures in the 
notes to and forming part of the Financial Report.

AASB 2011-9 Amendments to Australian 
Accounting Standards - Presentation of 
Items of Other Comprehensive Income 
[AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 
134, 1039 & 1049]

Periods 
beginning on or 
after 1 July 2012

This Standard amends the presentation of components 
of other comprehensive income including presenting 
separately those items that will be reclassified to profit or 
loss in the future and those that would not. Amendments 
will be applied retrospectively.

AASB 2012-5 Amendments to Australian 
Accounting Standards arising from Annual 
Improvements 2009-2011 Cycle  
[AASB 1,101, 116, 132, & 134 and 
Interpretation 2]

Periods 
beginning on or 
after 1 January 
2013

This Standard makes amendments to several Australian 
Accounting Standards. These amendments primarily relate 
to clarification of narrative requirements for comparative 
information and segment disclosures for interim financial 
reports.

The potential effect of these Standards is yet to be fully determined. However, it is not expected that the new or 
amended Standards will significantly affect the Group’s accounting policies, financial position or performance.

Woodside Petroleum Ltd.  |  Financial Report   85

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012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 Oil Business Unit

Exploration, evaluation, development, production and sale of crude oil in assigned permit areas including Laminaria, Mutineer–
Exeter, Enfield, Vincent and Stybarrow ventures. 

Pluto Business Unit

Exploration, evaluation, development, production and sale of liquefied natural gas and condensate in assigned permit areas.

Browse Business Unit

Exploration, evaluation and development of liquefied natural gas and condensate 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 Exploration, International and Sunrise Business Units.

Unallocated items

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.

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. 

86   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION2.  Operating segments (continued)

(a)  Revenue and profit after tax for the year ended 31 December 2012

t
s
e
W
h
t
r
o
n

f
l
e
h
S

t
i
n
U
s
s
e
n
i
s
u
B

2012 
US$m

l
i

O
a
i
l
a
r
t
s
u
a

t
i
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U
s
s
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n
i
s
u
B

o
t
u
P

l

t
i
n
U
s
s
e
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i
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B

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s
w
o
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B

t
i
n
U
s
s
e
n
i
s
u
B

s
e
t
a
t
S
d
e
t
i
n
U

t
i
n
U
s
s
e
n
i
s
u
B

r
e
h
t
O

d
e
t
a
c
o

l
l
a
n
U

s
m
e
t
i

d
e
t
a
d

i
l

o
s
n
o
c

2012 
US$m

2012 
US$m

2012 
US$m

2012 
US$m

2012 
US$m

2012 
US$m

2012 
US$m

3,300

1,545

1,427

(739)
(57)
(267)
(1,063)

2,237

(19)
4
-
-
(7)
-
-
2
-
-
-
-
21
(3)
2,235

(365)
(1)
(356)
(722)

823

(11)
-
-
-
-
-
-
-
-
1
(1)
(82)
8
-
738

(178)
(81)
(526)
(785)

642

(17)
-
-
-
-
-
-
-
-
(17)
3
(49)
3
(112)
453

-

-
-
-
-

-

(95)
-
-
-
-
-
3
-
-
-
-
-
1
-
(91)

76

(12)
(5)
(33)
(50)

26

(75)
-
-
-
-
-
5
-
-
-
-
-
1
(17)
(60)

-

-
-
-
-

-

(176)
-
-
-
-
-
-
-
-
1
1
(26)
-
(1)
(201)

-

(1)
(6)
9
2

2

1
-
(10)
-
-
(11)
754
-
(3)
12
4
-
21
(49)
721

2011 
US$m

2011 
US$m

2011 
US$m

2011 
US$m

2011 
US$m

2011 
US$m

2011 
US$m

6,348

(1,295)
(150)
(1,173)
(2,618)

3,730

(392)
4
(10)
-
(7)
(11)
762
2
(3)
(3)
7
(157)
55
(182)
3,795(1)

8
(145)
3,658
(614)
3,044

2011 
US$m

2,989

1,677

(692)
(43)
(182)
(917)
2,072

(4)
3
-
-
1
-
-
-
-
-
-
-
14
(39)
2,047

(252)
(1)
(374)
(627)
1,050

(3)
-
-
-
-
-
-
-
-
6
(3)
(14)
3
(4)
1,035

-

(1)
(6)
-
(7)
(7)

(278)
-
-
12
-
-
-
-
-
14
(3)
-
2
(330)
(590)

-

-
-
-
-
-

(31)
-
-
-
-
-
-
-
-
(3)
-
-
-
(3)
(37)

93

(13)
(6)
(32)
(51)
42

(69)
-
-
-
4
(1)
1
-
-
-
-
17
-
(22)
(28)

43

(10)
-
(26)
(36)
7

(194)
-
-
-
-
-
6
-
-
-
-
-
-
(1)
(182)

-

4,802

(13)
(5)
(1)
(19)
(19)

(8)
-
(5)
-
-
(11)
-
-
(7)
(10)
52
-
10
(35)
(33)

(981)
(61)
(615)
(1,657)
3,145

(587)
3
(5)
12
5
(12)
7
-
(7)
7
46
3
29
(434)
2,212(1)
10
(36)
2,186
(677)
1,509

Revenue
Operating revenue
cost of sales 
Cost of production
Shipping and direct sales costs
Oil and gas properties depreciation and amortisation
Total cost of sales

Gross profit

Exploration and evaluation
Share of associates net profit
Change in fair value of derivative financial instruments 
Change in fair value of other financial instruments
Loss on disposal of oil and gas properties
Depreciation of other plant and equipment
Gain on disposal of exploration and evaluation assets
Gain on disposal of investments
Net defined benefit plan loss
Exchange loss on cash balances
Other exchange gain
Impairment loss
Other income
Other expenses
Profit before tax and net finance income/(costs)
Finance income
Finance costs
Profit before tax
Taxes
Profit after tax

Revenue
Operating revenue
cost of sales 
Cost of production
Shipping and direct sales costs
Oil and gas properties depreciation and amortisation
Total cost of sales
Gross profit

Exploration and evaluation
Share of associates net profit
Change in fair value of derivative financial instruments 
Change in fair value of other financial instruments
Gain on disposal of oil and gas properties
Depreciation of other plant and equipment
Gain on disposal of exploration and evaluation assets
Gain on disposal of investments
Net defined benefit plan loss
Exchange gain on cash balances
Other exchange gain
Impairment reversal/(loss)
Other income
Other expenses
Profit before tax and net finance income/(costs)
Finance income
Finance costs
Profit before tax
Taxes
Profit after tax

(1) The performance of operating segments is evaluated based on profit before finance income, finance costs and tax. Financing requirements, finance income, finance 
costs and taxes are managed on a Group basis.

There were no significant inter-segment transactions during the financial year.

Woodside Petroleum Ltd.  |  Financial Report   87

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.  Operating segments (continued)

(b)  Segment assets and liabilities and other segment information at 31 December 2012

t
s
e
W
h
t
r
o
n

f
l
e
h
S

t
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n
U
s
s
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n
i
s
u
B

l
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O
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l
a
r
t
s
u
a

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B

o
t
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P

l

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U
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n
i
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B

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w
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B

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s
s
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n
i
s
u
B

s
e
t
a
t
S
d
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t
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n
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B

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t
a
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o

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U

s
m
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i

d
e
t
a
d

i
l

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s
n
o
c

2012 
US$m

2012 
US$m

2012 
US$m

2012 
US$m

2012 
US$m

2012 
US$m

2012 
US$m

2012 
US$m

Segment assets

Segment liabilities

4,083

1,704

14,981

1,714

448

771

Other segment information

Investment in associates

Additions to oil and gas properties

Additions to exploration and evaluation assets

Additions to other plant and equipment

2

328

7

-

-

132

58

-

-

899

8

-

2011 
US$m

2011 
US$m

2011 
US$m

48

57

-

-

283

-

2011 
US$m

Segment assets

Segment liabilities

3,975

1,941

14,672

1,184

1,632

573

1,028

86

Other segment information

Investment in associates

Additions to oil and gas properties

Additions to exploration and evaluation assets

Additions to other plant and equipment

2

460

28

-

-

366

48

-

-

2,446

283

-

-

-

460

-

318

49

-

25

2

-

2011 
US$m

365

41

-

15

(10)

-

227

71

3,449

24,810

5,873

8,983

-

(2)

43

-

-

-

(12)

9

2011 
US$m

2011 
US$m

2

1,382

389

9

2011 
US$m

216

112

878

23,231

6,490

9,962

-

-

7

-

-

-

-

2

2

3,287

816

2

(c)  Geographical information 

Revenue from external customers and non-current assets by geographical locations is detailed below. Revenue is attributable to 
geographic location based on the location of the customers.

australia

asia

United States of 
america

Other

consolidated

2012 
US$m

2011 
US$m

2012 
US$m

2011 
US$m

2012 
US$m

2011 
US$m

2012 
US$m

2011 
US$m

2012 
US$m

2011 
US$m

Revenue from external customers

549

507

5,483

3,400

Non-current assets

20,303

21,272

-

6

187

291

224

342

129

2

671

6,348

4,802

25

20,596(2) 21,645(3)

(2)  Non-current assets excludes derivatives (US$33 million) and deferred tax (US$892 million).

(3)  Non-current assets excludes derivatives (US$48 million) and deferred tax (US$524 million).

(d)  Major customer information 

The Group has one major customer which accounts for 11% of external revenue within the Pluto Business Unit (2011: nil).

88   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.  Revenue and expenses

(a)      Operating Revenue

Revenue from sale of goods

Liquefied natural gas
North West Shelf
Pluto

Pipeline natural gas
North West Shelf
United States of America

Condensate

North West Shelf
Pluto
Ohanet(1)
United States of America

Oil

North West Shelf
Laminaria
Mutineer–Exeter
Enfield
Vincent
Stybarrow
United States of America

Liquefied petroleum gas
North West Shelf
Ohanet(1)

Total revenue from sale of goods

LnG processing revenue

Total operating revenue

(b)  cost of sales

Cost of production 
Production costs
Royalties and excise
Carbon costs
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

(1)   Woodside’s interest in the Ohanet risk sharing contract expired in October 2011.

2012
US$m

2011
US$m

1,670
1,164
2,834

367
3
370

765
138
-
-
903

373
222
20
325
713
265
73
1,991

125
-
125
6,223

125

6,348

(692)
(501)
(17)
(40)
(45)
(1,295)

(150)

(41)
(42)
(1,084)
(6)
(1,173)
(2,618)
3,730

1,509
-
1,509

375
8
383

860
-
26
1
887

118
152
11
475
589
450
84
1,879

127
17
144
4,802

-

4,802

(505)
(466)
-
(31)
21
(981)

(61)

(7)
(21)
(581)
(6)
(615)
(1,657)
3,145

Woodside Petroleum Ltd.  |  Financial Report   89

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012 
3.   Revenue and expenses (continued)

(c)  Other income

Other fees and recoveries
Share of associates’ net profit
Other exchange gain
Gain on disposal of exploration and evaluation assets(1)
Gain on disposal of investments
Change in fair value of other financial instruments
Total other income

(d)  Other expenses

Exploration and evaluation

Exploration expensed in current year
Exploration expensed previously capitalised
Amortisation of license acquisition costs
Evaluation

Total exploration and evaluation

Other costs

Net defined benefit plan loss
(Loss)/gain on disposal of oil and gas properties
Change in fair value of derivative financial instruments
Exchange (loss)/gain on cash balances
Depreciation of other plant and equipment
General, administrative and other costs
Pluto mitigation and initial start up costs
Impairment of exploration and evaluation assets
(Impairment)/reversal of oil and gas properties(2)

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 

2012
US$m

2011
US$m

55
4
7
762
2
-
830

(230)
(38)
(26)
(98)
(392)

(3)
(7)
(10)
(3)
(11)
(96)
(86)
(26)
(131)
(373)
(765)
3,795

29
3
46
7
-
12
97

(381)
(147)
(28)
(31)
(587)

(7)
5
(5)
7
(12)
(130)
(304)
(14)
17
(443)
(1,030)
2,212

8
8

10
10

(26)
(119)
(145)
3,658

(27)
(9)
(36)
2,186

(1)   On 18 September 2012, the Group sold a 14.7% interest in the Browse LNG permits on an assumed unitised basis to Japan Australia LNG (MIMI Browse) Pty 
Ltd (MIMI) for US$2 billion. The proceeds were treated as a reimbursement of previously incurred costs and credited against the exploration and evaluation 
assets. The excess was recognised as a gain on sale. 

(2)   As part of the Group’s regular review of assets whose value may be impaired, the impairment loss includes, a charge of US$82 million recognised in relation to 
the Laminaria-Corallina field (which is part of the Australia Oil Business Unit segment). This followed an assessment of the expected ultimate reserve recovery. 
The recoverable amount for the cash-generating unit was determined based on the value in use calculation. The nominal pre-tax discount rate applied to the 
cash generating unit was 12%.

90   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION4.  

