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Jones Energy IncANNUAL REPORT 2013
POSITIONED FOR
FUTURE GROWTH
Woodside is a proud Australian company with a history of
achievement, and we are working hard to realise our vision of
becoming a global leader in upstream oil and gas
ON THE COVER
Record production
In 2013 we posted record production of
87.0 MMboe, highlighting our ongoing
commitment to deliver maximum value
from our base business.
Planned refurbishment works on the
Ngujima-Yin floating production storage
offloading vessel were undertaken and
production recommenced at the Vincent
oil field in November 2013.
Growth through exploration and
innovation
Woodside focused on growing a balanced
global portfolio in 2013. New entries into New
Zealand and Ireland underpinned our strategy
of global portfolio expansion, offering low-
cost access to areas in which our extensive
deepwater capabilities can be fully leveraged.
Our renewed focus on technology has the
potential to improve Woodside’s profitability
and competitiveness. Our Technology Division
worked to develop new in-house capabilities to
increase our range of development solutions.
Browse floating LNG
2013 was a pivotal year for the Browse
Development, with the Joint Venture
participants selecting floating LNG as the
technology for entry into basis of design
(BOD) to develop the three Browse gas fields.
The project entered BOD in September and
a final investment decision is targeted for
the second half of 2015.
Read more on 16
Read more on 17
Read more on 38
Effective capital management
Keeping each other safe
Our commitment to capital management in 2013
saw the company post a record full year dividend
of US 249 cps and a special dividend of
US 63 cps, exceeding our target dividend payout
ratio of 80% of underlying net profit after tax.
This result was underpinned by control over
spending and effective investment decision
making.
With strong cash flows and falling debt
Woodside is well placed to fund future growth
and retain its investment grade credit rating.
In 2013 we began implementing measures
to achieve global top quartile health and
safety performance by 2017.
This included adopting a new corporate
scorecard indicator with specific measures
for process safety and personal safety.
Significant improvement was recorded in
personal safety in 2013 and we will continue
to streamline our processes to deliver world-
class health and safety performance.
Enhancing our base business
2013 was a significant year for the North
West Shelf Project with the A$5 billion
North Rankin Redevelopment Project
achieving start-up.
The project enables the recovery of low
pressure gas, extends resource life and
supports our onshore gas assets.
We are focused on deriving additional
value from our producing assets and will
continue to invest in refurbishment and
development activities.
Read more on 15
Read more on 28
Read more on 20
Improving business productivity
Building our internal talent
Reliability of supply
To remain competitive in Australia’s high-
cost environment we launched an internal
productivity campaign in 2013, focused on
improving efficiency and effectiveness across
the organisation.
Delivering sustainable productivity
improvement will ensure Woodside remains a
competitive and efficient partner of choice.
The company is focused on securing our
future workforce through early career hires,
including graduates.
The graduate development program was
redesigned in 2013, and in 2014 our graduates
will undertake a broader program to support
development of both technical and leadership
capability.
We continued to work towards building a
diverse workforce and rolled out a three-year
Indigenous Employment Strategy, in support
of our Reconciliation Action Plan.
Our flagship Pluto LNG Project performed
strongly, and subsequent to year end
achieved the milestone of 100 LNG
cargoes loaded since the start of
production in April 2012.
Production optimisation activities
progressed, as we worked to deliver further
efficiencies and value from this project.
Read more on 8
Read more on 26
Read more on 22
Information available online
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.
In this report, we have indicated where
additional information is available online
like this
.
SCS-COC-004440
ii
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 ABOuT WOOdsIdE
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.
Woodside is Australia’s largest independent
oil and gas company, with safe and reliable
operations spanning decades.
The company has an extensive portfolio of
facilities which we operate on behalf of some
of the world’s major oil and gas companies.
We have been operating the landmark
Australian project, the North West Shelf,
since 1984 and it remains one of the world’s
premier liquefied natural gas (LNG) facilities.
In 2014 the asset will celebrate two significant
milestones - 30 years of operations and
25 years of LNG exports to Japan.
ABOuT THIs REpORT
This 2013 Annual Report is a summary of
Woodside’s operations, activities and financial
position as at 31 December 2013.
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 2013 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
With the successful start-up of the Pluto LNG
Plant in 2012, Woodside now operates six of
the seven LNG processing trains in Australia.
Together with our four operated offshore gas
production platforms, we are helping meet
the demand for cleaner energy from our
pipeline gas customers in Australia and LNG
customers in the Asia Pacific region.
Woodside also operates four oil floating
production storage and offloading vessels in
the Exmouth Basin, North West Shelf and
Timor Sea. This is the largest owner-operated
fleet in Australia with an excellent track
record of efficiently and safely producing from
current fields.
Driven by our world-class capabilities, we are
committed to expanding our LNG portfolio
through premium developments including the
Browse floating LNG Development.
Additionally, we are seeking to expand our
exploration portfolio, both within Australia
and globally, to generate future growth
opportunities for the company.
Our international assets include acreage
in New Zealand, Ireland, Myanmar, Peru,
Republic of Korea and Spain (Canaries), as
well as a deepwater production facility in the
Gulf of Mexico.
We remain focused on strengthening our
relationships with customers, co-venturers,
governments and communities to ensure we
are a partner of choice, and attain our vision of
becoming a global leader in oil and gas.
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.
REpORT OBjECTIVEs
This report meets our compliance and
governance requirements, and is designed
to provide easy to read information on
how Woodside performed in 2013 for our
stakeholders, including shareholders, staff,
customers and the community.
We aim to build awareness of our
operations and demonstrate how we
delivered on our mission and vision while
maintaining our values and commitment to
sustainable development.
CONTENTs
Overview
About this report
About Woodside
Values, mission, vision, and strategy
Our areas of activity
Performance summary
Chairman’s report
Chief Executive Officer’s report
Woodside Executives
Operating & Financial Review
i. Financial position
ii. strategy, outlook & risks
iii. Operations
a. North West Shelf
b. Pluto LNG
c. Australia Oil
d. Our people
e. Health, safety, security and
emergency management
f. Community engagement
g. Environmental report
h LNG market report
i. Reserves statement
iv. Growth
a. Browse
b. International
c. Global exploration
Governance
1
1
1
2
4
6
8
10
14
16
20
22
24
26
28
30
31
32
34
38
40
42
Board of Directors
44
Corporate governance statement 46
60
Directors’ report
61
Remuneration report
2013 Financial Report
75
shareholder information
143
Shareholder statistics
144
Share registry: enquiries
144
Investor relations: enquiries
145
Business directory
145
Key announcements 2013
146
Units, conversion factors
146
Glossary
147
Index
2013 summary charts
148
Ten year comparative data summary 149
Our 2013 sustainable
development Report
SUSTAINABLE
DEVELOPMENT
REPORT 2013
This report is a summary
of Woodside’s
sustainability approach,
actions and
performance for the
12 month period ending
31 December 2013.
WOODSIDE PETROLEUM LTD
This report will be available in March 2014.
Further information at woodside.com.au
1
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013
WOOdsIdE’s AREAs OF ACTIVITy IN AusTRALIA ANd INTERNATIONALLy
Dilli
17
8
Darwin
14
Broome
Karratha
WESTERN
AUSTRALIA
NORTHERN
TERRITORY
AUSTRALIA
11
3
2
6
1
12
5
4
1
6
Exmouth
16
1013
15
79
Producing assets (operated)
Producing assets (non-operated)
Projects
Our developments
Woodside offices and representative offices
Perth
pROduCING AssETs (OpERATEd)
pROjECTs
Karratha Gas plant
NWS Project
~28 km north-west of Karratha
Ngujima-yin FpsO
Vincent oil
~45 km north-west of Exmouth
Goodwyn A platform
NWS Project
~135 km north-west of Karratha
North Rankin Complex
NWS Project
~135 km north-west of Karratha
7
8
9
Northern Endeavour FpsO
Laminaria-Corallina oil
~550 km north-west of Darwin
Dampier
Karratha
11
Nganhurra FpsO
Enfield oil
~40 km north-west of Exmouth
North Rankin Redevelopment
NWS
~135 km north-west of Karratha
Okha floating production storage
offloading (FpsO) - NWS Project
~135 km north-west of Karratha
PRODUCING ASSETS (NON-OPERATED)
Angel platform
NWS Project
~135 km north-west of Karratha
pluto LNG plant and platform
Pluto LNG
~27 km north-west of Karratha
~180 km north-west of Karratha
stybarrow Venture MV16 FpsO
Stybarrow oil
~50 km north-west of Exmouth
10
Neptune platform
Gulf of Mexico
~220 Km off the coast of Louisiana
12
Greater Western Flank phase 1
NWS
~130 km north-west of Karratha
Dampier
Karratha
1
2
3
4
5
6
2
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn 17
8
Darwin
Dilli
14
Broome
WESTERN
AUSTRALIA
Perth
3
2
4
5
11
6
1
12
1
6
Exmouth
15
16
1013
79
Karratha
NORTHERN
TERRITORY
AUSTRALIA
Woodside offices and representative offices
International production and/or exploration
Israel subject to conditions
dEVELOpMENTs
Onslow
Cape Leveque
Exmouth
Wilson Point
13
Broome
14
Dampier
Karratha
15
Dampier
Karratha
16
Dili
Sunrise and
Troubadour
JPDA
Darwin
17
Greater Enfield oil
~50 km north-west of Exmouth
12°W
10°W
14°W
Browse LNG
~425 km north of Broome
persephone
~135 km north of Karratha
Greater Western Flank phase 2
~130 km north of Karratha
N
°
2
3
sunrise LNG
~150 km south-east of Timor-Leste and
~450 km north-west of Darwin
INTERNATIONAL pROduCTION ANd/OR EXpLORATION
Mandalay
Sagaing
Spain
CANARIAS-9
8
7
6
5
4
3
2
1
Las
Palmas
N
°
0
3
Seoul
Republic of
South Korea
Morocco
N
°
8
2
N
°
6
2
Myanmar
Magwe
AD-7
Naypyitaw
PEP 55793
Ireland
Japan
Block
108
Peru
Lima
Wellington
Block A-6
Pathein
(Bassein)
PEP 55794
034/20
034/19
035/16
035/24
035/23
035/25a
034/24
035/21
034/25
035/25b
035/30
044/05a
036/21
036/26
045/01
045/06
045/11
045/16
Canary Islands
Republic of Korea
Myanmar
peru
New Zealand
Ireland
0
100
200
300
Kilometres
CRS: WEL SE Asia Regional
130°E
135°E
0
100
200
Kilometres
CRS: WGS 1984
23/01/2014 / DRIMS#-9097827v1-1C
WOOdsIdE pETROLEuM LTd OVERVIEW
3
OVERVIEWCanary IslandsPeruNew ZealandIrelandGulf of MexicoBeijingRepublic of KoreaHoustonCanadaIsraelMyanmarTokyoDiliSingaporeeppppppeppSeoul pERFORMANCE suMMARy
In 2013 we posted a record production result and
delivered a total shareholder return of 17.7%
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 pages 14
75 .
safety - Total Recordable Injury Rate
(TRIR)
production up 2%
sales revenue down 7%
e
t
a
r
y
r
u
n
j
i
l
e
b
a
d
r
o
c
e
r
l
a
t
o
T
5.1
4.2
4.1
3.3
3.0
)
d
e
k
r
o
w
s
r
u
o
h
n
o
i
l
l
i
m
r
e
p
(
09 10
11
12
13
13
12
11
10
09
Production (MMboe)
Revenue (US$ million)
87.0
84.9
64.6
72.7
80.9
13
12
11
10
09
5,776
6,223
4,802
4,193
3,487
Our TRIR of 3.0 was a 27% improvement
on 2012.
We reported record annual production, driven
by a full year of Pluto LNG production and a
solid performance by the North West Shelf
Project.
Sales revenue was adversely impacted by a
higher gas proportion in the product mix, due
to a full year of Pluto LNG production, Vincent
vessel being off station for majority of the year
and natural field decline. This resulted in a
lower average realised price.
Reported net profit after tax down 41 %
dividends per share
(us cents per share) up 92%
underlying net profit after tax*
down 17%
Net profit after tax (US$ million)
Dividend per share (US cents)
Net profit after tax (US$ million)
13
12
11
10
09
1,749
2,009^
974
2,983
1,507
1,575
1,474
13
12
11
10
09
130
110
105
95
249
13
12
11
10
09
1,702
1,655
2,061
1,418
1,052
^ Normalised to remove Browse partial equity sale.
Net profit after tax was adversely impacted by
a higher gas proportion in the product mix and
asset impairments made in the period. The
2012 result was enhanced by US$974 million
due to the Browse partial equity sale.
Record production and disciplined capital
management resulted in a robust balance
sheet and provided the company with a solid
cash flow in 2013. As a result, the Board
declared a record full year dividend of US249
cps (interim dividend US83 cps, special
dividend US63 cps, final dividend US103 cps).
A combination of a higher gas proportion in
the product mix (resulting in lower realised
pricing) and asset impairments made in 2013,
saw underlying net profit after tax negatively
impacted.
Operating cash flow down 4%
Return on equity of 11.5%
Net debt down 20%
Operating cash flow (US$ million)
Return on equity (%)
Net debt (US$ million)
13
12
11
10
09
3,330
3,475
13
12
11
10
09
2,242
2,104
1,483
11.5
14.2^
11.9
19.7
14.2
16.7
13
12
11
10
09
1,541
1,918
5,061
3,952
3,732
^ Normalised to remove Browse partial equity sale.
2013 saw a decline in operating cash flow,
largely attributed to lower sales receipts due
to a higher gas proportion in the product mix,
leading to lower average realised pricing.
Return on equity was 11.5%, down
8.2 percentage points. The 2012 result
was enhanced due to the Browse partial
equity sale.
The reduction in net debt was largely the
result of a full year of Pluto LNG receipts.
Gearing declined to 9.2% down from 11.2%
in 2012.
* 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 summary charts can be found on page 149 .
4
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn
POSITIONED
FOR
FUTURE
GROWTH
Record production of
87.0 MMboe up 2.5%.
Record full year dividend
of us249 cps, up 92%.
Record final dividend of
us103 cps.
safe and successful start-
up of the North Rankin
Redevelopment project.
strong balance sheet
with gearing at 9%.
27% improvement in our
Total Recordable Injury
Rate.
Entries into Ireland and
New Zealand.
Results for the year
Reported net profit after tax
(US$ million) 1,749 2,983
(41)
2013
2012 % Change
Sales revenue
Cash flow from operating activities
Reported earnings per share
Total recordable injury rate1
5 year total shareholder return2
10 year total shareholder return2
Production
Proved reserves
Proved plus Probable reserves
Contingent resources
(US$ million) 5,776 6,223
(US$ million) 3,330 3,475
(US cents)
(TRIR)
(TSR, %)
(TSR, %)
(MMboe)
213
3.00
12.6
16.1
87.0
366
4.13
21.7
84.9
(MMboe) 1,143 1,231
(MMboe) 1,437 1,544
(MMboe) 1,692 1,745
(7)
(4)
(42)
27
(26)
2
(7)
(7)
(3)
(0.3)
n.m.3
1 In 2013 Woodside adjusted the calculation of the total recordable case frequency to exclude illness.
This metric is now called Total Recordable Injury Rate (TRIR). The 2012 figure has been adjusted to
reflect this change.
2 Source: Bloomberg, TSR is the compounded annual return over the specified period.
3 n.m. - not meaningful.
Indexed ten year performance
s
e
i
r
a
n
d
r
O
i
l
l
A
d
n
a
e
c
i
r
p
l
i
o
t
n
e
r
B
600
600
500
Brent oil price
Woodside (WpL)
AsX All Ordinaries Index
4
5
3
l
s
e
u
a
400
v
3
0
0
2
o
t
300
d
e
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1
200
200
100
0
0
31/12/2003
)
$
A
l
(
y
n
o
e
c
i
r
p
e
r
a
h
s
L
P
W
70
70
60
60
50
50
40
40
9 10
30
30
6
7
8
20
20
10
10
0
0
31/12/2013
Over the past ten years Woodside has outperformed the ASX All Ordinaries Index
(values are indexed to base 100 from 31 December 2003).
subsequent to year end
the 100th LNG cargo was
loaded from pluto LNG.
1 September 2004 NWS Train 4 start-up.
2 April 2005 Pluto gas discovery.
3 July 2007 Pluto final investment decision.
Entered a Memorandum
of understanding with
the Leviathan joint
Venture participants
(February 2014).
4 Global financial crisis impact.
5 September - October 2008 NWS
Train 5, Angel start-up.
6 April 2012 Pluto LNG production.
7 September 2012 sale of Browse equity
completed.
8 December 2012 in-principle agreement
to acquire a participating interest
in petroleum licenses covering the
Leviathan gas field, offshore Israel.
9 Browse recommends floating LNG
(FLNG) and in September 2013 the Joint
Venture selects FLNG as basis of design.
10 October 2013 North Rankin
Redevelopment Project achieves start-up.
WOOdsIdE pETROLEuM LTd OVERVIEW
5
OVERVIEW
CHAIRMAN’s REpORT
Michael Chaney AO
Chairman
In a year of mixed
fortunes for the global
economy and further
cost pressures for
Australia’s resources
sector, Woodside
continued to perform
strongly for its
shareholders in 2013
6
Record production from the company’s
operated facilities allowed it to capitalise
fully on robust energy demand from
the growing economies in our region;
and a disciplined approach to capital
management delivered record dividends
in parallel with the pursuit of new growth
opportunities.
strong and stable finances
Record production of 87.0 million barrels
of oil equivalent saw sales revenue of
US$5.78 billion. Reported net profit after
tax was US$1.75 billion and underlying
net profit after tax a healthy US$1.70
billion. With strong cash flows and falling
net debt, the company is well placed to
invest in new growth opportunities.
Woodside is in the fortunate position of
pursuing growth while at the same time
being able to return cash to shareholders.
During 2013 the Board declared a special
dividend to shareholders of 63 cents per
share, fully franked for Australian taxation
purposes. We also announced a dividend
payout ratio target of 80% of underlying
net profit after tax. The methodology
for calculating the final dividend was
amended to add back the net impacts
of impairments incurred in 2013. This
translated into a record 2013 full-year
dividend of 249 cents per share.
The Board expects to maintain this
dividend policy for the foreseeable future,
subject to the demands of significant
new capital investments or material
changes in the company’s business
environment.
Delivering superior shareholder returns
is, of course, about more than paying
healthy dividends. Long-term value
creation requires a disciplined approach
to capital management and investment
decisions and the ability to take
advantage of growth opportunities.
delivering on our strategy
During 2013 the company delivered
important achievements against
each element of its growth strategy:
maximising its core business; leveraging
its capabilities and growing its portfolio.
The Vincent floating production storage
and offloading vessel re-commenced
operations in late November following
planned shipyard maintenance and
refurbishment activities.
Following the Browse Joint Venture
participants’ decision not to proceed
with an onshore development of the
Browse gas reserves, basis of design
work was commenced for a floating
LNG (FLNG) development concept.
By combining Woodside’s offshore
development expertise with Shell’s FLNG
technology, the Browse Joint Venture is
well placed to deliver a development that
offers significant long-term value for our
shareholders and the nation.
Several exploration-led opportunities
were advanced in 2013 as we sought
to refresh and rebalance our global
exploration portfolio. Entry into two
blocks offshore Myanmar was finalised
during the year, as was entry into
emerging and frontier acreage offshore
Ireland and New Zealand. These
opportunities offer Woodside low-cost
access to prospective basins in which
the company’s deepwater exploration
capabilities can be fully utilised.
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn sustaining success in a competitive industry
Global market conditions continue to support our long-term
growth strategy, with robust demand for natural gas from Asia’s
major economies forecast for the remainder of this decade and
beyond. In the short-term, constraints on new global supply
support the company’s efforts to maximise value from its equity
LNG volumes that are subject to price reviews.
Beyond technology, Woodside is focused on driving down costs
through new project management solutions and control of back-
office costs, identified by the Business Council of Australia as
a key area for improvement for the local resources sector. The
company has also implemented a productivity challenge to cut
operating and corporate costs to ensure that we deliver the very
best value for our shareholders.
Board of directors changes
Mr Frank Cooper joined the board during the 2013 year.
Mr Cooper has more than 35 years experience in corporate tax
related to the mining, energy and utilities sector, including as a
partner in a major accounting firm.
Mr Cooper replaced Mr Erich Fraunschiel, who retired after ten
years service to the company. On behalf of the directors, I thank
Erich for his valuable contribution over that time, particularly in
respect of commercial matters.
Members of the Board, along with many others at Woodside
and beyond, mourned the passing in 2013 of former Chairman
Geoff Donaldson. Mr Donaldson served as Woodside’s
Chairman for 28 years until his retirement in 1984 and was
widely recognised as the father of the company.
Reflecting on Mr Donaldson’s legacy, it is clear how much this
company has achieved as it prepares to celebrate in 2014 the
60th anniversary of its founding. Led by Chief Executive Officer
Peter Coleman, our people are working hard to ensure that
Woodside’s future is equally successful.
Nonetheless, a defining feature of Woodside’s future operating
environment is increased competition, both at home and
internationally. The prospect of new LNG supply entering the
Asian region – during 2013 a further three proposed US LNG
projects received approval to export gas to non-Free Trade
Agreements markets – provides traditional buyers with more
options to secure supply on both the long-term and spot
markets.
In this context, it has become more important than ever to
address cost and productivity challenges that threaten to delay
the current and future waves of Australian LNG projects.
Policies that promote workforce mobility and flexibility and
reduce red and green tape will play an important role in keeping
our sector globally competitive; but industry must also get
its own house in order – which is why Woodside has taken
significant steps towards becoming a leaner, more innovative
and cost-competitive organisation.
The company is harnessing new technologies to deliver game-
changing results in terms of cost savings. Selecting FLNG as
the basis of design for Browse is a strong demonstration of this
approach, enabling development of a premium Australian gas
resource that could not be taken forward commercially via a
greenfield onshore facility.
Woodside believes the emergence of the Browse Basin as
a globally significant FLNG province will deliver substantial
benefits to the state and national economies, and not only
through additional revenue returned to the community. FLNG
delivers more jobs than a conventional facility during the
decades-long operational phase, and promises a range of
high-skilled opportunities associated with Western Australia’s
emergence as a hub for FLNG technology and project execution.
Michael Chaney AO
19 February 2014
Geoff donaldson, known across our
company as the father of Woodside,
sadly passed away in 2013. Geoff helped
found Woodside in 1954, and served as
Chairman of our company for 28 years
from 1956-1984.
More than any other individual, Geoff’s vision
and determination enabled Woodside to
become the leading Australian company it
is today. In the 1960s he made the visionary
decision to turn Woodside’s attention from
exploration offshore Victoria to WA’s North
West. In one of the great business deals in
Australian history, Geoff secured offshore
permits for Woodside covering 367,000
square kilometres. The world-class oil and gas
assets in these permits underpin Woodside’s
business to this very day.
Geoff’s spirit remains alive and strong within
our company, and we continue to honour him
through the Woodside Donaldson tanker that
delivers cargoes from the Pluto LNG Plant.
Geoff donaldson AO
WOOdsIdE pETROLEuM LTd OVERVIEW
7
OVERVIEW CHIEF EXECuTIVE OFFICER’s REpORT
peter Coleman
Chief Executive Officer and Managing Director
2013 was a year of hard work, as we focused on re-building our
portfolio and positioning the company for future growth
2013 Key performance highlights
Future objectives
Total Recordable Injury Rate of 3.0, a
Achieve global top quartile health and
27% improvement on 2012.
safety performance by 2017.
Record production of 87.0 MMboe.
Safe start-up of the North Rankin
Redevelopment Project.
Agreement by Browse Joint Venture to
select floating LNG (FLNG) technology
to commercialise the Browse fields.
Pursued new international
opportunities in Ireland, Myanmar,
New Zealand and Canada.
Persephone entered front-end
engineering and development (FEED)
phase.
Successful refurbishment of the
Vincent floating production storage and
offloading vessel (FPSO).
Entered a Memorandum of
Understanding (MoU) with the
Leviathan Joint Venture participants
(subsequent to year end).
Consider final investment decision
(FID) on Browse FLNG Development,
targeted for the second half of 2015.
Progress Greater Western Flank Phase
1 Project, scheduled for completion in
early 2016.
Advance offshore exploration in
Myanmar, Ireland and New Zealand.
Progress Xena field tie-in project
for Pluto LNG in 2015 and continue
to develop Greater Enfield Area oil
opportunities.
Maintain disciplined evaluation of new
value-add opportunities.
Harness technology to deliver lower
cost development solutions.
Leviathan Joint Venture targeting
domestic gas FID in 2014.
Total shareholder Return (TsR) performance against peers
Ten year compound annual return
(
)
30
%
n
r
u
t
e
r
L
p
W
l
r
e
d
o
h
e
r
a
h
s
l
a
t
o
t
r
a
e
y
0
1
-5
8
The ten year TSR reflects the long-term
sustainability of our business relative to our
peer group which includes: Anadarko, Apache,
BG, Conoco Philips, ENI, Hess, Marathon,
Murphy, Oil Search, Origin Energy,
Pioneer, Santos, Statoil, Talisman Repsol
and Tallow Oil.
Source: Bloomberg. TSR is the compounded annual
return over the specified period.
strategic statement
During 2013, Woodside’s values-led,
disciplined approach saw us take key
steps towards achieving our mission to
deliver superior shareholder returns. It
was a year of hard work, re-building our
portfolio and positioning the company for
future growth.
We made significant progress during
the year against the three elements of
our corporate strategy: maximising our
core business; leveraging our proven
capabilities; and growing our portfolio.
In line with the first element, the
North Rankin Redevelopment Project
successfully achieved start-up in October,
demonstrating our capacity to execute
complex projects - in this case the
integration of a new 65,000 tonne facility
next to an existing offshore production
platform. This redevelopment will extend
the production life of the world-class
North West Shelf asset.
In 2013, we demonstrated our
commitment to growing our portfolio,
working hard to further our entry into
the world-class Leviathan Project. In
February 2014, we announced that we
had entered an MoU with the Leviathan
Joint Venture participants, building on our
earlier in-principle agreement.
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn
Underpinning our corporate strategy
was a clear focus on creating a high
performance culture. We used the
Woodside Compass – linking Woodside’s
core values, vision, mission and strategic
direction – to guide us on our journey to
becoming a global leader in upstream oil
and gas.
safety
In 2013, Woodside began implementing
measures to achieve global top quartile
health and safety performance by 2017.
Significant improvement was recorded
in personal safety performance during
the year. Our TRIR of 3.0 was a 27%
improvement on 2012.
Record production
Our production result for 2013 is
testament to our focus on maximising our
core business. With record production of
87.0 MMboe we built on last year’s result
of 84.9 MMboe.
Subsequent to year end, our Pluto LNG
Project achieved the milestone of 100
LNG cargoes loaded since the start of
production in 2012. The overall LNG
train reliability of Pluto since start-up
continues to exceed our expectations.
Capital management
In 2013, we demonstrated effective
capital management - laying the
foundations for future growth. Our oil
and gas assets delivered strong operating
cash flows of US$3.33 billion and our
reported net profit after tax was
US$1.75 billion. Woodside has low
gearing, liquidity to support growth and
a solid investment grade credit rating.
Disciplined investment decisions,
managing our asset portfolio and
targeting cost reduction continue to
be the hallmarks of our capital
management approach.
We demonstrated our investment
discipline in our decision not to proceed
with the James Price Point development
concept for our Browse Project.
Internally, we have recognised that
to become a top quartile performer,
we need to focus our attention on
improving productivity. Our company-
wide Productivity Challenge is focused
on delivering sustainable productivity
improvement by the end of 2014. All
initiatives will ultimately impact our
bottom-line, through increased revenue
or decreased operating and capital
expenditures.
Growth opportunities
Building capability
As the company strives to be a global
leader in oil and gas, internally we are
focused on building our employees’
own leadership capabilities. In 2013,
we launched the Leadership and
Management Development Framework,
to engage and inspire our workforce, to
establish leadership succession planning
and to help guide our managers.
We continue to grow our pool of talented
individuals with technical and leadership
expertise through our successful
graduate and trainee programs. In 2014,
we will significantly boost our intake for
the Graduate Development Program to
71, up from 46 in 2013.
partner of choice
In line with our aspiration to be a partner
of choice, in 2013 we continued to focus
on achieving world-class environmental
performance and close engagement with
the communities where we operate.
On the environmental side, we developed
specialised oil spill contingency and
response teams to support Woodside’s
emergency response capabilities.
In terms of social investment, we made
a significant commitment to contribute
A$20 million over the next ten years
through the Woodside Development
Fund, which is intended to support
programs and organisations that focus
on early childhood development. Within
Woodside, our volunteering rates
continue to be among the highest in
Australia.
Outlook
Against a backdrop of increasing
competition for energy supply into the
Asia Pacific market, in 2014 Woodside
will continue to progress its corporate
strategy.
We also look forward to celebrating
our company’s 60th anniversary,
30 years of domestic gas production and
25 years of LNG exports. As always, we
remain focused on delivering superior
shareholder returns and becoming a
global leader in upstream oil and gas.
A key milestone for 2013 was the
agreement by the Browse Joint Venture
participants to adopt FLNG technology
as the basis of design to enable earliest
commercialisation of the world-class
Browse resource.
We have made excellent progress
on basis of design work in relation
to the FLNG development concept.
In the second half of 2014 we plan
to commence FEED, and the project
remains on track for FID in the second
half of 2015.
In addition to Browse, the Persephone
development entered the FEED phase
in the third quarter of this year, with
FID targeted for the second half of
2014. Persephone is the next major gas
development for the North West Shelf
Project, involving a subsea tieback to the
North Rankin Complex.
We continue to optimise our world-class
producing assets. Work is well underway
on the A$2.5 billion Greater Western
Flank Phase 1 Project and the Vincent
FPSO vessel re-commenced operations
in late November following planned
shipyard maintenance in Singapore.
High impact exploration
We made significant progress on
rebuilding our exploration portfolio,
pursuing opportunities where we see
alignment between our capabilities and
future value, such as Ireland, Myanmar
and New Zealand.
In line with our corporate strategy, we are
leveraging our technological expertise to
further our growth opportunities.
The Fortuna Survey, which mobilised in
December, is the first IsoMetrix™ marine
seismic survey acquired in Australia and
the largest survey ever undertaken by the
North West Shelf Project.
Enhanced margins
Achieving enhanced margins was a
focus for Woodside in 2013, particularly
through the ongoing LNG price reviews
within Woodside’s portfolio. New LNG
prices, which we will see in 2014, are on
trend with current regional pricing and
traditional regional indexation. Following a
strong start in early 2014 with the signing
of a sales and purchase agreement with
Chubu Electric Power, we will continue
to focus on growing our commercial and
marketing capabilities.
peter Coleman
19 February 2014
9
WOODSIDE PETROLEUM LTD OVERVIEWOVERVIEW OVERVIEW
OpERATING &
FINANCIAL REVIEW
GOVERNANCE
FINANCIAL
REpORT
sHAREHOLdER
INFORMATION
WOOdsIdE EXECuTIVEs
Robert Cole
Executive Director and Executive Vice
President, Corporate and Commercial
BSc LLB (Hons)
Lawrie Tremaine
Executive Vice President and
Chief Financial Officer
BBus, FCPA
Robert jointed Woodside in 2006 as
General Counsel after a 21 year career
with law firm Mallesons Stephen Jaques.
Lawrie has more than 30 years finance
leadership experience predominantly in the
resource and minerals processing industry.
Robert was appointed to the Woodside
Board in the role of Executive Director in
early 2012.
In his current role, Robert is responsible
for Legal and Company Secretariat,
Audit, Commercial (including Upstream),
Organisational Effectiveness, Corporate
Affairs, Security and Emergency
Management and Human Resources.
Robert is Chairman of the Australian
Petroleum Production and Exploration
Association and also sits on the Board
of the Committee for Perth and the West
Australian Youth Jazz Orchestra.
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, Continous Improvement
and Supply Chain. Lawrie is a National
Executive Member of the Group of 100.
dr Robert Edwardes
Executive Vice President Development
BSc (Eng), PhD
Robert has 36 years of resources industry
experience spanning the full breadth of
operations and projects, including health
safety and environment, operations
integrity, production technology,
development planning and delivery of
major capital projects.
In his role as Executive Vice President
Development, Robert is responsible
for front-end planning and execution of
onshore and offshore capital projects,
as well as reservoir management,
engineering, subsea and drilling
operations. He also has executive
accountability for the Browse and Sunrise
business units.
peter Coleman
Chief Executive Officer and
Managing Director
BEng (Civil and Computing), MBA
Peter has 30 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.
Peter is a member of both the University
of Western Australia Business School
Board and the Executive Committee
of the Australia Japan Business Co-
operation Council; and is Commissioner
of the West Australian Football
Commission.
He is a Fellow of the Australian
Academy of Technological Sciences and
Engineering, and in 2012 was awarded
the honorary title of Adjunct Professor in
Corporate Strategy from the University of
Western Australia.
In 2013 he received the Distinguished
Alumni Lifetime Achievement Award
from Monash University.
10
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013
dr Greg Roder
Executive Vice President
Corporate Strategy and Planning
BSc (Hons), PhD, MBL
Greg has over 30 years experience
in energy resources, infrastructure
investment, funds management, equity
capital markets and operational asset
management.
Greg joined Woodside in 2011 and
his role of Executive Vice President
Corporate Strategy and Planning
sees him responsible for setting and
coordinating Woodside’s growth path in
line with the agreed strategic themes the
company is pursuing.
Michael utsler
Chief Operations Officer
BSc (Petroleum Engineering)
Michael has over 35 years experience
in the upstream oil and gas industry.
He joined Woodside in 2013 as Chief
Operations Officer and is responsible for
Woodside’s producing facilities.
Prior to joining Woodside, Michael held
the position of President for the BP-Gulf
Coast restoration organisation, leading the
Deepwater Horizon response effort.
shaun Gregory
Senior Vice President Health, Safety,
Environment and Technology
Bsc (Hons), MBT
Shaun has worked in the oil and gas
industry for more than 20 years.
He joined Woodside in 1996 and has
held a variety of roles in areas including
mergers and acquisitions, corporate
strategy, new ventures and geophysics.
His current role sees him accountable
for the company’s efforts in advancing
oil and gas technology, and stewardship
of programs in health, safety and
environment.
phil Loader
Executive Vice President
Global Exploration
BSc (Geology), MBA, MSc, DIC
Phil joined Woodside in 2013, following
an extensive career in the upstream
sector spanning over 30 years.
As Executive Vice President Global
Exploration, Phil is responsible for the
company’s international exploration
activities.
Prior to joining Woodside, Phil’s roles
included Senior Vice President –
Exploration at Mubadala Petroleum in
the UAE and 11 years with Anadarko
Petroleum as Vice President Exploration.
11
WOODSIDE PETROLEUM LTD OVERVIEWOVERVIEW
OPERATING &
FINANCIAL REVIEW
pLuTO LNG
AusTRALIA OIL
Read more on 22
Read more on 24
NORTH WEsT sHELF
Read more on 20
OuR pEOpLE
Read more on 26
12
ENVIRONMENTAL
REpORT
Read more on 31
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn OPERATING &
FINANCIAL REVIEW
LNG MARKET REpORT
Read more on 32
COMMuNITy
ENGAGEMENT
Read more on 30
REsERVEs sTATEMENT
OuR HEALTH,
sAFETy, sECuRITy
ANd EMERGENCy
MANAGEMENT
Read more on 28
Read more on 34
13
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEWOPERATIONS FINANCIAL pOsITION
Woodside’s financial position continues to strengthen, following the
first full year of Pluto LNG production. We have delivered a record
dividend and the company is well placed to fund future growth
Key metrics
US$ million unless stated otherwise
Operating revenue
Costs of production
EBITdA
Depreciation and amortisation
EBIT
Reported NpAT
Non recurring items
underlying NpAT
Net cash from operating
activities
Capital expenditure
Exploration expenditure
Free cash flow
Dividends paid
Net debt
Key ratios
Gearing
%
US cps
Earnings
Underlying earnings US cps
Return on equity
%
Effective income tax rate %
sales volumes
Gas
Liquids
MMboe
MMbbl
Reported NpAT
3
8
9
,
2
4
7
9
2013 reported net profit after tax (NpAT) versus 2012
2013
5,926
1,242
3,756
1,218
2,538
1,749
47
1,702
2012
6,348
1,295
4,979
1,184
3,795
2,983
922
2,061
3,330
3,475
590
261
2,271
1,738
1,541
1,498
260
3,636
979
1,918
)
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o
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l
i
m
$
S
U
(
t
fi
o
r
p
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e
t
r
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p
e
R
3500
3000
2500
2000
1500
1000
500
0
2,983
(974)
2,009
(540)
138
25
(45)
24
30
(132)
(42)
104
182
(4)
1,749
Revenue
2
1
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2
T
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M
i
2013 NPAT was lower than 2012 due to reduced revenue associated with a higher gas proportion
in the product mix combined with the impact of the 2012 Browse partial equity sale and
additional oil and gas properties impairments on our Australian oil assets and Neptune.
11
366
253
19.7
27.2
9
213
207
11.5
29.8
67.4
18.3
*
Includes the impact of PRRT and tax expense.
** Price/FX includes oil price, foreign exchange rates.
*** Petroleum Resource Rent Tax.
57.6
26.2 We delivered strong financial
performance in 2013 with a reported net
profit of US$1,749 million.
Following a full year of production from
Pluto, the company posted record
production volumes of 87.0 MMboe.
The main differences were:
Browse partial equity sale which
generated a gain on sale of US$974
million (in 2012).
product mix resulted in a decrease
of US$540 million due to reduced oil
volumes and a higher proportion of lower
priced Pluto LNG as a percentage of total
sales. This resulted in a lower average
realised price.
Average realised price table
All in us$/boe
Pipeline natural gas
NWS LNG
Pluto LNG
Condensate
LPG
Oil
2013
26.31
77.43
54.52
2012 Variance
(0.38)
26.69
(0.42)
77.85
(0.38)
54.90
105.04 104.47
0.57
101.71 113.28 (11.57)
(2.23)
111.29 113.52
67.43
74.26
(6.83)
Volume impact resulted in a
US$138 million increase largely due
to a full year of Pluto production. This
increase more than offset the adverse
impact of the Vincent oil field being shut
in for the majority of the year due to
floating production storage offloading
(FPSO) refurbishment and continued
field decline in our oil assets.
Other expenses increased by US$132
million largely due to impairments. This
was partially offset by the absence
of Pluto mitigation costs and lower
exploration and evaluation expenditure.
Impairments
Enfield1
Stybarrow1
Neptune1
Laminaria-Corallina1
Pluto Train 2/3 FEED2
Total
2012
2013
us$M us$M
154
87
54
34
58
387
-
-
-
82
49
131
1 Assessment of the ultimate reserve recovery and
an increase in the carrying amount associated with
restoration estimate.
2 Decline in value of expansion costs.
petroleum Resource Rent Tax
decreased mainly due to lower
operational profits in 2013.
Income tax decreased largely due to
lower net profit before tax.
)
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o
i
l
l
i
m
$
s
u
(
4
7
4
,
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5
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,
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0
0
,
2
9
4
7
,
1
09
10
11
12
13
Net profit was adversely impacted due to the
Vincent floating production storage offloading
vessel being off station for majority of the year
and asset impairments made in the period. The
2012 result was enhanced by US$974 million
due to the Browse partial equity sale.
underlying earnings per share (Eps)
)
s
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2
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Volume weighted
average realised prices
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn
production cost1
Gas production cost
Total gas production costs increased
by US$75 million to US$429 million
in 2013 mainly due to a full year of
production at Pluto LNG. On a unit basis,
gas unit production costs increased from
US$5.19/boe to US$5.49/boe.
1 Unit production costs equals production costs
($ million) divided by production volume (MMboe).
)
m
$
s
u
(
s
t
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2.66
3.06
4.16
4.36 4.63
09
10
11
12
13
Gas production cost (excluding Pluto)
Oil production cost
Total oil production costs decreased
by US$34 million to US$304 million.
On a unit basis, oil unit production
costs increased from US$20.19/boe to
US$34.18/boe. This was attributable
to the Vincent FPSO being off station
for 11 months in 2013 for planned
refurbishment activities and lower
production mainly due to field decline at
the Greater Enfield Area oil assets.
)
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09
10
11
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13
Oil (excluding Vincent outage (US$/boe)
Funding
Our net debt has been reduced to
US$1,541 million resulting in 9% gearing.
The continued improvement of the key
cash flow to debt metrics has resulted
in our credit ratings being reaffirmed
(S&P: BBB+; Moody’s: Baa1) and S&P
upgrading their outlook to positive.
The available funds of US$3,823 million
(US$2,223 million cash and US$1,600
million undrawn debt) combined with
our ability to access long-term facilities
at competitive rates, provides us with
the capacity to fund future growth
opportunities. Our funding position will
continue to be evaluated as we progress
investment decisions on our major
projects.
disciplined investment decisions
In 2013 we maintained a disciplined
approach to investment decisions.
At the beginning of the year the company
made the decision not to proceed with
the proposed Browse LNG Development
at James Price Point. Furthermore, we
divested our remaining interest in the
Power Play asset and sold a large portion
of the exploration and evaluation acreage
held in the Gulf of Mexico.
This approach was also reflected in the
recent Memorandum of Understanding
signed for the Leviathan Project
(subsequent to year end).
Capital management
We invested US$851 million in our
business activities in 2013, down from
US$1,758 million in 2012. The 2013
spend comprises US$590 million in
capital expenditure on our projects
at Vincent, North West Shelf and
completing Pluto. In addition US$261
million was invested in exploration.
This lower investment expenditure
combined with full year production from
Pluto resulted in Woodside generating
a positive free cash flow of US$2,271
million (see graph below).
Free cash flow
)
n
o
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l
i
m
$
S
U
(
w
o
fl
h
s
a
c
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F
3,636
2,271
4,000
3,000
2,000
1,000
0
(1,000)
(2,000)
(3,000)
(4,000)
(837)
(1,291)
(3,225)
09
10
11
12
13
Excludes Browse equity sale which impacted
free cash flow due to sales proceeds in 2012
and associated capital gains tax in 2013.
dividend
In April, the Board resolved to target
a dividend payment payout ratio of
80% of underlying net profit after tax
(expressed in US dollars). In determining
the appropriate dividend payment, we
will consider, among other things, our
development profile, available cash flow
and future funding requirements.
The 2013 final dividend calculation will be
based on our underlying profit adjusted
for the impact of impairments of oil and
gas properties, net of tax.
Calculation methodology
Reported NpAT
Deduct gain on asset sales
underlying NpAT
Add back impairments net of tax $m
Basis for dividend
80% payout ratio
Full year dividend
Deduct interim dividend
Final dividend
us
2013
$m 1,749
$m
47
$m 1,702
213
$m 1,915
$m 1,532
cps.
cps.
cps.
186
83
103
The full Dividend Policy can be
found on our website.
underlying profit versus reported
profit2
US$ million
underlying NpAT
Non recurring items after tax
Pluto delay mitigation costs
Browse equity sale
Tax paid on Sales
Asset sales
Reported NpAT
2013
2012
1,702
2,061
-
-
-
47
(27)
974
(25)
-
1,749
2,983
2 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.
2013 underlying profit (down US$359
million) was impacted by lower revenue
resulting from an increase in lower priced
gas volumes, together with a decrease in
oil volumes associated with the Vincent
FPSO refurbishment and field decline
of other oil assets (US$422 million pre-
tax). Additionally oil and gas properties
impairments in 2013 increased by
US$256 million pre-tax.
15
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEWOPERATIONS
sTRATEGy, OuTLOOK ANd RIsKs
strategic direction
Our vision is to deliver superior
shareholder returns by becoming a
global leader in upstream oil and gas.
Our strategy to achieve this builds on
maximising the value of our core assets,
leveraging our capabilities and growing
our portfolio. We recognise the need
to work closely with partners, suppliers
and other stakeholders to meet our
objectives.
Grow portfolio
Leverage Capabilities
h
t
w
o
r
g
e
u
a
V
l
Maximise Core
Lead time
Maximise our core
Woodside has consistently delivered
value from its producing assets. We will
continue to work to extend the life of
our existing business and commercialise
discovered resources to the benefit of our
shareholders.
We intend to derive additional value by
reducing development and operational
costs and increasing efficiency through a
culture of continuous improvement.
We will continue to optimise the quality
of our portfolio. For example, in 2013
Woodside scaled back its presence in the
Gulf of Mexico as this area of the business
was not delivering the required value.
Leverage our capabilities
Woodside’s distinctive capabilities include
a proven track record in the design,
construction and operation of world class
LNG plants; the design, construction
and operations of a fleet of floating oil
production, storage and offtake facilities;
seismic acquisition and processing; and
deepwater drilling.
These skills provide new business growth
opportunities where our capabilities
can be applied to deliver commercial
upstream and development projects.
By selectively pursuing new technologies,
and through driving innovation in
design, we are increasing the range of
development solutions available to the
company. For example, innovation in
subsea development has the potential to
substantially reduce future compression
costs for our Pluto LNG project.
In addition, we have established external
partnerships with other like minded
organisations, including research bodies
and universities, to extend our business
capabilities and technological skill set in
key areas.
Woodside is building on its strong
knowledge of the evolving oil,
condensate and LNG markets. For
example the company established a
trading office in Singapore in 2013 and
entered a long term charter for an LNG
trading vessel – the first vessel in the
Woodside fleet that is not associated
with a specific LNG project.
Read more about our shipping and
trading capabilities on 33 .
Grow our portfolio
Woodside will grow its portfolio through
maturing our existing opportunities
and a combination of exploration and
commercial transactions.
We are seeking to build an exploration
portfolio with a balanced mix of mature,
emerging and frontier plays. To support
this effort, global studies are being
undertaken and have led to recent
farm-ins to Myanmar and Ireland and
successful gazettal bids in New Zealand.
While exploration is important for organic
value growth, the time to discover,
develop and monetise assets can be
significant. We continue to evaluate
commercial transactions that have the
potential to deliver significant value.
The company will maintain a disciplined
approach in order to increase shareholder
value and manage risk.
Subject to year end, Woodside and the
Leviathan Joint Venture participants have
agreed to convert a previous in-principle
agreement for the potential acquisition
of an interest in the Leviathan field
into a non-binding Memorandum of
Understanding (MoU).
The MoU provides a framework to
negotiate in good faith, the acquisition
of a 25% participating interest in each of
the 349/Rachel and 350/Amit petroleum
licences. The parties will negotiate
towards executing a fully termed
agreement by 27 March 2014.
The Leviathan field is contained within
the licences, and based on information
provided by the operator Noble Energy,
has an estimated ‘2C’ contingent
resource (100%) of 18.9 trillion cubic feet
of natural gas and 34.1 million barrels of
condensate.
Our 25% share has the potential
to increase Woodside’s contingent
resources by 50%.
Outlook
Market outlook
The global demand for natural gas,
coupled with the increasing role of LNG
in the global gas supply mix, provides a
positive outlook for the LNG industry.
Asia-Pacific remains the core market for
global LNG demand growth and Australia
is forecast to become the world’s largest
LNG exporter once projects under
construction are complete.
Price discussions with Pluto foundation
customers in 2013 resulted in an
upward price adjustment for quantities
already delivered (as reported in our Q4
results) and a new price from 2014.
With the current scheduling of cargoes,
this new price outcome is expected to
apply to approximately 25% of total Pluto
sales quantities in Q1 2014 and 35% in
Q2 2014.
From Q3 2014 onwards the new price
will apply to approximately 75% of total
sales* and the sales mix is expected to
reflect a “steady state” combination of
sales to foundation buyers (Tokyo Gas
and Kansai Electric) and other buyers.
*Assuming annualised average sales of
approximately 4.3 mtpa.
For more information on the global LNG
market outlook, please refer to 32 .
production range
Looking to 2014, a production range
of 86 to 93 MMboe is being targetted.
This comprises a product split of
approximately 39% from Pluto LNG, 23%
from North West Shelf (NWS) LNG, 14%
from NWS domestic gas and 24% from
condensate, oil and LPG.
Investment expenditure
Woodside’s total investment expenditure
in 2014 is expected to be approximately
US$2.2 billion (see Chart 2).
This expenditure encompasses a range
of activities, including Leviathan, Browse
FLNG Development, Greater Western
Flank Phase 1 project and Phase 1 of the
Xena field tie-in project.
Woodside’s share of maintenance
sustaining capital expenditure* in 2014 is
expected to be as follows:
North West Shelf- approximately
US$80 million (combined onshore
and offshore);
Pluto LNG- approximately
US$20 million (combined onshore
and offshore); and
Australia Oil- approximately
US$10 million.
*Sustaining capital expenditure is capital which
does not develop additional reserves.
16
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn
Chart 1 - 2014/2015 drilling and seismic activities
Q1
Q2
Q3
Q4
2014
2015
Q1
drilling
Exmouth sub basin
Beagle Basin
Outer Canning
Offshore Spain
seismic#
NWS
Exmouth sub basin
Outer Canning
Myanmar
Korea
New Zealand
Peru
Rydal
Toro
Well (TBA)
Well (TBA)
Hannover South
Steel Dragon
Anhalt
Canaries 1
Canaries 2**
Fortuna
Centaurus
Babylon
Lord
AD-7
* Target size: Gross Mean Success Volume 100%, un-risked. Small<20MMboe, Medium>20 MMboe and <100MMboe and Large>100MMboe.
**The second well is yet to be confirmed by the Joint Venture.
# All seismic is 3D except Peru which is 2D.
Drilling
size
Volume*
Small
Large
Medium
TBA
Large
Large
Large
Large
Medium
sq Km
4000
800
1200
3300
1200
500
1800
720#
Seismic
Exploration activities
development activities
As the company continues to focus on
expanding its global exploration portfolio,
expenditure in 2014 will be directed
towards approximately one half drilling,
one quarter seismic and one quarter
general permit activity (Chart 1).
Planning is underway to drill up to seven
wells in 2014, including up to five in
Australia (Outer Canning and Exmouth
sub-basin) and up to two in Spain
(Canaries). Seismic activities planned for
2014 will include programs in the Outer
Canning, Exmouth sub-basin, North
West Shelf, Myanmar, New Zealand and
Korea.
See 42 for more information on our
exploration activities.
Chart 2 - Woodside’s investment
expenditure outlook
The company’s key future development
activities include Browse, Leviathan,
Xena, Greater Western Flank Phase 1
and the Persephone gas development
(Chart 3).
Browse is currently progressing through
basis of design, with commencement
of front-end engineering and design
targeted for the second half of 2014.
A final investment decision on the project
is expected in the second half of 2015.
The Leviathan transaction contemplated
by the MoU is conditional upon the
execution of a fully termed agreement
and certain policy, tax and regulatory
approvals from the Israeli Government.
The parties will negotiate towards
executing a fully termed agreement by
27 March 2014.
As the next major gas development
for the North West Shelf Project,
Persephone involves a subsea tieback
to the North Rankin Complex. A final
investment decision is planned for the
second half of 2014.
The NWS ‘2P’ reserves (Chart 3) will be
developed in the period up to 2018, at an
expected cost of between approximately
US$ 6.00/boe and US$ 12.50/boe.
Woodside remains committed to
developing Greater Sunrise once
government alignment is achieved.
To read more about Sunrise, go to 41 .
NpAT sensitivities
For 2014, a US$1 movement in the Brent
oil price is expected to impact NPAT by
US$34 million and a $0.01 decrease in
the AUD:USD exchange rate is anticipated
to increase NPAT by US$4 million.
)
n
o
i
l
l
i
m
$
S
U
(
e
r
u
t
i
d
n
e
p
x
E
0
0
0
4
0
0
0
3
0
0
0
2
0
0
0
1
0
660
506
600
274
953
339
2,400
260
466
2,033
241
791
10
11
12
~1,000
~450
~300
~200
~230
14E
261
274
191
125
13
Pluto
NWS
Other
Exploration
Leviathan
Other includes Australia Oil, Browse, Sunrise, USA
and Corporate.
Chart includes capital and all exploration expenditure
and excludes capitalised interest.
The forecasted Leviathan expenditure is subject to
completion of the proposed transaction.
Chart 3 - development pipeline
2013
2014
2015
2016
2017
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Browse
NWs
GWF 1
Persephone
GWF 2
Lambert Deep
pluto - Xena
Greater Enfield5
Resource1
MMboe
955.62
133.03
36.94
158.82
Concept select
BOD and FEED
Execute
1 Woodside share
2 2C Contingent resource
3 2P Reserves - NWS Development over the next 5 years includes GWF 1, Persephone, GWF 2 and Lambert Deep
4 2P Reserves
5 Greater Enfield includes Laverda, Cimatti, Vincent, Ragnar and Enfield.
17
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEWOPERATIONS
Risk
Woodside’s approach to risk focuses on
enhancing opportunities, reducing threats
to our existing and potential business and
sustaining a competitive advantage. We
do this through the consistent application
of Woodside’s process for the recognition
and management of risk across the
organisation.
Woodside’s risk management process
is aligned to ISO 31000, the international
standard for risk management. It is a
part of Woodside’s overall management
system and sets out clearly defined
criteria to evaluate and report on
material risk. We systematically assess
the consequence of risk in areas such
as health and safety, environmental,
financial, legal and compliance, reputation
and brand, and social and cultural
impacts.
A range of material risks have been
identified which could adversely impact
Woodside. These risks are not listed
in order of significance, nor are they
all encompassing. Rather, they reflect
the most significant risks identified at a
whole of entity level.
The company has also appointed an
anti-bribery and corruption lawyer to
complement existing anti-fraud and
corruption resources.
Mitigating market outlook risks
External market conditions, including
commodity prices and demand for our
products, may impact Woodside’s future
financial performance.
Commodity prices are variable and are
impacted in part by global economic
factors beyond Woodside’s control.
Adverse commodity impacts are
managed in a number of ways. For
example, any reductions in global
LNG prices are managed through our
diversified portfolio of long-term sale and
purchase agreements. In practical terms,
this provides some downside price
protection.
Uncontracted LNG volumes are sold
at the prevailing LNG spot price, which
is subject to greater price volatility.
The financial value obtained from oil
production is significantly exposed to
fluctuations in the oil price.
Woodside mitigates the uncertainty
associated with product demand by
selling LNG under long-term ‘take or
pay’ sale agreements, in addition to the
spot market. There is greater uncertainty
associated with sales of product on the
spot market. The volume of product
available for sale to our customers in
the longer term is also influenced by our
ability to successfully commercialise
hydrocarbons, which is discussed below.
We are also exposed to fluctuations in
currency exchange rates and as a result,
Woodside’s financial results can be
negatively impacted. The impact of this
risk is mitigated because the majority
of Woodside’s hydrocarbon sales, and a
portion of debt costs, are denominated in
US dollars.
Our exposure to volatility in the
Australian dollar is partially offset by our
domestic gas revenue which is priced in
Australian dollars.
The impact of currency volatility becomes
more pronounced when Woodside is
undertaking new domestic, onshore
developments. Our current exposure to
these new projects is low.
Woodside generally considers that active
commodity and currency hedging does
not provide value to our shareholders,
but does consider the appropriateness
of such hedging from time to time and
in specific circumstances. Any hedging
activity is only undertaken in accordance
with limits approved by the Woodside
Board.
For the estimated impact of a change
in oil price or exchanges rates on NPAT,
please go to 17 .
Business interruption – impact on
production
Woodside’s ability to achieve superior
shareholder returns is substantially
influenced by our ability to safely and
reliably produce and deliver hydrocarbon
products to our customers. A sustained
and unplanned interruption to Woodside’s
production could significantly impact our
financial performance. Such an event
could occur for a number of reasons,
including loss of facility integrity, critical
process failures or a significant weather
event. Given that it is estimated that
Pluto LNG will provide approximately
39% of Woodside’s production in
2014 from Pluto’s one LNG train, a
sustained interruption in Pluto’s ability to
produce and export LNG would have an
adverse effect on Woodside’s financial
performance.
Woodside has in place an extensive
framework of controls to manage such
risks. These controls include our overall
production processes, inspection and
maintenance procedures and marine
assurance processes. Additionally, our
facilities are designed and operated
in accordance with the overall
environmental and climatic conditions
applicable to each facility.
Offshore and marine related activities
require specific consideration from a risk
perspective. These activities have the
potential to interrupt Woodside’s ability
to produce hydrocarbons. The removal
by a regulator of Woodside’s approval
to produce could also impact production
on a sustained basis. Woodside’s
processes focus on compliance with
legal and regulatory obligations, which
are complemented by the ongoing
engagement we have with regulators.
Loss of containment
A loss of hydrocarbon containment from
a Woodside operated facility or well could
be significant, resulting in personnel,
environmental, social, reputational and
financial loss. This risk is addressed via
an extensive control framework designed
to prevent the loss of hydrocarbon
containment in the first instance, and by
maintaining an appropriate capability to
minimise the impact of an event should
it occur. In 2013 the company developed
specialised oil spill contingency and
response teams to further enhance
Woodside’s emergency response
capabilities in this area.
Exploration risk
The ability to identify, acquire and
commercialise hydrocarbons will be
an ongoing contributor to Woodside’s
success. However, the risk that
Woodside’s exploration activities will be
unsuccessful, thereby reducing or limiting
future growth, does exist. Woodside’s
2014 drilling campaign is weighted
towards frontier exploration which
18
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn typically has lower likelihood of success,
but is balanced with the potential for
higher reward. Woodside’s overall
exposure to exploration risk is addressed
by a comprehensive exploration strategy
and a rigorous and disciplined review
of opportunities, complemented by the
company’s capabilities in geosciences
and deep water exploration.
We also look to address exploration risk
in part by balancing our global portfolio,
as demonstrated by recent farm-in
opportunities in Ireland and successful
gazettal bids in New Zealand.
Commercial transaction risk
Commercial transactions undertaken
with the objective of growing Woodside’s
portfolio are associated with a number
of risks. These include the risk of a sub-
optimal commercial outcome which
fails to deliver the value to Woodside
anticipated by the transaction, the
imposition of unfavourable regulatory
controls and obligations or the eventual
operational performance of any acquired
asset not meeting our expectations. Our
commercial processes are designed
to reduce the likelihood of these risks
materialising as a result of a commercial
transaction.
Commercialising hydrocarbons to
deliver value
The company is focused on ensuring
the commercialisation of hydrocarbons
to deliver superior shareholder returns.
A failure to do so may occur as a result
of choosing a sub-optimal development
option or failing to execute a project in a
way that achieves Woodside’s objectives
in relation to cost, schedule and quality.
If we are unsuccessful in managing
upward cost trends and declining
productivity, the value we can secure
from future developments will be
reduced. We are actively pursuing
strategies to reduce unit costs for
developments.
Creating effective commercial
arrangements with a range of partners,
stakeholders and contractors is an
important mechanism to offset this
risk. Woodside’s historic and ongoing
investment in robust and high-quality
opportunity development and project
management systems is also central to
the management of such risks.
Managing government and
regulatory risk
Given that Woodside’s business activities
are subject to extensive regulation,
unforeseen change introduced by
government may adversely impact
the company’s financial standing.
Government action, or conversely
inaction, may also negatively affect
Woodside’s ability to undertake future
development activities or maximise
value from existing assets. For example,
Woodside’s financial performance and
its ability to deliver value from existing
assets and proposed developments is
exposed to changes in governmental
approach to carbon pricing.
With Woodside increasing its global
footprint, the company is proactively
maintaining ongoing and constructive
relationships both with domestic and
international governments and regulators.
unreasonable prejudice
As permitted by sections 299(3) and
299A(3) of the Corporations Act 2001,
we have omitted certain information from
this Operating and Financial Review in
(Left) Woodside’s risk management process is
embedded and consistently applied in our overall
management system.
relation to our business strategy, future
prospects and likely developments in our
operations and the expected results of
those operations in future financial years.
We have done this on the basis that
such information, if disclosed, would be
likely to result in unreasonable prejudice
to Woodside (for example, because the
information is premature, commercially
sensitive, confidential or could give a
third party a commercial advantage). The
omitted information relates to our internal
budgets, forecasts and estimates, details
of our business strategy, and LNG
contractual pricing.
Forward looking statements
This report contains forward looking
statements, including statements of
current intention, statements of opinion
and expectations regarding Woodside’s
present and future operations, possible
future events and future financial
prospects. Such statements are not
statements of fact and may be affected
by a variety of known and unknown
risks, variables and changes in underlying
assumptions or strategy which could
cause Woodside’s actual results or
performance to differ materially from
the results or performance expressed or
implied by such statements. There can
be no certainty of outcome in relation
to the matters to which the statements
relate and the outcomes are not all within
the control of Woodside.
Further information on some important
factors that could cause actual results
or performance to differ materially from
those projected in such statements is
contained in the “Risk” section above.
Woodside makes no representation,
assurance or guarantee as to the
accuracy or likelihood of fulfilment of
any forward looking statement or any
outcomes expressed or implied in
any forward looking statement. The
forward looking statements in this report
reflect expectations held at the date of
this report and except as required by
applicable law or the ASX Listing Rules,
Woodside disclaims any obligation
or undertaking to publicly update
any forward looking statements, or
discussion of future financial prospects,
whether as a result of new information
or future events.
19
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEWOPERATIONS NORTH WEsT sHELF
The Okha floating production storage offloading
vessel demonstrated stable production with high
reliability and flareless operations in 2013.
During the year 244 LNG cargoes were loaded for
export to our customers.
The Greater Western Flank Phase 1 Project is a
subsea tieback to the Goodwyn A platform.
The start-up of the A$5 billion North Rankin Redevelopment Project is
a major achievement on a global scale that demonstrates Woodside’s
commitment to extend the life of the North West Shelf Project
North West shelf project
NWs key metrics (Woodside share)
2013 Key performance highlights
Interest
NWS Venture
Domestic Gas JV
Incremental Pipeline JV
China LNG JV
CWLH (crude oil)
16.67%
50.00%*
16.67%*
12.50%
33.33%
Operator Woodside
Facilities North Rankin Complex
Goodwyn A platform
Angel platform
Okha FPSO
Karratha Gas Plant
Location Offshore facilities ~135 km
north-west of Karratha, WA
Water
depth
products
80 - 130 metres
LNG, pipeline gas,
condensate, crude oil and LPG
First
production
1984 (pipeline gas)
* During 2013 Woodside’s average share of
pipeline gas production was approximately
46%. Woodside’s exact share of domestic
gas production depends on the quantities
and aggregate rate of production.
sales revenue
(US$ million) 3,230
3,300
2013
2012
Successful start-up of the North Rankin
Redevelopment.
LNG Train 2 major shutdown and
EBIT
(US$ million) 2,170
2,235
refurbishment.
Net gas
production
Net liquids
production
proved plus
probable
reserves
(MMboe)
36.3
36.7
Fortuna 3D Seismic survey mobilised.
(MMbbl)
10.4
10.8
(MMboe) 506.9
555.4
Future objectives
NWs contribution to Woodside’s
total production (100% = 87 MMboe)
Persephone development FID.