 Taxes

(a) 

 Tax expense comprises

PRRT

Current tax expense
Under/(over) provided in prior years
Deferred tax expense related to the movements in deferred tax balances

Income tax

Current tax expense
Under provided in prior years
Deferred tax expense related to the movements in deferred tax balances

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 
Under/(over) provided in prior years
Foreign exchange impact on tax expense
PRRT expense
Tax expense

2012
US$m

2011
US$m

387
-
(910)
(523)

1,030
14
93
1,137
614

3,658
523
4,181

1,254

(186)
(6)
(1)
58
-
14
4
(523)
614

92
-
(75)
17

579
(5)
86
660
677

2,186
(17)
2,169

651

-
(9)
(4)
21
2
(5)
4
17
677

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.

Woodside Petroleum Ltd.  |  Financial Report   91

Notes to and forming part of the Financial ReportFor the year ended 31 December 20124.   Taxes (continued)

at  
1 January

charged/ 
(credited) 
to income 
statement

acquisition/ 
(disposal)

at  
31 December

US$m

US$m

US$m

US$m

(c)  Deferred tax

2012

Deferred tax assets

Arising from temporary differences and tax losses

Foreign jurisdiction
Domestic jurisdiction

Arising from PRRT

Deferred tax liabilities
Arising from temporary differences

Exploration and evaluation assets
Oil and gas properties
Financial instruments
Other liabilities
Provisions
Other

Arising from PRRT

2011

Deferred tax assets
Arising from temporary  
differences and tax losses
Foreign jurisdiction
Domestic jurisdiction

Arising from PRRT

Deferred tax liabilities
Arising from temporary differences

Exploration and evaluation assets
Oil and gas properties
Financial instruments
Other liabilities
Provisions
Other

Arising from PRRT

11
22
491
524

563
686
39
(203)
(374)
(53)
1,167
1,825

11
30
211
252

410
548
114
(238)
(203)
(49)
962
1,544

-
(22)
390
368

(71)
229
(6)
118
(53)
33
(117)
133

-
(8)
280
272

153
138
(75)
35
(171)
(4)
205
281

-
-
-
-

(308)
-
-
121
-
-
(403)
(590)

-
-
-
-

-
-
-
-
-
-
-
-

11
-
881
892

184
915
33
36
(427)
(20)
647
1,368

11
22
491
524

563
686
39
(203)
(374)
(53)
1,167
1,825

92   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION4.   Taxes (continued)

(d)  Unrecognised deferred tax assets

Tax losses not recognised

Revenue
Capital

Deductible temporary differences not recognised(1)

Temporary differences associated with investments

2012
US$m

2011
US$m

250
-
3,203

5

3,458

205
100
144

4

453

(1)   Includes a deductible temporary difference of $3 billion related to the transition of the North West Shelf Project to the PRRT regime. Refer Note 1(ae).

 (e)  Tax losses

At the reporting date the Group has unused (recognised and not recognised) tax losses of US$751 million  
(2011: US$981 million) that are available for offset against future taxable profits.

There are no deferred tax assets recognised in respect of tax losses as they have been fully utilised in 2012  
(2011: US$16 million).

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 2012 (2011: nil). 

(f) 

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 35(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.

Woodside Petroleum Ltd.  |  Financial Report   93

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012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)(1)

2012

2011

2,983
814,751,356
366

1,507
791,668,973
190

(1)  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.

There have been no transactions involving ordinary shares between the reporting date and the date of completion of this 
Financial Report.

6.  Dividends paid and proposed

(a)  Dividends paid during the financial year

Prior year fully franked final dividend US$0.55, paid on 4 April 2012 
(2011: US$0.55, paid on 6 April 2011)
Current year fully franked interim dividend US$0.65, paid 2 October 2012 
(2011: US$0.55 paid on 30 September 2011)

(b)   Dividend declared (not recorded as a liability)

Final dividend US$0.65,to be paid on 3 April 2013  
(2011: US$0.55, paid on 4 April 2012)

Dividend per share in respect of financial year (US cents)

2012
US$m

2011
US$m

443

536

979

536

130

430

436

866

443

110

(c)   Franking credit balance

Franking credits available for the subsequent periods

3,391

2,785

94   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION7. 

cash and cash equivalents

(a)

components of cash and cash equivalents

Cash at bank

Money market deposits

Total cash and cash equivalents

(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

8.  Receivables

Trade receivables(1)

Other receivables(2)

Dividends receivable(3)

Interest receivable

(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

(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)

Warehouse stores and materials (at cost)

2012
US$m

2011
US$m

94

2,328

2,422

20

21

41

2012
US$m

2011
US$m

94

2,328

2,422

20

21

41

2012
US$m

2011
US$m

449

122

2

1

574

339

328

2

-

669

2012
US$m

2011
US$m

1

106

63

71

241

1

3

119

72

195

7

18

Woodside Petroleum Ltd.  |  Financial Report   95

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012 
2012
US$m

2011
US$m

10

4

18

32

1

-

30

-

33

64

9

7

-

16

3

5

30

10

38

86

2012
US$m

2011
US$m

17

3

20

1

2

3

41

52

93

1

2

3

10.   Other financial assets 

(a)  Other financial assets (current)

Derivative instruments (at fair value)(1)

Embedded derivatives (at fair value)(2)

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(3)

Derivative instruments (at fair value)(1)

Embedded derivatives (at fair value)(2)

(1)  Details regarding derivative instruments are contained in Note 25(f).
(2)  Embedded derivatives relate to sales contracts.
(3)  Represents restricted cash associated with JBIC facility, refer to Note 25(e).

11.   Other assets

(a)  Other assets (current)

Prepayments

Other

(b)  Other assets (non-current)

Other

Investment in associates

96   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION12.  Exploration and evaluation assets

(a)  Reconciliations of the carrying amounts of exploration  

and evaluation assets

Carrying amount at 1 January

Additions

Disposals at written down value(1)

Amortisation of licence acquisition costs

Expensed (previously capitalised):

Exploration

Evaluation

Impairment loss

Transferred exploration and evaluation

carrying amount 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

2012
US$m

2011
US$m

2,235

389

(1,311)

(26)

(38)

(91)

(26)

(12)

1,120

1,801

816

(10)

(28)

(147)

(29)

(14)

(154)

2,235

2012
US$m

2011
US$m

87

773

147

111

2

1,200

712

136

155

26

-

6

1,120

2,235

(1)  On 18 September 2012, the Group sold a 14.7% interest in the Browse LNG permits on an assumed unitised basis to Japan Australia LNG (MIMI Browse)  

Pty Ltd (MIMI) for US$2 billion. The proceeds were treated as a reimbursement of previously incurred costs and credited against the exploration and evaluation  
assets. The excess was recognised as a gain on sale.

Woodside Petroleum Ltd.  |  Financial Report   97

Notes to and forming part of the Financial ReportFor the year ended 31 December 201213.  Oil and gas properties

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

Year ended 31 December 2012

Carrying amount at 1 January 2012

Additions

Disposals at written down value

Depreciation and amortisation

Impairment loss

Completions and transfers 

carrying amount at 31 December 2012

at 31 December 2012

Historical cost

Accumulated depreciation and impairment

net carrying amount

Year ended 31 December 2011

304

-

-

(41)

-

522

785

1,106

(321)

785

120

4,314

126

-

-

(42)

-

444

522

845

(323)

522

93

(1)

(1,084)

(82)

13,585

16,825

23,014

(6,189)

16,825

-

-

(6)

-

-

120

373

(253)

120

Carrying amount at 1 January 2011

338

141

3,827

132

Additions

Disposals at written down value

Depreciation and amortisation

Impairment reversal

Completions and transfers 

Carrying amount at 31 December 2011

At 31 December 2011

Historical cost

Accumulated depreciation and impairment

Net carrying amount

-

-

(7)

-

(27)

304

574

(270)

304

-

-

(21)

-

-

332

(61)

(581)

17

780

-

-

(6)

-

-

120

4,314

126

14,425

1,289

(3)

-

(49)

(14,539)

1,123

1,172

(49)

1,123

12,079

2,955

(10)

-

-

(599)

14,425

19,289

1,382

(4)

(1,173)

(131)

12

19,375

26,510

(7,135)

19,375

16,517

3,287

(71)

(615)

17

154

19,289

402

(282)

120

9,384

(5,070)

4,314

373

(247)

126

14,425

-

14,425

25,158

(5,869)

19,289

Borrowing costs capitalised in oil and gas properties during the year were US$101 million (2011: US$200 million) at a weighted 
average interest rate of 3.4% (2011: 3.3%).

98   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION14.  Other plant and equipment

(a)  Other plant and equipment

Plant and equipment

Less: Accumulated depreciation

(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

Depreciation

carrying amount at 31 December

15.  Payables

(a)  Payables (current)

Trade payables(1)
Other payables(1)
Interest payable(2)

(b)  Payables (non-current)

Trade payables
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 25(e).
(3)  Loan payables are unsecured, interest-free and have a repayment period of 10 years.

2012
US$m

2011
US$m

170

(110)

60

62

9

(11)

60

161

(99)

62

72

2

(12)

62

2012
US$m

2011
US$m

268

517

44

829

2

194

196

343

827

44

1,214

-

215

215

Woodside Petroleum Ltd.  |  Financial Report   99

Notes to and forming part of the Financial ReportFor the year ended 31 December 201216. 

interest-bearing liabilities

(a) 

interest-bearing liabilities (current)(1)

Bonds

Debt facilities

(b) 

interest-bearing liabilities (non-current)(1)

Bonds

Debt facilities

(1)  Details regarding interest-bearing liabilities are contained in Note 25(e).

17.   Tax payable

PRRT payable

Income tax payable

18.  Other financial liabilities

Other financial liabilities (non-current)

Other financial liability

2012
US$m

2011
US$m

250

325

575

-

770

770

2,386

1,379

3,765

2,626

1,706

4,332

2012
US$m

2011
US$m

116

531

647

(10)

84

74

2012
US$m

2011
US$m

7

7

6

6

100   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
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

Year ended 31 December 2012

At 1 January 2012

Change in provision

Unwinding of present value discount

at 31 December 2012

at 31 December 2012

Current

Non-current

Year ended 31 December 2011

At 1 January 2011

Change in provision

Unwinding of present value discount

At 31 December 2011

At 31 December 2011

Current

Non-current

2012
US$m

2011
US$m

21

3

24

118

17

30

165

24

3

27

134

17

30

181

Restoration 
of operating 
locations(1)

Employee
benefits(2)

Other

Total

US$m

US$m

US$m

US$m

899

115

24

1,038

9

1,029

1,038

581

295

23

899

26

873

899

175

25

-

200

153

47

200

156

19

-

175

134

41

175

244

(75)

-

169

128

41

169

11

233

-

244

167

77

244

1,318

65

24

1,407

290

1,117

1,407

748

547

23

1,318

327

991

1,318

(1)  Details regarding restoration of operating locations are contained in Note 1(l) and 1(ae).
(2)  Details regarding employee benefits are contained in Note 1(v) and 27.

Woodside Petroleum Ltd.  |  Financial Report   101

Notes to and forming part of the Financial ReportFor the year ended 31 December 201221.  contributed equity

(a)  

issued and fully paid shares 

823,910,657 (2011: 805,671,604) ordinary shares(1)

(b)   Shares reserved for employee share plans

961,799 (2011: 1,298,284) ordinary shares(2)

2012
US$m

2011
US$m

6,547

5,880

(44)

(67)

(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)   Information relating to the number of Woodside Petroleum Ltd shares reserved for employee share plans can be found in Note 27(a) and (b).

2012
Shares

2011
Shares

2012
US$m

2011
US$m

(c)  Movements in issued and fully paid shares

At 1 January

805,671,604

783,401,631

5,880

5,036

Dividend reinvestment plan: 

2010 final dividend(1)
2011 interim dividend(2)
2011 final dividend(3)

Employee share plans:

2012 employee equity plan(4)

Balance at the end of the period

-
-
11,639,053

9,828,189
12,441,784
-

6,600,000

-

823,910,657

805,671,604

-
-
431

236

6,547

440
404
-

-

5,880

(1)   7,397,386 ordinary shares issued at A$43.80 and 2,430,803 ordinary shares issued at A$42.32.
(2)   9,507,762 ordinary shares issued at A$33.43 and 2,934,022 ordinary shares issued at A$33.49.  
(3)   2,924,534 ordinary shares issued at A$34.88 and 8,714,519 ordinary shares issued at A$35.40. 
(4)   6,600,000 ordinary shares issued at A$34.71.

102   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION22.  Other reserves 

Year ended 31 December 2012
At 1 January 2012
Share-based payments
Share plan redemptions
Available-for-sale financial assets
Companies voluntarily liquidated
at 31 December 2012

Year ended 31 December 2011
At 1 January 2011
Share-based payments
Share plan redemptions
Available-for-sale financial assets
Companies voluntarily liquidated
At 31 December 2011

nature and purpose of reserves

Employee benefits reserve

Employee 
benefits 
reserve

Foreign 
currency 
translation 
reserve

Hedge of net 
investment 
reserve

investment 
fair value 
reserve

Total

US$m

US$m

US$m

US$m

US$m

303
68
(270)
-
-
101

192
111
-
-
-
303

663
-
-
-
-
663

679
-
-
-
(16)
663

110
-
-
-
-
110

110
-
-
-
-
110

(13)
-
-
(2)
-
(15)

(10)
-
-
(3)
-
(13)

1,063
68
(270)
(2)
-
859

971
111
-
(3)
(16)
1,063

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.