Ongoing major refurbishment at
Karratha Gas Plant (KGP).
Fortuna 3D seismic processing and
interpretation.
Assess opportunities to process third
party gas at KGP.
NWS gas and condensate
NWS oil
Rest of business
%
50
4
46
During 2013, NWS made a significant
contribution of 46.7 MMboe to Woodside’s
annual production.
(Right) North Rankin Complex achieved start-up
in October 2013.
20
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn The Woodside operated North West Shelf (NWS) Project
is a multi-billion dollar world-class asset which continues to
deliver strong profits for the company. We are committed
to maintaining high profitability while also delivering on our
commitments for safe and reliable production.
In 2013, the NWS Project delivered revenue of US$3.23 billion.
This equates to a contribution of approximately 56% of
Woodside’s total sales revenue for the year. Revenue was lower
than the previous year due to lower LNG, LPG and condensate
production. This was the result of planned maintenance and
cyclone activity in the first half of the year.
Woodside’s share of production from the NWS Project was
46.7 MMboe.
We delivered 244 cargoes of LNG, of which eight were sold on
the spot market. Woodside’s share of total LNG sales volumes
for 2013 was 21.25 MMboe. We produced 13.96 MMboe of
pipeline gas to customers in Western Australia in 2013 with
100% reliability.
Optimising the value of the existing business
In 2013, we continued our journey to optimise value from
existing assets and sanctioned projects.
In October, the North Rankin Redevelopment Project achieved
start-up and exported gas to the KGP. This A$5 billion project
involved the construction and installation of a second platform,
North Rankin B, with modification and refurbishment of the
existing North Rankin A facility. The project enables the recovery
of low pressure gas, extends resource life and supports our
onshore gas assets.
The A$2.5 billion Greater Western Flank Phase 1 project
continued engineering, procurement and fabrication activities
with the project 63% complete. The project is scheduled for
completion in early 2016 and will develop the Goodwyn GH
and Tidepole gas fields via a subsea tie-back to the existing
Goodwyn A platform.
During May, the first significant refurbishment scope was
completed on LNG Train 2 in parallel with the planned
major turnaround activity. By running these scopes of work
concurrently we minimised impact to operations.
Established in October, the Karratha Life Extension project is an
integrated program which will execute refurbishment and life
extension works at the KGP efficiently and cost effectively.
The total cost to Woodside in 2013 for sustaining capital* was
approximately US$50 million of which the majority related to
KGP refurbishment activities. By taking a strategic approach to
maintain the plant integrity Woodside is ensuring plant capacity
and reliability is maintained well into the future while minimising
the impact to production.
*Sustaining capital expenditure is capital which does not develop
additional reserves.
develop NWs project resources
We are committed to developing NWS resources and
maintaining supply deliverability in order to extend the NWS
business.
In Q3 the Persephone development entered the front-end
engineering and design phase. Persephone is the next major
gas development for the NWS Project and involves a subsea
tieback to the North Rankin Complex (North Rankin A and North
Rankin B). A final investment decision is planned for 2H 2014.
We are progressing the Greater Western Flank Phase 2 project
towards a final investment decision in 2015. This project will
develop the Keast, Dockrell, Sculptor- Rankin, Lady Nora and
Pemberton fields via a subsea tie-back to the Goodwyn A. We
are also evaluating Lambert Deep as a potential tie-back to the
existing Angel platform.
Extend the life of the NWs
In 2013, we continued to explore opportunities to extend
the life of the NWS Project and maximise the use of existing
infrastructure.
The Fortuna 3D marine seismic survey mobilised in December
and will be the largest ever delivered by the NWS Project. This
survey will cover 4050 km2 of NWS acreage, providing high
resolution, multi-sensor broadband data of the area. This data
will allow for the optimisation of hydrocarbon recovery from
developed and undeveloped fields.
The NWS project participants are currently assessing
opportunities to process third party gas at KGP. The NWS
Project offers a unique opportunity for third party gas owners
to leverage value from our infrastructure.
Outlook
Woodside’s commitment to production excellence will
continue to be an essential component of our success in the
years to come. In 2014, the NWS Project celebrates 30 years
of successful domestic gas production and 25 years of LNG
exports to Japan. These two significant achievements reflect
our reputation as a reliable and efficient operator.
We will continue to invest to maintain our world-class assets
with the refurbishment of the KGP ongoing in 2014.
Under existing LNG sales contracts, approximately 55%
of NWS LNG annual production volumes will have prices
renegotiated in 2014.
We remain committed to maximising our core business and
will continue to seek opportunities to optimise value in order to
extend the life of the NWS Project into the future.
21
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEWOPERATIONS pLuTO LNG
Pluto LNG onshore infrastructure comprises
a single LNG processing train with a forecast
production capacity of 4.3 million tonnes a year.
Pluto LNG involved considerable innovation,
going from discovery to production in just
seven years and from final investment decision
to start-up in less than five.
During 2013 the first planned shutdown of
Pluto LNG was undertaken for maintenance.
The shutdown reinforces Woodside’s extensive
capabilities and the effective contracting
partnerships supporting our business.
Pluto LNG continued to build a solid reputation as a safe and
reliable supplier of LNG
pluto LNG
Interest
WA-34-L
WA-350-P
WA-404-P
90%
90%
100%
Operator Woodside
Location
Pluto and Xena fields, 190 km
north-west of Karratha, WA
Water
depth
400 - 1,000 metres
pluto key metrics (Woodside share)
2013
2012
Operating
revenue
(US$ million) 2,098
1,427
EBIT
(US$ million)
954
453
Net gas
production
Net liquids
production
proved plus
probable
reserves
(MMboe)
32.2
22.0
(MMbbl)
2.6
1.9
(MMboe) 884.6
922.7
22
2013 Key performance highlights
Future objectives
Pluto environmental operating licence
Progress development of Xena
approved.
Phase 1.
Achieved high levels of performance
and reliability in latter part of 2013
following unplanned shutdown in June.
Deliver improved operational efficiency
through Pluto’s new LNG organisation
model.
4th quarter LNG reliability exceeded plan.
Maintain safe and reliable production.
Approval of expenditure for Phase 1
development of Xena.
Subsequent to the end of the quarter,
on 2 January, Pluto loaded its 100th
LNG cargo since the start of LNG
production in April 2012.
pluto LNG contribution to Woodside’s
total production (100% = 87 MMboe)
Pluto LNG
Pluto condensate
Rest of business
%
37
3
60
During 2013, Pluto LNG contributed
a substantial 34.8 MMboe to full-year
production.
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn production performance
LNG shipping capability
Pluto LNG continued to build a solid reputation in the latter part
of 2013 as a reliable and dependable supplier of LNG, backed
by high rates of plant availability.
The high reliability followed an unplanned shutdown of the
LNG processing train at the end of June following an issue
with the dehydration system and associated remedial works
in July and August.
The improved reliability resulted in a total production of
34.8 MMboe, comprising 32.2 MMboe of LNG and
2.6 MMbbl of condensate.
Pluto LNG’s first planned shutdown took place in April,
with about 450 people on site and more than 15,000 hours
worked. The shutdown offered an opportunity to address
outstanding commissioning issues and was successfully
completed without a recordable safety incident.
Pluto delivered 58 LNG cargoes in 2013, 48 of which were
to Woodside’s foundation customers Tokyo Gas and Kansai
Electric.
In the fourth quarter Pluto plant reliability and production
outperformed all previous quarters due to increased reliability
and system optimisation. Overall LNG train reliability since
initial start-up continues to exceed expectations.
Financial contribution
Woodside’s share of revenue resulting from Pluto LNG’s
production performance was US$1,702 million. Revenue from
condensate sales contributed US$246 million to Woodside’s
revenue. A further US$150 million was received for LNG
processing services.
Woodside continued to build its LNG shipping capability in 2013,
adding the ‘Woodside Rogers’ to its LNG fleet. The Woodside
Rogers completed its maiden voyage in July and is the fourth
vessel in the Pluto LNG fleet. The vessel is named after
Woodside’s former Chairman Bill Rogers.
The vessel is the second long-term charter vessel for Pluto
LNG and provides shipping capacity to maximise value from
Pluto LNG sales and will support Woodside’s LNG trading and
shipping business.
Xena development
During the year the Pluto joint venture participants approved the
expenditure required for Phase 1 of the Xena field tie-in project.
Xena is part of the Pluto LNG foundation project, with Phase 1
development expected to cost approximately US$370 million
(100% project) and access 219 billion cubic feet of dry gas and
2.5 million barrels of condensate at Proved plus Probable level
(100% project).
Phase 1 comprises a production well tied-in to the Pluto flowlines,
approximately 11 km east of the Pluto field and 16 km west of
the Pluto A riser platform. Drilling activities are expected to start
in mid 2014. Tie-in is planned for 2015.
Outlook
We commenced a process late in 2013 to select a new
organisational model for its Pluto LNG operations with the aim
of delivering efficiencies and innovations in a rapidly changing
and competitive LNG market.
Implementing the new organisational model is a natural
progression of the Pluto LNG journey, from construction through
commissioning and now in steady production. Once finalised,
the proposed new organisational model will be phased in over
time and is expected to be fully implemented in 2015.
Pluto Future LNG seeks to draw on Woodside’s long-standing
experience as an LNG operator and offshore operator, leverage
new technologies and develop a Pluto-specific organisational
structure.
Woodside is committed to supporting and working with
its people during this organisational change, as well as
maintaining a continued focus on high standards of health,
safety and environmental management; plant reliability; and
customer focus.
Further information on Woodside’s engagement with the
Indigenous community is available in the 2013 Sustainable
Development Report on pages 22 and 23 .
(Left) The Woodside Rogers completed its maiden
journey when it arrived in Karratha on 26 July 2013.
23
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEWOPERATIONS AusTRALIA OIL
Following maintenance and refurbishment, the
Ngujima-Yin was re-deployed to the Vincent
field at the end of 2013. Production is well on
track with the improvements expected to deliver
strong results.
The Nganhurra floating production storage
offloading (FPSO) vessel is one of four FPSO’s
in Woodside’s fleet. Oil is produced through five
subsea wells connected to the vessel.
The Northern Endeavour is one of the world’s
largest floating production, storage and offloading
vessels and can hold 1.4 million barrels of oil.
The successful
shipyard
refurbishment of
the Ngujima-Yin
delivers a basis
for solid future
production while we
continue to pursue
new development
and exploration
opportunities
2013 Key performance highlights
Future objectives
Successfully completed the sale of
Progress the execution of an additional
Woodside’s interest in Mutineer Exeter
oil project.
Successfully completed shipyard
refurbishment and production start-up
of the Ngujima-Yin floating production
storage offloading (FPSO) vessel.
Australia Oil (non-NWs) key metrics
(Woodside share)
2013
2012
sales revenue
(US$ million)
519
1,545
EBIT
(US$ million)
(154)
738
Net liquids
production
proved plus
probable
reserves
(MMbbl)
4.7
12.5
(MMboe)
41.6
57.8
During 2013, the Vincent FPSO was
offstation for planned shipyard maintenance
and refurbishment resulting in a significant
reduction to sales revenue of US$688 million,
relative to 2012. The FPSO is now back on
station.
infill well in the Vincent field.
Continue to advance Greater Enfield
development opportunities including
Laverda.
Drill the Toro (operated) and Rydal (non-
operated) exploration wells.
Conduct the Babylon and Centaurus 3D
multi source seismic surveys.
Deliver a full year of Vincent production
from refurbished Ngujima-Yin FPSO.
Manage portfolio of declining assets.
Australia Oil (non-NWs) contribution
to Woodside’s total production
(100% = 87 MMboe)
Enfield
Laminaria-Corrallina
Stybarrow
Vincent
Rest of business
%
2
1
<2
<1
95
During 2013 Australia Oil (non-NWS)
contributed 4.7 MMbbls to Woodside’s
annual production.
24
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn 60%
Enfield oil field
Interest
Operator
Facilities
Location
WA-28-L
Woodside
Nganhurra FPSO
~40 km off the
North West Cape, WA
Water depth
400 - 500 metres
Crude oil
Products
First production July 2006
Enfield has produced 72.1 MMbbls (100% project) of oil since
start up in 2006. Annual production at Enfield of 3.2 MMbbls,
(1.9 MMbbls Woodside share) continued to reflect reliable
performance and anticipated natural field decline in 2013.
A decision was made not to take forward the front-end
engineering and design studies for the proposed Cimatti-Enfield
tieback concept. Cimatti is now being considered as part of a
larger Greater Enfield development opportunity.
Vincent oil field
Interest
Operator
Facilities
Location
Water depth
Products
First production
60%
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 37.8 MMbbls (100% project) of oil
since start up in 2008. Reduced production of 0.7 MMbbls,
(0.4 MMbbls Woodside share) for 2013 was due to the Ngujima-
Yin FPSO being off station for planned shipyard maintenance
and refurbishment for the majority of the year. The Ngujima-Yin
FPSO was taken to Singapore for dry dock works in January
2013. Production recommenced at the Vincent field on
29 November 2013.
The commissioning and ramp up of the Vincent FPSO since
its return to station from shipyard maintenance has progressed
well. Enhanced sailing performance and improved disconnection
and reconnection reliability have all been demonstrated enabling
improved facility uptime.
We are currently considering a further infill well opportunity
with a target for drilling execution in Q4 2014.
stybarrow oil field
Interest
Operator
WA-32-L
BHP Billiton
50%
Stybarrow Venture FPSO
Facilities
Location
~50 km off the
North West Cape, WA
825 metres
Crude oil
Water depth
Products
First production November 2007
Laverda development
Interest
Operator
Location
WA-36-R
Woodside
~50 km off the
North West Cape, WA
Water depth
~800 metres
60%
In 2013 Laverda activities focused on maturing the
development concept and our understanding of the
recoverable resource. This work will continue into 2014.
Laminaria - Corallina oil field
Interest
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
Operator
Facilities
Location
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.
Laminaria-Corallina oil fields have delivered over 200 MMbbls
(100% project) of oil production of since commencement in
1999. Lower production of 1.6 MMbbls, (1.0 MMbbls Woodside
share) was consistent with anticipated natural field decline. In
2014 we will continue to optimise costs based on planning for
end of field life.
Mutineer-Exeter
Woodside signed a sale and purchase agreement with Santos
on 21 December 2012 to sell its 8.2% interest in the Santos
operated Mutineer Exeter oil project. This agreement was
completed in February 2013.
Outlook
We will continue to focus on delivering the safe and reliable
operation of our Australia oil assets. Unlocking efficiencies
in operations, the optimisation of costs and the successful
delivery of infill well opportunities will be key opportunities for
maximising value and extending field life.
An active exploration program off Western Australia’s North
West Cape reflects our ongoing interest in new development
and tie-back opportunities in the region.
A full year of Vincent production in 2014 will deliver an improved
Australia Oil contribution to our overall performance.
Stybarrow has produced 57.9 MMbbls (100% project) of oil
since start up in 2007. Production in 2013 was 2.8 MMbbls,
(1.4 MMbbls Woodside share).
25
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEWOPERATIONS OuR pEOpLE
In 2013 the Women of Woodside network
supported breast cancer awareness through a
variety of activities.
Working together to ensure safe and reliable
operations at Karratha Gas Plant.
Employees participate in a team building exercise.
Number of employees and voluntary
turnover
9.4
8.5
6.8
5.2 5.4
)
%
(
o
i
t
a
r
r
e
v
o
n
r
u
t
y
r
a
t
n
u
o
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l
9
1
2
,
3
0
5
6
,
3
6
5
8
,
3
7
9
9
,
3
9
8
8
,
3
09 10 11
12
13
l
s
e
e
y
o
p
m
e
l
a
t
o
T
Woodside’s voluntary turnover rate increased
from 8.5% in 2012 to 9.4% in 2013, attributed
primarily to the ongoing industry demand for
talent.
Indigenous employment
s
e
e
y
o
p
m
e
l
l
a
t
o
T
3
3
6
3
5
7
4
5
4
6
9
4
8
5
4
8
2
9
1
0
1
09
10
11
12 13
Contractors*
Pathways
Employees - Permanent/Fixed
* No Indigenous contractors were employed in
2012 or 2013 as a result of start-up of Pluto LNG.
The number of Indigenous employees
(permanent/fixed) increased to 101 from
92 (up 9.8% when compared to 2012).
Indigenous pathway participant numbers
decreased with the majority transitioning to
Woodside employment.
26
Delivering superior shareholder returns is
built upon a high performance culture which
requires us to attract and retain a diverse,
capable and engaged workforce
2013 Key performance highlights
Future objectives
Embed the Leadership and
Management Development
Framework, including broadening the
curriculum, to develop outstanding
global leaders and build a strong
Woodside culture.
Roll out a development program for
high talent women and a job design
toolkit to support continued career
development and progression.
Implement the enhanced Graduate
Development Program.
Embedded Woodside values into
key people processes, including
performance management ratings and
employee survey, to help build a strong
Woodside culture.
Launched the Leadership and
Management Development Framework,
to build strong leadership capability.
Rolled out the three year Indigenous
Employment Strategy, in support of our
Reconciliation Action Plan (RAP).
Converted 79% of graduating
Indigenous pathways participants to
full-time jobs since 2009.
Endorsed an enhanced Graduate
Development Program.
Ongoing focus on gender diversity with
our 2013 graduate intake achieving
48% female representation.
Increased women in middle and senior
management roles, exceeding our
2013 target.
(Right) Indigenous trainees take part in mentoring.
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn
Building capability
A key corporate strategy is to grow our future workforce through
entry level opportunities. Woodside continues to build future
capability through trainee programs (apprentice and vacation),
our graduate program and via internal leadership training.
The Woodside Training Academy aims to build technical
and professional skills for apprentices and trainees. In 2013,
125 participants undertook technical development through
the Academy. Testimony to the quality of the development
received, 89% of all trainees and apprentices secured
permanent employment at the successful conclusion of their
respective programs.
Greater focus is being placed on pre-engagement activities and
strengthening our pipeline for graduates through early school
engagement, work experience and vacation placement for
scholarship holders.
The vacation student intake increased by approximately 50%,
from 48 in 2012 to 73 in 2013. Additionally, five Timor Leste
students took part in the Timor Leste Professional Development
program in 2012 and 2013. Enhancements to the vacation
program were implemented to ensure a more rigorous
assessment process and an improved student experience,
both aimed at increasing the conversion of high quality vacation
students to graduates.
The Graduate Development Program was reviewed in 2013,
to ensure Woodside develops talent with both technical and
leadership expertise, securing a stronger internal leadership
succession pipeline for the future.
In 2013 there were 46 graduates new to Woodside, with a
total of 133 graduates on the three-year graduate program.
The 2014 graduate intake increased from 46 in 2013 to 71
in 2014, of which almost half were female. Going forward,
graduate numbers will continue to increase, as the company
looks to build on its internal capabilities.
The Leadership and Management Development Framework is
supported by a detailed curriculum of experience, mentoring
and educational activities that employees can undertake to build
the skills and competence required to become strong leaders.
In 2013, our Leadership Development programs were attended
by 2407 participants, an increase of 179% on 2012 attendance.
developing a diverse workforce
Woodside is in the second year of the three-year gender
diversity strategy roll out. Progress has been made with planned
2012 and 2013 activities, however some measurable objectives
have not been achieved, including a job design toolkit.
The toolkit will support continued career development and
progression by helping employees utilise flexible working
arrangements more effectively.
Females comprise 27% of our workforce a slight increase from
2012. This places us above industry average of approximately
15%. In 2013 women held 12.4% of middle and senior
management roles, an improvement from approximately 10%
in 2012. The percentage of females leaving the organisation is
approximately 9% - in line with total turnover.
Community engagement continued in 2013, with Woodside
sponsoring university scholarships for talented females.
During 2013, we rolled out a three-year Indigenous Employment
Strategy to support our Agreements and our RAP. At the end of
2013, Woodside had 101 Indigenous employees and 54 people
on Indigenous pathway programs. Woodside also sponsored
four Indigenous university students participating in Woodside’s
cadetship program. Since 2009, 79% of Indigenous pathways
participants have converted to full-time, direct employment. The
strategy commits to a future target of 85% conversion rate.
For further information on our Diversity Policy and RAP
commitments visit our website.
Woodside is focused on building cultural competency to provide
our workforce with the knowledge and skills required for
different work environments. This will also build a strong
foundation as we enter into new countries in line with our
growth strategy.
Supporting this, Woodside continued to provide cultural
awareness training across the organisation to raise awareness
and build an understanding of Indigenous traditional societies
and contemporary issues.
Outlook
With competition for talent remaining high, Woodside is
focused on developing its employees through globally
competitive training and education programs. Additionally, the
company is committed to embedding a values-led culture to
promote an engaged workforce.
27
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEWOPERATIONS HEALTH, sAFETy, sECuRITy ANd EMERGENCy MANAGEMENT
To achieve our goal of top quartile safety performance we must
continue to do the right thing, hold ourselves to account and above
all, keep each other safe
Reinforcing our key health and safety message for all employees.
2013 Key performance highlights
Future objectives
Recorded a 27% improvement in
personal safety performance.
Achieve global top quartile health and
safety performance by 2017.
Adopted corporate indicators to
measure process and personal
safety, allowing us to benchmark our
performance globally.
Executed three pilot health and
wellbeing programs focusing on
healthy bodies, healthy living and
healthy minds.
Woodside’s crisis and emergency
management arrangements were
rated an equal first in an independent,
external benchmark against six
Australian oil and gas companies.
Developed a company wide Fraud and
Corruption Control Program.
Embed process safety across the
asset lifecycle to demonstrate a clear
understanding of our hazards, robust
risk management plans and encourage
a committed workforce at all levels.
Increase the company’s capability
and competence in prevention,
preparedness, detection and response
to threats.
Streamline Health and Safety systems
and processes to improve internal
efficiencies.
Total recordable injury rate
Tier 2 process safety events (psE)
OGP top quartile
Woodside (actual)
Woodside (target)
13
12
4
5
e
t
a
r
y
r
u
n
j
i
l
e
b
a
d
r
o
c
e
r
l
a
t
o
T
d
e
k
r
o
w
s
r
u
o
h
n
o
i
l
l
i
m
r
e
p
6
5
4
3
2
1
0
09
11
13
15
17
Woodside has benchmarked its total
recordable injury rate against global
top quartile performance of the International
Association of Oil of Gas Producers (OGP).
Woodside is targeting significant improvement
to achieve top quartile performance by 2017.
Woodside regularly reviews its data and adjusts
accordingly.
28
In 2012, Woodside commenced classifying
process safety events in accordance with
American Petroleum Institute Recommended
Practise 754, to enable global benchmarking.
A typical Tier 1 PSE is loss of containment of
hydrocarbons greater than 500kg (within the first
hour of the event).
A typical Tier 2 PSE is loss of containment of
hydrocarbons greater than 50kg but less than
500kg (within the first hour of the event).
Participants take part in the Rev-up health and
safety wellbeing program.
In 2013, we rolled-out the ‘we keep
each other safe’ branding across
Woodside sites to provide a constant
visual reminder to all employees and
contractors that, health and safety is
something we all value. Keeping each
other safe is integral to our Compass
values, it’s also crucial to our long-term
aspiration of no one gets hurt,
no incidents.
Our goal is to deliver health
and safety performance that meets
global top quartile as measured against
peers in the International Association
of Oil and Gas Producers (OGP). This is
reflected in our Health and Safety Policy
and operating standards.
In 2013, the health and safety strategy
was restructured to highlight four key
Strategic Imperatives. These imperatives
drive our yearly action plans and ensure
our activities are appropriately targeted.
1 Streamline Health and Safety systems
and processes to improve internal
efficiencies.
2 Integrate human factors in our
strategic activities to improve health,
safety and operational effectiveness.
3 Embed process safety across the
asset lifecycle to demonstrate a
clear understanding of our hazards,
robust risk management plans and
encourage a committed workforce
at all levels.
4 Work collaboratively with our
contractors to consistently deliver
world-class health and safety
performance.
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn
2013 performance
There were zero Tier 1 Process Safety
Events (PSEs) and four Tier 2 PSEs
recorded during the year. There were no
work-related fatalities recorded in 2013.
Our Total Recordable Injury Rate (TRIR)
of 3.0 was a 27% improvement on 2012.
Our TRIR was impacted by a total of
42 injuries (compared to 79 in 2012).
In 2013 there were six lost workday
injuries (compared with 18 in 2012). None
of the recordable injuries had the potential
to result in a fatality.
Hand injuries were predominant both
in first aid cases and total recordable
injuries (medical treatment, restricted or
lost workday cases), with 67% of hand
injuries being superficial.
streamlining systems and
processes
A continuous improvement effort
commenced in 2013 to streamline our
health, safety and environment processes
and systems to improve our efficiency.
By providing lean, simpler, and more
effective processes we can improve
workforce engagement, health, safety
and environment outcomes and improve
productivity.
This improvement project will also reduce
waste and unnecessary duplication of
processes and documentation.
Contractor engagement
In November 2013, we brought together
Woodside and contractor senior
executives for a CEO Contractor Health
and Safety engagement forum to discuss
and improve our internal contracting
processes.
The information obtained at the forum
and throughout 2013 has led to a number
of key changes for implementation in
2014. Building sustainable and mutually
beneficial relationships with our
contractors is integral to our strategic
imperatives and in line with our Compass
values.
security and emergency
management
The company’s crisis and emergency
management preparedness was
enhanced with regular training
complementing the weekly training at
all Incident Coordination Centres.
In 2013 Woodside successfully managed
travel risk associated with its international
opportunities, including developing
ventures in Myanmar. Additionally, the
team worked to ensure the company’s
operations in Australia and overseas
remained protected from cyber threats.
Woodside’s exposure to fraud and
corruption was further controlled through
a range of mechanisms including anti-
bribery, corruption and fraud training and
due diligence processes.
The company has also appointed an
anti-bribery and corruption lawyer to
complement existing anti-fraud and
corruption resources.
Outlook
While significant improvement was
recorded in personal safety performance
during the year, both process safety and
personal safety performance still show
room for improvement when compared
against global benchmarks, such as the
top quartile of the OGP.
In 2014 we will focus on implementing
our four Strategic Imperatives to help
us achieve global top quartile health and
safety performance by 2017.
We will continue to streamline our
systems and processes and work
collaboratively with our contractors to
deliver world-class health and safety
performance.
Woodside will look to embed the Fraud
and Corruption Control Program and the
Cyber Security Plan across the company.
Further, we will ensure a travel security
system is in place to protect our people in
high-risk locations.
Woodside holds frequent oil spill training
scenarios, often involving up to 250 people
working across a range of disciplines.
The award winning virtual 3D heat stress
training simulation.
Woodside is always looking for
innovative ways to communicate key
health and safety messages.
When the company was charged
with educating employees about the
hazards associated with working in
hot and humid conditions, a decision
was made to move beyond traditional
classroom-based training to a virtual 3D
environment.
An interactive training simulation was
created to teach participants how to
prevent heat stress and the correct
procedures to follow in emergency
situations. With heat stress and
dehydration a persistent risk to the
health of many Woodside workers in
the North West of Australia, the 3D
simulation is a critical training element
in Woodside’s safety program.
This program has been widely
recognised for its innovative approach
to training, winning the 2013 Platinum
Award in the Games and Simulation
category in the Learn X Impact Awards.
It was also a finalist in APPEA’s 2013
Health and Safety Awards.
Further information on Our People
and our Health, Safety and Security
is available in our 2013 Sustainable
Development Report on page 28 .
29
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEWOPERATIONS COMMuNITy ENGAGEMENT
Contributing to the capability and capacity of the communities in
which we operate is critical to creating positive social outcomes
impact in communities in Australia and
internationally, by working collaboratively
with industry, governments and
community organisations on an agreed
area of social outcome with an agreed set
of shared measures.
Woodside decided to focus the efforts of
the fund on early childhood development to:
Bring about meaningful, long-term
positive change in communities;
Build a sustainable workforce for the
future; and
Demonstrate impact through a shared
monitoring and evaluation process.
The rationale to focus on early childhood
stems from research which shows
that positive learning, physical, social,
emotional and cultural development
in early childhood directly impacts
a person’s ability to achieve their
potential. By investing in early childhood
development we believe we will
positively impact many social issues.
Our new collaborative approach to social
investment is not a wholesale change.
Rather, the Fund’s activities complement
the range of philanthropic and partnership
activities funded through our broader
social investment program where we
invest in communities’ health and safety,
education, youth, environment, arts
and culture, community development,
Indigenous and volunteering programs.
These programs and activities are on-
going.
Our performance
Woodside is a member of the London
Benchmarking Group 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 2013
was A$10.1 million. This equates to
0.35% of a three-year averaged PBT
(2011-2013).
In 2014 Woodside will launch a new
online community forum ‘Canvas’ to
promote and report on the impact our
social investment contribution is having
on the community and to encourage
discussion about the outcomes achieved
by community partners and program
participants.
Please register to join our community
forum at canvas@woodside.com.au
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.
In 2013 our employees contributed
5,400 volunteering hours, valued at
A$979,380, compared to 2012 in which
our employees contributed 5,800
volunteering hours, valued at A$963,090.
In addition to volunteering, our
employees donated A$206,149 through
workplace giving in 2013.
Outlook
Our refreshed approach in developing
a collaborative social investment
model allows clear goals to be set.
As the Woodside Development Fund
parameters mature, we will incorporate
feedback and measurement results to
shape future activities.
Over time, we hope to encourage others
to become involved and help us realise
the potential of this approach by:
contributing additional funds or non-
monetary resources;
advocating for Fund programs;
partnering as a provider of services or
programs; and
providing evaluation or monitoring
support.
Further information on our
Community Engagement is
available in our 2013 Sustainable
Development Report on 18 .
2013 Key performance highlights
Contributed A$10.1 million worth
of social investment* to our host
communities.
Our staff contributed 5,400
volunteering hours, valued at
approximately A$1 million.
Our voluntary social investment
contribution in 2013 equated to 0.35%
of a three-year averaged profit before
tax (2011 to 2013).
Approved the creation of the Woodside
Development Fund - a ten year,
A$20 million commitment.
Future objectives
Implement the Woodside
Development Fund, targeting early
childhood development.
Meet our target of contributing 0.5%
profit before tax (PBT) by 2015 to
community programs.
Our approach
Wherever we operate, we believe we
can assist in building the capability and
capacity of local communities, through
our social investment contribution.
We seek to positively impact
communities through philanthropy,
corporate volunteering, sponsorships
and partnering. Our Social Investment
Strategy (2009-2012) was based on
a three tiered funding model with a
theme of contributing to health and
well-being on a personal, community and
environmental level.
Throughout 2013 we focused on
implementing the recommendations of
our 2012 Corporate Social Investment
Review which identified key opportunities
to improve the way we contribute to
communities and communicate the
impact of our contributions.
The Woodside Development Fund,
a ten year A$20 million commitment
to a specific area of social outcome,
represents the continuing evolution of
our social investment program. The Fund
will be a catalyst for positive, long-term
* Includes cash value, in-kind and voluntary hours
(Woodside share)
30
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn ENVIRONMENTAL REpORT
At Woodside we aim to understand the environments in which
we operate and strive to be a global leader in environmental
management and protection
2013 Key performance highlights
Reviewed and revised our
Environmental Strategy.
Continued development of specialised
spill contingency and response
capability to ensure our capacity to
effectively respond to a significant loss
of containment incident.
Contract signed to access critical oil
spill equipment, as part of Woodside’s
response strategy to potential
significant spill events.
FuTuRE OBjECTIVEs
Implement the revised Environmental
Strategy.