Investment fair value reserve

Used to record changes in the fair value of the Group’s available-for-sale financial assets.

Woodside Petroleum Ltd.  |  Financial Report   103

Notes to and forming part of the Financial ReportFor the year ended 31 December 201223.  Retained earnings

At 1 January

Net profit for the year
Dividends
at 31 December

24.  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

2012
US$m

5,782

2,983
(979)
7,786

2011
US$m

5,141

1,507
(866)
5,782

2012
US$m

2011
US$m

31
7,800
(427)
(934)
6,866
6,547
(44)
79
303
(19)
6,866
965
965

-
6,800
(131)
(426)
6,374
5,880
(67)
264
303
(6)
6,374
885
885

Woodside Petroleum Ltd and Woodside Energy Ltd (a subsidiary company) are parties to a Deed of Cross Guarantee as 
disclosed in Note 35(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 25(e).

25.  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. 

104   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION25.  Financial and capital risk management (continued)

(a)   Financial risk management objectives and policies (continued)

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. 

(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 the functional currency in which they are measured. The functional currency of all entities within the 
Group is US dollars.

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. 
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.

2012

2011

USD

aUD

Other

Total

USD

AUD

US$m

US$m

US$m

US$m

US$m

US$m

Other

US$m

Total

US$m

2,366
474
38
2,878

224

4,366

7
4,597

37
98
58
193

770

-

-
770

19
2
-
21

31

-

-
31

2,422
574
96
3,092

1,025

4,366

7
5,398

16
555
48
619

475

5,136

6
5,617

22
114
54
190

915

-

-
915

3
-
-
3

39

-

-
39

41
669
102
812

1,429

5,136

6
6,571

Financial assets

Cash
Receivables
Other financial assets

Financial liabilities

Payables
Interest-bearing liabilities(1)

Other financial liabilities

(1)  Excludes transaction costs.

Woodside Petroleum Ltd.  |  Financial Report   105

Notes to and forming part of the Financial ReportFor the year ended 31 December 201225.  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  
12% 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

Post tax profits  
 (decrease)/increase

Other comprehensive income  
(decrease)/increase

2012
US$m

2011
US$m

2012
US$m

2011
US$m

US$:A$ +12% (2011:+15%) 
US$:A$ -12% (2011:-15%)

43
(55)

66
(89)

-
-

-
-

(ii)  Commodity price risk

The Group’s revenue is exposed to commodity price fluctuations, in particular oil and gas prices. As at reporting 
date, the Group had no financial instruments with material exposure to commodity price risk.

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.

(iii) 

Interest rate risk

Interest rate risk is the risk that the Group’s financial position will fluctuate due to changes in market interest 
rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to financial 
instruments with floating interest rates including long-term debt obligations and cash and short-term deposits.

The Group aims 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 25(f). No hedging programs 
were placed during 2012 (2011: nil).

Cash and short-term deposits are short term in nature and are therefore monitored by Group Treasury to achieve 
the optimal outcome.

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:

2012
US$m

2011
US$m

2,422
10
2,432

(1,717)
(250)
(1,967)

41
19
60

(2,487)
(250)
(2,737)

Financial assets

Cash and cash equivalents
Other financial assets

Financial liabilities

Interest-bearing liabilities(1)
Derivative instruments

(1)  Excludes transaction costs.

106   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION25.  Financial and capital risk management (continued) 

(b)   Market risk (continued) 

(iii) 

Interest rate risk (continued) 

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 +1.8%/- 0.5% 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, bound by a lower limit of 0%.

Judgements of reasonably possible movements

LIBOR +1.8% (2011: +1.5%)

LIBOR -0.5% (2011: -1.5%)

Post tax profits
(decrease)/increase

Other comprehensive income  
(decrease)/increase

2012
US$m

2011(2)
US$m

2012
US$m

2011
US$m

16

(5)

(5)

5

-

-

-

-

(2)  Excludes impact of sensitivities on interest-bearing liabilities where borrowing costs are capitalised to qualifying assets. For 2011 no interest bearing liabilities 

were considered as all borrowing costs were capitalised.

Significantly higher cash and cash equivalents at 31 December 2012 has favourably impacted net profit sensitivity 
(for an increase in LIBOR).

(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. At 31 December 2012, the Group has a total 
of US$4,122 million available undrawn facilities and cash at its disposal. Financing facilities available to the Group are 
disclosed in Note 25(e). Refer to Note 25(g) for details of the repayment obligations in respect of the amount of  
facilities drawndown.

2012
Payables maturity analysis

2011
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
Loan payables
Interest payable

Total payables

182
490
-
6

678

6
3
-
-

9

82
24
194
38

338

270
517
194
44

255
827
-
6

1,025

1,088

6
-
-
-

6

82
-
215
38

335

343
827
215
44

1,429

Woodside Petroleum Ltd.  |  Financial Report   107

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012 
25.  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 and deposits with banks and financial institutions.

The Group manages its credit risk on trade receivables and financial instruments by predominantly dealing with 
counterparties with an investment grade credit rating. 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, the Group held $2,422 million in cash on deposit with 10 financial institutions. 
The amounts held with these institutions are within the counterparty limits as approved by the Chief Financial Officer 
and the Board approved Group Treasury Policy. 

2012

2011

Receivables maturity analysis

Receivables 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 receivables
Other receivables
Dividends receivable
Interest receivable

Total receivables

449
119
2
1

571

-
1
-
-

1

-
2
-
-

2

449
122
2
1

574

339
323
2
-

664

-
1
-
-

1

-
4
-
-

4

339
328
2
-

669

(e) 

Financing facilities

364-day revolving credit facilities

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 12 bi-lateral loan facilities totalling US$950 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

5
5
5
4
3
4

currency

AUD, USD
Multiple
USD
AUD, USD
AUD, USD
USD

Extension option

Evergreen
Evergreen
Not evergreen
Evergreen
Evergreen
Evergreen

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. 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. 

108   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION25.  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 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;

•	 The 2014 US$700 million bond has a fixed rate coupon of 4.50% p.a. and matures on 10 November 2014;

•	 The 2019 US$600 million bond has a fixed rate coupon of 8.75% p.a. and matures on 1 March 2019; and

•	 The 2021 US$700 million bond has a fixed rate coupon of 4.60% p.a. and matures on 10 May 2021.

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 
7 January 2012. 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 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.

Woodside Petroleum Ltd.  |  Financial Report   109

Notes to and forming part of the Financial ReportFor the year ended 31 December 201225.  Financial and capital risk management (continued) 

(f)  Hedging and derivatives

Interest rates 

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.

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.

(g)  Maturity profile of interest-bearing liabilities

The maturity profile of the Group’s interest-bearing liabilities are as follows:

Fair value

2012
US$m

2011
US$m

10

19

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

2012

Interest-bearing liabilities(1)

(757)

(1,335)

(736)

(172)

(172)

(1,987)

(5,159)

2011

Interest-bearing liabilities(1)

(952)

(761)

(1,339)

(740)

(174)

(2,167)

(6,133)

(1) Excludes deferred transaction costs.

The amounts disclosed in the tables above are the contractual undiscounted cash flows, representing principal  
and interest, and hence will not necessarily reconcile with the amounts disclosed in the consolidated statement  
of financial position.

110   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION25.  Financial and capital risk management (continued)

(h) 

Fair values

The Group uses various methods in estimating the fair value of a financial instrument. These methods and financial 
instruments to which the method applies are as follows:

•	 Level 1 - the fair value of listed equity instruments is based on quoted market prices in active markets at reporting 

date.

•	 Level 2 - the fair value is estimated using 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 and 
forward commodity contracts.

•	 Level 3 - the fair value is estimated using inputs for the asset or liability that are not based on observable market 

data. This methodology applies to the fair value measurement of embedded derivatives.

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.

The fair values of financial instruments are as follows:

2012

2011

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

-

-

1

-

-

10

-

-

-

-

-

-

-

4

33

10

-

1

4

33

-

-

3

-

-

9

10

-

-

-

-

-

-

7

38

9

10

3

7

38

Financial assets

Derivative instruments

Current

Non-current

Other investments (available-for-sale):

Listed entity investments

Embedded derivatives:

Current

Non-current

Woodside Petroleum Ltd.  |  Financial Report   111

Notes to and forming part of the Financial ReportFor the year ended 31 December 201225.  Financial and capital risk management (continued)

(h) 

Fair values (continued)

Transfer between categories

There were no transfers between Level 1 and Level 2 during the year.

Reconciliation of Level 3 fair value movements

At 1 January

Amortisation recognised in the income statement

At 31 December

Total amortisation stated in the above table for assets held at the end of the financial year 

(i) 

capital management

2012
US$m

2011
US$m

45

(7)

38

(7)

54

(9)

45

(9)

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 remained in force up to and including the 2012 interim dividend. The DRP will be deactivated for the 2012 
final dividend. 

Group Treasury monitors a range of financial metrics, including gearing, and treasury policy breaches and exceptions.  
The gearing ratio which is net debt divided by total equity (excluding non controlling interest) plus net debt is 11%  
(2011: 29%) at reporting date.

112   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION26.  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

2012
US$m

2011
US$m

241
572
619

411
482
337

1,432

1,230

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. 

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$487 million 
during the year (2011: US$540 million). A portion of this amount relates to arrangements containing non-lease elements, 
which are not practicable to separate.

(b) capital expenditure commitments

The Group has capital expenditure commitments contracted for but not provided for in the Financial Report of  
US$174 million (2011:US$568 million).

(c)

Exploration commitments
The Group has exploration obligations for the following regions which are contracted for but not provided for in the 
Financial Report:

Australia

Browse Basin
Canning Offshore Basin
Carnarvon Basin

The Americas

Gulf of Mexico
Peru

Asia 

Korea

Middle East & Africa
Canary Islands

2012
US$m

2011
US$m

4
238
185

86
16

-

140
669

18
187
153

11
2

72

-
443

These obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations  
of the Group.

Woodside Petroleum Ltd.  |  Financial Report   113

Notes to and forming part of the Financial ReportFor the year ended 31 December 201227.  Employee benefits

(a)   Woodside employee share plans

(i)  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 May 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 vested in April 2012 and had 39 employees participating as at 31 December 2012.

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.

114   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION27.  Employee benefits (continued)

(a)   Woodside employee share plans (continued)

(ii)  Woodside employee equity plan

In July 2009 Woodside introduced the Woodside Petroleum Ltd 2009 - 2012 Employee Equity Plan (EEP) which 
was available to all employees including executives, other than the CEO. The EEP was 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. 

Eligible participants were entitled to receive an allocation of ERs. Each ER entitled the participants to receive a 
Woodside share on vesting. The ERs vested on 1 August 2012 and unrestricted possession (full entitlement) of 
these shares was transferred to employees.

Shares were issued by the company to satisfy vesting ER entitlements. The number of ERs that vested was 
adjusted for any interruptions to an employee's service. Participants in the EEP could not dispose of or otherwise 
deal with an ER and did not receive any dividends or have voting rights in respect of an ER. Allocations of ERs to 
participants were adjusted when the company made a bonus issue of shares.

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 was accounted for as a share-based payment to employees for services provided. The fair value of the 
benefit provided was estimated using the Black-Scholes option pricing technique.

The number of ERs and movements in each EEP offer was as follows:

2012

Grant date  

On issue at 
beginning of year

Granted during  
the year

Vested during  
the year(1)

Forfeited/lapsed 
during the year

On issue at  
end of year

29 February 2012
16 December 2011
16 September 2011
10 June 2011
18 March 2011
17 December 2010
24 September 2010
25 June 2010
30 April 2010
19 March 2010
30 December 2009
31 October 2009

-
82,602
83,605
98,387
115,098
186,549
207,563
296,414
39,352
232,567
194,013
5,235,377
6,771,527

69,644
-
-
-
-
-
-
-
-
-
-
-
69,644

(67,404)
(81,581)
(80,228)
(92,845)
(111,412)
(178,871)
(193,317)
(286,726)
(37,222)
(223,569)
(186,899)
(4,994,681)
(6,534,755)

(2,240)
(1,021)
(3,377)
(5,542)
(3,686)
(7,678)
(14,246)
(9,688)
(2,130)
(8,998)
(7,114)
(240,696)
(306,416)

(1) Amount includes 93,867 rights that were settled in cash.