Develop a robust environmental
management system which can
be applied both in Australia and
internationally.
Flare gas and intensity
(excludes commissioning)
14.2
9.6
9.3
8.0
7.5
3
4
3
7
2
3
1
2
4
6
4
2
7
1
2
0
5
1
6
2
1
9
7
5
6
9
2
1
09
10
11
12
13
Flared gas intensity (tonne/kilotonnes
hydrocarbon production)
Total gas flared for operated ventures
(kilotonnes)
Woodside portion of flaring (kilotonnes)
Environmental incidents reported
to regulators
13
12
11
10
09
4
4
6
6
8
Four environmental incidents were reported to
regulators in 2013.
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 and operations. 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.
Environmental performance
During 2013 four environmental
incidents were reported to the State
and Commonwealth regulators as part
of our licence conditions. Two incidents
occurred at the Karratha Gas Plant; a spill
to land (28m3 of a diluted low toxicity
methyldiethanolamine) and discharge of
air emissions outside licence limits.
The third and fourth incidents occurred
at the Goodwyn A Platform with spills to
ocean (160 litres of hydraulic oil and 100
litres of diesel fuel).
No environmental fines or penalties in
relation to environmental incidents during
2013 were received.
Biodiversity and ecosystems
Woodside is co-investing with leading
Australian researchers to underpin our
decision making and meet the company’s
commitment to ensuring operations
remain sustainable by understanding the
environments in which we operate.
As part of Woodside’s collaborative
research partnership with the Australian
Institute of Marine Science (AIMS), a
book “Discovering Scott Reef” was
launched in 2013. The book presents an
account of the 20 years of research effort
at Scott Reef.
In 2013 Woodside co-funded AIMS and
WA Museum to undertake more than
50 days of field-based environmental
research to better understand and
document the tropical ecosystems of
Australia’s northwest.
Flare gas and intensity
Woodside produced 9.9 million tonnes of
CO2 equivalent (mtpa) which was above
our target of 9.3 mtpa and a 2% increase
from 2012. This increase was due to
the Pluto Gas Plant and Okha FPSO
commissioning and production activities
and required flaring.
In 2013 the company exceeded its
flaring intensity target of 8.5 tonnes
per kilotonne (t/kt) of produced
hydrocarbon, with 14.2 t/kt reported
for production operations (excluding
commissioning). This increase was
attributed to Karratha Gas Plant trips,
testing and issues with equipment such
as the cryogenic heat exchangers, which
are being managed through our shut-
down program.
Controlling environmental impacts
During 2013 Woodside continued to
work on improving process safety, spill
contingency planning and response
across all Woodside facilities and
operations.
Carbon price
In 2013 the company incurred an
expense of US$36 million for its carbon
emissions under the Clean Energy Act.
Browse
As a result of the Browse Joint
Venture participants considering
floating LNG (FLNG) technology as the
development concept, previous State and
Commonwealth environmental approvals
received for the development based on
an LNG Precinct near James Price Point
are no longer applicable. Woodside is
now preparing environmental approval
documentation for a FLNG development
concept.
Outlook
Woodside remains focused on
maintaining a low level of environmental
incidents, as well as looking to
significantly reduce flaring rates,
as facilities currently undergoing
commissioning transition to normal
operations.
We are looking at becoming engaged in
more international opportunities, as we
expand into new locations.
31
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEWOPERATIONS LNG MARKET REpORT
Woodside is well placed to leverage its strong marketing position
and capability to support new Australian and international
developments
Global LNG supply and demand
a
p
t
m
600
500
400
300
200
100
0
2012
2030
Possible projects
Projects under construction
Operational
WoodMackenzie demand (Nov 2013)
FACTS demand (Oct 2013)
CERA demand: Global redesign (Oct 2013)
Global LNG trade
300
250
200
t
m
150
100
50
0
2000
25
20
15
%
10
5
0
2012
Global spot/short-term* LNG trade
Global medium/long-term** LNG trade
% Share of spot/short-term trade (RHS)
Source: FGE
* FGE defines spot/short-term LNG trade as volumes
delivered under contracts with a duration two years
or less.
** FGE defines medium/long-term LNG trade as
volumes delivered under contracts with a duration
of more than two years.
32
Global LNG growth outlook
remains strong
The robust growth outlook in the LNG
industry is based on a combination of
global demand for natural gas and the
increasing role of LNG in the global gas
supply mix. It is expected that by 2030
global demand for LNG will be more
than double the current 2013 level of
approximately 240 million tonnes per
annum, corresponding to an average
annual growth rate of 4% to 5%.
Currently, Japan accounts for about one
third of total LNG imports. While Japan
is expected to remain the largest LNG
importer, demand from China, India
and other emerging Asian LNG import
markets is growing rapidly. For Japan and
South Korea, the future role of nuclear
power remains the key uncertainty in the
outlook for LNG demand growth. At the
end of 2013 all of Japan’s nuclear reactors
remained shut-down, and the proposed
restart of some of these facilities may be
subject to further delays.
The dynamics of global LNG demand are
also being affected by increasing demand
from the Middle East and South America.
In addition to LNG demand growth in
power generation, commercial, and
residential gas use, LNG demand for
transport use is also growing rapidly.
There is increasing investment in
infrastructure for LNG as a fuel for ships
and heavy-duty trucks, particularly in
China, Europe and North America.
projects under construction to lift
supply pre-2020
For the past several years global supply
remained relatively flat. The industry has
been in a construction phase, following a
spate of project approvals which occurred
across 2009 and into early 2012. At the
end of 2013 around a dozen projects
were under construction, which together
amounted to nearly 100 million tonnes
per annum of new supply. The first of
these projects is expected to ramp-
up towards the end of 2014. Seven of
these projects are located in Australia
and by the end of the decade Australia
is predicted to overtake Qatar as the
world’s largest supplier of LNG.
First us supply
By 2016, the United States is set to
become a global LNG exporter. The
first US-based liquefaction facility
was approved in 2012, and at 2013
year end there was up to 20 million
tonnes per annum of US supply under
construction. It is expected that at
least one additional project will be
approved in 2014 and by 2020 US
supply will approach 40 million tonnes
per annum.
New wave of supply required to
meet long-term demand
Further new supply is required to
meet demand post-2020. Given the
required lead time for construction
of major LNG projects, it is critical
that some of the currently proposed
projects secure foundation sales and
progress to a final investment decision
within the next few years in order for
supply to keep pace with long-term
demand.
The list of potential LNG projects
includes new developments in
existing supply regions, such as
Australia and Russia, as well as in
emerging supply regions, particularly
North America and East Africa. In the
case of North America, the prospect
of LNG exports is underpinned
by increased production of shale
gas. Shale gas projects have been
proposed in both the US and Canada,
with leading US projects based on
brownfield conversion of existing
import terminals, with feedgas to be
supplied from the domestic gas grid.
In contrast, most Canadian projects
will require significant investment in
upstream facilities. The establishment
of an LNG export industry based on
recent large gas discoveries offshore
East Africa faces some additional
challenges related to frontier
development, including sovereign
risk, agreement of fiscal terms, Joint
Venture alignment and lack of existing
infrastructure.
New supply for the next decade
and beyond will be facilitated by
technological advances, including
a range of options for floating
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn liquefaction facilities. Another
example of the role of technology
in LNG supply diversification is the
increasing investment in small-scale
liquefaction plants.
LNG pricing in the Asia pacific
market is robust
Prices for LNG deliveries in
Woodside’s target market of North
Asia under long-term contracts
continue to reflect strong indexation
to oil prices. During 2013 prices for
spot deliveries were close to the
average price, indicating a tightening
market which is anticipated to prevail
for several years.
It is expected that LNG prices will
remain robust for new long-term
sales, in order to support investment
in new supply. The traditional pricing
mechanism in Asia Pacific has been
strongly linked to oil. However, recent
industry debate has focused on the
role of US LNG sales which have a
price component linked to the US
domestic gas price. At the current
low US gas prices, the prospect of
these deliveries is exerting some
downward pressure on traditional
pricing mechanisms for sales from
new projects. However looking
forward, it is expected that the long-
term price of US LNG delivered into
Asian markets will be comparable to
current oil-linked LNG pricing.
Woodside’s existing long-
term LNG sales are being
recalibrated to the market
Long term LNG sales and purchase
agreements typically have periodic
price reviews that recalibrate price
to reflect the prevailing market
conditions for comparable supply.
Woodside has engaged in various
price negotiations for several existing
supply arrangements. A number
have been concluded, with transition
to new prices for a significant
proportion of Woodside’s equity LNG
from early 2014. Other negotiations
will continue into 2014.
Price formulae adjustments under
regional contracts are moving
increasingly towards long-term
landed average Japanese prices and
benchmarks.
Adding value to pluto
A key marketing highlight for 2013
was the signing of a non binding
Heads of Agreement for the sale
of LNG to Chubu Electric, which
was formalised into a binding Sales
and Purchase Agreement in early
2014. This sales arrangement is
underpinned by supply from the
Pluto LNG Project and provides
significant seller flexibility. The
arrangement is for the supply of up
to 1.5 million tonnes of LNG over the
three year period from 2014 to 2017.
This new mid-term sales agreement
adds to the long term relationship
with Chubu Electric. Notwithstanding
this commitment, LNG production
is expected to be available for other
short term and/or spot LNG sales.
To further optimise the value from
the Pluto LNG Project, Woodside
has added a dedicated fourth ship to
the integrated fleet - the Woodside
Rogers. This is a new 160,000m3
LNG ship constructed in the Daewoo
Shipbuilding and Marine Engineering
(DSME) shipyard in South Korea.
The Rogers has been taken on a
long-term charter and is named in
honour of ex-Chairman Bill Rogers.
The addition of the Woodside Rogers
results in Woodside having access
to four dedicated ships for Pluto LNG
sales, two of which are supplied to
the project by foundation customers,
Tokyo Gas and Kansai Electric.
Price discussions with Pluto
foundation customers in 2013
resulted in an upward price
adjustment for quantities already
delivered (as reported in our Q4
results) and a new price from 2014.
With the current scheduling of
cargoes, this new price outcome is
expected to apply to approximately
25% of total Pluto sales quantities
Q1 2014 and 35% in Q2 2014.
From Q3 2014 onwards the new
price will apply to approximately 75%
of total sales* and the sales mix is
expected to reflect a steady state
combination of sales to Foundation
Buyers (Tokyo Gas and Kansai
Electric) and other buyers.
*Assuming annualised average sales of
approximately 4.3 mtpa.
strong market for Browse LNG
In support of long-term company
growth via the development of the
Browse gas resource, Woodside,
together with Japan Australia LNG
(MIMI Browse) Pty Ltd (MIMI) are
continuing marketing activities for
foundation sales in Japan. Woodside
is separately marketing Browse
FLNG in key LNG markets outside
of Japan. Customers have been
updated on the change in technology
and recognise the significance of the
project - both for diversification of
supply and in meeting future demand
in the region. Woodside is confident
the LNG market will support the
earliest possible commercialisation
of this world-class resource.
Woodside’s marketing
strength supports growth
As the major Australian supplier,
Woodside’s key marketing 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.
Our marketing efforts in 2014 will
be focused on the consolidation
and optimisation of LNG sales
from operating assets, as well as
generating revenue from other
shipping and trading activities.
Woodside’s growth activities provide
opportunities to extend the existing
broad base of premium Asian
customers and to expand into new
markets. Woodside is well placed
to leverage its strong marketing
position and capability to support
new Australian and international
developments.
In 2013 Woodside established
a dedicated office in Singapore.
The office will play a pivotal role
in supporting our growing LNG
marketing, trading and shipping
capabilities, in line with the
company’s expanding international
portfolio.
In Q4 the company commenced
trading with the Woodside Goode,
our first LNG ship not dedicated to
a specific project. The ship will be
managed from the Singapore office,
originating third party LNG trades
from outside Australia to markets in
South America or north Asia. The
Woodside Goode is named in honour
of ex-Chairman Charles Goode.
33
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEWOPERATIONS REsERVEs sTATEMENT
Developed reserves increased by 22% (Proved) and 13% (Proved
plus Probable) following start-up of North Rankin B in Q3 2013
2013 Key performance highlights
Proved Developed and Proved
plus Probable Developed reserves
increased by 116.5 MMboe and 96.0
MMboe respectively largely due to
start-up of NRB.
The portion of Browse contingent
resources available as sales gas
increased by 16.6 MMboe mainly due
to the positive revisions in ultimate
recovery as a result of a change in
development concept to floating LNG
(FLNG).
Refer to 36 for notes to the reserves statement
Woodside’s reserves(1,2,3,4) and contingent
resources(5) overview*
Proved(11) Developed(12) and Undeveloped(13)
Proved Developed
Proved Undeveloped
Proved plus Probable(14) Developed and Undeveloped
Proved plus Probable Developed
Proved plus Probable Undeveloped
Best Estimate (2C) contingent resources
Key metrics
2013 reserves replacement ratio(15)
Organic 2013 reserves replacement ratio(16)
Three year reserves replacement ratio
Organic three year reserves replacement ratio
Reserves life(17)
Browse Contingent Resource (2C)
and sales Gas Reconciliation
Annual production(18)
Net acquisitions and divestments
dry gas(6)
Condensate(7)
Oil
Total
Bcf(8)
MMbbl(9)
MMbbl
MMboe(10)
5,708
3,213
2,495
7,092
4,133
2,959
7,489
102.9
51.0
51.9
125.2
65.1
60.2
230.9
%
%
%
%
Years
MMboe
MMboe
38.9
35.3
3.6
67.0
61.4
5.6
1,143.2
650.0
493.2
1,436.5
851.6
585.0
147.6
1,692.3
proved
3
4
32
32
13
90.3
(0.7)
proved plus
probable
(19)
(17)
0
1
16
90.3
(1.0)
1100
)
e
o
b
M
M
(
e
m
u
o
V
l
700
4
.
1
1
0
,
1
)
2
1
0
2
E
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(
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c
r
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n
i
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4
.
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7
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.
9
3
9
6
.
6
1
6
.
5
5
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)
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t
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i
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e
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e
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t
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n
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t
n
o
C
The sales gas portion of Browse contingent
resources (2C) has increased by 16.6 MMboe
as a result of positive revisions in ultimate
recovery due to the change in development
concept to FLNG. The decrease in contingent
resources at year end 2013 is primarily due
to a change in categorisation of fuel and
flare associated with a change of reporting
reference point.
At year end 2012, the reference point for
Browse James Price Point (JPP) was defined
as the inlet to the onshore (downstream)
processing facility, which means resources
were reported including downstream fuel and
flare. For Browse FLNG development, the
reference point is defined at the outlet of the
FLNG facility, hence year end 2013 contingent
resources are reported excluding the fuel and
flare required for production and processing
up to the reference point.
34
proved developed and undeveloped reserves annual reconciliation
by product*
Reserves at 31 December 2012
Revision of previous estimates(19)
Extensions and discoveries(20)
Acquisitions and divestments
Annual production
Reserves at 31 december 2013
dry gas
Bcf
6,125
Condensate
MMbbl
108.8
Oil
MMbbl
47.3
Total
MMboe
1,230.6
(3)
0
(1)
3.1
0.0
0.0
(413)
5,708
(8.9)
102.9
1.0
0.0
(0.6)
(8.9)
3.6
0.0
(0.7)
(90.3)
38.9
1,143.2
proved plus probable developed and undeveloped reserves annual
reconciliation by product*
Reserves at 31 December 2012
Revision of previous estimates
Extensions and discoveries
Acquisitions and divestments
Annual production
Reserves at 31 december 2013
dry gas
Bcf
7,505
Condensate
MMbbl
130.9
Oil
MMbbl
95.9
Total
MMboe
1,543.6
1
0
(1)
3.3
0.0
0.0
(413)
7,092
(8.9)
125.2
(19.3)
(15.8)
0.0
(0.8)
(8.9)
0.0
(1.0)
(90.3)
67.0
1,436.5
Best Estimate contingent resources annual reconciliation by product*
Contingent resources at 31 December 2012
Transfer to reserves
Revision of previous estimates
Extensions and discoveries
Acquisitions and divestments
dry gas
Bcf
7,836
Condensate
MMbbl
231.2
Oil
MMbbl
139.3
Total
MMboe
1,745.2
(9)
(316)
0
(23)
(0.2)
2.0
0.0
(2.1)
11.2
2.1
0.0
(5.0)
9.5
(51.3)
0.0
(11.1)
Contingent resources at 31 december 2013
7,489
230.9
147.6
1,692.3
proved developed and undeveloped reserves summary by region*
Greater Pluto(21)
North West Shelf(22)
Greater Exmouth(23)
Other Australia(24)
United States of America(25)
Reserves
*Small differences are due to rounding.
dry gas
Bcf
3,438
2,269
0
0
1
Condensate
MMbbl
51.8
Oil
MMbbl
0.0
51.2
0
0.0
0.0
13.8
21.2
2.4
1.5
Total
MMboe
654.9
463.0
21.2
2.4
1.7
5,708
102.9
38.9
1,143.2
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn
Refer to 36 for notes to the reserves statement
proved reserves*
proved developed reserves summary by region*
Greater Pluto
North West Shelf
Greater Exmouth
Other Australia
United States of America
Reserves
dry gas
Bcf
1,628
1,584
0
0
1
3,213
Condensate
MMbbl
21.2
Oil
MMbbl
0.0
29.8
0.0
0.0
0.0
51.0
12.4
19.2
2.4
1.3
35.3
proved undeveloped reserves summary by region*
Greater Pluto(26)
North West Shelf(26)
Greater Exmouth
Other Australia
United States of America
Reserves
dry gas
Bcf
1,810
685
0
0
0
2,495
Condensate
MMbbl
30.6
Oil
MMbbl
0.0
21.3
0.0
0.0
0.0
51.9
1.4
2.0
0.0
0.2
3.6
proved plus probable developed and undeveloped reserves
summary by region*
dry gas
Bcf
4,653
2,438
0
0
2
Condensate
MMbbl
68.4
Oil
MMbbl
0.0
56.8
0.0
0.0
0.0
22.4
39.0
2.6
3.0
7,092
125.2
67.0
1,436.5
proved plus probable developed reserves summary by region*
Total
MMboe
306.7
320.2
19.2
2.4
1.5
650.0
Total
MMboe
348.1
142.8
2.0
0.0
0.2
493.2
Total
MMboe
884.6
506.9
39.0
2.6
3.3
l
d
e
p
o
e
v
e
d
n
U
d
n
a
d
e
p
o
e
v
e
D
l
s
e
v
r
e
s
e
r
d
e
p
o
e
v
e
D
l
)
e
o
b
M
M
(
)
e
o
b
M
M
(
s
e
v
r
e
s
e
r
6
9
2
,
1
8
0
3
,
1
2
9
2
,
1
1
3
2
,
1
3
4
1
1
,
1
3
3
4
6
2
8
4
2
0
5
3 6
3
5
09
10 11
12
13
Proved Developed reserves
increased by 116.5 MMboe
primarily due to start-up of North
Rankin B.
proved plus probable
reserves*
l
d
e
p
o
e
v
e
d
n
U
d
n
a
d
e
p
o
e
v
e
D
l
s
e
v
r
e
s
e
r
d
e
p
o
e
v
e
D
l
)
e
o
b
M
M
(
)
e
o
b
M
M
(
s
e
v
r
e
s
e
r
1
5
6
,
1
0
8
6
,
1
0
1
6
,
1
4
4
5
,
1
7
3
4
,
1
4
4
4
4
5
3
5
2
3
2
5
6 8
5
7
09
10
11
12
13
Greater Pluto
North West Shelf
Greater Exmouth
Other Australia
United States of America
Reserves
Greater Pluto
North West Shelf
Greater Exmouth
Other Australia
United States of America
Reserves
Greater Pluto
North West Shelf
Greater Exmouth
Other Australia
United States of America
Reserves
Greater Browse27
Greater Sunrise28
Greater Pluto
North West Shelf
Greater Exmouth
Other Australia
United States of America
Other International29
Contingent resources
*Small differences are due to rounding.
proved plus probable undeveloped reserves summary by region*
Best Estimate contingent resources summary by region*
Condensate
MMbbl
31.8
Oil
MMbbl
0.0
dry gas
Bcf
2,454
1,678
0
0
1
dry gas
Bcf
2,198
760
0
0
1
4,133
65.1
Condensate
MMbbl
36.6
Oil
MMbbl
0.0
33.2
0.0
0.0
0.0
23.6
0.0
0.0
0.0
20.2
36.4
2.6
2.2
61.4
2.2
2.6
0.0
0.8
5.6
2,959
60.2
dry gas
Bcf
4,660
1,717
660
101
284.8
66
1
0
Condensate
MMbbl
138.1
Oil
MMbbl
0.0
75.6
10.6
3.1
3.0
0.5
0.0
0.0
0.0
0.0
22.9
113.1
10.1
1.5
0.0
Proved plus Probable Developed
reserves increased by 96.0 MMboe
primarily due to start-up of the
North Rankin B.
proved plus probable reserves*
(developed & undeveloped)
Total
MMboe
462.4
347.8
36.4
2.6
2.4
851.6
Total
MMboe
422.2
159.2
2.6
0.0
0.9
585.0
Total
MMboe
955.6
376.7
126.4
43.8
166.1
22
1.7
0.0
Developed
Greater Pluto undeveloped
NWS undeveloped
Other undeveloped
%
59
29
11
<1
At year-end 2013, 59% of the
Proved plus Probable reserves were
categorised as developed, up from
49% in 2012.
7,489
230.9
147.6
1,692.3
35
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEWOPERATIONS
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).
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, 95% of Woodside’s Proved Reserves have
been externally verified by independent review over the past
four years.
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).
Qualified petroleum Reserves and Resources
Evaluator statement
The Reserves Statement is based on and fairly represents
information and supporting documentation prepared by qualified
petroleum reserves and resources evaluators. The Reserves
Statement has been approved by Mr Ian F. Sylvester, Vice
President Reservoir Management, who is a full-time employee
of the company and a member of the Society of Petroleum
Engineers. 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.
Notes to the reserves statement
1
2
‘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.
Assessment of the economic value of a project,
in support of a reserves booking, uses Woodside
Portfolio Economic Assumptions (PEAs). The PEAs
are reviewed on an annual basis or more often if
required. The review is based on historical data and
forecast estimates for economic variables such
as product prices and exchange rates. The PEAs
are approved by the Woodside Board. Specific
contractual arrangements for individual projects are
also taken into account.
3 Woodside uses both deterministic and probabilistic
methods for estimation of petroleum resources at
the field and project levels. Unless otherwise stated,
all petroleum estimates reported at the region
or company level are aggregated by arithmetic
summation by category. Note that the aggregated
Proved level may be a very conservative estimate
due to the portfolio effects of arithmetic summation.
4 Woodside reports reserves net of the fuel and
5
flare required for production, processing and
transportation up to a reference point. For offshore
oil projects, the reference point is defined at the
outlet of the Floating Production Storage Facility
(FPSO). For onshore gas projects, the reference
point is defined as the inlet to the onshore
(downstream) processing facility. Downstream fuel
and flare represents 12.5% of Woodside’s Proved
(Developed and Undeveloped) and Proved plus
Probable (Developed and Undeveloped) 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 fuel and flare required for
production, processing and transportation up to a
reference point and non-hydrocarbons not present
in sales products. Contingent resources 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’ (50% confidence level).
6
’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.
7
‘Condensate’ is defined as ‘C5 plus’ petroleum
components.
36
8
9
10
11
12
13
14
‘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.
‘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.
‘Undeveloped reserves’ are those reserves for
which wells and facilities have not been installed or
executed but are expected to be recovered through
future investments.
‘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.
15 The ‘reserves replacement ratio’ is the reserves
(Developed and Undeveloped) change during the
year, before the deduction of production, divided by
production during the year. The ‘three-year reserves
replacement ratio’ is the reserves (Developed and
Undeveloped) change over three years, before the
deduction of production for that period, divided by
production during the same period.
16 The ‘organic annual reserves replacement ratio’ is
the reserves (Developed and Undeveloped) change
during the year, before the deduction of production
and adjustment for acquisition and divestments,
divided by production during the year.
17 The ‘reserves’ life is the reserves (Developed and
Undeveloped) divided by production during the year.
18
‘Annual production’ is the volume of dry gas,
condensate and oil produced during the year and
converted to ’MMboe’ 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
between sales and reserves product definitions,
reserves reported gross of downstream fuel and
flare and the ‘MMboe’ conversion factors applied.
19
20
‘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.
21 The ‘Greater Pluto’ region comprises the Pluto-
Xena, Larsen, Martell, Martin, Noblige, Remy, Alaric
and Cadwallon fields.
22 The ‘North West Shelf’ (NWS) region 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 12.4% of
NWS Proved (Developed and Undeveloped) dry gas
reserves and 17% of NWS Proved (Developed and
Undeveloped) condensate reserves.
23 The ‘Greater Exmouth’ region comprises the
Vincent, Enfield, Stybarrow-Eskdale, Greater
Laverda, Cimatti and Ragnar fields.
24
‘Other Australia’ includes the Laminaria-Corallina
and Argus fields. Woodside completed the sale of
its interests in the Mutineer-Exeter oil project on
26 February 2013, with effective sale date of 1 July
2012.
25 Woodside’s resources in the United States of
America include the Neptune field. Woodside
completed the sale of its interests in the Power Play
field in November 2013 with an effective sale date
of 1 August 2013.
26 Material concentrations of reserves in the
Greater Pluto and North West Shelf regions have
remained undeveloped for longer than 5 years
from the dates they were initially reported as the
incremental reserves are expected to be recovered
through future developments to meet long term
contractual commitments. The incremental
projects are included in the company business
plan, demonstrating the intent to proceed with the
developments.
‘Greater Browse’ comprises the Brecknock,
Calliance and Torosa fields. For the Browse FLNG
development, the reference point is defined as the
outlet of the FLNG facility, which means contingent
resources are reported excluding the fuel and flare
required for production and processing up to the
reference point.
‘Greater Sunrise’ comprises the Sunrise and
Troubadour fields.
‘Other International’ previously included fields in
Brazil concession BM-S-48. After evaluating the
results of the Panoramix-3 and Vampira-1 appraisal
operations, the BM-S-48 Joint Venture submitted a
request to relinquish the concession.
27
28
29
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn GROWTH
GROWTH
BROWsE
Read more on 38
INTERNATIONAL
Read more on 40
GLOBAL EXpLORATION
Read more on 42
37
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEW BROWsE
Woodside’s Broome office staff continued to
engage with the community, including volunteering
on local conservation projects. For more information,
please refer to the 2013 Woodside Sustainable
Development Report.
Running for over 20 years, the Woodside and
Australian Institute of Marine Science research
program at Scott Reef is one of the most
comprehensive scientific investigations of a
coral reef system in Australia.
Woodside conducted site rehabilitation activities
at James Price Point between October and
December 2013.
The floating LNG (FLNG) development concept being considered by
the Browse Joint Venture seeks to realise the earliest commercial
development of this world-class resource
Browse
Interest
TR/5; R2; WA-30-R
WA-31-R; WA-32-R
WA-28-R; WA-29-R
WA-275-P
34%
34%
17%
17%
Operator
Location
Woodside
Offshore 425 km
north of Broome, WA
Water depth 400 - 800 metres
Contingent
Resources^
^ Woodside share. Net resources are subject
4.7 Tcf gas,
138.1 MMbbl condensate
to unitisation outcomes.
2013 Key performance highlights
Future objectives
Browse Joint Venture to be in a
position to consider commencing
front-end engineering and design
(FEED) in 2014.
Woodside is targeting a final
investment decision (FID) for the
second half of 2015.
Woodside will continue working
actively on marketing of LNG volumes
in the Japanese and other regional
markets.
Technical and commercial evaluation of
the onshore development concept at
James Price Point completed.
Key Principles Agreement signed with
Shell in relation to the use of Shell’s
FLNG technology.
Browse Joint Venture decision
to proceed with FLNG as the
development concept for entry into
basis of design (BOD).
Browse Joint Venture referred
the FLNG Development to the
Department of the Environment
under the Commonwealth
Environment Protection and
Biodiversity Conservation Act 1999.
The Development received an
Environmental Impact Statement (EIS)
level of assessment.
Darwin
Location of joint venture permits in the Browse area
WA-30-R
R 2
TR/5
Browse joint Venture permits
Gas fields
WA-32-R
WA-29-R
WA-275-P
WA-275-P
Torosa
Brecknock
Calliance
WA-31-R
WA-28-R
WA-28-R
0
100
200
kilometres
Horizontal Datum: GDA 1994
38
James Price Point
Derby
Broome
Port Hedland
Karratha
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn Woodside is 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 are estimated to contain
gross (100%) contingent resources (2C)
of 14.9 Tcf of dry gas and 441.2 million
barrels of condensate.
FLNG concept selection for BOd
In April 2013, Woodside announced
that the James Price Point development
concept did not meet the company’s
commercial requirements for a positive
final investment decision.
In June 2013, the Browse Joint Venture
sought a variation to the Browse retention
lease conditions to align proposed
future activities with the conditions
of the leases. In August 2013, the
Commonwealth-Western Australia
Offshore Petroleum Joint Authority (Joint
Authority) approved the amendments
sought to the Commonwealth leases.
Woodside and the Browse Joint Venture
are committed to the earliest commercial
development of the Browse Basin
resources in a way that will provide
long-lasting economic and employment
benefits to Western Australia and
Australia.
The Browse Joint Venture selected
FLNG as the development concept on
2 September 2013 and decided to enter
the BOD phase.
BOD will determine the basic design
parameters of the development concept,
which at this stage is premised on three
FLNG facilities located in Australian
Commonwealth waters.
Each facility will comprise of a large
hull approximately 488 m long, 74 m
wide and 44 m deep. Production
capacity for each facility is expected to
be approximately 3.9 mtpa of LNG and
17,000 bpd to 22,000 bpd of condensate.
The proposed Browse FLNG
Development will apply Shell’s ‘Design
One, Build Many’ philosophy as the basis
of design for the Browse FLNG facilities.
By only making modifications for Browse-
specific conditions, there is opportunity
to maintain quality and realise benefits in
cost and project schedule.
The ability to stage the capital
expenditure and build the production
profile across the FLNG vessels
reinforces the benefits of FLNG
technology in managing project risk,
by combining lower upfront capital
expenditure with earlier cash generation.
james price point
After the Browse Joint Venture’s
selection of the FLNG development
concept in September 2013, Woodside
undertook a series of site rehabilitation
activities at James Price Point between
October and December 2013. Activities
included decommissioning groundwater
bores, revegetating cleared areas,
removing infrastructure and collecting
seed bank material. Activities were
conducted in accordance with approvals
and with the involvement of Traditional
Owners throughout. Woodside has
implemented a three-year monitoring
program to regularly track the results of
the rehabilitation work.
On 10 September 2013, Woodside
issued formal notice of its intention
to withdraw from the Native Title
Agreement with the State Government
and Goolarabooloo Jabirr Jabirr
peoples (Browse LNG Precinct Project
Agreement). Withdrawal will be effective
on 11 March 2014. Woodside has made a
total of A$25.6 million in payments under
this agreement.
Environmental progress
Woodside and the Browse Joint Venture
have invested more than A$55 million
in environmental research and studies,
often in conjunction with leading
academic and research organisations, to
better understand the offshore marine
environment in the vicinity of the three
Browse gas fields.
Darwin
GROWTH
On 29 November 2013, the proposed
Browse FLNG Development was referred
to the Commonwealth Department of
Environment for consideration under the
Environment Protection and Biodiversity
Conservation Act 1999 (Cth) (EPBC Act).