2011

-
-
-
-
-
-
-
-
-
-
-
-
-

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

16 December 2011
16 September 2011
10 June 2011
18 March 2011
17 December 2010
24 September 2010
25 June 2010
30 April 2010
19 March 2010
30 December 2009
31 October 2009

-
 -      
 -      
 -      

192,851 
227,999 
323,173 
41,677 
257,654 
202,176 
5,568,584 
6,814,114

 82,602
 83,605
 104,048
 125,477
 -
 -
 -
 -
 -
 -
 -
395,732 

-
-
-
-
-
-
-
-
-
(241)
(2,975)
(3,216)

 -      
 -      

(5,661)
(10,379)
(6,302)
(20,436)
(26,759)
(2,325)
(25,087)
(7,922)
(330,232)
(435,103)

82,602 
83,605 
98,387 
115,098 
186,549 
207,563 
296,414 
39,352 
232,567 
194,013 
5,235,377 
6,771,527 

Woodside Petroleum Ltd.  |  Financial Report   115

Notes to and forming part of the Financial ReportFor the year ended 31 December 201227.  Employee benefits (continued)

(a)   Woodside employee share plans (continued)

(ii)  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 2012, 31 December 2011, 31 December 2010 and 31 December 2009:

Grant date  

Vesting date  

Share price at 
grant date  
(a$/share)

Employee benefit 
fair value  
(US$/ER)

Expected  
dividend return 
(%)

Expected life 
(years)

Valuation assumptions

29 February 2012
16 December 2011
16 September 2011
10 June 2011
18 March 2011
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
1 August 2012
1 August 2012
1 August 2012
1 August 2012
1 August 2012

37.24 
31.30 
34.25 
43.55 
44.41
43.17
44.48
43.28
45.40
46.73
47.35
47.70

32.46
30.59 
32.50 
39.79 
42.17 
40.81
40.51
35.71
39.83
40.53
39.68
39.81

2.5
2.5 
2.5 
2.5 
2.5 
2.5 
2.5 
2.5 
2.5 
2.5 
2.5 
2.5 

0.42
0.63 
0.88 
1.15 
1.38 
1.62
1.85
2.10
2.26
2.37
2.59
2.75

(iii)  Woodside equity plan

In November 2011 Woodside introduced the Woodside Petroleum Ltd - Woodside Equity Plan (WEP) which is available to 
all Australian based permanent employees including executives, other than the CEO and executive directors. Woodside’s 
intention is to enable eligible employees to build up a holding of equity in the company as they progress through their 
career at Woodside. The number of Equity Rights (ERs) offered to each eligible employee is calculated with reference to 
salary and performance. The linking of performance to an allocation allows Woodside to recognise and reward eligible 
employees for high performance. The WEP is intended to provide an opportunity to share in the growth of the company 
as well as provide a retention mechanism for participating employees. Participants do not make any payment in respect of 
the ERs at grant or at vesting.

Eligible participants receive an allocation of ERs. Each ER entitles the participant to receive a Woodside share on the 
vesting date three years after the effective date. ERs may vest prior to the vesting date on a change of control or on a pro 
rata basis, at the discretion of the CEO, limited to the following circumstances; redundancy, retirement (after six months 
participation), death, termination due to medical illness or incapacity or total and permanent disablement of a participating 
employee. An employee whose employment is terminated by resignation or for cause prior to the vesting date 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 WEP 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. 

The WEP is accounted for as a share-based payment to employees for services provided. The fair value of the benefit 
provided will be estimated using the Black-Scholes option pricing technique. 

116   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION27.  Employee benefits (continued)

(a)   Woodside employee share plans (continued)

(iii)  Woodside equity plan (continued)

The WEP had 3,144 employees participating at 31 December 2012.

The number of equity rights and movements in each WEP offer are as follows:

2012

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

1 October 2012
30 November 2011

  -
1,664,607

1,664,607

1,912,965
9,960

1,922,925

  -
(2,940)

(2,940)

  -
(150,265)

(150,265)

1,912,965
1,521,362

3,434,327

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 November 2011

  -

1,669,427

-

(4,820)

1,664,607

2011

The following table lists the inputs to the Black-Scholes option pricing technique used for the years ended  
31 December 2012 and 31 December 2011.

Grant date

Vesting date

Share price at grant 
date (a$/share)

Employee benefit 
fair value (US$/ER)

Expected dividend 
return (%)

Expected life 
(years)

1 October 2012
30 November 2011 30 November 2014

1 October 2015

33.20
32.80

31.99
30.49

2.5
2.5

3
3

Valuation assumptions

(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 2012 Directors’ Report.

The following table illustrates the number and weighted average prices of shares reserved and acquired during the year 
by the plan.

2012

2011

number of 
shares

Weighted 
average price

(a$/share)

Opening balance

Purchases during the year

Vested during the year

Shares reserved for executives 
under EIP/PR

562,830

300,000

(172,823)

690,007

42.61

35.54

34.77

33.35

cost

US$m

18

11

(6)

23

Number of 
shares

Weighted 
average price

(A$/share)

503,244

200,000 

(140,414)

562,830 

46.88

35.50

47.80 

42.61 

Cost

US$m

18

7 

(7)

18 

Woodside Petroleum Ltd.  |  Financial Report   117

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012 
27.  Employee benefits (continued)

(b)   Executive share plans (continued)

Equity rights are granted on 1 January of each performance year. The EIP is accounted for as a share based payment to 
employees for services provided. The fair value of the benefit provided was estimated using the Binomial or Black-Scholes 
option pricing technique combined with a Monte Carlo simulation methodology, where relevant. Historical volatility has been 
used to estimate the volatility of the share price.

On 7 December, the Board approved a modification to the EIP rules for equity rights granted for the 2012 performance year. 
The modifications effected both the Short Term Award (STA) and Long Term Award (LTA).

For the 2012 performance year, the STA deferred equity component will be delivered in the form of restricted shares. 
Participants will receive any dividends paid on their restricted shares after they have been allocated.

The LTA award for the 2012 performance year is granted in the form of Variable Pay Rights (VPRs), the vesting of which 
is linked to service and Relative Total Shareholder Return (RTSR). The vesting of RTSR-tested VPRs is conditional on 
satisfactory ranking of Woodside’s RTSR, as calculated under the EIP rules, over a four or five year period in comparison 
with an international peer group and separately the ASX top 50. The international oil and gas LTA Peer Group for grant of 
the RTSR-tested VPRs for the 2012 performance year is set out in Table 8 of the Remuneration Report. This peer group has 
a weighting of 67%. The ASX 50 Index as at 7 December 2012, the plan modification date, was taken as the second peer 
group. The selection of the ASX 50 as a second peer group with a weighting of 33% was made in order to reflect Woodside’s 
performance against similar organisations traded on the Australian Securities Exchange. The RTSR in respect of Woodside 
and both peer groups is calculated by an external advisor in accordance with the EIP rules on the fourth anniversary of the 
allocation of these RTSR-tested VPRs. The outcome of the test is measured against the schedule shown in Table 5 of the 
Remuneration Report. Any RTSR-tested VPRs which do not vest at this time are subject to a second RTSR test on the fifth 
anniversary of the allocation date. Any RTSR-tested VPRs that do not vest on the fifth anniversary lapse.

For further details regarding the 2008 to 2011 plans, refer to the Remuneration Report included in the 2012 Directors’ Report.  
As a consequence of the rule modifications, the fair value of the benefit provided was revalued at modification date. 

EIP Time-tested variable pay rights (VPRs)/restricted shares

Fair value of the original equity right at 1 January, 2012

Fair value of modified equity right at 7 December, 2012
Less: Fair value of original equity right at 7 December, 2012
Incremental value of modified equity right at 7 December, 2012

Valuation 
assumptions

t
a
e
c
i
r
P
e
r
a
h
S

e
t
a
d
t
n
a
r
g

d
l
e
i
y
d
n
e
d
i
v
i
d

d
e
t
c
e
p
x
E

t
fi
e
n
e
b
e
e
y
o
p
m
E

l

e
u
l
a
v
r
i
a
f

(US$/VPR)

(a$/share)

(%)

28.22

35.95
(33.19)
2.76

30.62

34.22
34.22

2.5

-
2.5

EIP relative total shareholder return (RTSR) tested VPRs

Valuation assumptions

e
u
l
a
v
r
i
a
f

t
fi
e
n
e
b

e
e
y
o
p
m
E

l

t
a
e
c
i
r
P
e
r
a
h
S

e
t
a
d
t
n
a
r
g

(US$/VPR)

(a$/share)

Fair value of the original equity right at 1 January, 2012
Weighted average of fair value equity right at 7 December, 2012
Less: Fair value of original equity right at 7 December, 2012
Decrement in value of modified equity right at 7 December, 2012

15.90
20.64
(21.68)
(1.04)

30.62
34.22
34.22

t
s
e
r
e
t
n

i
e
e
r
f
k
s
i
R

e
t
a
r

(%)

3.9
2.7
3.2

d
l
e
i
y
d
n
e
d
i
v
i
d

d
e
t
c
e
p
x
E

(%)

2.5
3.4
2.5

d
e
t
c
e
p
x
E

y
t
i
l
i
t
a
l
o
v

(%)

36
22
24

118   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27.  Employee benefits (continued)

(b)  Executive share plans (continued)

EIP Time-tested variable pay rights (VPRs)/restricted shares

Performance 
year

Grant date

Vesting 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

Share price 
at grant 
date

Employee 
benefit  
fair value

Expected 
dividend 
yield

(a$/share)

(US$/VPR)

(%)

Restricted shares

2012

1 January 2012 22 February 2016

-

191,848

-

-

191,848

30.62

30.98(1)

-

Valuation 
assumption

Variable pay rights

2011

2010

2009

2008

1 January 2011

25 February 2015

133,469

1 January 2010 25 February 2014

1 January 2009 5 March 2013

1 January 2008 27 February 2012

67,985

79,765

59,974

-

-

-

-

(11,058)

(7,986)

114,425

(7,078)

(9,476)

(59,974)(2)

(5,898)

(6,824)

-

55,009

 63,465

42.56

47.20

36.70

 -     

50.39

38.87

38.32

29.57

39.81

2.5

2.5

2.5

3.0

(1)  Fair value of restricted shares is represented by the sum of the grant date fair value of $28.22 and the incremental benefit on modification date amounting to $2.76.
(2)    Amount includes 13,951 shares that were settled with a fair value of $31.26. 

EIP Time-tested VPRs - additional allocation following renounceable rights issue

As a consequence of the renounceable rights issue by the Group in December 2009, the Board exercised its discretion under the 
EIP plan rules to adjust the number of VPRs held by participants to maintain the value equivalence of the unvested VPR awards 
made for the 2008 performance year.

Performance 
year

Grant date

Vesting 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

Share price 
at grant 
date

Employee 
benefit  
fair value

Expected 
dividend 
yield

(a$/share)

(US$/VPR)

(%)

2008

13 December 
2009

27 February 
2012

513

-

(498)(3)

(15)

-

47.18

39.92

2.5

(3)  Amount includes 116 shares that were settled in cash with a fair value of $31.26.

Valuation 
assumption

Woodside Petroleum Ltd.  |  Financial Report   119

Notes to and forming part of the Financial ReportFor the year ended 31 December 201227.  Employee benefits (continued)

(b)   Executive share plans (continued)

EIP relative total shareholder return (RTSR) tested VPRs

r
a
e
y
e
c
n
a
m
r
o
f
r
e
P

e
t
a
d
t
n
a
r
G

s
e
t
a
d
g
n
i
t
s
e
V

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u
s
s
i

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y
f
o
g
n
n
n
g
e
b

i

i

g
n
i
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u
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d
e
t
n
a
r
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r
a
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y
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h
t

e
h
t
g
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e
V

r
a
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y

d
e
s
p
a
l

/

d
e
t
i
e
f
r
o
F

r
a
e
y
e
h
t
g
n
i
r
u
d

d
n
e
t
a
e
u
s
s
i

n
O

r
a
e
y
f
o

t
a
e
c
i
r
p
e
r
a
h
S

e
t
a
d
t
n
a
r
g

t
fi
e
n
e
b
e
e
y
o
p
m
E

l

)
2
(
e
u
l
a
v
r
i
a
f

Valuation assumptions

)
2
(
y
t
i
l
i
t
a
l
o
v

d
e
t
c
e
p
x
E

e
t
a
r

t
s
e
r
e
t
n

i

e
e
r
f

k
s
i
R

d
l
e
i
y
d
n
e
d
i
v
i
d

d
e
t
c
e
p
x
E

2012

1 January 2012

2011

1 January 2011

22 February 2017
22 February 2018
25 February 2015

25 February 2016

-

597,680

337,524

2010

1 January 2010

25 February 2014

211,740

2009 1 January 2009

5 March 2013

165,640

25 February 2015

2008 19 February 2008 27 February 2012

81,606

5 March 2014

-

-

-

-

-

-

-

-

-

2008 1 January 2008

27 February 2012

226,580

- (113,299)(1)

(113,281)

2007 1 January 2007

4 March 2012

150,345

-

-

(150,345)

(1)  Amount includes 15,183 shares that were settled with cash with a fair value of $7.44.

(a$/ 
share)

(US$/ 
VPR) 

(%)

(%)

(%)

-

597,680

30.62

15.90

(17,956)

319,568

42.56

21.36

36

36

3.9

5.7

2.5

2.5

(12,338)

199,402

47.20

20.02

38

5.3

2.5

(7,911)

157,729

36.70

14.82

36

3.6

2.5

(81,606)

-

-

-

51.26

50.39

38.11

19.90

19.08

14.36

29

26

25

4.5

6.6

6.0

3.0

3.0

3.0

(2)  A review of the RTSR valuation model was conducted to ensure it accurately reflects the EIP rules. Prior year fair values have been appropriately restated to reflect  

the changes. 

EIP RTSR tested - additional allocation following renounceable rights issue
As a consequence of the renounceable rights issue by the Group in December 2009, the Board exercised its discretion under the 
EIP plan rules to adjust the number of VPRs held by participants to maintain the value equivalence of the unvested VPR awards 
made for the 2007 and 2008 performance years.

Valuation assumptions

r
a
e
y
e
c
n
a
m
r
o
f
r
e
P

e
t
a
d
t
n
a
r
G

s
e
t
a
d
g
n
i
t
s
e
V

t
a
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u
s
s
i

n
O

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g
n
n
n
g
e
b

i

i

g
n
i
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d
d
e
t
n
a
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G

r
a
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y
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h
t

e
h
t
g
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V

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d
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p
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/

d
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f
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F

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d
n
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a
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n
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f
o

t
a
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c
i
r
p
e
r
a
h
S

e
t
a
d
t
n
a
r
g

t
fi
e
n
e
b
e
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y
o
p
m
E

l

l

)
3
(
e
u
a
v
r
i
a
f

t
s
e
r
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t
n

i
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r
f

k
s
i
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e
t
a
r

d
e
t
c
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p
x
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d
e
t
c
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p
x
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)
3
(
y
t
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d
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i

2008 13 December 2009 27 February 2012

1,882

2008 13 December 2009 31 March 2012

2007 13 December 2009 14 March 2012

678

1,245

-

-

-

(941)(4)

-

-

(941)

(678)

(1,245)

-

-

-

47.18

47.18

47.18

25.53

23.07

22.94

44

47

48

5.0

5.3

4.7

2.5

2.5

2.5

(3)  A review of the RTSR valuation model was conducted to ensure it accurately reflects the EIP rules. Prior year fair values have been appropriately restated to reflect  

the changes. 

(4)  Amount includes 253 shares that were settled with cash with a fair value of $7.46. 

(a$/ 
share)

(US$/ 
VPR)

(%)

(%)

(%)

120   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27.  Employee benefits (continued)

(b)   Executive share plans (continued)

Pay rights
Pay rights are accounted for as a share-based payment, with fair value estimated using the Binomial or Black Scholes option 
pricing technique combined with a Monte Carlo simulation methodology, where relevant. Historical volatility has been used to 
estimate the volatility of the share price.

Valuation  
assumptions

)
2
(

y
t
i
l
i
t
a
l
o
v

d
e
t
c
e
p
x
E

(%)

41

)
2
(

e
t
a
r

t
s
e
r
e
t
n

i

e
e
r
f
k
s
i
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(%)

4.5

)
2
(

d
l
e
i
y
d
n
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d
i
v
i
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d
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t
c
e
p
x
E

(%)

2.5

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f
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P

)
1
(

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r
p
e
r
a
h
S

e
t
a
d
t
n
a
r
g

t
fi
e
n
e
b
e
e
y
o
p
m
E

l

)
2
(

e
u
l
a
v
r
i
a
f

(a$/share)

(US$/VPR)

(5,674)

11,348

43.59

21.25

2010

1 June 2010

15 March 2012

17,022

15 March 2013

15 March 2014

2008 5 May 2008

5 March 2012

11,972

-

-

-

-

(11,972)

-

59.22

26.48

31

6.5

3.0

(1)  Pay rights granted on 5 May 2008  and 1 June 2010 are RTSR-tested. 
(2)  Valuation assumptions and employee benefit fair values are based on weighted averages.

Pay rights - additional allocation following renounceable rights issue

As a consequence of the renounceable rights issue by the Group in December 2009, the Board exercised its discretion 
under the Pay Rights Plan rules to adjust the number of VPRs held by participants to maintain the value equivalence of the 
unvested VPR awards for the 2008 performance year.

Valuation assumptions

e
c
n
a
m
r
o
f
r
e
P

r
a
e
y

e
t
a
d
t
n
a
r
G

g
n
i
t
s
e
V

s
e
t
a
d

t
a
e
u
s
s
i

n
O

r
a
e
y
f
o
g
n
n
n
g
e
b

i

i

g
n
i
r
u
d
d
e
t
n
a
r
G

r
a
e
y
e
h
t

e
h
t
g
n
i
r
u
d
d
e
t
s
e
V

r
a
e
y

d
e
s
p
a
l

/

d
e
t
i
e
f
r
o
F

r
a
e
y
e
h
t
g
n
i
r
u
d

d
n
e
t
a
e
u
s
s
i

n
O

r
a
e
y
f
o

t
a
e
c
i
r
p
e
r
a
h
S

e
t
a
d
t
n
a
r
g

t
fi
e
n
e
b
e
e
y
o
p
m
E

l

)
3
(

e
u
l
a
v
r
i
a
f

)
3
(

y
t
i
l
i
t
a
l
o
v

d
e
t
c
e
p
x
E

)
3
(

e
t
a
r

t
s
e
r
e
t
n

i

e
e
r
f
k
s
i
R

(a$/share)

(US$/VPR)

(%)

(%)

2008

13 December 
2009

5 March 2012 

98

-

-

(98)

-

47.18

28.35

40

4.3

(3)  Valuation assumptions and employee benefit fair values are based on weighted averages.

)
3
(

d
l
e
i
y
d
n
e
d
i
v
i
d

d
e
t
c
e
p
x
E

(%)

2.5

Woodside Petroleum Ltd.  |  Financial Report   121

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
27.  Employee benefits (continued)

(c)   cEO sign-on incentive shares

Mr Coleman gave up certain rights with his former employer to join Woodside as CEO. To recognise these interests, he 
was paid a one off sign-on incentive. Woodside acquired Woodside Shares to the value of $3 million to be held in trust for 
Mr Coleman. One third of these shares will vest each anniversary after the date of his appointment (in the absence of any 
accelerating event, including a change of control, in which case all shares will vest on the date of the control event). 

Any unvested entitlements will be forfeited if Mr Coleman’s employment is terminated for cause or by his resignation. 
Mr Coleman cannot dispose of or deal with any restricted shares until such restricted shares vest. In the event bonus 
shares are allotted in respect of the sign-on shares, the bonus shares will be allotted to the Trustee and held for  
Mr Coleman on the same terms and conditions as the underlying restricted shares. 

The number of equity rights and movements in the CEO Sign-On Incentive share offer was as follows:

Year

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

2012
2011

30 May 2011
30 May 2011

66,004
-

-
66,004

(22,002)
-

-
-

44,002
66,004

The following table lists the inputs to the Black-Scholes option pricing technique used for the year ended  
31 December 2012.

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)

30 May 2011
30 May 2011
30 May 2011

30 May 2012
30 May 2013
30 May 2014

45.97
45.97
45.97

49.19
49.19
49.19

-
-
-

1
2
3

(d)   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 2012.

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 2012 were US$17 million 
(2011: US$20 million). 

122   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION27.  Employee benefits (continued)

(d)   Superannuation plan (continued)

Defined benefit plan asset/(liability) included in the statement of financial position

Present value of the defined benefit obligation
Fair value of defined benefit plan assets

net defined benefit liability - non-current

Defined benefit plan categories of plan assets

Cash
Australian equity
International equity
Fixed income
Property
Other

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 (loss)/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 gain/(loss)
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
Defined benefit plan expense

2012
US$m

2011
US$m

(211)
181

(30)

2012
%

7
26
29
18
15
5

100

(184)
154

(30)

2011
%

8
28
29
14
16
5

100

2012
US$m

2011
US$m

(184)
(12)
(7)
(17)
(3)
14
(2)
(211)

154
11
8
17
3
(14)
2
181

14
9
(13)
10
20

(160)
(10)
(9)
(13)
(3)
14 
(3)
(184)

146 
10 
(13)
20 
3 
(14)
2 
154

7 
7 
(8)
21 
27 

Woodside Petroleum Ltd.  |  Financial Report   123

Notes to and forming part of the Financial ReportFor the year ended 31 December 201227.  Employee benefits (continued)

(d)   Superannuation plan (continued)

Defined benefit plan principal actuarial assumptions

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 salary increase rate

Financial year

2012

2011

3.10% p.a.
3.10% p.a.
5.00% p.a.

3.70% p.a.
3.70% 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. 

Defined benefit plan historical information

Financial year

2012
US$m

2011
US$m

2010
US$m

(211)

181

(30)

8

(7)

(184)

154

(30)

(13)

3

(160)

146

(14)

(3)

3

Restated
2009
US$m

Restated
2008
US$m

(133)

119

(14)

7

4

(115)

83

(32)

(43)

(1)

2012
US$m

265
26
20

311

2011
US$m

191
18
27

236

2012
US$

2011
US$

12,828,321

12,346,879

458,505

632,747

3,418,775

6,060,666

-

355,266

(533,441)

986,775

17,060,867

19,493,626

Present value of defined benefit obligation(1)

Fair value of plan assets

(Deficit)/surplus in plan

Experience adjustments gain/(loss) - plan assets

Experience adjustments (loss)/gain - plan liabilities

(1)  Includes any provision for contribution tax on plan surplus or deficit.

(e) 

Employee benefits expense

Employee benefits
Defined contribution plan costs
Defined benefit plan expense

28.  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 benefits

124   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION28.  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: 

i

g
n
n
e
p
O

i

)
2
(
g
n
d
o
h

l

non-executive  
directors
M A Chaney
E Fraunschiel
A Jamieson
P J M H Jungels(4)
D I McEvoy
M Cilento
C Haynes(5)
S Ryan(6)

Executives
P Coleman(7)
L Tremaine
R Cole
V Santostefano

20,000
81,930
3,000
9,205
7,924
1,382
186
-

 66,004
 2,224
15,174
 28,051

L Della Martina(8)

 54,884

P Moore
F Ahmed
G Roder(9)
R Edwardes(10)

 6,190
2,500
-
-

2012

/

n
o
i
t
i
s
i
u
q
c
a

)
l
a
s
o
p
s
i
d
(

-
e
g
n
a
h
c

t
e
n

r
e
h
t
o

g
n
i
s
o
c

l

i

g
n
d
o
h

l

i

g
n
n
e
p
O

i

)
2
(
g
n
d
o
h

l

 - 
 - 
 - 
 - 
 - 
-
-
-

 - 
 - 
 - 
(9,205)
 - 
-
-
-

20,000
81,930
4,235
 - 
8,040
2,086
1,333
-

20,000
81,930
3,000
9,205
7,702
613
 - 
 - 

)
3
(
P
S
D
E
n

 - 
 - 
1,235
 - 
116
704
1,147
-

-
-
 - 
 - 

 - 

 - 
 - 
-
-

(11,000)
3,748
13,328
10,113

-
-
 - 
 - 

55,004
5,972
28,502
38,164

 -
1,354
13,403
19,846

5,739

(60,623)

 - 

53,193

 6,959
4,386
-
-

 - 
 - 
-
543

13,149
6,886
-
543

5,436
2,500
-
-

)
3
(
P
S
D
E
N

 - 
 - 
 - 
 - 
222
769
186 
 - 

 -
 - 
 - 
 - 

 - 

 - 
-
-
-

2011

/
n
o
i
t
i
s
u
q
c
A

i

)
4
(
)
l
a
s
o
p
s
d
(

i

-
e
g
n
a
h
c

t
e
N

r
e
h
t
o

i

g
n
s
o
C

l

i

g
n
d
o
h

l

 - 
 - 
 - 
 - 
 - 
 - 
 - 
 - 

66,004
870 
1,771 
8,205 

1,691 

754 
-
-
-

 - 
 - 
 - 
 - 
 - 
 - 
-
 - 

20,000
81,930
3,000
9,205
7,924
1,382
186
 - 

 -
 -   
 -   
 -   

 66,004
 2,224 
 15,174 
 28,051 

 -   

 54,884 

 -   
-
-
-

 6,190 
 2,500 
-
-

(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 

(6)  Dr Ryan was appointed a non-exectutive director of Woodside on  

6 December 2012.

(7)   Mr Coleman was appointed as CEO on 30 May 2011. Prior to this  

or amounts held by KMP who commenced during the year.

Mr Coleman was not employed by the Group.

(3)  Relates to participation in the Non-Executive Directors’ Share Plan 

(NEDSP).

(4)  Dr Jungels departed Woodside on 7 December 2012.
(5)  Dr Haynes was appointed a non-executive director of Woodside on  

1 June 2011.

(8)   Mr Della Martina departed Woodside on 10 May 2012.
(9)   Mr Roder became a KMP on 27 October 2011. 
(10)   Mr Edwardes became a KMP on 7 May 2012.