The referral initiates the environmental
impact assessment process under
the Commonwealth EPBC Act. On
10 January 2014, Woodside received
advice that the Development should be
assessed by EIS.
Marketing update
Subsequent to the end of 2013 (ASX
dated 2 January 2014), Woodside advised
that Japan Australia LNG (MIMI Browse)
Pty Ltd (MIMI) gave notice terminating its
long-term sales and purchase agreement
(SPA) for around 1.5 million tonnes
of LNG a year from the Browse LNG
Development. The conditions of the
SPA required a positive final investment
decision on the Browse onshore
development concept by 31 December
2013. Woodside and MIMI continue
working actively on marketing of co-
mingled LNG volumes in the Japanese
market. In addition, Woodside remains in
ongoing discussions with other regional
customers regarding potential sales
from its portfolio of Australian LNG
developments, including Browse.
Outlook
Woodside is well-placed to deliver the
work required to put the Browse Joint
Venture in a position to consider FEED
entry in 2014, with a view to reaching FID
in the second half of 2015.
39
WA-30-R
R 2
TR/5
WA-32-R
WA-29-R
WA-275-P
WA-275-P
Torosa
Brecknock
Calliance
WA-31-R
WA-28-R
WA-28-R
James Price Point
Derby
Broome
Port Hedland
Karratha
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEW Neptune oil field
Canada
Interest
AT 574, 575, 618
WI 20%
NRI 17.5%
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
bottom hole pressure reduction campaign
has reduced the effects of natural field
decline.
The near-term development plan for
Neptune includes the possible drilling of
one infill well.
In early 2014 Woodside entered into
an agreement with the Government of
British Columbia for the exclusive right
to access an area of Crown land for the
potential development of a liquefied
natural gas (LNG) facility and export
terminal.
The Crown land is located at Grassy
Point, near Prince Rupert, British
Columbia, on Canada’s west coast.
Woodside will now assess the technical
feasibility of constructing an LNG facility
at Grassy Point and continue discussions
with potential joint venturers and gas
suppliers in relation to the proposed LNG
development.
Any decision to proceed with an LNG
development at Grassy Point is subject
to a variety of internal and external
approvals.
INTERNATIONAL
Gulf of Mexico
Key metrics (Woodside share)
2013
2012
Sales revenue
(US$ million)
79
Net production
(MMboe)
0.9
76
0.8
Proved plus
Probable
reserves
(MMboe)
3.3
7.7
Following a strategic review of areas
of future growth and focus, Woodside
is scaling back its presence in the Gulf
of Mexico. The company has signed
purchase and sale agreements to
sell its 20% interest in the Anadarko-
operated Power Play field with effect
from 1 August 2013. Closing occurred
in November 2013. Further sale
transactions are pending.
40
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn GROWTH
sunrise
Israel
In April 2013 the Timor-Leste
Government referred a dispute with the
Australian Government, relating to the
treaty on Certain Maritime Arrangements
in the Timor Sea, to international
arbitration in accordance with the dispute
resolution procedure in the Timor Sea
Treaty.
Subsequently Woodside and the Sunrise
Joint Venture participated in a tripartite
meeting with both the Australian and
Timor-Leste Governments, to discuss
the need for alignment of the two
governments before the development
can proceed.
The first arbitration hearing occurred
in December 2013 and an outcome is
expected in late 2014.
Woodside awaits the outcome of
arbitration and remains committed to
developing the Greater Sunrise resource.
Woodside continued work in 2013
towards finalising an in-principle
agreement for the company to acquire
an interest in each of the 349/Rachel
and 350/Amit petroleum licences, which
contain the Leviathan gas field offshore
Israel.
In June 2013 the Government of Israel
announced a natural gas export policy
which maintained the domestic gas
reservation for the Leviathan field at
50%, despite an aggregate increase in
reservation volumes for all fields to 60%.
A challenge to the legality of the Israeli
Government’s natural gas export policy
was dismissed by the Israeli Supreme
Court in October 2013. The government
policy provides sufficient export volumes
that could underpin a viable export project
for Leviathan. The Israeli government
is finalising its tax policy setting for gas
export projects, which we expect will
become clear in the first half of 2014.
Subsequent to year end, Woodside and
the Leviathan Joint Venture participants
have agreed to convert a previous
in-principle agreement for the potential
acquisition of an interest in the Leviathan
field into a non-binding Memorandum of
Understanding (MoU).
The MoU provides a framework to
negotiate in good faith, the acquisition
of a 25% participating interest in each of
the 349/Rachel and 350/Amit petroleum
licences. The parties will negotiate
towards executing a fully termed
agreement by 27 March 2014.
Consistent with the previous in-principle
agreement Woodside would be the
operator of any LNG development of the
field, while Noble Energy would remain
upstream operator.
The Leviathan field is contained within
the licences, and based on information
provided by the operator Noble Energy,
has an estimated ‘2C’ contingent
resource (100%) of 18.9 trillion cubic feet
of natural gas and 34.1 million barrels of
condensate.
Our 25% share has the potential
to increase Woodside’s contingent
resources by 50%.
The transaction contemplated by the
MoU is conditional upon the execution
of a fully termed agreement and certain
policy, tax and regulatory approvals from
the Israeli Government.
41
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEW GLOBAL EXpLORATION
Woodside acquired over 10,000 km2 of new 3D
seismic data during 2013.
The Atwood Eagle drill rig was secured in
2013 and is expected to commence drilling
in mid-2014.
We are leveraging our capabilities in areas such
as deepwater exploration, project development
and marketing to expand our global portfolio.
Exploration is focused on growing a balanced global portfolio to
provide future growth opportunities for the business
2013 Key performance highlights
Continued to build the company’s
exploration portfolio, with new
permit entries offshore Ireland and
New Zealand.
Successfully completed farm-in
agreements to exploration blocks
offshore Myanmar.
Acquired over 10,000 km2 of new 3D
seismic data to identify potential future
drilling candidates.
We secured two drilling rigs for 2014
to pursue development and exploration
opportunities offshore Western
Australia.
Future objectives
Drill up to seven wells in 2014, five in
Australia (three of which will be drilled
in the Frontier Outer Canning Basin)
and up to two in Spain (Canary Islands).
Continue to grow a global exploration
portfolio in emerging provinces
characterised by materiality and quality.
2013 exploration results
During 2013 Woodside secured entry into
four new basins; the Porcupine Basin in
Ireland, the Rakhine Basin in Myanmar
and the Taranaki Basin and Great South
Basin in New Zealand.
Drilling activity was confined to Australia
and included three wells in the Exmouth
sub-basin (Gumbo-1, Minarelli-1,
Stybarrow East-1) and one in the Dampier
sub-basin (Goodwyn North-1). Gumbo-1,
Minarelli-1 and Goodwyn North-1 did not
encounter hydrocarbons. Hydrocarbons
were encountered at Stybarrow East-1,
but the discovery was non-commercial.
Three planned wells were deferred
to 2014, due to global operational
constraints with contracting long range
helicopters and consequent impacts on
contracting a rig. The helicopter constraint
has been resolved and the deferred wells
are included in the 2014 drilling program.
Seismic activity in 2013 involved the
acquisition of over 10,000 km2 of
3D seismic data and 386 km of 2D
seismic data, over both Australian and
international permits. The Admiral
3D survey in the Browse Basin was
completed at the start of 2013, acquiring
2868 km2 over permits WA-447-P and
WA-449-P. The Polly 3D survey was
completed in May, comprising 7425 km2
across four 100% equity permits in the
Beagle Basin. Both surveys fulfilled
primary term seismic work program
commitments.
The Fortuna 3D survey in the Dampier
sub-basin mobilised in December for a
January 2014 start, covering the core
North West Shelf (NWS) Project acreage.
This survey is the first application of
IsoMetrixTM technology in Australia
and will provide a broadband, multi-
component dataset over the entire survey
area. In addition to the 3D campaigns,
a 2D survey (Pivot 2D) acquired 386km
over permits WA-461-P and WA-463-P
located offshore Exmouth. This survey
targeted deeper structures around
existing Exmouth oil hubs. In Myanmar,
the Padauk 3D survey was completed
in March, totalling 1786 km2 3D seismic
over block A-6.
Active portfolio management was a
key focus of 2013, with divestment of
approximately 35,460 km2 (gross) of
lower prospectivity permits and licenses,
and the acquisition of 30,500 km2 of
new permits and licenses. In line with
the company’s exploration strategy, the
management and further development
of the inventory is a continual process
as Woodside pursues a balanced global
exploration portfolio.
42
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn Broadening the portfolio
New Zealand
Woodside 70% (operator)
In December, Woodside was awarded
permit 55793, covering 2418 km² in the
Taranaki Basin (off the west coast of the
North Island) and permit 55794, covering
9835 km² in the Great South Basin (off
the south-east coast of the South Island).
The permits come into force in April 2014
and were awarded as part of the New
Zealand Government’s 2013 Block Offer.
New Zealand Oil & Gas Ltd has 30%
equity in the permits.
Ireland
Licensing Option (LO) 11/4 and 11/6
Woodside 85% (operator)*
LO 11/10 Woodside 60% (operator)*
Frontier Exploration Licence (FEL) 5/13
Woodside 90% (operator)
*Subject to granting of Frontier Exploration Licences.
In June, Petrel Resources Plc accepted
Woodside’s offer to acquire a 85%
interest in LO 11/4 and LO 11/6, covering
1400 km² in the Porcupine Basin off
the west coast of Ireland. Separately,
Bluestack Energy accepted Woodside’s
offer to acquire a 90% participating
interest in LO 11/3, covering 1271 km²
in the Porcupine Basin. LO 11/3 has
subsequently been converted into FEL
5/13.
In October, Two Seas Oil and Gas Ltd
accepted Woodside’s offer to acquire the
company’s 60% interest and operatorship
of LO 11/10, also in the Porcupine Basin.
Strike Oil holds the remaining 40% in the
licence.
Myanmar
A-6 Woodside 50% (non-operator)
AD-7 Woodside 40% (non-operator)
Agreements for Woodside to farm-in to
Production Sharing Contracts for blocks
A-6 and AD-7 in the Rakhine Basin were
finalised in January 2013 and March 2013
respectively.
Exploration activity progressed in both
blocks during the year, with completion
in late March of the 1786 km2 Padauk 3D
seismic survey in A-6. Processing of the
survey data will be finalised by March
2014. A decision on whether to drill an
exploration well in the block is scheduled
for Q2 2014.
Myanmar combines prospective
exploration acreage with a rapidly
developing domestic and adjacent export
energy market to provide opportunities
for Woodside to leverage its capabilities
in areas such as deepwater exploration,
project development and marketing.
Other
Brazil
Woodside holds a 12.5% interest in
one concession agreement covering
314 km2 in the Santos Basin offshore
Brazil. The joint venture submitted a
request to relinquish the acreage in
late 2013.
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. The Royal Decree is
currently the subject of legal proceedings
initiated by third party interest groups.
The joint venture plans to drill up to two
wells in 2014.
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 720 km of
2D seismic, currently planned for 2014.
Republic of Korea
In 2012 the Jujak-1 well was drilled. In
2013 studies confirmed preparations for a
500km2 3D seismic survey plan for 2014.
Australian outlook
The 2014 Australian drilling campaign
will provide two key insights. Firstly, the
Toro well will be drilled in the Exmouth
sub-basin and will test the potential for
an additional gas resource around the
Ragnar Hub. Secondly, three wells will be
drilled in the Outer Canning Basin, testing
the petroleum systems of this frontier
basin.
We secured two drilling rigs for 2014
to pursue development and exploration
opportunities offshore Western Australia.
Four 3D marine seismic surveys (MSS)
are planned for acquisition in 2014. These
surveys will provide data over recently
acquired permits in the Browse and
Exmouth Basins, while also providing a
new dataset over the core NWS acreage.
GROWTH
International outlook
For our permits in New Zealand,
Woodside has committed to acquiring
900 km² of seismic data within
12 months.
Woodside is working to establish an
office in Ireland. The company has
submitted applications to convert each of
its LOs into Frontier Exploration Licences
(FEL). Once the FELs are finalised,
the company will plan the necessary
seismic acquisition and other exploration
activities.
Supported by a new office in Yangon to
be opened in 2014, we will continue to
pursue our options to grow our business
in Myanmar.
Woodside and operator Daewoo
International Corporation commenced
acquisition of approximately 1250 km2 of
3D seismic in AD-7 in January 2014.
Processing of the survey data is expected
to be completed by August 2014, in
advance of a decision by June 2015 on
whether to drill an exploration well in a
subsequent exploration period.
43
WOODSIDE PETROLEUM LTD OPERATING & FINANCIAL REVIEW BOARd OF dIRECTORs
a
b
c
d
e
a) Michael A Chaney, AO
b) peter j Coleman
Chairman - BSc, MBA, Hon LLD (UWA),
FAICD
Director since November 2005
Chairman since July 2007
Independent: Yes
Age: 63
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), International
Education Advisory Council (since
2011) 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 (since 2005) and Prime
Minister’s Business Advisory Council
(since 2013).
44
CEO and Managing Director - BEng, MBA
Director since May 2011
Independent: No
Age: 53
Residence: Perth, Australia
Experience
30 years experience in the global
oil and gas industry, including
27 years with the ExxonMobil
group, culminating as Vice President
Development Company, with
responsibility for leading development
and project work in the Asia Pacific.
Committee membership
Attends Board committee meetings.
Current directorships
Chair: Australian Petroleum
Production and Exploration Association
(member since 2011).
Director: Committee for Perth (since
2011) and West Australian Youth Jazz
Orchestra (since 2013).
d) Melinda A Cilento
BA, BEc (Hons), MEc
Director since December 2008
Appointed an Adjunct Professor in
Independent: Yes
Corporate Strategy by the University
of Western Australia in 2012.
Age: 48
Residence: Melbourne, Australia
Committee membership
Attends Board committee meetings.
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 2011).
c) Robert j Cole
Executive Director and Executive Vice
President, Corporate and Commercial -
BSc, LLB (Hons)
Director since February 2012
Independent: No
Age: 51
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 a national law firm.
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).
Councillor: Victorian Division of
the Australian Institute of Company
Directors (since 2011).
Member: Advisory Panel of the
Australian Scholarships Foundation
(since 2011), Advisory Council of
the Global Foundation (since 2011),
Australian Securities and Investments
Commission External Advisory Panel
(since 2013) and NAB Advisory
Council on Corporate Responsibility
(since 2013).
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn
f
g
h
i
e) Frank C Cooper
BCom, FCA
Director since February 2013
Independent: Yes
Age: 58
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
Chair of the Audit & Risk Committee.
Member of the Human Resources
& Compensation and Nominations
Committees.
Current directorships
Chair: Insurance Commission of
Western Australia (since 2012),
University of Western Australia
Strategic Resources Committee (since
2012) and West Australian Football
Commission (member since 2007).
Member: Senate of the University
of Western Australia (since 2012)
and State Health Research Advisory
Council (since 2012).
f) Christopher M Haynes, OBE
BSc, DPhil, CEng, FIMechE
Director since June 2011
Independent: Yes
Age: 66
Residence: United Kingdom
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).
g) Andrew jamieson, OBE
FREng, CEng, FIChemE
Director since February 2005
Independent: Yes
Age: 66
Residence: United Kingdom
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).
i) sarah E Ryan
PhD (Petroleum and Geophysics), BSc
(Geophysics) (Hons 1), BSc (Geology)
Director since December 2012
Independent: Yes
Age: 47
Residence: Sunshine Coast, Australia
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).
Director: Leif Hoegh & Co Ltd (since
2009) and Velocys PLC (since 2010).
h) david I McEvoy
BSc (Physics), Grad Dip (Geophysics)
Director since September 2005
Independent: Yes
Age: 67
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.
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,
and Director, Equity Investment at
institutional investment firm Earnest
Partners where she was responsible
for research and portfolio management
in the global energy sector. She
remains a consultant to Earnest
Partners.
Committee membership
Member of the Audit & Risk,
Sustainability and Nominations
Committees.
Current directorships
Director: Aker Solutions ASA
(since 2011).
NOT PICTURED
j) Erich Fraunschiel
BCom (Hons)
Mr Erich Fraunschiel retired with
effect on 28 February 2013 after ten
years of service on Woodside’s Board
of Directors. Mr Fraunschiel served
on a number of Woodside Board
committees including as chairman
of the Audit & Risk Committee and
member of the Sustainability and
Nominations Committees.
45
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE CORpORATE GOVERNANCE sTATEMENT
We believe high standards of governance and
transparency are essential
46
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal 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 2013 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 59.
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;
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,
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
Authorities
Framework
Operating
structure
Management
Committees
Woodside Management system
47
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE and the granting of security over the
undertaking of the company or any of
its assets;
the majority of the Board should
comprise directors who are both non-
executive and independent;
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 seven non-
executive directors, the CEO and the
Executive Director and Executive Vice
President, Corporate and Commercial.
Details of the directors, including their
qualifications, experience, date of
appointment and independent status, are
set out on pages 44 and 45.
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 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. There
are two women on the Board. The
Board recognises that there is 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
44), interfere with the discharge of his
duties to the company. The Board is
satisfied that Mr Chaney commits the
time necessary to discharge his role
effectively.
2.4 director independence
ASXCGC Recommendations 2.1, 2.6
The independence of a director is
assessed in accordance with Woodside’s
Policy on Independence of Directors.
A copy of the Policy on
Independence of Directors is
available in the corporate governance
section of Woodside’s website.
In accordance with the policy, the Board
assesses independence with reference
to whether a director is non-executive,
not a member of management and
who is free of any business or other
relationship that could materially interfere
with, or could reasonably be perceived to
materially interfere with, the independent
exercise of their judgement.
In making this assessment, the
Board considers all relevant facts and
circumstances. Relationships that the
Board will take into consideration when
assessing independence are whether a
director:
is a substantial shareholder of the
company or an officer of, or otherwise
associated directly with, a substantial
shareholder of the company;
is employed, or has previously been
employed in an executive capacity
by the company or another Group
member, and there has not been a
period of at least three years between
ceasing such employment and serving
on the Board;
has within the last three years been
a principal of a material professional
adviser or a material consultant to the
company or another Group member, or
an employee materially associated with
the service provided;
48
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn
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 seven of the nine
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.
Dr Haynes serves on the board of
directors of WorleyParsons Limited,
a supplier of engineering services
to Woodside. The value of services
provided by the WorleyParsons Limited
group of companies to Woodside in
2013 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 Dr Haynes
remains independent. Where a matter
involving WorleyParsons Limited comes
before the Board, the Directors’ Conflict
of Interest Guidelines apply (refer
section 2.5 below).
Certain non-executive directors hold
directorships or executive positions in
companies with which Woodside has
commercial relationships. Details of other
directorships and executive positions
held by non-executive directors are set
out on pages 44 and 45.
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 a
director would not usually be expected
to nominate for re-election once he or
she has served ten years on the Board.
Exceptions to this principle may be made
where the Nominations Committee
considers that an individual director
brings special skills to the Board which
are difficult to replace at the time and
the Board has assessed the director as
remaining independent.
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
49
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE will have regard to normally accepted
nomination criteria, including:
to shareholders for election at the next
AGM.
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;
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 Erich Fraunschiel
and Dr Pierre Jungels had both served
ten years on the Board and retired with
effect on 7 December 2012 and 28
February 2013 respectively. During 2012,
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.
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
Board support for a director’s re-election
is not automatic and is subject to
satisfactory director performance (in
accordance with the evaluation process
described in section 2.9).
2.8 directors’ appointment,
induction training and continuing
education
All new directors are required to sign
and return a letter of appointment which
sets out the key terms and conditions
of their appointment, including duties,
rights and responsibilities, the time
commitment envisaged and the Board’s
expectations regarding their involvement
with committee work.
Induction training is provided to all new
directors. It includes a comprehensive
induction manual, discussions with
the CEO and senior executives and
the option to visit Woodside’s principal
operations either upon appointment
or with the Board during its next site
tour. The induction materials and
discussions include information on
Woodside’s strategy, culture and values;
key corporate and Board policies; the
company’s financial, operational and risk
management position; the rights and
responsibilities of directors; and the role
of the Board and its committees and
meeting arrangements.
All directors are expected to maintain
the skills required to discharge their
obligations to the company. Directors
are encouraged to undertake continuing
professional education including industry
seminars and approved education
courses. These are paid for by the
company, where appropriate. In addition,
the company provides the Board with
regular educational information papers
and presentations on industry-related
matters and new developments with the
potential to affect Woodside.
2.9 Board performance evaluation
ASXCGC Recommendations 1.3, 2.5, 2.6
The Nominations Committee is
responsible for determining the process
for evaluating Board performance.
Evaluations are conducted annually and
have produced improvements in Board
processes and overall efficiency.
The Board performance evaluation
process is conducted by way of
questionnaires appropriate in scope and
content to effectively review:
the performance of the Board and
each of its committees against the
requirements of their respective
charters; and
the individual performance of the
Chairman and each director.
The questionnaires are completed
by each director and the responses
compiled by an external consultant.
The reports on Board and committee
performance are provided to all directors
and discussed by the Board.
The report on the Chairman’s
performance is provided to the Chairman
and two committee chairmen for
discussion.
The report on each individual director
is provided to the individual and copied
to the Chairman. The Chairman meets
individually with each director to discuss
the findings of their report.
The performance of each director retiring
at the next AGM is taken into account by
the Board in determining whether or not
the Board should support the re-election
of the director.
The Human Resources & Compensation
Committee reviews and makes
recommendations to the Board
on the criteria for the evaluation of
the performance of the CEO. The
Board conducts the evaluation of the
performance of the CEO.
The Remuneration Report on pages
61 to 73 discloses the process for
evaluating the performance of senior
executives, including the CEO. In 2013,
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
50
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn management attend Board meetings
when a matter under their area of
responsibility is being considered or as
otherwise requested by the Board.
reference to the committee charters and
other issues the committee members
or Board consider appropriate for
consideration by the committees.
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
61 to 74. 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 2014 AGM.
2.12 Board meetings
During the year ended 31 December
2013, the Board held six Board meetings.
In addition, a strategic planning session
was held in conjunction with the June
Board meeting. A number of directors
also made site visits during the year.
Details of directors’ attendance at
Board meetings are set out in Table 1
on page 53.
The Chairman, in conjunction with
the CEO and the Company Secretary,
sets the agenda for each meeting. Any
director may request matters be included
on the agenda.
Typically at Board meetings the agenda
will include:
minutes of the previous meeting and
matters arising;
the CEO’s report;
the CFO’s report;
reports on major projects and current
issues;
specific business proposals;
reports from the chairs of the
committees on matters considered at
committee meetings; and
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 60 in the Directors’
Report. The appointment and removal
of a Company Secretary is a matter for
decision by the Board. The Company
Secretaries are responsible for ensuring
that Board procedures are complied
with and that governance matters are
addressed. All Directors have direct
access to the 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:
Audit & Risk Committee;
Nominations Committee;
Human Resources & Compensation
minutes of previous committee
Committee; and
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
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
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 53.
All directors are entitled to attend
meetings of the standing committees.
Papers considered by the standing
committees are also available to all
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 2013
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.
51
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE 3.2 Audit & Risk Committee
reviewing and making
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 53
which sets out their attendance at
meetings. Their qualifications are listed
on pages 44 and 45.
Key activities undertaken by the Audit &
Risk Committee during the year included:
monitoring developments in
accounting, financial reporting and
taxation relevant to Woodside;
approval of the scope, plan and fees for
the 2013 external audit;
reviewing the independence and
performance of the external auditor;
reviewing significant accounting
policies and practices;
reviewing Internal Audit reports and
approval of the 2014 Internal Audit plan;
recommendations 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
without management present, and 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.
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 53 sets out their
attendance at committee meetings.
Key activities undertaken by the
Nominations Committee during the year
included:
reviewing the Group’s key risks and risk
review of the size and composition of
management framework;
the Board;
reviewing 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 Group Treasury
Policy; and
Board succession planning;
making recommendations to the Board
regarding the directors seeking re-
election at the 2014 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 53 which sets out
their attendance at meetings.
Key activities undertaken by the Human
Resources & Compensation Committee
during the year included:
monitoring legislative and corporate
governance developments in relation to
employment and remuneration matters
relevant to Woodside;
reviewing the company’s remuneration
policies and practices, 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;
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;
52
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn 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 2013 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 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 2013 is
provided in the Remuneration Report on
page 67.
The Chairman, the CEO, the Executive
Director and Executive Vice President,
Corporate and Commercial and the
head of the Human Resources function
are regular attendees at the Human
Resources & Compensation Committee
meetings. The CEO and the Executive
Director and Executive Vice President,
Corporate and Commercial were not
present during any committee or Board
agenda item where their 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;
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 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 2014, which will be
made available in the sustainable
development section of Woodside’s
website.
Table 1. directors in office, committee membership and directors’ attendance at meetings during 2013.
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 directors
P Coleman
R Cole
Non-executive directors(4)
M Chaney
M Cilento
F Cooper(3)
E Fraunschiel(4)
C Haynes
A Jamieson
D McEvoy
S Ryan
Legend:
Current Chairman
Current member
Prior member
6
6
6
6
6
1
6
6
6
6
6
6
6
6
6
1
6
6
6
6
6
6
6
3
6
1
6
5
6
6
6
1
6
6
6
7
7
7
7
2
7
7
7
5
7
4
6
6
5
5
6
6
1
6
6
6
6
2
2
2
2
2
0
2
2
2
2
2
2
2
0
2
2
2
2
6
1
6
6
6
6
Notes:
(1)
‘Held’ indicates the number of meetings held during the period of each director’s tenure. Where a director is not a member but
attended meetings during the period, only the number of meetings attended, rather than held, is shown.
‘Attended’ indicates the number of meetings attended by each director.
(2)
(3) Mr Cooper was appointed a director on 1 February 2013. He was appointed Chairman of the Audit & Risk Committee effective 28
February 2013 following Mr Fraunschiel’s retirement.
(4) Mr Fraunschiel retired with effect on 28 February 2013.
53
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE The Chairman, the CEO, the Executive
Director and Executive Vice President,
Corporate and Commercial, 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.
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. Transcripts of material briefings
are provided to the market via ASX and
posted to the website shortly following
the briefing.
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.
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.
All of Woodside’s directors attended the
company’s 2013 AGM and are expected
to attend the 2014 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 price-sensitive
information concerning Woodside
is assessed with reference to the
Continuous Disclosure and Market
Communications Policy and associated
guidelines as soon as the employee
becomes aware of the information.
A copy of the Continuous Disclosure
and Market Communications
Policy is available in the corporate
governance section of Woodside’s
website.
5 promoting responsible and
ethical behaviour
5.1 Code of Conduct, Anti Bribery
and Corruption policy (ABC policy)
and Whistleblower policy
ASXCGC Recommendation 3.1
Woodside has a Code of Conduct and
an ABC Policy which outline 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
and the ABC Policy cover matters such
as compliance with laws and regulations,
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WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn 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 and the ABC
Policy 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 and the ABC Policy. 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 the ABC Policy to foster an
environment that encourages ethical
behaviour and compliance with the
Code and the ABC Policy. 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 and the ABC Policy 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 2014 and made available in
the sustainable development section
of Woodside’s website, provides
further information on the Code of
Conduct.
Directors and senior management are
required to provide annual certification
of their compliance with the Code of
Conduct and 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.
55
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE 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.
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.
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 2013, 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 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 2013 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.
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WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn 7 External auditor relationship
ASXCGC Recommendation 4.4
In accordance with Woodside’s
External Auditor Policy, the Audit &
Risk Committee oversees detailed
External Auditor Guidelines covering the
terms of engagement of Woodside’s
external auditor. The guidelines include
provisions directed to maintaining the
independence of the external auditor and
assessing whether the provision of any
non-audit services by the external auditor
that may be proposed is appropriate.
Such provisions are referenced to
the Code of Ethics published by the
International Federation of Accountants
(IFAC).
The External Auditor Guidelines contain a
set of controls which address threats to
the independence of the external auditor
including, in particular, any threat which
may arise by reason of self-interest,
self-review, advocacy, familiarity or
intimidation.
The External Auditor Guidelines classify a
range of non-audit services which could
potentially be provided by the external
auditor as:
acceptable within limits;
requiring the approval of the CFO;
requiring the approval of the Audit &
Risk Committee; or
not acceptable.
The services considered not acceptable
for provision by the external auditor
include:
internal audit;
acquisition accounting due diligence
where the external auditor is also the
auditor of the other party;
transactional support for acquisitions or
divestments where the external auditor
is also the auditor of the other party;
book-keeping and financial reporting
activities to the extent such activities
require decision-making ability and/or
posting entries to the ledger;
the design, implementation, operation
or supervision of information systems
and provision of systems integration
services;
independent expert reports;
financial risk management; and
taxation planning and taxation
transaction advice.
The External Auditor Guidelines require
rotation of the audit partner and audit
review partner at least every five years
and prohibit the reinvolvement of a
previous audit partner in the audit service
for two years following rotation.
In addition to incorporating safeguards to
ensure compliance with sections 324CI
and 324CK of the Corporations Act in
respect of employment of a former
partner of the audit firm or member of
the audit team as a director or senior
employee of Woodside, the Guidelines
also require assessment of the
significance of a potential threat to the
external auditor’s independence before
any employment of a former partner or
audit team member. Any employment
of a member of the audit team or a
partner of the audit firm also requires the
approval of the Audit & Risk Committee.
Information on the procedures for
the selection and appointment of the
external auditor and for the rotation
of external audit engagement
partners is available in the corporate
governance section of Woodside’s
website.
8 diversity
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.
For further information on our
Diversity Policy and Reconciliation
Action Plan commitments visit our
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
supporting culture;
Providing diversity education and
training as well as undertaking
diversity initiatives and measuring their
effectiveness;
The Board reviewing Woodside’s
diversity strategy; and
The Board annually reviewing the
measurable objectives it has set for
achieving improvement in the diversity
mix of Woodside and the progress in
achieving those objectives.
With the implementation of a new three
year Indigenous Employment Strategy
in the third quarter of 2013, Woodside
aims to increase the number of
sponsored Indigenous scholarships and
strengthen the transition of Indigenous
participants from secondary and tertiary
education into Woodside employment.
To increase the Indigenous talent pool,
the strategy will continue to develop
and deliver partnerships with key
external stakeholders, including schools,
universities and other community
organisations.
To support the increase in Indigenous
participation, Woodside remains
committed to building cultural
awareness. In 2013, 305 employees
attended cultural awareness training.
A total of 1159 employees have
attended since 2011 which exceeds our
Reconciliation Action Plan aspiration of
750 Woodside employees attending
cultural awareness training by 2015.
Woodside continued to undertake
initiatives in 2013 aimed at improving
gender diversity across the organisation.
Key activities carried out to support the
2012-2014 Gender Diversity Strategy
included a process review of graduate
development which recommended
improvements to the program for
implementation in 2014. This will enable
earlier operational site experience to
improve long term development and
succession preparedness.
Graduate recruitment process
improvements continue to result in
positive gender diversity results, with
females representing 48% of the overall
2014 graduate intake and 36% of our
technical graduate intake.
The annual remuneration review
continues to demonstrate effective
pay parity for males and females doing
similar roles.
Education remains a focus to improve
diversity outcomes. In 2013, Woodside’s
development curriculum was
supplemented by two new programs
with a diversity focus. The first program,
‘Recruitment Selection’, is targeted at
managers to ensure effective, unbiased
recruitment selection decisions are
made. Sixty six participants attended the
program, which was well received. The
second program is a general diversity
awareness training program, ‘Diversity
– we give everyone a fair go’ (Equal
57
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE Employment Opportunity), and has been
completed by 3555 employees.