Woodside Petroleum Ltd.  |  Financial Report   125

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012 
 
 
 
 
 
 
 
 
 
 
28.  Key management personnel compensation (continued)

(c)   Executives’ interests in variable pay rights (VPR), pay rights (PR) and equity rights (ER)

VPR, PR and ER holdings of key management personnel

2012

name 

P Coleman(1)

L Tremaine

R Cole

V Santostefano
L Della Martina(2)
P Moore
F Ahmed(3)
G Roder (4)
R Edwardes(5)

2011

Name 

P Coleman

L Tremaine

R Cole

V Santostefano
L Della Martina
P Moore
F Ahmed
G Roder

at 1 January 
 2012

allocated in  
2012

Vested in  
2012

net change -  
other

at 31 December  
2012

 -  

20,400

47,153

36,157
34,032
24,379
37,197

 -   
 - 

66,560

14,034

16,962

16,785
12,268
11,040
14,098

 -  
 -  

 -  

 -  

(6,748)

(13,328)

(10,113)
(5,739)
(6,959)
(11,811)

 -  
 -  

(2,569)

(9,263)

(6,287)
(40,561)
(2,772)
(6,220)

 -  
 -  

66,560

25,117

41,524

36,542

 -  

25,688
33,264

 -  
 -  

At 1 January  
2011

Allocated in  
2011

Vested in  
2011

Net change -  
other

At 31 December  
2011

-

14,673

35,266

27,059
25,120
16,873
30,790
-

 -   

 -   

7,961

13,658

10,781
10,603
8,260
9,457

(870)

(1,771)

(1,683)
(1,691)
(754)
(1,003)

 -   

 -   

 -   

(1,364)

 -   

 -   
 -   
 -   

(2,047)

 -   

 -   

20,400

47,153

36,157
34,032
24,379
37,197

 -   

(1)  Mr Coleman was appointed as CEO on 30 May 2011. Prior to this Mr Coleman was not employed by the Group.
(2)  Mr Della Martina departed Woodside on 10 May 2012.
(3)  Amount includes 3,272, 4,119 and 34 shares that were settled in cash with a fair value of $31.36, $7.44 and $7.46 respectively. 
(4)  Mr Roder became a KMP on 27 October 2011.
(5)  Mr Edwardes became a KMP on 7 May 2012.

126   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION28.  Key management personnel compensation (continued)

(d)   Summary of Executives’ interests in shares under the Woodside Share Purchase Plan (WSPP)

name

Year

Opening 
balance

Shares purchased 
under WSPP

Matching  
shares

Shares vested  net change 

- other

closing 
balance

P Coleman(1)

L Tremaine

R Cole

V Santostefano

L Della Martina(2)

P Moore

F Ahmed

G Roder(3)

R Edwardes(4)

2012
2011
2012
2011
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2012
2011
2010
2012
2011
2010
2009
2012
2011
2012

-
-
-
-
395
769
893
498
124
-
395
769
893
498
124
-
395
769
893
498
124
-
234
358
-
-
-
-
-
-
-

-
-
-
-
-
-
-
158
173
62
-
-
-
158
173
62
-
-
-
158
173
-
-
-
-
-
-
-
-
-
-

-
-
-
-
-
-
-
237
201
62
-
-
-
237
201
62
-
-
-
237
201
-
-
-
-
-
-
-
-
-
-

-
-
-
-
(395)
(374)
(124)
-
-
-
(395)
(374)
(124)
-
-
-
(395)
(374)
(124)
-
-
-
(234)
(124)
-
-
-
-
-
-
-

-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

-
-
-
-
-
395
769
893
498
124
-
395
769
893
498
124
-
395
769
893
498
-
-
234
-
-
-
-
-
-
-

(1)  Mr Coleman was appointed as CEO on 30 May 2011. Prior to this Mr Coleman was not employed by the Group.
(2)  Mr Della Martina departed Woodside on 10 May 2012.
(3)  Mr Roder became a KMP on 27 October 2011. 
(4)  Mr Edwardes became a KMP on 7 May 2012. 

Woodside Petroleum Ltd.  |  Financial Report   127

Notes to and forming part of the Financial ReportFor the year ended 31 December 201229.  Events after the end of the reporting period

Dividends

Since the reporting date, the directors have declared a fully franked dividend of US$0.65 (2011: US$0.55), payable on  
3 April 2013. The amount of this dividend will be US$536 million (2011: US$443 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.

30.  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

commitments 

US$m

Entities with significant influence  
over the Group

Royal Dutch Shell Group (Shell Group)

Shell Company of Australia Ltd

- purchases of goods

Other members of Shell Group

- purchases of services

Other members of Shell Group

- sales of goods

2012

2011

2012

2011

2012

2011

-

-

-

-

313

467

70

108

27

18

-

-

(1)

-

-

1

6

-

-

-

12

14

-

-

Shell Energy Holdings Australia Ltd is deemed a related party through its 23.1% (2011: 23.6%) interest of  
190,119,364 ordinary shares (2011: 190,119,364 ordinary shares) in the shareholding of the Group. 

The Group and Shell have common interests in joint ventures (refer to Note 33(a)).

(b)  Terms and conditions of transaction with related parties

Sales to and purchases from related parties are made at arm’s length on 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 on 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 2012 (2011: nil).

128   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
 
 
31.  contingent liabilities and contingent assets

contingent liabilities at the reporting date

Not otherwise provided for in the Financial Report

Contingent liabilities(1)

Guarantees(2)

2012
US$m

2011
US$m

17

7

24

15

5

20

(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.

32.  auditor remuneration 

Fees of the auditors of the company for:

Audit and review of financial reports

Ernst & Young

Audit

Non-audit services

Ernst & Young

Other assurance/advisory services
Other services

2012
US$’000

2011
US$’000

1,731

1,731

1,463

1,463

1,960
30

1,990

839
27

866

Woodside Petroleum Ltd.  |  Financial Report   129

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012 
33.  Joint ventures

(a) 

Joint venture interests

The Group's interests in joint venture assets as at 31 December 2012 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 30).

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
Canning Offshore Basin

Middle East and africa

Exploration and Evaluation Assets

Canary Islands 

The americas

Producing and Developing Assets

Gulf of Mexico

Exploration and Evaluation Assets

Gulf of Mexico 
Brazil
Peru

asia

Exploration and Evaluation Assets

Republic of Korea

Group interest %

Related party interest %

12.5 - 50.0
60.0
59.9 - 66.7
8.2
50.0
90.0

17.0 - 75.0
15.8 - 90.0
26.7 - 35.0
55.0

30.0

20.0

10.0 - 65.0
12.5
20.0

50.0

8.3 - 16.7
-
-
-
-
-

25.0 - 35.0
15.8
25.0 - 33.3
45.0

-

-

-
-
-

-

130   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION33.  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
Exploration and evaluation assets
Oil and gas properties

(c)  commitments through jointly controlled assets

The aggregate of the Group’s commitments through jointly controlled assets is as follows:

Capital
Exploration 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

2012
US$m

2011
US$m

14
48
5
67

9
652
9,640
10,301
10,368

2012
US$m

153
534
687

30
50
15
95

10
1,582
9,409
11,001
11,096

2011
US$m

316
384
700

Group interest %

2012

16.67

16.67

16.67

16.67

2011

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.

34.  associated entities

Entity

Principal activity

International Gas Transportation Company Ltd(1) LNG vessel fleet management.

(1)  The associate is incorporated in Bermuda.

Group interest %

2012
16.67

2011
16.67

Woodside Petroleum Ltd.  |  Financial Report   131

Notes to and forming part of the Financial ReportFor the year ended 31 December 201235.  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 Energy (USA), Inc

Gryphon Exploration Company
Gander, Inc (formerly ATS, Inc)

  Woodside Offshore LLC

  Woodside Natural Gas, Inc
                 Avilla 8 LLC

  Woodside Energy (Peru) Pty Ltd
  Woodside Energy (Myanmar) Pte Ltd

  Woodside Energy (Algeria) Pty Ltd 
  Woodside Technical Services Pty Ltd 

Metasource 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)
(4)
(4,7)
(4,8)
(4)
(4,9)
(2,4)
(10)
(2,4)
(2,4,6)
(2,4)
(2,4)
(2,4)
(2,4,6)
(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)
(2,4,6)
(2,4)
(2,4)

Australia

Australia
USA
USA
USA
USA
USA
USA
USA
Australia
Singapore
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 2012.
(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 Power Australia Pty Ltd and Tokyo Gas Pluto Pty Ltd each have 5% of the shares in these companies.
(6)  These companies were deregistered on 7 August 2012.
(7)  The dissolution of Gander Inc was effective on 5 December 2012.
(8)  The dissolution of Woodside Offshore LLC was effective on 1 November 2012. 
(9)  The dissolution of Avila 8 LLC was effective on 7 January 2011 and formally notified to the authorities on 10 October 2012.
(10) Woodside Energy (Myanmar) Pte Ltd was incorporated on 5 December 2012.

132   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
35.  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 2001 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

2012
US$m

2,325

(1,129)

1,196

6,932
(979)

7,149

2011
US$m

2,723

(1,042)

1,681

6,117
(866)

6,932

Woodside Petroleum Ltd.  |  Financial Report   133

Notes to and forming part of the Financial ReportFor the year ended 31 December 201235.  Subsidiaries (continued)

(b)   Deed of cross Guarantee and closed group (continued)

closed Group consolidated statement of financial position

2012
US$m

2011
US$m

current assets

Cash and cash equivalents
Receivables
Inventories
Other financial assets
Other assets
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
Tax payable
Other financial liabilities
Other liabilities
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

34
500
187
4
13
738

6
17,809
1
777
4,870
59
14
23,536
24,274

520
542
26
24
166
1,278

6,844
767
7
165
812
8,595
9,873
14,401

6,547
(44)
749
7,149
14,401

(61)(1)
700
177
7
65
888

7
16,549
1
697
5,119
61
-
22,434
23,322

744
72
23
27
158
1,024

6,974
758
6
181
682
8,601
9,625
13,697

5,880
(67)
952
6,932
13,697

(1) Excess joint venture funds were put on deposit in interest- bearing accounts in Woodside Finance Ltd.

36.  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.

134   Woodside Petroleum Ltd.  |  2012 annual Report

Notes to and forming part of the Financial ReportFor the year ended 31 December 2012OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION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 2012 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 2012 and of the performance of the Group for the financial year ended 31 December 2012;

(c)  the financial statements and notes thereto 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 35 will be able to meet any 

obligations or liabilities 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 2012.

For and on behalf of the Board

M a chaney, aO
Chairman  
Perth, Western Australia

P J coleman 
Chief Executive Officer and  
Managing Director 
Perth, Western Australia

20 February 2013

20 February 2013

Woodside Petroleum Ltd.  |  Financial Report   135

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 2012, and the consolidated income statement, consolidated statement of comprehensive 
income, 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 of the financial report that gives a true and fair view in accordance 
with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are 
necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In 
Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the 
financial statements comply with International Financial Reporting Standards.

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. Those standards require that we comply with relevant ethical requirements relating to audit 
engagements and plan and perform the audit to obtain reasonable assurance about 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 the auditor’s 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, the auditor considers 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.

Opinion
In our opinion:

a.  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 as at 31 December 2012 and of its performance for 
the year ended on that date; and

ii  complying with Australian Accounting Standards and the Corporations Regulations 2001; and

b.  the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the remuneration report

We have audited the Remuneration Report included in pages 53 to 65 of the Directors’ Report for the year ended 31 December 
2012. 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.

Opinion
In our opinion, the Remuneration Report of Woodside Petroleum Ltd for the year ended 31 December 2012, complies with section 
300A of the Corporations Act 2001.

Ernst & Young

136   Woodside Petroleum Ltd.  |  2012 annual Report

R J curtin, Partner 
Perth, Western Australia
20 February 2013
Liability limited by a scheme approved under Professional Standards Legislation.

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONshAReholdeR infoRmAtion

As at 12 February 2013

number of shareholdings

There were 208,277 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

152,552

49,436

4,247

1,934

108

208,277

There were 3,204 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

JP Morgan Nominees Australia Limited 

BNP Paribas Noms Pty Ltd 

Citicorp Nominees Pty Limited 

AMP Life Limited

UBS Wealth Management Australia Nominees Pty Ltd

HSBC Custody Nominees (Australia) Limited 

Australian Foundation Investment Company Limited

Pacific Custodians Pty Limited 

BNP Paribas Noms Pty Ltd 

BNP Paribas Noms Pty Ltd 

Perpetual Trustee Company Limited

Argo Investments Limited

Navigator Australia Ltd 

QIC Limited

Nulis Nominees (Australia) Limited 

number of  
shares

% of issued  
capital

58,711,412

98,611,429

29,221,449

40,041,409

597,324,958

823,910,657

7.13

11.97

3.55

4.86

72.50

100.00

shares held

% of issued  
capital

190,119,364

123,613,279

83,140,887

80,836,852

25,403,171

12,772,531

9,728,129

7,733,468

5,682,812

5,364,039

3,687,376

3,182,886

2,960,376

2,928,814

2,769,981

2,082,481

1,700,873

1,510,929

1,289,143

1,047,257

23.08

15.00

10.09

9.81

3.08

1.55

1.18

0.94

0.69

0.65

0.45

0.39

0.36

0.36

0.34

0.25

0.21

0.18

0.16

0.13

total

567,554,648

68.89

Substantial shareholders as disclosed in substantial shareholder notices given to the company are as follows:

Shell Energy Holdings Australia Limited

190,119,364

23.26*

*Since Shell Energy Holdings Australia Ltd’s most recent notice of change of interests of substantial shareholder was given on 4 April 2012, its interest in Woodside’s issued capital has 
reduced to 23.08%, as a result of additional shares being issued by Woodside. 

Woodside Petroleum Ltd.  |  shareholder information   137

Annual General meeting
The 2013 AGM of Woodside Petroleum Ltd 
will be held at 10 am (AWST) on  
24 April 2013, at the 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 Woodside 
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. 

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 dividends 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 are paid in US dollars.

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
Woodside’s Dividend Reinvestment 
Plan (DRP) was suspended by the Board 
in February 2013 until further notice. 
However, shareholders with registered 
addresses in Australia and New Zealand 
can still elect to participate in the DRP, 
pending a decision by the Board to 
recommence the DRP at some future 
date. If the DRP is recommenced in the 
future, the ASX will be notified via an 
announcement lodged with the ASX 
Market Announcements Platform. If the 
DRP is recommenced, shareholders who 
have elected to participate in the DRP 
will have the dividends on some or all of 
their shares automatically reinvested in 
additional shares. Information on the DRP 
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.

Australian securities exchange 
listing
Woodside Petroleum Ltd securities 
are listed on the Australian Securities 
Exchange (ASX) under the code WPL. 

 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

138   Woodside Petroleum Ltd.  |  2012 Annual Report

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONbusiness directory

Key announcements 2012

Registered office perth
Woodside Petroleum Ltd
240 St Georges Terrace, Perth, WA 6000 
Telephone: +61 8 9348 4000
Postal address: GPO Box D188
Perth, WA 6840

broome
29 Coghlan Street, Broome, WA 6725
Telephone: 1800 036 654

Karratha 
Burrup Peninsula, Karratha, WA 6714
Telephone: 1800 634 988

houston (usA)
Woodside Energy (USA) Inc.
Sage Plaza
5151 San Felipe, Suite 1200
Houston, TX 77056, USA
Telephone: +1 713 401 0000

february

Appointment of Executive Director

march

April

Pluto LNG Project achieves ready for start-up

Variation to Browse Basin retention leases approved

Pluto begins LNG production

Offer for sale of Browse equity and LNG volumes 

August

Equity changes in Browse Joint Ventures

Woodside reports 2012 half-year profit of $812 million

september

Sale of Browse equity completed

october

Farm-in offer accepted for offshore Myanmar PSC

Speculation regarding Israeli petroleum licences

Changes to Board of Directors

december

Woodside enters major gas discovery offshore Israel

Changes to Board of Directors 

events calendar 2013

Key calendar dates for Woodside shareholders in 2013. 

Please note dates are subject to review.

january

17 Fourth quarter 2012 report

february

20 2012 full-year result and final dividend announcement

25 Ex-dividend date for final dividend

march

April

1 Record date for final dividend

3 Payment date for final dividend

18 First quarter 2013 report

22 AGM proxy returns close at 10.00 am (AWST)

june

july

24 Annual General Meeting

30 Woodside half-year end

18 Second quarter 2013 report

August

21 2013 half-year result and interim dividend announcement

TBA Ex-dividend date for interim dividend

TBA Record date for interim dividend

october

TBA Payment date for interim dividend

17 Third quarter 2013 report

december

31 Woodside year end

Woodside Petroleum Ltd. |  shareholder information   139

units, conversion factors and glossary

units

bbl

Bcf

boe

kPa

Mcf

barrel

billion cubic feet

barrel of oil equivalent 

thousands of Pascals

thousand cubic feet

MMbbl million barrels

MMboe million barrels of oil equivalent

MMBtu million British thermal units

mtpa

million tonnes per annum

psi

t

Tcf

TJ

pounds per square inch 

tonnes

trillion cubic feet

terajoules

conversion factors

product

factor

conversion 
factors*

Domestic Gas

1TJ

163.6 boe

Liquefied Natural 
Gas (LNG)

1 tonne

8.9055 boe

Condensate

Oil

1 bbl

1 bbl

1.000 boe

1.000 boe

Liquefied  
Petroleum Gas 
(LPG)

Gulf of Mexico 
Gas

1 tonne

8.1876 boe

1 MMBtu 0.1724 boe

* Minor changes to some conversion factors can occur 
over time due to gradual changes in the process stream.

140   Woodside Petroleum Ltd. |  Glossary

Glossary

$, $m

1H, 2H

APPEA
Appraisal well
ASEAN
Basis of design
Brent
Brownfield

Condensate

Crude oil
CWLH
Development well
DRP
EEP
EIP
EIS
EPA
EPS
ER
Front-end engineering  
and design (FEED)
FID

Flaring

FPSO
Gearing
GoM
Greenfield

GWF
Infill well
ISO
JV
KGP
KPI
LIBOR
LNG
LPG
LTA
Net debt
NPAT
NRB
NR2
NWS
PRRT 
PSC
Q1, Q2, Q3, Q4

RAP
Return on equity

ROACE

RTSR, TSR
STA
TRCF
TSR
Unit production costs

USD
VAR
VPR
VWAP
WEP
WSPP

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)
Australian Petroleum Production and Exploration Association
A well drilled to follow up a discovery and evaluate its commercial potential
Association of Southeast Asian Nations
Specification of owner's requirements
Intercontinental Exchange (ICE) Brent Crude deliverable futures contract (oil price)
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
A well drilled for the purpose of recovering hydrocarbons
Dividend reinvestment plan
Employee equity plan
Executive incentive plan
Environmental Impact Statement
Enviromental Protection Authority
Earnings per share
Equity rights
Preliminary design and cost and schedule confirmation before a final investment 
decision
Final investment decision
Flaring is the term used to describe the controlled burning of gas found in oil and 
gas reservoirs.
Floating production storage and offloading vessel
Net debt divided by (net debt + equity)
Gulf of Mexico
Development or exploration located outside the area of influence of existing 
operations/infrastructure
Greater Western Flank
Drilled for the purpose of increasing production
International Organisation for Standardisation
Joint Venture
Karratha Gas Plant
Key performance indicator
London Inter-Bank Offer Rate
Liquefied natural gas
Liquefied petroleum gas
Long-term award
Total debt less cash and cash equivalents
Net profit after tax
North Rankin B platform
North Rankin Redevelopment Project
North West Shelf Project
Petroleum Resources Rent Tax
Production Sharing Contract
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)
Woodside’s Reconciliation Action Plan
A measure of company performance calculated as equity attributable to 
shareholders (excluding non-controlling interests) divided by reported NPAT 
(excluding non-controlling interests) expressed as a percentage  
Return on average capital employed is calculated as net profit after tax and net 
finance costs (after tax) divided by average debt and equity
Relative total shareholder return, total shareholder return
Short-term award
Total recordable case frequency (per million hours worked)
Total shareholder return
Production costs ($ million) divided by production volume (MMboe)
US dollars
Variable annual reward
Variable pay rights
Volume weighted average price
Woodside’s equity plan
Woodside share purchase plan

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATIONindex

A
American depository receipts
Angel platform
Annual General Meeting, 2013 Notice
Anti-bribery and corruption
Australia Oil
b
Balance sheet
Board of Directors
Brazil
Brent
Browse LNG
c
Canary Islands
Carbon tax, Clean Energy Legislation
CEO remuneration
CEO report
CFO report
Chairman’s report
Cimatti
Committees of the Board
Compass (workplace culture)
Compliance
Contingent resources
Conversion factors
Corporate governance
d
Darwin LNG  
Directors’ declaration
Diversity
Dividend
Dividend Policy
Dividend Reinvestment Plan
e
Emissions
Employees
Enfield
Environmental report
Environmental incidents
Events calendar 2013
Exchange rate
Executives
Exploration review
External auditor relationship
f
Financial report
Flare gas and intensity
Floating LNG
Franking credit balance
Funding
G
Gearing
Global LNG demand
Goodwyn A
Graduates
Greater Exmouth
Greater Western Flank
Gulf of Mexico (GoM)
h
Health and safety
Henry Hub
i
Income tax 
Independent audit report
Indigenous
Israel
j
James Price Point
K
Karratha Gas Plant
l
Laminaria–Corallina
Laverda
Leviathan
LNG market
LNG Train 2
LNG Train 4
London Benchmarking Group
Long-term award

138
3, 24
138
11
28, 29

7, 8, 31, 143
5, 36, 37, 39, 143
iii, 34,35
3, 9, 29, 140, 142
iii, 2, 3, 5- 9, 13, 15-17, 21, 30, 31

iii, 35
13, 44, 45, 83
57
6, 7
8, 9
4, 5
7, 29
43
iii, 7
ii, 11, 20, 43, 46-49, 52
3, 16, 17, 30, 32
140
38-52

33
135
7, 10, 49, 50
1, 2-4, 8, 52, 138
4, 8, 9
138

13, 45, 56
10
6, 9, 28, 29
13
13
139
9, 59
21
18, 19
48, 49

67-134
13
33
94
9

2, 143
14
13, 24, 25
7, 10, 49, 50
16, 17, 19
4, 6, 15, 25
iii, 18, 19, 34, 35

6, 7, 11, 20, 45, 48, 56
15

8, 9, 52
136
10, 26, 27, 31, 49
iii, 3, 5, 7, 9, 18, 19, 34, 35, 139

5, 13, 31

iii, 24, 25

9, 28, 29
7, 19, 28, 29
iii, 1, 3, 5-7, 9, 15, 19, 34, 35
14, 15
24, 25
25
12
54-57

m
Mission
MODEC Venture II FPSO
Mutineer–Exeter
Myanmmar
n
Native Title Agreement
Neptune
Net profit after tax
Nganhurra FPSO
Ngujima-Yin FPSO
North American LNG, US LNG
North Rankin A
North Rankin B
North Rankin Redevelopment Project
North West Shelf Project
NWS Oil Redevelopment Project
Northern Endeavour FPSO
o
Ohanet Risk Sharing Contract
Oil spill response plan
Okha FPSO
Outer Canning Basin
p
Payout ratio, dividend
Petroleum Resource Rent Tax (PRRT)
Performance summary
Peru
Pluto LNG
Pluto LNG expansion
Power Play
Price out of range
Production
Proved plus Probable reserves
Proved reserves
Production Sharing Contract
R
Realised prices (average)
Reconciliation Action Plan
Remuneration report
Republic of Korea
Reserves statement
Reserves replacement ratio
Retention lease
Retention (of employees) 
Return on equity
Risk management, policy, system
s
Sales revenue
Security
Securities Dealing Policy
Sensitivities
Share plans
Share price performance
Share registry: enquiries
Shareholders: twenty largest
Shareholdings: distribution
Short-term award
Strategy, Woodside
Stybarrow Venture FPSO
Social investment contributions
Sunrise LNG
t
Technology
Tension leg platform
Timor-Leste
Total shareholder return
TRCF (total recordable case frequency)
Turnover (employees)
u
United States
Unit production cost
v
Values
Vincent
Vision
Volunteering
W
Whale research
WPL
X
Xena

ii, iii, 7,  46
29
9, 28, 29
iii, 1, 3, 5-7, 9, 15, 18, 19, 34, 35

31
8, 34, 35
2-4, 8, 9, 54
13, 28, 29
28,29
5, 14, 15
4, 22, 24, 25
iii, 4, 22-25
iii, 7, 22, 25
iii, 7, 12, 24, 25, 44
25
13, 29

8, 34, 89 
11
13, 24, 25
iii, 18, 19

4, 9, 143
8, 9
2, 3
iii, 18, 19, 35
ii, iii, 2,4, 6-11, 13-16, 22, 26, 27
27
35
15
2-4, 6-9, 14-17, 24-29, 34, 35, 142, 143
3, 16, 17, 24, 26, 28, 34, 142
3, 16, 17
5, 6, 9, 35

8
7, 10, 45, 49
53-65
18, 19, 35
16, 17
16
31
10, 44, 50, 55, 58, 64
2
11, 20, 47, 48, 104-112

2, 3, 6-8, 24, 25, 28, 29, 34
11
59
9
55, 57, 64
3
138
137
137
54-58, 61
iii, 4-7
28, 29
12, 27, 33
5-7, 12, 32, 33

iii, 7, 19
35
5, 7, 32, 33
3, 6, 55-57
3, 7, 11
10

16, 17, 59, 138, 142
9

ii, iii, 7, 11, 39, 46
8, 9, 28, 29
ii, iii, 7, 46
12

31
3, 6, 137, 138

6, 26, 27

  For our areas of activity refer to page iv.

Woodside Petroleum Ltd.  |  shareholder information   141

2012 summary charts

product view

investment

Gas and condensate*
Oil*
Exploration and other
* Indicative only as some assets produce oil and gas

2012
2011
85% 75%
14% 12%
<2% 13%

Regional view

investment

Australia
United States
Rest of World

2012
2011
98% 99%
2% <1%
0% <1%

The majority of our investment expenditure was directed 
towards our LNG projects including North West Shelf, Pluto 
LNG and the proposed Browse LNG Development.

Capital expenditure in the north-west of Australia continues to 
dominate regional investment.

production

Natural gas*
Oil
Condensate
* Includes LNG, LPG and pipeline gas

2012
2011
69% 60%
20% 26%
11% 14%

production

Australia
United States
Rest of World

2012
2011
99% 95%
1% 2%
0% 3%

With the start-up of Pluto LNG, the proportion of natural 
gas in Woodside’s portfolio mix has increased, while oil and 
condensate has decreased. 