Community engagement continued
in 2013, with Woodside sponsoring
university scholarships for talented
women, presenting at internal and
external forums focused on diversity and
continuing support to industry bodies
to advocate for and raise the profile of
women in the resources sector.
Despite these efforts, females comprise
only 27% of our workforce, a slight
increase from 26.7% in 2012. In 2013,
women held 12.4% of middle and senior
management roles, an improvement
from approximately 10% in 2012.
The percentage of females leaving
the organisation is 9.4%, equal to total
turnover.
Woodside remains committed to
delivering its Gender Diversity Strategy
in 2014, embedding activities from 2012
and 2013. This will be supplemented
by providing our talented females
with specific targeted development
opportunities to continue career
progression and conducting a further
review of Woodside’s processes and
progress to inform development of
our next three-year Gender Diversity
Strategy which will commence in 2015.
2014 measurable objectives
Achieve gender balance in Woodside’s
graduate intake;
Increase the percentage of women in
middle and senior management roles;
Maintain remuneration equity between
men and women;
Maintain middle and senior female
turnover that is equal to or less than
total middle and senior management
turnover;
Maintain 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 (EEO) training, selection
and promotion and Leading Diverse
Teams programs.
Woodside will report on progress against
these objectives in its 2014 Annual
Report.
2013 measurable objectives
progress
Achieve gender balance in Woodside’s
graduate intake
Of the 2014 graduate intake in total 48% were female with 36% of our
technical intake being female.
Increase the percentage of women in senior
management roles
Middle and senior female representation increased from 10.3% in 2012 to
12.4% in 2013.
Maintain remuneration equity between men
and women in the same role at the same level
The annual remuneration review process continued to demonstrate that
effective remuneration parity exists between men and women in the same role.
Achieve female senior management turnover
that is equal to or less than total senior
management turnover
A significant reduction in middle and senior female voluntary turnover with an
actual result of 2.5% (Australian) which is significantly below total middle and
senior management turnover of 10.3% (Australian).
Achieve overall female turnover that is equal to
or less than organisational turnover
Overall female voluntary turnover has increased from 8.5% in 2012 to 9.4% in
2013, the same as the total organisational voluntary turnover.
Increase the overall percentage of females
employed by Woodside
Gender representation has increased slightly with females representing 27%
of Woodside’s workforce, from 26.7% in 2012.
deliver diversity development programs,
including Equal Employment Opportunity
training, recruitment and promotion training
and ‘Leading diverse Teams’ programs.
‘Recruitment Selection’ training was conducted throughout 2013 with 66
managers attending.
‘Diversity – we give everyone a fair go’ (Equal Employment Opportunity)
program was provided online through 2013 and completed by 3561
employees.
‘Leading Diverse Teams’ workshops were attended by 42 managers.
Further information regarding Woodside’s commitment to diversity will be available in Woodside’s 2013 Sustainable Development
Report which will be released in March 2014 and made available in the sustainable development section of Woodside’s website.
Table 2 – Woodside workforce gender profile
Female
Female %
Administration
Technical
supervisory/professional
Middle Management
senior Management
Total
Board Members
221
359
388
80
5
1,053
2
66.6
24.9
27.2
12.5
11.1
27.1
22.2
Male
111
1,085
1,040
560
40
2,836
7
Male %
33.4
75.1
72.8
87.5
88.9
72.9
77.8
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WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal 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.
Remuneration Report
Companies should provide the information indicated in Guide to Reporting on Principle 1.
2.1, 2.9, Remuneration Report
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.
2.2, 2.4
2.2, 2.3
2.2, 2.3
3.1, 3.3
2.9
2.2, 2.4, 2.6, 2.7, 2.9, 2.10,
3.1, 3.3
principle 3: promote ethical and responsible decision-making
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:
• the practices necessary to maintain confidence in the company’s integrity
• the practices necessary to take into account their legal obligations and the reasonable expectations of their
5.1
stakeholders
• 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:
• consists only of non-executive directors
• consists of a majority of independent directors
•
• has at least three members.
is chaired by an independent chair, who is not chair of the board
The audit committee should have a formal charter.
Companies should provide the information indicated in Guide to Reporting on Principle 4.
principle 5: Make timely and balanced disclosure
5.1
5.2
Companies should establish written policies designed to ensure compliance with ASX Listing Rule
disclosure requirements and to ensure accountability at a senior executive level for that compliance and
disclose those policies or a summary of those policies.
Companies should provide the information indicated in Guide to Reporting on Principle 5.
principle 6: Respect the rights of shareholders
6.1
6.2
Companies should design a communications policy for promoting effective communication with
shareholders and encouraging their participation at general meetings and disclose their policy or a summary
of that policy.
Companies should provide the information indicated in Guide to Reporting on Principle 6.
principle 7: Recognise and manage risk
3.1, 3.2
3.1, 3.2
3.1, 3.2
3.1, 3.2, 7
4.2
4.2
4.1
4.1
6.1
6.2
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.
6.4
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:
• consists of a majority of independent directors
•
• has at least three members.
is chaired by an independent chair
3.1, 3.4
3.1, 3.4
Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of
executive directors and senior executives.
Remuneration Report
Companies should provide the information indicated in Guide to Reporting on Principle 8.
3.1, 3.4, 5.2
59
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE dIRECTORs’ REpORT (INCLudING REMuNERATION REpORT)
dividends
The directors have declared a final
dividend out of profits of the company in
respect of the year ended 31 December
2013 of US103 cents per ordinary share
(fully franked) payable on 26 March 2014.
A fully franked final dividend of US65
cents per ordinary share was paid to
shareholders on 3 April 2013 in respect
of the year ended 31 December 2012.
Together with the fully franked special
dividend of US63 cents per share paid to
shareholders on 29 May 2013 and
the fully franked interim dividend of US83
cents per share paid to shareholders on
25 September 2013, the total dividend
paid during the 2013 year was US211
cents per share fully franked.
Woodside’s dividend reinvestment plan
remained suspended during the year.
Company secretaries
The following individuals have acted as
company secretary during 2013:
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 the Governance Institute of Australia.
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 2013.
directors
The directors of Woodside Petroleum
Ltd in office at any time during or since
the end of the 2013 financial year and
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 44 and 45.
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 53.
Details of director and senior executive
remuneration is set out in the
Remuneration Report on pages 61 to 73.
The particulars of directors’ interests in
shares of the company as at the date of
this report are set out on page 74.
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 US$1,749 million (US$2,983
million in 2012).
Review of operations
A review of the operations of the
Woodside Group during the financial year
and the results of those operations are
set out on pages 1 to 43.
significant changes in state of
affairs
The review of operations (pages 1 to
43) 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 US103 cents (2012: US65 cents),
payable on 26 March 2014. The amount
of this dividend will be US$849 million
(2012: US$536 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.
Leviathan Memorandum of
understanding (Mou)
In 2014 Woodside announced it had
entered an MoU with the Leviathan Joint
Venture participants, building on the
earlier in-principle agreement
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 31.
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 2013.
60
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn REMuNERATION REpORT (AudITEd)
CONTENTS
Overview
Executive Remuneration
CEO Remuneration
Woodside Equity Plan
Contracts for KMP Executives
Non-executive directors
Human Resources & Compensation Committee
Securities Dealing Policy
Use of Remuneration Consultants
Reporting Notes
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 2013 and 2012
Variable Annual Rewards – Executive Incentive Plan
5
Vesting schedule for RTSR-tested VPRs awarded for the 2012 and 2013 performance years
6
7
8
9
10
11
12
13
Vesting schedule for RTSR-tested VPRs awarded for the performance years 2009 to 2011
LTA Peer Group for performance years 2009 to 2011
STA Peer Group and LTA Peer Group 2012 and 2013 performance years – International Oil & Gas Companies
Summary of Terms and Conditions of unvested RTSR-tested VPRs
Summary of Terms and Conditions of unvested deferred STA
Summary of KMP executives’ interests in Time-tested VPRs
Summary of KMP executives’ interests in Restricted Shares
Summary of KMP executives’ interests in RTSR-tested VPRs
Woodside Equity Plan
14
Summary of KMP executives’ interests in Equity Rights under the WEP
Non-Executive Directors
15
16
Annual base Board and committee fees for non-executive directors
Total remuneration paid to non-executive directors in 2013 and 2012
62
63
65
65
66
66
67
67
67
67
62
63
66
68
69
69
69
69
70
70
70
71
72
73
73
73
61
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE Overview
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 2013 AGM was held on 24 April. The Remuneration
Report for 2012 was adopted at the AGM with a clear majority
of 470,742,153 votes in favour of the motion (representing
95.21% of the votes received).
Executive incentive arrangements
The Company’s executive incentive arrangements are designed
to ensure ongoing alignment with Woodside’s strategic direction
and values. Since 2012, the key terms of the executive incentive
arrangements are:
A short-term award (STA) delivered two thirds cash and
one third as deferred equity in the form of ordinary fully paid
Woodside Shares allocated subject to a three year service
condition (Restricted Shares).
A long-term award (LTA) granted in the form of variable pay
rights (VPRs), the vesting of which is linked to service and
relative total shareholder return (RTSR):
the VPRs are divided into two tranches, each of which is
subject to separate RTSR performance hurdles; one tranche
with a weighting of 33% tested against top 50 ASX-listed
companies, and a second tranche with a weighting of 67%
tested against an oil and gas peer group of 18 companies;
VPRs are subject to a four or five year testing period; and
executives only benefit from retesting in the fifth year if
the company’s relative performance exceeds the 50th
percentile threshold and achieves a superior RTSR ranking
at the second test date.
Details of the executive incentive arrangements are
provided on 63 to 65 of this report.
KMp remuneration outcomes for 2013
Performance outcomes for 2013 for the Chief Executive Officer
and the broad executive group, including Key Management
Personnel (KMP), were as follows:
the value of the STA scorecard for 2013 was 0.8 out of a
maximum possible result of 2;
the total potential amount of the STA pool for 2013 ranged
from a minimum of A$ nil to a maximum of A$36,020,407.
The actual STA pool for 2013 was A$14,408,163 for 104
participants including the Chief Executive Officer and the
Executive Director and Executive Vice President Corporate
and Commercial;
one third of the STA for the 2013 performance year for current
executives (A$4,802,721) will be deferred as an equity award,
the vesting of which is dependent on three years continuous
service; and
a LTA in respect of the 2013 performance year will be
allocated in February 2014 to eligible participants.
Vested Awards during 2013:
time-tested VPRs that were allocated in 2010 as deferred STA
in respect of the 2009 performance year vested during 2013;
and
the LTA awarded in 2010 was subject to performance testing
during 2013 and failed to reach the vesting hurdle. As such
this award will be subject to a second performance test in
2014.
In 2013, Woodside also made awards of equity rights (ERs)
under the Woodside Equity Plan to KMP, excluding the Chief
Executive Officer, the Executive Director and Executive Vice
President Corporate and Commercial and the non-executive
directors. Each ER entitles the participant to receive a Woodside
share on the vesting date three years after the effective grant
date.
There were no individual retention arrangements for KMP
entered into or vested in 2013.
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 shows the key financial
measures of company performance over the past five years.
Non-executive directors
The total fees paid to the Chairman and the non-executive
directors on the Board (including fees paid for their involvement
on Board committees) are kept within the total approved by
shareholders. The Board determined that no increase would
be made to non-executive director fees in 2013. Non-executive
directors do not receive performance payments.
Table 1 - Woodside five year performance
year Ended 31 december
Net Profit After Tax
Earnings Per Share(1)
Dividends Per Share
Production
Share closing price (last
trading day of the year)
5 Year rolling TSR(2)
Relative TSR(3)
(US$ million)
(US cents)
(US cents)
(MMboe)
(A$)
(%)
(1 year)
2013
1,749
213
249
87.0
38.90
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
12.59
4th Quartile
(0.33)
2nd Quartile
4.58
4th Quartile
12.11
4th Quartile
26.44
1st 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 64.
(4) Amounts were translated to US dollars using monthly average exchange rates. The share closing price (last trading day) for 2008 was $36.70.
62
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn Executive directors
P Coleman (Managing Director and Chief Executive Officer) (CEO)
R Cole (Executive Director and Executive Vice President, Corporate and Commercial)
senior executives
F Ahmed (Executive Vice President Technology)(1)
R Edwardes (Executive Vice President Development)
S Gregory (Senior Vice President Health, Safety, Environment & Technology)(2)
P Loader (Executive Vice President Global Exploration)(3)
P Moore (Executive Vice President Exploration)(4)
G Roder (Executive Vice President Corporate Strategy & Planning)
V Santostefano (Chief Operations Officer)(5)
L Tremaine (Executive Vice President and Chief Financial Officer)
M Utsler (Chief Operations Officer)(6)
Non-executive directors
M A Chaney (Chairman)
M A Cilento
F Cooper(7)
E Fraunschiel (8)
C M Haynes
A Jamieson
D I McEvoy
S Ryan
(1) On 31 July 2013 Mr Ahmed departed from Woodside.
(2) Effective 1 July 2013 Mr Gregory was appointed to the position of Senior Vice
(5) Mr Santostefano ceased to be a KMP on 30 November 2013 and will leave
employment with Woodside on 30 June 2014.
President Health, Safety, Environment & Technology. He previously held the position of
Vice President Global New Ventures.
(6) On 2 December 2013 Mr Utsler joined Woodside and became KMP.
(7) Effective 1 February 2013 Mr Cooper was appointed a non-executive director of
(3) On 1 July 2013 Mr Loader joined Woodside and became KMP.
(4) On 1 August 2013 Mr Moore departed from Woodside.
Woodside.
(8) Effective 28 February 2013 Mr Fraunschiel retired as 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
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. The actual percentages received will vary
from year to year for each executive depending on performance
outcomes. 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
duties and accountabilities;
benchmarks remuneration against appropriate comparator
position
groups;
aligns executive incentive rewards with the creation of value
for shareholders; and
CEO
30%
Not at risk
Fixed Annual
Reward
At risk
Variable Annual Reward
sTA
30%
LTA
40%
complies with applicable legal requirements and appropriate
Executives
45%-50%
30%-33%
20%-22%
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, including
KMP, 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 comprises:
Short-term award (detailed on page 64);
Long-term award (detailed on page 64);
participation in general employee share plans (other than
executive directors); and
participation in retention plans from time to time.
Executive Incentive plan
In 2012 the Committee undertook a review of the approach,
framework and structure of the executive incentive
arrangements. These changes were implemented with effect
from the 2012 performance year onwards.
The short-term and long-term awards which are described
in more detail below are delivered through the Executive
Incentive Plan (EIP) (except for the CEO). 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).
63
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE 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).
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).
The Scorecard for 2013 was based on four equally weighted
measures:
safety and environmental component, based on two equally
weighted performance measures: process safety events
(PSEs) including process safety related environmental events;
and total recordable injury rate (TRIR);
production;
operating expenditure; and
Woodside’s one year total return to shareholders, ranked
against an international peer group (STA Peer Group, see
Table 8 on page 69). 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 (using Australian dollars as a common currency).
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. The targets are set to support performance in the
current year, having regard for the prior year’s performance,
industry standards and Woodside’s mission to deliver superior
shareholder returns.
At the conclusion of the performance year the Board assesses
the company’s performance having regard to these Scorecard
measures and the targets set.
For the 2013 performance year, the Board determined a
Scorecard outcome of 0.8 out of a maximum of two. In
summary, for 2013:
Woodside exceeded its target TRIR performance; however,
PSEs were below target;
record annual production of 87 million barrels of oil equivalent
was achieved; however, this was below the target set in the
Scorecard;
performance on operating cost was below target; and
Woodside achieved 14th place in the STA peer group of 18.
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 outcome (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);
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 STA (if any).
The STA for a performance year is delivered two thirds in cash,
and one third deferred and made as an award of Restricted
Shares subject to a three year deferral period (vesting period). As
KPIs must be satisfied before an executive can receive a grant
of Restricted Shares, the Board considers it reasonable for the
executives to earn dividends on the Restricted Shares during the
deferral period. The deferred portion of STA made in respect of
performance years 2009 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 with effect from a date
determined by the Board.
There are no further performance conditions for vesting of
deferred STA.
A summary of the terms of unvested deferred STA awarded to
KMP is provided in Table 10 on page 70. Details of Restricted
Shares awarded to KMP are provided in Table 12 on page 71.
Details of Time-tested VPRs awarded for previous performance
periods are provided in Table 11 on page 70.
Long-term award (LTA)
The LTA for the 2013 performance year is granted in the form
of VPRs, the vesting of which is linked to service and total
shareholder return. A VPR is a right to receive a fully paid
ordinary share in Woodside, subject to satisfaction of vesting
conditions. The number of VPRs awarded under the EIP for
long-term award purposes for the 2013 performance year is
calculated by dividing the value of the award by the fair value of
a VPR (as calculated in accordance with the relevant accounting
standards).
The RTSR-tested VPRs are divided into two tranches with each
tranche subject to a separate 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 1 December 2013. 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
and 2013 performance years are set out in Table 8 on page 69.
The LTA has been designed to align the company strategy
with executive performance. RTSR was chosen as the LTA
performance measure in order to ensure that Woodside’s
executives’ remuneration is aligned with the company’s
performance in relation to the performance of peer companies.
64
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn 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 69. 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
equals or exceeds the 50th percentile threshold and achieves a
superior RTSR ranking at the second test date compared to that
achieved on the first test date. Any RTSR-tested VPRs that do
not vest on the fifth anniversary lapse.
RTSR-tested VPRs 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.
A summary of the terms and conditions of unvested RTSR-
tested VPRs under each award made to executives under the
EIP is provided in Table 9 on page 70. A summary of KMP
executives’ interests in RTSR-tested VPRs is provided in
Table 13 on page 72.
Long-term awards 2009 – 2011
The LTA for the performance years 2009 to 2011 inclusive was
granted in the form of VPRs, the vesting of which is linked to
service and total shareholder return.
The vesting of the 2009 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 2009 to 2011 is set out in Table 7 on
page 69.
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 69. If no RTSR-tested VPRs
vest 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.
The treatment of the 2009 to 2011 RTSR-tested VPRs on
termination of employment, death or total and permanent
disablement, and change of control, is as outlined above.
Variable pay rights
The Board has the discretion to satisfy VPRs 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 VPRs may be acquired
through on market purchase, or in the case of VPRs allocated
from 2012 onwards, by on market purchase or subscription.
If the Board exercises its discretion to satisfy vested VPRs 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 VPR.
CEO remuneration
Mr Coleman’s remuneration is governed by his contract of
employment which, in summary, for 2013 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 64 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 non-executive
director 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.
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 page 64.
Long-term award
The LTA entitlement for the 2013 performance year will be
allocated in February 2014 and will be subject to RTSR testing
in February 2018. The vesting conditions for the LTA allocation
reflect those contained in the EIP as outlined on page 64 and
summarised in Table 9 on page 70 in respect of the 2013 EIP
allocation.
A summary of the CEO’s equity awards is provided in Tables 11
to 13 on page 72.
sign-on bonus
In the year when he commenced as CEO, 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
shares on 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 the second tranche of one third of the
shares vested on 30 May 2013 being the second anniversary of
Mr Coleman’s employment. The fair value of each of the shares
awarded was US$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 Equity plan
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
65
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE 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 (WEP) to recognise
and reward the commitment of eligible employees.
The 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 64 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 14 on page 73 provides a summary of KMP executives’
interests in ERs under the WEP.
Contracts for KMp executives
All KMP have 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
(NEDs) aims to attract, retain, motivate and to remunerate fairly
and responsibly having regard to:
the level of fees paid to NEDs 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 NEDs are recommended by the Human Resources
& Compensation Committee based on advice from external
remuneration consultants, 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 Board determined that no increases would be made to NED
fees in 2013.
The Woodside Petroleum Ltd shareholding guideline for NEDs
requires NEDs to hold a minimum holding of 2,000 Woodside
Petroleum Ltd shares and NEDs 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 NEDs 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
9.25%). Non-executive directors do not earn retirement
benefits other than superannuation and are not entitled to any
form of performance-linked remuneration.
Table 3 - summary of contractual provisions for KMp executives
Name
P Coleman
F Ahmed(3)
R Cole
R Edwardes
S Gregory
P Loader
P Moore(4)
G Roder
V Santostefano(5)
L Tremaine
M Utsler(6)
Employing company
Woodside Petroleum Ltd
Contract duration
Unlimited
Woodside Energy Ltd
Fixed Term Contract until 13 February 2015
Woodside Energy Ltd
Unlimited
Woodside Energy Ltd
Fixed Term Contract until 6 May 2015
Woodside Energy Ltd
Woodside Energy Ltd
Woodside Energy Ltd
Woodside Energy Ltd
Woodside Energy Ltd
Woodside Energy Ltd
Unlimited
Fixed Term Contract until 1 July 2018
Unlimited
Fixed Term Contract until 31 August 2017
Unlimited
Unlimited
Woodside Energy Ltd
Fixed Term Contract until 2 December 2018
Termination notice
period company(1)(2)
Termination notice
period executive
12 months
12 months
12 months
6 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
6 months
6 months
3 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 Ahmed departed Woodside on 31 July 2013.
(4) Mr Moore departed Woodside on 1 August 2013.
(5) Mr Santostefano ceased to be a KMP on 30 November 2013 and will leave
employment with Woodside on 30 June 2014.
(6) In 2013 the Board approved changes to the termination provisions for new executive
contracts and reduced the notice period to be provided by executives from 6 months
to 3 months. Mr Utsler is the first new KMP with the new notice provisions.
66
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn Table 15 on page 73 shows the annual base Board and
committee fees for NEDs.
In addition to these fees, NEDs 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 NED in
2013 is set out in Table 16 on page 73.
Human Resources & Compensation Committee
The Human Resources & Compensation Committee
(Committee) assists the Board to determine appropriate
remuneration policies and structures for NEDs 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 52 and 53.
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 55. In addition
to the restrictions imposed under the Securities Dealing Policy,
KMP 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 independent external
advisors to provide input to the process of reviewing NED,
executive director and executive remuneration. The Committee
receives executive remuneration recommendations directly
from external independent remuneration consultants. The
table below shows the fees payable to independent external
remuneration consultants during 2013.
Under communications and engagement protocols
adopted by the Company, the market data reports and the
recommendations were provided directly to the Committee
chairman, and the consultants provided a statement to the
Committee that the reports and 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 that the recommendations made by
Mercer Consulting and Egan Associates 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. In addition to the fees paid by Woodside
to Mercer Consulting outlined in the table below, a further
A$51,687 was paid directly by Woodside to Mercer Consulting
in respect of these services. No other fees were paid to Mercer
Consulting or Egan Associates during 2013.
2013 remuneration consultant fees
Remuneration
consultant
services
provided
Market data and
remuneration
recommendations
(NED fees)
Market data and
remuneration
recommendations
(2014 CEO remuneration)
Mercer Consulting
Egan Associates
Reporting notes
Fees
A$24,412
A$35,063
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.
67
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE Table 4 - Compensation of KMp executives for the year ended 31 december 2013 and 2012
Fixed Annual Reward
Variable Annual Reward
short Term
post
employment
short Term
share based
payments
s
e
e
f
,
s
e
i
r
a
l
a
s
s
e
c
n
a
w
o
l
l
a
&
$
&
s
t
fi
e
n
e
B
c
n
i
(
s
e
c
n
a
w
o
l
l
a
)
1
(
)
y
r
a
t
e
n
o
m
-
n
o
n
$
y
n
a
p
m
o
C
o
t
s
n
o
i
t
u
b
i
r
t
n
o
c
n
o
i
t
a
u
n
n
a
r
e
p
u
s
$
m
r
e
t
-
t
r
o
h
s
)
2
(
)
h
s
a
c
(
d
r
a
w
a
$
)
3
(
s
n
a
l
p
e
r
a
h
s
$
2,227,583 194,687
16,516 1,456,904 2,579,669
2,255,383
84,745
16,693
2,380,590
2,559,787
e
c
i
v
r
e
s
g
n
o
L
e
v
a
e
l
$
75,147
71,777
n
o
i
t
a
n
m
r
e
T
i
s
t
fi
e
n
e
b
$
l
a
t
o
T
n
o
i
t
a
r
e
n
u
m
e
r
$
6,550,506
7,368,975
597,749
279,256
658,746
275,676
854,144
40,203
17,362
375,466
441,858
280,857
(139,313)
84,021
54,793
765,099
(141,452)
890,113 2,390,765
2012
825,899
27,609
38,722
556,487
439,589
100,099
807,319
71,936
16,516
371,151
368,746
25,602
509,534
366,898
36,714
330,317
75,884
15,334
213,922
16,551
7,949
179,149
161,602
80,014
402,476
24,369
921
101,260
24,028
9,432
562,486
22
235,960
405,206
797,230
37,897
62,241
10,845
51,840
88,927
75,722
181,211
245,583
336,625
173,707
41,921
22,637
524,353
(127,990)
436,787 1,158,847
738,321
48,779
59,761
270,387
48,785
7,576
593,284
631,571
720,197
35,420
19,827
35,137
122,308
129,549
616,037
389,325
10,996
310,731
363,868
71,745
68,804
267,259
1,178,326
(82,019)
923,504 3,038,082
593,264
21,657
24,969
489,505
291,218
57,645
130,274
2,069
7,232
21,967
966
2,007
173,641
23,933
38,201
(492,083)
(201,199)
85,400
(372,107)
e
c
n
a
m
r
o
f
r
e
p
d
e
t
a
l
e
r
%
62
67
32
12
46
50
45
30
52
45
42
36
27
48
54
45
53
14
1,159,987
1,783,826
1,988,405
1,661,270
1,334,681
659,187
1,025,089
1,416,766
1,173,609
1,858,054
1,509,733
1,478,258
164,515
Executives
year
P Coleman, Chief
Executive Officer(4)
F Ahmed, Executive Vice
President Technology(5)(6)
R Cole, Executive Director
and Executive Vice
President Corporate and
Commercial
R Edwardes, Executive
Vice President
Development(7)
S Gregory, Senior
Vice President Health,
Safety, Enviornment &
Technology(8)
P Loader, Executive
Vice President Global
Exploration(5,9)
P Moore, Executive Vice
President Exploration(10)
G Roder, Executive Vice
President Corporate
Strategy and Planning(11)
V Santostefano, Chief
Operations Officer(12)
L Tremaine, Executive
Vice President and Chief
Financial Officer
M Utsler, Chief
Operations Officer(13)
L Della Martina, Executive
Vice President Pluto(14)
2013
2012
2013
2012
2013
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
(1) Reflects the value of allowances and benefits including but not limited to travel,
motor vehicle and health insurance.
(2) The amount represents the short-term incentive earned in the respective year,
(3)
which is 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 Gregory’s 2009 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.
(4) 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.
(5) As a non-resident for Australian tax purposes Mr Ahmed and Mr Loader have
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 their normal
monthly salary. The amount is included in salaries, fees and allowances.
(6) On 31 July 2013 Mr Ahmed departed Woodside. Mr Ahmed’s Long Service
Leave has been adjusted in accordance with the Accounting Standards to reflect
his departure. As required by the Accounting Standards, the figure reported as
‘termination benefits’ for Mr Ahmed includes the value of accrued statutory
leave entitlements. These are not termination benefits for the purposes of the
statutory cap on termination benefits. The ‘termination benefits’ figure also
includes the accelerated costs of a payment in lieu of 11 months’ notice.
(7) Mr Edwarde’s 2013 share based payment amortisation expense has been
accelerated based on his contract end date of 6 May 2015.
(8) On 1 July 2013 Mr Gregory was appointed to KMP. Mr Gregory did not meet
the definition of KMP under AASB 124 for years prior to 2013. Previous years
comparative figures are not shown.
(9) Mr Loader commenced with Woodside on 1 July 2013.
(10) On 1 August 2013 Mr Moore departed Woodside. Mr Moore’s Long Service
Leave has been adjusted in accordance with the Accounting Standards to reflect
his departure. As required by the Accounting Standards, the figure reported
as ‘termination benefits’ for Mr Moore includes the value of accrued statutory
leave entitlements. These are not termination benefits for the purposes of the
statutory cap on termination benefits. The ‘termination benefits’ figure also
includes the accelerated costs of a payment in lieu of nine months’ notice.
(11) Mr Roder’s 2013 share based payment amortisation expense has been
accelerated based on his contract end date of 31 August 2017.
(12) Mr Santostefano ceased being KMP on 30 November 2013 and will leave
employment with Woodside on 30 June 2014. Mr Santostefano’s Long Service
Leave has been adjusted in accordance with the Accounting Standards to reflect
his departure. As required by the Accounting Standards, the figure reported
as ‘termination benefits’ for Mr Santostefano includes salary due in 2014
through to when Mr Santostefano ceases employment in June and the value of
accrued statutory leave entitlements. These are not termination benefits for the
purposes of the statutory cap on termination benefits. The ‘termination benefits’
figure also includes the accelerated costs of a payment in lieu of four months’
notice.
(13) Mr Utsler commenced with Woodside on 2 December 2013.
(14) On 10 May 2012 Mr Della Martina departed Woodside. Mr Della Martina’s Long
Service Leave has been adjusted in accordance with the Accounting Standards
to reflect his departure.
68
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn
EXECuTIVE INCENTIVE pLAN
Table 5 - Vesting schedule for RTsR-tested VpRs awarded for the 2012 and 2013 performance years
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 2009 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 - LTA peer Group for performance years 2009 to 2011
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
Table 8 - sTA peer Group and LTA peer Group 2012 and 2013
performance years – International Oil & Gas Companies
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
69
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE 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 2009 to 2013.
Terms and Conditions
2013 VpR Allocation
2012 VpR Allocation 2011 VpR Allocation
2010 VpR Allocation 2009 VpR Allocation
Allocation Date
21 February 2014
22 February 2013
1 March 2012
25 February 2011
5 March 2010
Pricing Date
Grant Date
1 January 2013
7 December 2012
31 December 2011
31 December 2010 31 December 2009
1 January 2013
1 January 2012
1 January 2011
1 January 2010
1 January 2009
Allocation Price(1)
A$20.00
A$19.65
A$31.93
A$42.78
A$47.86
Vesting Date(2)
21 February 2018
22 February 2017
1 March 2015
25 February 2014
5 March 2013
Retesting Date
21 February 2019(3)
22 February 2018(3)
1 March 2016(4)
25 February 2015(4)
5 March 2014(4)
(1) 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.
For the 2013 performance year, the allocation price is the fair value of a variable pay right as at 1 December 2013.
(2) Provision is made for accelerated vesting in certain events such as total and permanent disability, death or a change in control of Woodside.
(3) Any VPRs that do not vest as a result of the first test will be re-tested based on a five year performance period.
(4) Retesting is applied to the RTSR-tested VPRs if the RTSR threshold is not achieved at the vesting date.
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 2009 to 2013.
Terms and Conditions
2013 Allocation
2012 Allocation
2011 Allocation
2010 Allocation
2009 Allocation
Deferral Instrument
Restricted Shares
Restricted Shares
Time-tested VPRs
Time-tested VPRs
Time-tested VPRs
Allocation Date
21 February 2014
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 2013
31 December 2012
31 December 2011
31 December 2010
31 December 2009
1 January 2013
1 January 2012
1 January 2011
1 January 2010
1 January 2009
A$37.90
A$34.09
A$31.93
A$42.78
A$47.86
21 February 2017
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.