The Australian projects provide the majority of Woodside’s 
production volumes.  Refer to our areas of activity map on  
page iv, which shows the locations of our producing assets.

Revenue

Natural gas*
Oil
Condensate
* Includes LNG, LPG and pipeline gas

2012
2011
53% 42%
32% 39%
15% 19%

Revenue

Australia
United States
Rest of World

2012
2011
99% 97%
1% 2%
0% 1%

The revenue profile is largely derived from the increased gas 
streams following the Pluto start-up. While oil production in 2012 
represented only 20% of Woodside’s total production volume, 
ongoing strong oil prices resulted in the oil portfolio contributing 
32% to Woodside’s total revenue.  Refer to page 3 to view the 
Brent oil price graph indexed over ten years.

While the bulk of our revenue is currently derived from Australia, 
Woodside’s growth strategy seeks to capture new opportunities 
to broaden our portfolio.  Refer to the CEO report on pages 6 
and 7 for further information on our strategy. 

Reserves (proved plus probable)

Reserves (proved plus probable)

Natural gas*
Oil
Condensate
* Includes LNG, LPG and pipeline gas

2012
2011
85% 85%
6% 7%
9% 8%

Australia
United States
Rest of World

2012
2011
99% 99%
<1% <1%
<0.1% <0.1%

With gas representing the larger portion of Woodside’s reserves, 
our focus is on commercialising the undeveloped volumes of the 
gas assets we hold, in order to maximise shareholder return.

The majority of Woodside’s Proved plus Probable reserves are 
located in Australia, however we anticipate a greater diversity 
will result from the implimentation of our growth strategy.

142   Woodside Petroleum Ltd. |   2012 summary charts

OVERVIEWBUSINESS REVIEWSGOVERNANCEFINANCIAL REPORTSHAREHOLDER INFORMATION10 year comparative data summary

profit and loss (usdm)(1)
operating Revenues
Australia

Pipeline Gas
LNG
LPG
Condensate
Oil
LNG Processing Revenue

Gulf of Mexico
Algeria
Mauritania
total
EBITDAX
EBITDA 
EBIT2 
Exploration and Evaluation
Depreciation and Amortisation
Finance Costs
Tax Expense
Non-controlling interest
Reported NPAT
Underlying NPAT
Reported EPS (cents)3
Underlying EPS (cents)3
DPS (cents)
Underlying payout ratio (%) 
EBITDA/Op Cash Flow (%)
balance sheet (usdm)1
Total Assets
Debt
Net Debt
Shareholder Equity
cash flow (usdm) and capital expenditure (usdm)
Cash Flow From
Operations
Investing
Financing

capital expenditure

Exploration and Evaluation
Oil and Gas Properties4

Ratios (%)
Reported ROACE
Underlying ROACE
Reported Return on Shareholders Funds
Underlying Return on Shareholders Funds
Gearing
volumes
sales (million boe)
Australia

Pipeline Gas
LNG
LPG
Condensate
Oil

Gulf of Mexico
Mauritania
Algeria
Total (million boe)
production (million boe)
Australia

Pipeline Gas
LNG
LPG 
Condensate
Oil

Gulf of Mexico
Mauritania
Algeria
Total (million boe)
other AsX data
Reserves (Proved plus Probable)
Gas (Tcf)
Condensate (MMbbl)
Oil (MMbbl)
other
Employees5
Shares

High (A$)
Low (A$)
Close (A$)
Number (000’s)

No. Shareholders
Market Capitalisation (USD equivalent at reporting date)
Market Capitalisation (AUD equivalent at reporting date)
Finding Costs ($/boe) (3 year average)6,7
Reported effective Income Tax Rate (%) 
Net Debt/Total Market Cap (%)

2012

2011

2010

2009

2008

2007

2006

2005

2004(8)  
(Restated)

2003

367 
2,834 
125 
903 
1,918 
125 
76 
 -   
 -   
6,348 
 5,371 
 4,979 
 3,795 
 392 
 1,184 
 137 
 614 
 61 
 2,983 
 2,061 
 366 
 253 
130
51
 143 

375 
1,509 
127 
860 
1,795 
 -   
93 
43 
 -   
4,802 
 3,426 
 2,839 
 2,212 
 587 
 627 
 26 
 677 
 2 
 1,507 
 1,655 
 190 
 209 
 110 
 53 
 127 

309 
1,310 
115 
708 
1,579 
 -   
117 
55 
 -   
4,193 
 3,334 
 3,005 
 2,256 
 329 
 749 
 (18)
 697 
 2 
 1,575 
 1,418 
 204 
 183 
 105 
57
 143 

378 
769 
94 
571 
1,496 
 -   
124 
55 
 -   
3,487 
 3,308 
 3,055 
 2,303 
 253 
 752 
 12 
 823 
 (6)
 1,474 
 1,052 
 210 
 150 
 95 
 64 
 206 

320 
1,007 
112 
669 
2,685 
 -   
197 
55 
 -   
 5,045 
 3,885 
 3,584 
 2,852 
 301 
 732 
 19 
 1,287 
 -   
 1,546 
 1,823 
 225 
 266 
 100 
 38 
 111 

 24,810 
 4,340 
 1,918 
 15,148 

 23,231 
 5,102 
 5,061 
 12,658 

 20,196  17,753  10,317 
2,044 
4,939 
1,946 
3,732 
4,633 
8,812 

 4,915 
 3,952 
 11,091 

227 
619 
92 
577 
1,521 
 -   
133 
55 
137 
3,361 
 2,541 
 2,101 
 1,560 
 440 
 541 
 8 
 687 
 -   
 864 
 948 
 128 
 141 
 91 
 64 
 101 

8,515 
903 
782 
4,458 

182 
614 
75 
512 
1,062 
 -   
119 
56 
252 
2,872 
 2,339 
 2,021 
 1,684 
 318 
 337 
 20 
 590 
 -   
 1,075 
 1,030 
 163 
 157 
 98 
 63 
 139 

7,072 
1,435 
1,188 
3,313 

185 
548 
70 
480 
736 
 -   
21 
55 
 -   
2,095 
 1,685 
 1,452 
 1,238 
 234 
 213 
 7 
 387 
 -   
 844 
 791 
 128 
 120 
 70 
 58 
 138 

5,107 
826 
656 
2,565 

177 
360 
44 
342 
586 
 -   
 -   
56 
 -   
1,565 
 1,603 
 1,417 
 1,213 
 186 
 204 
 0 
 367 
 -   
 845 
 495 
 129 
 75 
 44 
 58 
 160 

4,250 
791 
169 
2,162 

167 
296 
36 
268 
546 
 -   
 -   
5 
 -   
1,318 
 905 
 712 
 558 
 193 
 154 
 17 
 197 
 -   
 344 
 344 
 51 
 51 
 33 
 64 
 91 

3,596 
803 
670 
1,830 

 3,475 
 161 
 (1,252)

 2,242 
 (3,533)
 362 

 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)

 883 
 (69)
 (259)

 785 
 (484)
 (273)

383
1,145

778
2,651

703
2,933

273
3,992

418
4,031

447
1,965

376
1,091

210
993

77
480

74
250

16.5% 9.0% 10.5% 14.5% 25.9% 17.2% 26.8% 26.8%
11.8% 9.9% 9.5% 10.5% 29.6% 18.8% 26.0% 26.8%
19.7% 11.9% 14.2% 16.7% 33.4% 19.4% 32.5% 32.9%
14.5% 12.9% 13.0% 12.5% 37.1% 20.9% 31.5% 31.5%
11.2% 28.6% 26.3% 29.8% 29.6% 14.9% 26.4% 20.4%

30.3% 15.0%
18.9% 13.8%
39.1% 18.8%
27.3% 18.8%
7.2% 26.8%

 13.9 
 42.6 
 1.1 
 8.6 
 16.8 
 0.8 
 -   
 -   
 83.8 

 13.8 
 43.9 
 1.1 
 9.3 
 16.0 
 0.8 
 -   
 -   
 84.9 

 14.0 
 22.4 
 1.1 
 7.8 
 15.7 
 1.1 
 -   
 1.8 
 63.9 

 14.0 
 22.6 
 1.2 
 7.9 
 16.0 
 1.1 
 -   
 1.8 
 64.6 

 14.8 
 22.7 
 1.3 
 9.1 
 19.8 
 2.2 
 -   
 2.3 
 72.2 

 14.8 
 23.2 
 1.4 
 9.1 
 19.7 
 2.2 
 -   
 2.3 
 72.7 

 18.4 
 21.3 
 1.5 
 9.7 
 24.3 
 3.2 
 -   
 2.3 
 80.7 

 18.4 
 21.5 
 1.5 
 9.5 
 24.5 
 3.2 
 -   
 2.3 
 80.9 

 18.9 
 17.0 
 1.2 
 7.9 
 29.8 
 3.1 
 -   
 2.3 
 80.2 

 18.9 
 17.4 
 1.2 
 7.9 
 30.5 
 3.1 
 -   
 2.3 
 81.3 

 16.4 
 17.0 
 1.2 
 7.8 
 20.4 
 2.6 
 2.0 
 2.3 
 69.7 

 16.4 
 17.4 
 1.2 
 8.0 
 20.5 
 2.6 
 2.2 
 2.3 
 70.6 

 15.5 
 17.3 
 1.2 
 8.0 
 16.5 
 2.6 
 4.3 
 2.3 
 67.7 

 15.6 
 17.4 
 1.2 
 8.0 
 16.4 
 2.6 
 4.4 
 2.3 
 67.9 

 16.6 
 17.0 
 1.2 
 8.7 
 13.3 
 0.4 
 -   
 2.3 
 59.5 

 16.6 
 17.2 
 1.2 
 8.6 
 13.4 
 0.4 
 -   
 2.3 
 59.7 

 16.5 
 13.3 
 1.0 
 8.8 
 14.7 
 -   
 -   
 2.3 
 56.6 

 16.6 
 13.8 
 1.1 
 8.7 
 14.9 
 -   
 -   
 2.3 
 57.4 

 18.0 
 11.9 
 1.1 
 9.7 
 19.8 
 -   
 -   
 0.1 
 60.6 

 18.0 
 12.1 
 1.0 
 9.8 
 19.7 
 -   
 -   
 0.1 
 60.7 

 7.51    
 130.90    
 95.90    

 7.80    
 138.70    
 108.50    

 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    

 3,124    
 70.51    
 26.81    
 36.70    

 3,650 
 49.28 
 40.56 
 42.56 

 3,856 
 50.85 
 29.76 
 30.62 

 3,219    
 53.87    
 31.19    
 47.20    

 2,981    
 56.66    
 34.81    
 50.39    

 3,997 
 38.16 
 30.09 
 33.88 

 2,888    
 49.80    
 34.81    
 38.11    

 2,508    
 39.39    
 19.87    
 39.19    
 823,911  805,672  783,402  748,599     698,553     688,331     666,667     666,667    
 83,829 
208,277  205,868   201,134   175,257   141,035   131,460   119,003 
 19,146 
 20,033 
 31,567 
 28,983 
 26,127    
 25,407    
 35,334    
 27,914 
 14.09 
 3.95    
 2.47    
 5.71    
27.2% 30.5% 25.2% 33.7% 32.6% 35.8% 35.4% 31.4%
6.6% 20.0% 11.6% 11.8% 11.0% 2.6% 5.9% 3.4%

 30,353 
 34,685    
 3.60    

 33,745 
 33,342 
 6.12 

 17,717 
 25,637    
 3.35    

 25,287 
 24,670 
 12.67 

 2,528    
 21.48    
 14.11    
 20.10    

 2,219    
 15.10    
 10.00    
 14.80    
 666,667     666,667    
 69,491 
 7,420 
 9,867    
 1.18    
30.3% 36.4%
1.6% 9.0%

 72,267 
 10,456 
 13,400    
 1.43    

1  Comparative financial 

information prior to 2010 
has been converted on a 
consistent basis in accordance 
with Note 1(o) to the Financial 
Report. Cash flow and capital 
expenditure have been 
converted using a consistent 
approach adopted on a 
conversion of expenses.

2  EBIT is calculated as a profit 

before income tax, PRRT and 
net finance costs.

3  Earnings per share has been 
calculated using the following 
weighted average number of 
shares (2012: 814,751,356 ; 
2011: 791,668,973 ; 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).

4  2005 Oil and Gas Properties 
capital expenditure includes 
acquitions through business 
combinations of A$415m, 
relating to the acquisition 
of Gryphon Exploration 
Company. 

5  From 2005 employee 

numbers do not include third 
party contractors. Previous 
years have included third party 
contractors.

6  Finding cost for 2003 includes 
acquisitions of additional 
Scope for Recovery volumes.

7  Finding cost methodology has 
changed from 2004 to be in 
accordance with the FAS69/
SEC industry standard.

8  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 effect of AIFRS.

Woodside Petroleum Ltd.  |  10 year summary   143

2012 ANNUAl REpORT

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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