Table 11 - summary of KMp executives’ interests in time-tested VpRs(1)
Name
P Coleman
F Ahmed
R Cole
S Gregory(4)
P Moore(5)
Allocation date
Vesting date(2)
March 2012
March 2010
March 2015
March 2013
February 2011
February 2014
March 2012
March 2010
March 2015
March 2013
February 2011
February 2014
March 2012
March 2010
March 2010
March 2015
March 2013
March 2013
February 2011
February 2014
March 2012
V Santostefano(6) March 2010
March 2015
March 2013
L Tremaine(7)
February 2011
February 2014
March 2012
March 2010
March 2012
March 2015
March 2013
March 2015
Awarded but
not vested
Vested in
2013
% of total
vested
Lapsed in
2013
Fair value(3) of VpRs by
performance year
14,791
2,415
4,330
4,302
6,301
2,018
2,776
2,286
5,492
4,470
3,692
100
4,599
100
937
2,694
100
100
3,786
100
1,445
100
38.87
29.57
38.32
38.87
29.57
38.32
38.87
34.91
29.57
38.32
38.87
29.57
38.32
38.87
29.57
38.87
(1) For valuation purposes all VPRs are treated as if they will be equity settled, with the
exception of Mr Gregory’s 2009 VPRs which were settled as cash as a result of his
international secondment. The fair value for the cash settled awards is recalulated at
the end of every reporting period.
(3)
(2) Vesting date and exercise date are the same. Vesting is subject to a three year service
condition. No amount is payable by the executives on the grant or vesting of Variable
Pay Rights. The minimum total value of the grants for future financial years is nil if
relevant vesting conditions are not satisfied. An estimate of the maximum possible
total value in future financial years is the fair value as shown above multiplied by the
number of VPRs awarded.
70
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. The fair value of rights is amortised over the
vesting period, such that ‘total remuneration’ includes a portion of the fair value of
unvested equity compensation during the year. The amount included as remuneration
is not related to or indicative of the benefit (if any) that individual executives may
ultimately realise should these equity instruments vest.
(4) Mr Gregory did not meet the definition of KMP under AASB 124 for years prior to
2013. Previous years comparative figures are not shown.
(5) On 1 August 2013 Mr Moore departed Woodside.
(6) Mr Santostefano ceased to be KMP on 30 November 2013 and will leave employment
with Woodside on 30 June 2014.
(7) Mr Tremaine did not meet the definition of KMP under AASB 124 for years prior to
2011. Previous years comparative figures are not shown.
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn Table 12 - summary of KMp executives’ interests in Restricted shares
Name
P Coleman
Allocation date
February 2013
Vesting date(1)
February 2016
Awarded but
not vested
33,720
Vested in
2013
% of total
vested
Lapsed in
2013
Value of Restricted shares
by performance year
30.98
February 2014
February 2017
19,924
F Ahmed(2)
R Cole
February 2013
February 2016
February 2013
February 2016
February 2014
February 2017
R Edwardes
February 2013
February 2016
S Gregory(3)
P Loader(4)
P Moore(5)
G Roder
February 2014
February 2017
February 2014
February 2017
February 2014
February 2017
February 2013
February 2016
February 2013
February 2016
February 2014
February 2017
V Santostefano(6)
February 2013
February 2016
L Tremaine
February 2013
February 2016
M Utsler(7)
February 2014
February 2017
February 2014
February 2017
3,978
7,882
5,134
4,710
5,075
2,566
1,450
2,566
3,829
4,603
8,726
6,933
4,249
322
35.18
30.98
30.98
35.18
30.98
35.18
35.18
35.18
30.98
30.98
35.18
30.98
30.98
35.18
35.18
(1) Vesting date and exercise date are the same. Vesting is subject to satisfaction of
vesting conditions. The minimum total value of the grants for future financial years
is nil if relevant vesting conditions are not satisfied. An estimate of the maximum
possible total value in future financial years is the fair value at grant date multiplied by
the number of Restricted Shares awarded.
(2) On 31 July 2013 Mr Ahmed departed Woodside.
(3) Mr Gregory did not meet the definition of KMP under AASB 124 for years prior to
2013. Previous years comparative figures are not shown.
(4) Mr Loader commenced with Woodside on 1 July 2013.
(5) On 1 August 2013 Mr Moore departed Woodside. Mr Moore did not meet the
definition of KMP under AASB 124 for the years prior to 2010. Comparative figures
are not shown.
(6) Mr Santostefano ceased to be KMP on 30 November 2013 and will leave employment
with Woodside on 30 June 2014.
(7) Mr Utsler commenced with Woodside on 2 December 2013.
71
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE
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
2013
% of total
vested
Lapsed in
2013
Fair value(4)
of VpRs
P Coleman
March 2012
March 2016
February 2013
February 2018
February 2014
February 2019
F Ahmed(5)
March 2010
March 2014
February 2011
February 2015
March 2012
March 2016
February 2013
February 2018
February 2014
February 2019
R Cole
March 2010
March 2014
February 2011
February 2015
March 2012
March 2016
February 2013
February 2018
February 2014
February 2019
R Edwardes
February 2013
February 2018
S Gregory(6)
P Loader(7)
P Moore(8)
February 2014
February 2019
February 2014
February 2019
February 2014
February 2019
February 2011
February 2015
March 2012
March 2016
February 2013
February 2018
February 2014
February 2019
G Roder
February 2013
February 2018
February 2014
February 2019
V Santostefano(9) March 2010
March 2014
February 2011
February 2015
March 2012
March 2016
February 2013
February 2018
February 2014
February 2019
L Tremaine(10)
March 2012
March 2016
February 2013
February 2018
February 2014
February 2019
M Utsler(11)
February 2014
February 2019
51,769
150,665
156,940
6,017
7,042
9,768
16,503
9,618
6,305
7,526
10,661
19,430
20,010
11,923
19,780
10,000
7,536
4,412
6,264
10,788
6,360
5,774
17,940
5,190
6,665
9,293
18,259
18,860
7,564
14,631
16,560
1,676
21.36
15.90
20.77
14.82
20.02
21.36
15.90
20.77
14.82
20.02
21.36
15.90
20.77
15.90
20.77
20.77
20.77
20.02
21.36
15.90
20.77
15.90
20.77
14.82
20.02
21.36
15.90
20.77
21.36
15.90
20.77
20.77
(1) For valuation purposes all VPRs are treated as if they will be equity settled.
(2) Vesting date and exercise date are the same. Vesting is subject to satisfaction of
(5) On 31 July Mr Ahmed departed Woodside.
(6) Mr Gregory did not meet the definition of KMP for the years prior to 2013.
vesting conditions. The minimum total value of the grants for future financial years
is nil if relevant vesting conditions are not satisfied. An estimate of the maximum
possible total value in future financial years is the fair value at grant date multiplied by
the number of VPRs awarded.
(3) Vesting date is 5 March 2014 (re-test date) in respect of March 2010 allocations,
(4)
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 February 2013 allocations and
21 February 2018 or 21 February 2019 in respect of February 2014 allocations.
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. 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.
Comparative figures are not shown.
(7) Mr Loader commenced with Woodside on 1 July 2013.
(8) On 1 August 2013 Mr Moore departed Woodside. Mr Moore did not meet the
definition of KMP for the years prior to 2010. Comparative figures are not shown.
(9) Mr Santostefano ceased to be KMP on 30 November 2013 and will leave
employment with Woodside on 30 June 2014.
(10) Mr Tremaine did not meet the definition of KMP for the years prior to 2011.
Comparative figures are not shown.
(11) Mr Utsler commenced with Woodside on 2 December 2013.
72
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn
Table 14 - summary of KMp executives’ interests in Equity Rights under the WEp
Name
R Cole
S Gregory(2)
P Moore(3)
Grant date
30 November 2011
1 October 2013
30 November 2011
1 October 2012
V Santostefano(4) 30 November 2011
1 October 2012
1 October 2013
L Tremaine
30 November 2011
1 October 2012
1 October 2013
Number of
Equity Rights
granted
Number of
Equity Rights which have
lapsed/forfeited
Number of
Equity Rights which have
vested during 2013
Fair Value of Equity
Rights(1)
1,830
3,100
1,830
2,000
1,830
2,000
3,100
1,830
2,000
3,100
811
1,444
1,019
556
30.49
30.47
30.49
31.99
30.49
31.99
30.47
30.49
31.99
30.47
(1) The fair value of Equity Rights as at their date of grant has been determined by
(2) Mr Gregory did not meet the definition of KMP for the years prior to 2013.
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. The minimum
total value in future financial years is nil if relevant vesting conditions are not satisfied.
An estimate of the maximum possible total value in future financial years is the fair
value as shown above multiplied by the number of Equity Rights awarded.
Comparitive figures are not shown.
(3) A total of 2,255 Equity Rights with a value of A$86,276 were forfeited on
Mr Moore’s departure on 1 August 2013.
(4) Mr Santostefano ceased to be KMP on 30 November 2013 and will leave employment
with Woodside on 30 June 2014.
Table 15 – Annual base Board and committee fees for non-executive directors
position
Chairman of the Board(1)
Non-executive directors(2)
Committee Chairman
Committee Member
Board
$A
679,200(3)
206,500(3)
Inclusive of committee work.
(1)
(2) Board fees paid to non-executive directors, other than the Chairman.
Audit & risk
committee
$A
Human resources
& compensation
committee
$A
sustainability
committee
$A
Nominations
committee
$A
54,400(3)
27,100(3)
46,000(3)
23,000(3)
46,000(3)
23,000(3)
Nil
Nil
(3) Annual fee from 1 July 2013 (unchanged from 1 July 2012).
Table 16 – Total remuneration paid to non-executive directors in 2013 and 2012
M A Chaney
M A Cilento
F C Cooper(1)
E Fraunschiel(2)
C Haynes
A Jamieson
P J M H Jungels(3)
D I McEvoy
S Ryan
Cash salary and fees
pension super
salaries, fees and
allowances
Company contributions to
superannuation
$
655,144
689,698
243,557
255,162
247,113
49,133
287,672
270,387
278,127
289,991
302,898
326,670
269,697
282,702
247,512
19,132
$
59,782
62,073
22,225
22,965
22,580
4,421
25,891
24,609
25,444
22,586
1,722
Total
$
714,926
751,771
265,782
278,127
269,693
53,554
313,563
270,387
278,127
289,991
302,898
326,670
294,306
308,146
270,098
20,854
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
(1) Effective 1 February 2013 Mr Cooper was appointed a non-executive director of Woodside.
(2) On 28 February 2013 Mr Fraunschiel retired as a non-executive director of Woodside.
(3) On 7 December 2012 Dr Jungels retired as a non-executive director of Woodside.
73
WOODSIDE PETROLEUM LTD GOVERNANCEGOVERNANCE 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
services by the external auditor during
the financial year is compatible with the
general standard of independence for
auditors imposed by the Corporations
Act for the following reasons:
all non-audit services were provided in
accordance with Woodside’s External
Auditor Policy and External Auditor
Guidelines; and
all non-audit services were subject to
the corporate governance processes
adopted by the company and have
been reviewed by the Audit & Risk
Committee to ensure that they do not
affect the integrity or objectivity of the
auditor.
Further information on Woodside’s policy
in relation to the provision of non-audit
services by the auditor is set out in
section 7 of the Corporate Governance
Statement on page 57.
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.
director
MA Chaney
MA Cilento
RJ Cole1,2,3
PJ Coleman2,3
F Cooper
CM Haynes
A Jamieson
DI McEvoy
SE Ryan
Relevant interest
in shares
20,000
2,086
40,983
88,724
860
2,397
5,380
8,040
918
(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 65.
(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 70 to 73.
(3) Messrs Cole and Coleman will be allocated
restricted shares and variable pay rights under
Woodside’s Executive Incentive Plan on
21 February 2014, as set out in the Remuneration
Report on pages 70 to 71.
74
Signed in accordance with a resolution of
the directors.
M A Chaney, AO
Chairman
Perth, Western Australia
19 February 2014
p j Coleman
Chief Executive Officer and
Managing Director
Perth, Western Australia
19 February 2014
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
financial year ended 31 December 2013,
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
19 February 2014
Liability limited by a scheme approved under
Professional Standards Legislation.
WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOn 2013 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 arrangements
34. Associated entities
35. Subsidiaries
36. Corporate information
Directors’ declaration
independent audit report
76
77
78
79
80
81
94
97
99
102
102
102
103
103
103
104
104
105
107
107
108
108
108
108
109
109
110
111
111
111
120
121
129
133
133
134
134
135
136
137
140
141
142
75
FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT cOnsOLiDaTED incOmE sTaTEmEnT
For the year ended 31 December 2013
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 benefit
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.
2013
Us$m
5,926
(2,594)
3,332
93
(887)
2,538
10
(189)
2,359
224
(769)
1,814
1,749
65
1,814
213
2012
US$m
6,348
(2,618)
3,730
820
(755)
3,795
8
(145)
3,658
523
(1,137)
3,044
2,983
61
3,044
366
76
OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013 cOnsOLiDaTED sTaTEmEnT OF cOmPREhEnsivE incOmE
For the year ended 31 December 2013
Profit for the year
Other comprehensive income
items that may be reclassified to profit or loss in subsequent periods:
Net change in fair value of available-for-sale financial assets
items that will not be reclassified to profit or loss in subsequent periods:
Remeasurement gains/(losses) on defined benefit plan
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.
2013
Us$m
2012
US$m
1,814
3,044
1
15
16
(2)
-
(2)
1,830
3,042
1,765
65
1,830
2,981
61
3,042
77
FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT cOnsOLiDaTED sTaTEmEnT OF FinanciaL POsiTiOn
As at 31 December 2013
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 financial liabilities
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.
78
notes
2013
Us$m
2012
US$m
7
8
9(a)
10(a)
11(a)
9(b)
10(b)
11(b)
12
13(a)
14
4(c)
15(a)
16(a)
17
18(a)
19(a)
20
15(b)
16(b)
4(c)
18(b)
19(b)
20
21(a)
21(b)
22
23
2,223
453
192
4
23
2,895
8
32
32
1,063
18,490
80
1,170
20,875
23,770
575
1,177
317
10
30
255
2,364
-
2,587
1,533
10
114
1,204
5,448
7,812
15,958
6,547
(42)
923
7,797
15,225
733
15,958
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
OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013 cOnsOLiDaTED sTaTEmEnT OF cash FLOws
For the year ended 31 December 2013
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 of oil and gas properties and other assets
Gain on disposal of exploration and evaluation assets
(Gain)/loss on disposal of oil and gas properties
Gain on disposal of investments
Change in fair value of derivative financial instruments
Net finance costs
Tax expense
Exploration and evaluation written off
Other
Changes in assets and liabilities
Decrease in trade and other receivables
Decrease/(increase) in inventories
Decrease in provisions
Increase in other assets and liabilities
Decrease 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
Payments for carbon tax
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
Income taxes paid on disposal of exploration and evaluation assets
net cash (used in)/from investing activities
cash flows from/(used in) financing activities
Repayments of borrowings
Contributions (to)/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 financing activities
net (decrease)/increase in cash held
cash and cash equivalents at the beginning of the year
Effects of exchange rate changes
cash and cash equivalents at the end of the year
The accompanying notes form part of the Financial Report.
notes
2013
Us$m
2012
US$m
1,814
3,044
1,266
-
387
(13)
(39)
-
47
179
545
6
39
101
48
(118)
11
(163)
4,110
1
13
4
(186)
(506)
(86)
(4)
(16)
3,330
(710)
-
17
39
(405)
(1,059)
(583)
(139)
-
-
(1,748)
(2,470)
(199)
2,422
-
2,223
1,217
26
131
(762)
7
(2)
10
137
614
129
66
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
7
79
FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT
cOnsOLiDaTED sTaTEmEnT OF chanGEs in EqUiTy
For the year ended 31 December 2013
y
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f
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e
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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 2013
6,547
(44)
101
663
110
(15)
7,786
15,148
679
15,827
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2)
4
-
-
-
15
15
-
-
-
-
(4)
52
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
1
-
-
-
-
-
-
-
1,749
1,749
-
16
1,749
1,765
-
-
-
-
-
-
(1,738)
-
-
-
(2)
-
52
(1,738)
65
-
65
(11)
-
-
-
-
-
-
1,814
16
1,830
(11)
-
-
(2)
-
52
(1,738)
at 31 December 2013
6,547
(42)
164
663
110
(14)
7,797
15,225
733
15,958
At 1 January 2012
5,880
(67)
303
663
110
(13)
5,782
12,658
611
13,269
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
The accompanying notes form part of the Financial Report.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2)
(2)
2,983
-
2,983
2,983
(2)
2,981
-
-
-
-
-
-
-
-
-
-
-
-
-
(979)
-
431
-
(11)
-
68
(979)
61
-
61
7
-
-
-
-
-
-
3,044
(2)
3,042
7
431
-
(11)
-
68
(979)
663
110
(15)
7,786
15,148
679
15,827
8080
OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013
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 Investment 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 18 February 2014.
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 2012. 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
AASB 10 Consolidated Financial Statements
As a result of the adoption of AASB 10, the Group has changed its accounting policy with respect to determining
whether it has control over, and consequently whether it consolidates, its subsidiaries. AASB 10 introduces a new control
model which broadens the situations in which an entity is considered to be controlled by another entity and is applicable
to all subsidiaries.
The adoption of AASB 10 did not have a material impact on the financial position or performance of the Group.
Consequential amendments were also made to other Standards via 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].
AASB 11 Joint Arrangements
The adoption of AASB 11 has resulted in changes to the Group’s accounting policy with respect to interests in
joint arrangements. AASB 11 uses the principles of control in AASB 10 to define joint control, and therefore the
determination of whether joint control exists or has changed. The Group is now required to classify its interests in joint
arrangements as either joint operations or joint ventures taking into consideration the structure of the arrangement.
Joint operations give the venturers a right to the underlying assets and obligations of the venture and are accounted for
by recognising the Group’s share of those assets and obligations. Joint ventures give the venturers a right to the net
assets of the venture and are accounted for using the equity method.
The adoption of AASB 11 did not have a material impact on the financial position or performance of the Group.
Consequential amendments were also made to other Standards via 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].
AASB 12 Disclosures of Interests in Other Entities
AASB 12 prescribes the required disclosures for the Group’s interests in its subsidiaries and joint arrangements. New
disclosures have been introduced regarding the judgements made by management to determine whether control exists
and to require summarised information about joint arrangements and subsidiaries with non-controlling interests.
The adoption of AASB 12 has resulted in additional disclosures which have been incorporated into Notes 33 and 35.
8181
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 1. summary of significant accounting policies (continued)
(a) Basis of preparation (continued)
AASB 13 Fair Value Measurement
AASB 13 establishes a single source of guidance for determining the fair value of assets and liabilities. AASB 13 does not
change when fair value is required to be used, but rather provides guidance on how to determine fair value when required
or permitted.
The adoption of AASB 13 has not materially impacted the fair value measurement. Additional fair value disclosures have
been incorporated into the financial statements.
Consequential amendments were also made to other Standards via 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
Revisions to AASB 119 have resulted in amendments to the Group’s accounting policy for retirement benefits. Gains and
losses arising from changes in actuarial estimates are now recognised immediately in other comprehensive income.
This change in accounting policy did not have a material impact on the financial position or performance of the Group.
Consequential amendments were also made to other Standards via AASB 2011-10 Amendments to Australian Accounting
Standards arising from AASB 119 [AASB 1, 8, 101, 124, 134, 1049 & 2011-8 and Interpretation 14].
Other Changes
The Group has adopted the following other amended Standards which have not resulted in any significant changes to
accounting policies:
AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Other Comprehensive Income [AASB 1,
5, 7, 101, 112, 120, 121, 132, 133, 134, 1039 & 1049]; and
AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-11 Cycle [AASB
1, 101, 116, 132 & 134 and Interpretation 2].
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 and its subsidiaries as at 31
December each year.
Subsidiaries are all those entities over which the Group has power over the investee such that the Group is able to direct
the relevant activities, has exposure or rights to variable returns from its involvements with the investee and has the ability
to use its power over the investee to affect the amount of the investor’s returns.
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.
8282
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 1. summary of significant accounting policies (continued)
(c) Basis of consolidation (continued)
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using
consistent accounting policies. All intercompany balances and transactions, including unrealised profits and losses arising
from intra-group transactions, have been eliminated in full.
A change in ownership of a subsidiary that does not result in a loss of control is accounted for as an equity transaction.
On loss of control of a subsidiary, all carrying amounts of assets, liabilities and non-controlling interests are derecognised.
Any retained interest in the subsidiary is remeasured to its fair value and a gain or loss is recognised in the income
statement.
Investments in subsidiaries are carried at cost less impairment charges in the separate financial statements of the parent
company. Dividends received from subsidiaries are recorded as other income in the separate income statement of
the parent company and do not impact the recorded cost of investment. The parent company will assess whether any
indicators of impairment of the carrying amount of the investment in the subsidiary exist. Where such indicators exist, to
the extent that the carrying amount of the investment in the subsidiary 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.
8383
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT
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.
(g) Other plant and equipment
Other plant and equipment is stated at cost less accumulated depreciation and any impairment charges.
8484
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 1. summary of significant accounting policies (continued)
(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 assessed half-
yearly to determine whether there is an indication of impairment. 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 of disposal.
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.
8585
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 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.
8686
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 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 arrangements
Joint arrangements are arrangements of which two or more parties have joint control. Joint control is the contractual
agreed sharing of control of the arrangement which exists only when decisions about the relevant activities require
unanimous consent of the parties sharing control. Joint arrangements are classified as either a joint operation or
joint venture, based on the rights and obligations arising from the contractual obligations between the parties to the
arrangement.
To the extent the joint arrangement provides the Group with rights to the individual assets and obligations arising from
the joint arrangement, the arrangement is classified as a joint operation and as such,the Group recognises its:
• Assets, including its share of any assets held jointly;
• Liabilities, including its share of any liabilities incurred jointly;
• Revenue from the sale of its share of the output arising from the joint operation;
• Share of revenue from the sale of the output by the joint operation; and
• Expenses, including its share of any expenses incurred jointly.
To the extent the joint arrangement provides the Group with rights to the net assets of the arrangement, the investment
is classified as a joint venture and accounted for using the equity method. 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. Refer to
note (u) for further details of the equity method.
(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 (usually 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.
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.
8787
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 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.
8888
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013
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 arrangement.
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 expected to be wholly settled within one year after
the end of the period in which the employees render the related services are recognised as long term employee
benefits. 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 expected to
be wholly settled within one year after the end of the period in which the employees render the related services are
classified as short term benefits and 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.
8989
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 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 in other comprehensive
income in the statement of comprehensive income.
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.
9090
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013
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.
9191
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 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.
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 that 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
the 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 PRRT 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.
9292
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 1. summary of significant accounting policies (continued)
(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
application date
of the standard
Periods
beginning on or
after 1 January
2017
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
AASB 2012-3 Amendments to Australian
Accounting Standards - Offsetting Financial
Assets and Financial Liabilities
AASB 2013-3 Amendments to AASB 136
– Recoverable Amount Disclosures for Non-
Financial Assets
AASB 2013-4 Amendments to Australian
Accounting Standards – Novation of
Derivatives and Continuation of Hedge
Accounting [AASB 139]
AASB 1031 Materiality
Annual Improvements to IFRSs 2010-2012
Cycle
Periods
beginning on or
after 1 January
2014
Periods
beginning on or
after 1 January
2014
Periods
beginning on or
after 1 January
2014
Periods
beginning on or
after 1 January
2014
Periods
beginning on or
after 1 July 2014
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 amendment deletes from AASB 124 individual
key management personnel disclosure requirements
for disclosing entities that are not companies. It also
removes the individual KMP disclosure requirements for all
disclosing entities in relation to equity holdings, loans and
other related party transactions.
AASB 2012-3 adds application guidance to AASB
132 Financial Instruments: Presentation to address
inconsistencies identified in applying some of the offsetting
criteria of AASB 132, including clarifying the meaning of
“currently has a legally enforceable right of set-off” and
that some gross settlement systems may be considered
equivalent to net settlement.
AASB 2013-3 amends the disclosure requirements in AASB
136 Impairment of Assets.The amendments include the
requirement to disclose additional information about the
fair value measurement when the recoverable amount
of impaired assets is based on fair value less costs of
disposal.
AASB 2013-4 amends AASB 139 Financial Instruments:
Recognition and Measurement to permit the continuation
of hedge accounting in specified circumstances where
a derivative, which has been designated as a hedging
instrument, is novated from one counterparty to a central
counterparty as a consequence of laws or regulations.
The revised AASB 1031 is an interim standard that cross-
references to other Standards and the Framework (issued
December 2013) that contain guidance on materiality.
AASB 1031 will be withdrawn when references to AASB
1031 in all Standards and Interpretations have been
removed.
This standard sets out amendments to International
Financial Reporting Standards (IFRSs) and the related
bases for conclusions and guidance made during the
International Accounting Standards Board’s Annual
Improvements process. These amendments have not
yet been adopted by the AASB.
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.
9393
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 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.
Pluto Business Unit
Exploration, evaluation, development, production and sale of liquefied natural gas and condensate in assigned permit areas.
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.
Browse Business Unit
Exploration, evaluation and development of liquefied natural gas and condensate in assigned permit areas.
Other
This segment comprises the activities undertaken by the United States, 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.
9494
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 2. Operating segments (continued)
(a) Revenue and profit after tax for the year ended 31 December 2013
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Us$m
2013
Us$m
3,230
2,098
(718)
(41)
(267)
(1,026)
2,204
(17)
4
(37)
-
-
-
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-
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2,170
(245)
(88)
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5,926
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130
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25
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(275)
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79
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(50)
29
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14
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13
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(54)
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(19)
(293)
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(17)
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18
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(116)
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2012
US$m
2012
US$m
2012
US$m
2012
US$m
2012
US$m
2012
US$m
3,300
1,427
1,545
(739)
(57)
(267)
(1,063)
2,237
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21
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2,235
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(526)
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642
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453
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823
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8
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738
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2,359
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1,814
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(1,295)
(150)
(1,173)
(2,618)
3,730
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(7)
(11)
762
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(3)
4
(157)
55
(182)
3,795(1)
8
(145)
3,658
(614)
3,044
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
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 costs
Other exchange gain/(loss)
Impairment loss
Other income
Other expenses
Profit before tax and net finance 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
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 costs
Other exchange gain
Impairment loss
Other income
Other expenses
Profit before tax and net finance 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.
(2) The composition of ‘other’ has been restated in 2012 to include the USA business unit.
There were no significant inter-segment transactions during the financial year.
9595
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT
2. Operating segments (continued)
(b) segment assets and liabilities and other segment information at 31 December 2013
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2013
Us$m
3,931
1,628
2
218
11
-
2012
US$m
4,083
1,714
2
328
7
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2013
Us$m
14,303
422
-
96
6
-
2012
US$m
14,981
771
-
899
8
-
l
i
O
a
i
l
a
r
t
s
u
a
t
i
n
U
s
s
e
n
i
s
u
B
2013
Us$m
1,450
577
-
263
24
-
2012
US$m
1,704
448
-
132
58
-
e
s
w
o
r
B
t
i
n
U
s
s
e
n
i
s
u
B
)
2
(
r
e
h
t
O
2013
Us$m
2013
Us$m
149
34
-
-
79
-
2012
US$m
48
57
-
-
283
-
451
85
-
14
39
-
2012
US$m
545
120
-
23
45
-
d
e
t
a
c
o
l
l
a
n
U
s
m
e
t
i
2013
Us$m
3,486
5,066
-
-
2
30
d
e
t
a
d
i
l
o
s
n
o
c
2013
Us$m
23,770
7,812
2
591
161
30
2012
US$m
2012
US$m
3,449
24,810
5,873
8,983
-
-
(12)
9
2
1,382
389
9
Segment assets
Segment liabilities
Other segment information
Investment in associates
Additions to oil and gas properties
Additions to exploration and evaluation assets
Additions to other plant and equipment
Segment assets
Segment liabilities
Other segment information
Investment in associates
Additions to oil and gas properties
Additions to exploration and evaluation assets
Additions to other plant and equipment
(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
2013
Us$m
2012
US$m
2013
Us$m
2012
US$m
2013
Us$m
2012
US$m
2013
Us$m
2012
US$m
2013
Us$m
2012
US$m
Revenue from external customers
446
549
5,377
5,483
Non-current assets
19,530
20,303
-
-
78
154
187
291
25
21
129
5,926
6,348
2
19,705(3) 20,596(4)
(3) Non-current assets exclude deferred tax (US$1,170 million).
(4) Non-current assets excludes derivatives (US$33 million) and deferred tax (US$892 million).
(d) major customer information
The Group has two major customers which account for 18% and 12% of external revenue within the Pluto and North West Shelf
Business Units (2012: one customer 11%).
9696
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013
3. Revenue and expenses
(a) Operating revenue
Revenue from sale of goods
Liquefied natural gas
North West Shelf
Pluto
Pipeline natural gas
North West Shelf
United States of America
Condensate
North West Shelf
Pluto
Oil
North West Shelf
Laminaria
Mutineer–Exeter (1)
Enfield
Vincent
Stybarrow
United States of America
Liquefied petroleum gas
North West Shelf
Total revenue from sale of goods
LnG processing revenue
Total operating revenue
(b) cost of sales
Cost of production
Production costs
Royalties and excise
Carbon costs
Insurance
Inventory movement
Shipping and direct sales costs
Oil and gas properties depreciation and amortisation
Land and buildings
Transferred exploration and evaluation
Plant and equipment
Marine vessels and carriers
Total cost of sales
Gross profit
(1) Woodside sold its interest in Mutineer-Exeter in February 2013.
2013
Us$m
2012
US$m
1,645
1,702
3,347
366
5
371
754
246
1,000
377
99
-
200
25
195
74
970
88
88
5,776
150
5,926
(732)
(461)
(36)
(41)
28
(1,242)
(145)
(61)
(42)
(1,099)
(5)
(1,207)
(2,594)
3,332
1,670
1,164
2,834
367
3
370
765
138
903
373
222
20
325
713
265
73
1,991
125
125
6,223
125
6,348
(692)
(501)
(17)
(40)
(45)
(1,295)
(150)
(41)
(42)
(1,084)
(6)
(1,173)
(2,618)
3,730
9797
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT
3. Revenue and expenses (continued)
(c) Other income
Other fees and recoveries
Share of associates’ net profit
Other exchange gain
Gain/(loss) on disposal of oil and gas properties
Gain on disposal of exploration and evaluation assets
Gain on disposal of investments
Total other income
(d) Other expenses
Exploration and evaluation
Exploration expensed in current year
Exploration expensed previously capitalised
Amortisation of license acquisition costs
Evaluation
Total exploration and evaluation
Other costs
Net defined benefit plan costs
Change in fair value of derivative financial instruments
Depreciation of other plant and equipment
General, administrative and other costs
Pluto mitigation and initial start up costs
Impairment of exploration and evaluation assets
Impairment of oil and gas properties(2)
Total other costs
Total other expenses
Profit before tax and net finance costs
(e)
Finance income
Interest
Total finance income
(f)
Finance costs
Unwinding of present value discount (accretion)
Other finance costs
Total finance costs
Profit before tax
2013
Us$m
2012
US$m
21
4
16
39
13
-
93
(241)
(4)
(45)
(27)
(317)
(3)
(47)
(11)
(128)
6
-
(387)
(570)
(887)
2,538
10
10
(28)
(161)
(189)
2,359
55
4
4
(7)
762(1)
2
820
(230)
(38)
(26)
(98)
(392)
(3)
(10)
(11)
(96)
(86)
(26)
(131)
(363)
(755)
3,795
8
8
(26)
(119)
(145)
3,658
(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$2 billion. The proceeds were treated as a reimbursement of previously incurred costs and credited against the exploration and evaluation
assets. The excess was recognised as a gain on sale.
(2) Details regarding impairment of oil and gas properties are contained in note 13(b).
9898
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 4.
Taxes
(a)
Tax expense comprises
PRRT
Current tax expense
Deferred tax expense related to the movements in deferred tax balances
Income tax
Current tax expense
(Over)/under provided in prior years
Deferred tax expense related to the movements in deferred tax balances
Total tax expense reported in the income statement
(b) Reconciliation of tax expense to prima facie tax payable
Profit before tax
PRRT benefit
Profit after PRRT benefit
Tax expense calculated at 30%
Tax effect of items which are non-deductible/(assessable)
Sale of assets
Research and development
Other
Foreign expenditure not brought to account
(Over)/under provided in prior years
Foreign exchange impact on tax expense
PRRT benefit
Tax expense
2013
Us$m
2012
US$m
176
(400)
(224)
521
(11)
259
769
545
2,359
224
2,583
775
-
(6)
(5)
51
(11)
(35)
(224)
545
387
(910)
(523)
1,030
14
93
1,137
614
3,658
523
4,181
1,254
(186)
(6)
(1)
58
14
4
(523)
614
The tax rate used in the above reconciliation is that applied to resident companies pursuant to the income tax statutes in
force in Australia as at the reporting date. There has been no change in the corporate tax rate when compared with the
previous reporting year.
9999
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 4. Taxes (continued)
at
1 January
charged/
(credited)
to income
statement
charged/
(credited) to
equity
acquisition/
(disposal)
at
31 December
Us$m
Us$m
Us$m
Us$m
Us$m
(c) Deferred tax
2013
Deferred tax assets
Arising from temporary differences
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
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
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
-
-
290
290
23
229
(32)
97
(8)
(31)
(122)
156
-
(22)
390
368
(71)
229
(6)
118
(53)
33
(117)
133
-
-
-
-
-
-
-
-
-
6
-
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(12)
(12)
-
5
-
(4)
3
(1)
-
3
-
-
-
-
(308)
-
-
121
-
-
(403)
(590)
11
-
1,159
1,170
207
1,149
1
129
(432)
(46)
525
1,533
11
-
881
892
184
915
33
36
(427)
(20)
647
1,368
100100
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 4. Taxes (continued)
(d) Unrecognised deferred tax assets
Tax losses not recognised
Revenue losses
Deductible temporary differences not recognised(1)
Temporary differences associated with investments
2013
Us$m
2012
US$m
259
3,469
4
3,732
250
3,203
5
3,458
(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 and unrecognised tax losses of US$774 million (2012: US$751 million) that
are available for offset against future taxable profits.
No deferred tax asset has been recognised in respect of tax losses due to the uncertainty of future profit streams
(2012: Nil).
(f)
Tax consolidation
The parent and its wholly-owned Australian controlled entities have elected to enter tax consolidation, with
Woodside Petroleum Ltd as the head entity of the tax consolidated group. The members of the tax consolidated
group are identified at Note 35(a).
Entities within the tax consolidated group have entered into a tax funding arrangement and a tax sharing agreement
with the head entity. Under the terms of the tax funding arrangement, Woodside Petroleum Ltd and each of the entities
in the tax consolidated group have agreed to make a tax equivalent payment to or from the head entity calculated on
a stand alone basis based on the current tax liability or current tax asset of the entity. Such amounts are reflected in
amounts receivable from, or payable to, other entities in the tax consolidated group.
The tax sharing agreement entered into between members of the tax consolidated group provides for the
determination of the allocation of income tax liabilities between the entities, should the head entity default on its tax
payment obligations. No amounts have been recognised in the financial statements in respect of this agreement as
payment of any amounts under the tax sharing agreement is considered remote.
101101
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 5. Earnings per share
Profit attributable to equity holders of the parent (US$m)
Weighted average number of shares on issue
Basic and diluted earnings per share (US cents)(1)
2013
2012
1,749
822,983,715
213
2,983
814,751,356
366
(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$0.65, paid on 3 April 2013
(2012: US$0.55, paid on 4 April 2012)
2013 fully franked special dividend US$0.63, paid on 29 May 2013 (2012: Nil)
Current year fully franked interim dividend US$0.83, paid on 25 September 2013
(2012: US$0.65 paid on 2 October 2012)
(b) Dividend declared (not recorded as a liability)
Final dividend US$1.03,to be paid on 26 March 2014
(2012: US$0.65, paid on 3 April 2013)
2013
Us$m
2012
US$m
536
518
684
1,738
443
-
536
979
849
536
Dividend per share in respect of financial year (US cents)
249
130
(c) Franking credit balance
Franking credits available for the subsequent periods
2,545
3,391
7.
cash and cash equivalents
components of cash and cash equivalents
Cash at bank
Money market deposits
Total cash and cash equivalents(1)
(1) Reconciles to statement of cashflows.
2013
Us$m
2012
US$m
132
2,091
2,223
94
2,328
2,422
102102
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 8. Receivables
Trade receivables(1)
Other receivables(2)
Dividends receivable(3)
Interest receivable(3)
(1) Denominated in a mixture of Australian dollars and US dollars, interest free and settlement terms between 7 and 30 days.
(2) Other receivables are interest-free with various maturities.
(3) Dividends and interest receivable are receivable within 30 days of period end.
9.
inventories
(a)
inventories (current)
Petroleum products (at cost)
Work in progress
Goods in transit
Finished stocks
Warehouse stores and materials (at cost)
(b)
inventories (non-current)
Warehouse stores and materials (at cost)
10. Other financial assets
(a) Other financial assets (current)
Derivative instruments (at fair value)(1)
Embedded derivatives (at fair value)(2)
Cash held in reserve
(b) Other financial assets (non-current)
Other investments (available-for-sale)
Listed (at fair value)
Cash held in reserve(3)
Embedded derivatives (at fair value)(2)
(1) Details regarding derivative instruments are contained in Note 25(f).
(2) Embedded derivatives relate to sales contracts.
(3) Represents restricted cash associated with JBIC facility, refer to Note 25(e).
2013
Us$m
2012
US$m
284
167
2
-
453
449
122
2
1
574
2013
Us$m
2012
US$m
-
32
81
79
192
1
106
63
71
241
8
7
2013
Us$m
2012
US$m
-
-
4
4
2
30
-
32
10
4
18
32
1
30
33
64
103103
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT
11. Other assets
(a) Other assets (current)
Prepayments
Other
(b) Other assets (non-current)
Other
Investment in associates
12. Exploration and evaluation assets
(a) Reconciliations of the carrying amounts of exploration
and evaluation assets
Carrying amount at 1 January
Additions
Disposals at written down value
Amortisation of licence acquisition costs
Expensed (previously capitalised):
Exploration
Evaluation
Impairment loss
Transferred exploration and evaluation
carrying amount at 31 December
(b) carrying amounts of exploration and evaluation assets
Regions
Australia
Browse Basin
Carnarvon Basin
Bonaparte Basin
The Americas
Gulf of Mexico
Brazil
Asia
Myanmar
2013
Us$m
2012
US$m
22
1
23
30
2
32
17
3
20
1
2
3
2013
Us$m
2012
US$m
1,120
161
(34)
(45)
(4)
(2)
-
(133)
1,063
2013
Us$m
162
693
161
31
-
16
2,235
389
(1,311)(1)
(26)
(38)
(91)
(26)
(12)
1,120
2012
US$m
87
773
147
111
2
-
(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$2 billion. The proceeds were treated as a reimbursement of previously incurred costs and credited against the exploration and evaluation
assets. The excess was recognised as a gain on sale.
1,063
1,120
104104
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 13. Oil and gas properties
(a) Oil and gas properties
Land
and
buildings
Transferred
exploration
and
evaluation
Plant
and
equipment
marine
vessels and
carriers
Projects
in
development
Total
Us$m
Us$m
Us$m
Us$m
Us$m
Us$m
year ended 31 December 2013
Carrying amount at 1 January 2013
Additions
Disposals at written down value
Depreciation and amortisation
Impairment loss
Completions and transfers
carrying amount at 31 December 2013
at 31 December 2013
Historical cost
Accumulated depreciation and impairment
net carrying amount
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
785
-
-
(61)
-
(12)
712
1,100
(388)
712
304
-
-
(41)
-
522
785
1,106
(321)
785
522
-
(1)
(42)
(4)
(1)
474
835
(361)
474
16,825
120
167
(14)
(1,099)
(325)
1,066
16,620
24,110
(7,490)
16,620
-
-
(5)
-
-
115
373
(258)
115
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
1,123
424
-
-
(58)
(920)
569
627
(58)
569
14,425
1,289
(3)
-
(49)
(14,539)
1,123
1,172
(49)
1,123
19,375
591
(15)
(1,207)
(387)
133
18,490
27,045
(8,555)
18,490
19,289
1,382
(4)
(1,173)
(131)
12
19,375
26,510
(7,135)
19,375
Borrowing costs capitalised in oil and gas properties during the year were US$29 million (2012: US$101 million) at a weighted
average interest rate of 4.5% (2012: 3.4%).
105105
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 13. Oil and gas properties
(b)
impairment of non-current assets – oil and gas properties
At 31 December 2013 the Group assessed each asset or cash generating unit to determine whether an indicator of impairment
existed. Indicators of impairment include changes in future selling prices, future costs and reserves. As a result, the recoverable
amounts of the cash-generating units and some specific oil and gas assets were formally estimated, resulting in an impairment
loss of $387 million (2012: $131 million) being recognised for the year.
Estimates of recoverable amounts of oil and gas assets are based on their value in use. A range of pre-tax discount rates have been
applied between 12% to 13% (2012: 12%).
cash
generating
unit (cGU)
2013
impairment
of cGU:
segment
Description
asset class
Land and
buildings
Transferred
exploration
and
evaluation
($m)
($m)
Plant and
equipment
marine
vessels and
carriers
Projects in
development
Total
Enfield
Australia Oil BU
Oil Field
Stybarrow
Australia Oil BU
Oil Field
Laminaria-
Corallina
Australia Oil BU
Oil Field
Pluto
Pluto BU
Studies and
Developments
Neptune
USA BU
Oil Field
-
-
-
-
-
-
-
-
-
-
($m)
154
87
34
-
54
($m)
($m)
-
-
-
-
-
-
-
-
58
-
($m)
154
87
34
58
54
387
Total
2012
impairment
of cGU:
Laminaria-
Corallina
Australia Oil BU
Oil Field
Pluto
Pluto BU
Studies and
Developments
Land and
buildings
Transferred
exploration
and
evaluation
Plant and
equipment
marine
vessels and
carriers
Projects in
development
($m)
($m)
($m)
($m)
($m)
($m)
-
-
-
-
82
-
-
-
-
49
82
49
131
An impairment charge of $329 million (2012: $82 million) was recognised in relation to the Enfield ($154 million), Stybarrow
($87 million), Neptune ($54 million) and Laminaria-Corallina ($34 million) fields following an assessment of the expected ultimate
future production and an increase in the carrying amount associated with a revision to the Group’s restoration estimate.
106106
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 14. Other plant and equipment
(a) Other plant and equipment
Plant and equipment
Less: Accumulated depreciation
(b) Reconciliation of the carrying amounts of other plant and equipment at the beginning and
end of the financial year
Carrying amount at 1 January
Additions
Depreciation
carrying amount at 31 December
15. Payables
(a) Payables (current)
Trade payables(1)
Other payables(1)
Loan payables(2)
Interest payable(3)
(b) Payables (non-current)
Trade payables(1)
Loan payables(2)
(1) Trade and other payables are interest-free and normally settled on 30 day terms.
(2) Loan payables are unsecured, interest-free and have a repayment period of 10 years.
These loans are with non-controlling interests and are expected to be repaid within one year.
(3) Details regarding interest-bearing liabilities are contained in Note 25(e).
2013
Us$m
2012
US$m
200
(120)
80
60
30
(10)
80
170
(110)
60
62
9
(11)
60
2013
Us$m
2012
US$m
216
253
66
40
575
-
-
-
268
517
-
44
829
2
194
196
107107
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 16.
interest-bearing liabilities
(a)
interest-bearing liabilities (current)(1)
Bonds
Debt facilities
(b)
interest-bearing liabilities (non-current)(1)
Bonds
Debt facilities
(1) Details regarding interest-bearing liabilities are contained in Note 25(e).
17. Tax payable
PRRT payable
Income tax payable
18. Other financial liabilities
(a) Other financial liabilities (current)
Other financial liability
(b) Other financial liabilities (non-current)
Other financial liability
19. Other liabilities
(a) Other liabilities (current)
Unearned revenue
Gas purchase commitments
(b) Other liabilities (non-current)
Unearned revenue
Gas purchase commitments
Defined benefit superannuation plan
108108
2013
Us$m
2012
US$m
1,100
77
1,177
1,289
1,298
2,587
250
325
575
2,386
1,379
3,765
2013
Us$m
2012
US$m
206
111
317
116
531
647
2013
Us$m
2012
US$m
10
10
10
10
-
-
7
7
2013
Us$m
2012
US$m
27
3
30
109
14
(9)
114
21
3
24
118
17
30
165
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 20. Provisions
year ended 31 December 2013
At 1 January 2013
Change in provision
Unwinding of present value discount
at 31 December 2013
at 31 December 2013
Current
Non-current
Year ended 31 December 2012
At 1 January 2012
Change in provision
Unwinding of present value discount
At 31 December 2012
At 31 December 2012
Current
Non-current
(1) Details regarding restoration of operating locations are contained in Note 1(l) and 1(ae).
(2) Details regarding employee benefits are contained in Note 1(v) and 27.
21. contributed equity
(a)
issued and fully paid shares
823,910,657 (2012: 823,910,657) ordinary shares(1)
(b) shares reserved for employee share plans
902,040 (2012: 961,799) ordinary shares(2)
Restoration
of operating
locations(1)
Employee
benefits(2)
Other
Total
Us$m
Us$m
Us$m
Us$m
1,038
128
25
1,191
24
1,167
1,191
899
115
24
1,038
9
1,029
1,038
200
(24)
-
176
139
37
176
175
25
-
200
153
47
200
169
(77)
-
92
92
-
92
244
(75)
-
169
128
41
169
1,407
27
25
1,459
255
1,204
1,459
1,318
65
24
1,407
290
1,117
1,407
2013
Us$m
2012
US$m
6,547
6,547
(42)
(44)
(1) All shares are a single class with equal rights to dividends, capital distributions and voting. The company does not have authorised capital nor par value in
respect of its issued shares.
(2) Information relating to the number of Woodside Petroleum Ltd shares reserved for employee share plans can be found in Note 27(a) and (b).
2013
shares
2012
Shares
2013
Us$m
2012
US$m
(c) movements in issued and fully paid shares
At 1 January
823,910,657
805,671,604
6,547
5,880
Dividend reinvestment plan:
2011 final dividend(1)
Employee share plans:
2012 employee equity plan(2)
Balance at the end of the period
-
-
11,639,053
6,600,000
-
-
823,910,657
823,910,657
6,547
431
236
6,547
(1) 2,924,534 ordinary shares issued at A$34.88 and 8,714,519 ordinary shares issued at A$35.40.
(2) 6,600,000 ordinary shares issued at A$34.71.
109109
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 22. Other reserves
year ended 31 December 2013
At 1 January 2013
Share-based payments
Share plan redemptions
Available-for-sale financial assets
Defined benefits remeasurements
at 31 December 2013
year ended 31 December 2012
At 1 January 2012
Share-based payments
Share plan redemptions
Available-for-sale financial assets
At 31 December 2012
nature and purpose of reserves
Employee benefits reserve
Employee
benefits
reserve
Foreign
currency
translation
reserve
hedge of net
investment
reserve
investment
fair value
reserve
Total
Us$m
Us$m
Us$m
Us$m
Us$m
101
52
(4)
-
15
164
303
68
(270)
-
101
663
-
-
-
-
663
663
-
-
-
663
110
-
-
-
-
110
110
-
-
-
110
(15)
-
-
1
-
(14)
(13)
-
-
(2)
(15)
859
52
(4)
1
15
923
1,063
68
(270)
(2)
859
Used to record share-based payments associated with the employee share plans and actuarial movements in the defined
benefit plan.
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.
110110
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 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
Shares 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
2013
Us$m
7,786
1,749
(1,738)
7,797
2012
US$m
5,782
2,983
(979)
7,786
2013
Us$m
2012
US$m
62
7,506
(51)
(581)
6,925
6,547
(42)
115
303
2
6,925
1,760
1,760
31
7,800
(427)
(934)
6,866
6,547
(44)
79
303
(19)
6,866
965
965
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.
111111
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 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.
2013
2012
UsD
aUD
Other
Total
USD
AUD
Us$m
Us$m
Us$m
Us$m
US$m
US$m
Other
US$m
Total
US$m
2,147
344
28
2,519
168
3,783
17
3,968
65
110
8
183
373
-
3
376
11
(1)
-
10
34
-
-
34
2,223
453
36
2,712
575
3,783
20
4,378
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
Financial assets
Cash
Receivables
Other financial assets
Financial liabilities
Payables
Interest-bearing liabilities(1)
Other financial liabilities
(1) Excludes transaction costs.
112112
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 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
11% 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
2013
Us$m
2012
US$m
2013
Us$m
2012
US$m
US$:A$ +11% (2012:+12%)
US$:A$ -11% (2012:-12%)
14
(17)
43
(55)
-
-
-
-
(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 2013 (2012: 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:
Financial assets
Cash and cash equivalents
Other financial assets
Financial liabilities
Interest-bearing liabilities(1)
Derivative instruments
(1) Excludes transaction costs.
2013
Us$m
2012
US$m
2,223
-
2,223
(1,383)
-
(1,383)
2,422
10
2,432
(1,717)
(250)
(1,967)
113113
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 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 in the London Interbank Offered Rate (LIBOR), with all other variables held constant.
The LIBOR +1.0%/- 0.35% 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 +1.0% (2012: +1.8%)
LIBOR -0.35% (2012: -0.5%)
(c) Liquidity risk
Post tax profits
(decrease)/increase
Other comprehensive income
(decrease)/increase
2013
Us$m
2012
US$m
2013
Us$m
2012
US$m
10
(4)
16
(5)
-
-
-
-
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 2013, the Group has a total of US$3,823
million available undrawn facilities and cash at its disposal. Financing facilities available to the Group are disclosed in
Note 25(e). Refer to Note 25(g) for details of the repayment obligations in respect of the amount of facilities
drawn down.
2013
Payables maturity analysis
2012
Payables maturity analysis
< 30 days 30-60 days > 60 days
Total
< 30 days 30-60 days > 60 days
Total
Us$m
Us$m
Us$m
Us$m
US$m
US$m
US$m
US$m
Trade payables
Other payables
Loan payables
Interest payable
Total payables
139
253
-
2
394
76
-
-
-
76
1
-
66
38
105
216
253
66
40
575
182
490
-
6
678
6
3
-
-
9
82
24
194
38
338
270
517
194
44
1,025
114114
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013
25. Financial and capital risk management (continued)
(d) credit risk
Credit risk is the risk that a contracting entity will not complete its obligation under a financial instrument, resulting in
a financial loss to the Group. Credit risk arises from the financial assets of the Group, which comprise trade and other
receivables and deposits with banks and financial institutions.
The Group manages its credit risk on trade receivables and financial instruments by predominantly dealing with
counterparties with an investment grade credit rating. Customers who wish to trade on unsecured credit terms are
subject to credit verification procedures. Receivable balances are monitored on an ongoing basis. As a result, the
Group’s exposure to bad debts is not significant. The Group’s maximum credit risk is limited to the carrying amount of
its financial assets. The amounts held with these institutions are within the counterparty limits as approved by the Chief
Financial Officer and the Board approved Group Treasury Policy.
2013
2012
Receivables maturity analysis
Receivables maturity analysis
< 30 days 30-60 days > 60 days
Total
< 30 days 30-60 days > 60 days
Total
Us$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
284
166
2
-
452
-
-
-
-
-
-
1
-
-
1
284
167
2
-
453
449
119
2
1
571
-
1
-
-
1
-
2
-
-
2
449
122
2
1
574
(e)
Financing facilities
364-day revolving credit facilities
The Group has two dual currency (US and Australian dollars) 364-day revolving credit facilities totalling US$100 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.
115115
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 25. Financial and capital risk management (continued)
(e)
Financing facilities (continued)
Bonds
The Group has four 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 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).The Commercial Tranche has subsequently been repaid, with the final
payment made on 28 February 2013. There is a prepayment option for the JBIC Tranche. Interest rates are based on
LIBOR. Interest is payable semi-annually in arrears and the principal amortises 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.
116116
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 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.
The interest rate swaps expired on 15 November 2013. As at reporting date the Group had no further interest rate
swaps.
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$250 million bond from a fixed
rate to floating rate exposure.
De-designated as a fair value
hedge on 1 January 2007.
(g) maturity profile of interest-bearing liabilities
The maturity profile of the Group’s interest-bearing liabilities are as follows:
Fair value
2013
Us$m
2012
US$m
-
10
Due for payment in
1 year
or less
1-2 years
2-3 years
3-4 years
4-5 years more than
Total
5 years
Us$m
Us$m
Us$m
Us$m
Us$m
Us$m
Us$m
2013
Interest-bearing liabilities(1)
(1,333)
(734)
(171)
(171)
(170)
(1,830)
(4,409)
2012
Interest-bearing liabilities(1)
(757)
(1,335)
(736)
(172)
(172)
(1,987)
(5,159)
(1) Excludes deferred transaction costs.
The amounts disclosed in the table above are the undiscounted cash flows, representing principal and interest, and
hence will not necessarily reconcile with the amounts disclosed in the consolidated statement of financial position.
117117
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 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 financial instruments are as follows:
2013
2012
quoted
market
price
(Level 1)
valuation
technique -
market
observable
inputs
(Level 2)
valuation
technique -
non-market
observable
inputs
(Level 3)
Total
Quoted
market
price
(Level 1)
Total
Valuation
technique -
market
observable
inputs
(Level 2)
Valuation
technique -
non-market
observable
inputs
(Level 3)
Us$m Us$m Us$m Us$m US$m
US$m
US$m US$m
Financial instruments
Derivative instruments
Current
Other investments (available-for-sale):
Listed entity investments
Embedded derivatives:
Current
Non-current
-
2
-
-
-
-
-
-
-
-
(1)
(2)
-
2
(1)
(2)
-
1
-
-
10
-
-
-
-
-
4
33
10
1
4
33
The fair value of financial assets and financial liabilities not measured at fair value approximates their carrying amount,
with the exception of the Group’s four unsecured bonds which have a carrying amount of US$2.4 billion and a level 1
fair value of US$2.6 billion. The Group’s repayment obligations remain unchanged.
118118
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 25. Financial and capital risk management (continued)
(h)
Fair values (continued)
Transfer between categories
There were no transfers between Level 1 and Level 2 during the year.
Reconciliation of Level 3 fair value movements
At 1 January
Amortisation recognised in the income statement
At 31 December
Total amortisation stated in the above table for assets held at the end of the financial year
(i)
capital management
2013
Us$m
2012
US$m
37
(40)
(3)
(40)
45
(8)
37
(8)
Group Treasury is responsible for the Group’s capital management including cash, debt and equity. Capital management
is undertaken to ensure that a secure, cost-effective and flexible supply of funds is available to meet the Group’s
operating and capital expenditure requirements. This involves the use of corporate forecasting models, which facilitates
analysis of the Group’s financial position including cash flow forecasts to determine the future capital management
requirements.
Group Treasury maintains a stable capital base from which the Group can pursue its growth aspirations, whilst
maintaining a flexible capital structure that allows access to a range of debt and equity markets to both draw upon and
repay capital. An example of the Group’s capital management is the activation of the Dividend Reinvestment Plan (DRP)
during a period of high capital expenditure.
The DRP was approved by shareholders at the Annual General Meeting in 2003 for activation as required to fund future
growth. The DRP was suspended by the Board in February 2013 until further notice.
Group Treasury monitors a range of financial metrics, including gearing and cash flow leverage, and treasury policy
breaches and exceptions. The gearing ratio which is net debt divided by total equity (excluding non-controlling interest)
plus net debt is 9% (2012: 11%) at reporting date.
119119
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 26. Expenditure commitments
(a) Operating lease commitments
Rentals payable on non-cancellable operating leases, due
Within one year
After one year but not more than five years
Later than five years
2013
Us$m
2012
US$m
433
818
848
241
572
619
2,099
1,432
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$347
million during the year (2012: US$487 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$103 million (2012: US$174 million).
(c) Exploration commitments
The Group has exploration obligations for the following regions which are contracted for but not provided for in the
Financial Report:
Australia
Browse Basin
Canning Offshore Basin
Carnarvon Basin
New Zealand
The Americas
Gulf of Mexico
Peru
Asia
Korea
Myanmar
Middle East & Africa
Canary Islands
2013
Us$m
2012
US$m
28
110
82
21
1
23
8
12
149
434
4
238
185
-
86
16
-
-
140
669
These obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations
of the Group.
120120
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 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. Conditions applied in order for employees to become entitled to the matching shares.
The WSPP final vesting was in April 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.
(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 the 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.
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 for 2012 was as follows:
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
2012
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
(1) Amount includes 93,867 rights that were settled in cash.
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)
-
-
-
-
-
-
-
-
-
-
-
-
-
121121
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 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 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
will be 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, at the discretion of the CEO, limited to the following circumstances; redundancy, retirement, death,
termination due to medical illness or capacity or total and permanent disablement of a participating employee. An
employee whose employment is terminated by resignation, cessation of an employment contract 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.
122122
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 27. Employee benefits (continued)
(a) woodside employee share plans (continued)
(iii) Woodside equity plan (continued)
The WEP had 3,539 employees participating at 31 December 2013.
The number of equity rights and movements in each WEP offer are as follows:
2013
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 2013
1 October 2012
30 November 2011
-
1,912,965
1,521,362
3,434,327
2,874,030
41,497
-
2,915,527
-
(6,112)
(12,079)
(18,191)
-
(174,196)
(159,146)
(333,342)
2,874,030
1,774,154
1,350,137
5,998,321
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
The following table lists the inputs to the Black-Scholes option pricing technique used for the years ended
31 December 2013, 31 December 2012 and 31 December 2011.
Grant date
vesting date
share price at grant
date (a$/share)
Employee benefit
fair value (Us$/ER)
Expected dividend
return (%)
Expected life
(years)
1 October 2013
1 October 2012
30 November 2011 30 November 2014
1 October 2016
1 October 2015
37.77
33.20
32.80
30.47
31.99
30.49
5.0
2.5
2.5
3
3
3
valuation assumptions
(b) Executive share plans
The Executive Incentive Plan (EIP) and Pay Rights (PR) Plan became effective 1 January 2005 and 15 March 2007
respectively. For further details regarding the EIP and the Group’s remuneration structure for the CEO and senior
executives refer to the Remuneration Report included in the 2013 Directors’ Report.
The following table illustrates the number and weighted average prices of shares reserved and acquired during the year
by the plan.
2013
2012
number of
shares
weighted
average price
(a$/share)
Opening balance
Purchases during the year
Vested during the year
Shares reserved for executives
under EIP/PR
690,007
41,602
(72,373)
659,236
33.35
39.08
45.57
32.37
cost
Us$m
23
2
(4)
21
Number of
shares
Weighted
average price
(A$/share)
562,830
300,000
(172,823)
690,007
42.61
35.54
34.77
33.35
Cost
US$m
18
11
(6)
23
123123
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT
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.
In the prior year, on 7 December 2012, the Board approved a modification to the EIP rules for the 2012 performance year
and each year thereafter. The modifications affected both the Short Term Award (STA) and Long Term Award (LTA).There
have been no further modifications in 2013.
For the 2012 performance year onwards, 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 for the 2012 performance year onwards 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 onwards is set out in Table 8 of the Remuneration Report. This
peer group has a weighting of 67%. The ASX 50 Index as at 1 December 2013 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 2013 Directors’
Report.
As a consequence of the 2012 rule modifications, the fair value of the benefit provided was revalued at the 2012
modification date 7 December 2012.
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
EIP relative total shareholder return (RTSR) tested VPRs
valuation
assumptions
t
fi
e
n
e
b
e
e
y
o
p
m
E
l
e
u
l
a
v
r
i
a
f
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
(Us$/vPR)
(a$/share)
(%)
28.22
30.62
35.95
(33.19)
2.76
34.22
34.22
2.5
-
2.5
valuation assumptions
e
u
l
a
v
r
i
a
f
t
fi
e
n
e
b
e
e
y
o
p
m
E
l
t
a
e
c
i
r
P
e
r
a
h
s
e
t
a
d
t
n
a
r
g
d
e
t
c
e
p
x
E
y
t
i
l
i
t
a
l
o
v
(Us$/vPR)
(a$/share)
(%)
Fair value of the original equity right at 1 January 2012
Weighted average of fair value equity right at 7 December 2012
Less: Fair value of original equity right at 7 December 2012
Decrement in value of modified equity right at 7 December 2012
15.90
20.64
(21.68)
(1.04)
30.62
34.22
34.22
36
22
24
t
s
e
r
e
t
n
i
e
e
r
f
k
s
i
R
e
t
a
r
(%)
3.9
2.7
3.2
d
l
e
i
y
d
n
e
d
i
v
i
d
d
e
t
c
e
p
x
E
(%)
2.5
3.4
2.5
124124
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013
27. Employee benefits (continued)
(b) Executive share plans (continued)
EIP Time-tested variable pay rights (VPRs)/restricted shares
Performance
year
Grant date
vesting date
On issue at
beginning of
year
Granted
during the
year
vested
during the
year
Forfeited/
lapsed during
the year
On issue
at end of
year
share price
at grant
date
Employee
benefit
fair value
Expected
dividend
yield
(a$/share)
(Us$/vPR or
shares)
(%)
Restricted shares
valuation
assumption
2013
2012
1 January 2013 21 February 2017
-
116,244
-
-
116,244
33.88
1 January 2012 22 February 2016
191,848
Variable pay rights
2011
2010
2009
1 January 2011
1 March 2015
1 January 2010 25 February 2014
1 January 2009 5 March 2013
114,425
55,009
63,465
-
-
-
-
(2,587)
(6,238)
183,023
30.62
(2,893)
(1,807)
(4,503)
107,029
42.56
(2,631)
50,571
47.20
(62,755)(2)
(710)
-
36.70
35.18
30.98(1)
38.87
38.32
29.57
-
-
2.5
2.5
2.5
(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 6,965 shares that were settled in cash with a fair value of $34.91.
EIP relative total shareholder return (RTSR) tested VPRs
e
h
t
g
n
i
r
u
d
d
e
t
s
e
v
r
a
e
y
-
-
r
a
e
y
e
c
n
a
m
r
o
f
r
e
P
e
t
a
d
t
n
a
r
G
s
e
t
a
d
g
n
i
t
s
e
v
t
a
e
u
s
s
i
n
O
r
a
e
y
f
o
g
n
n
n
g
e
b
i
i
g
n
i
r
u
d
d
e
t
n
a
r
G
r
a
e
y
e
h
t
2013
1 January 2013
21 February 2018
-
651,488
2012
1 January 2012
2011
1 January 2011
21 February 2019
22 February 2017
22 February 2018
1 March 2015
1 March 2016
597,680
319,568
2010
1 January 2010
25 February 2014
199,402
25 February 2015
2009 1 January 2009
5 March 2013
157,729
5 March 2014
-
-
-
-
d
e
s
p
a
l
/
d
e
t
i
e
f
r
o
F
r
a
e
y
e
h
t
g
n
i
r
u
d
d
n
e
t
a
e
u
s
s
i
n
O
r
a
e
y
f
o
t
a
e
c
i
r
p
e
r
a
h
s
e
t
a
d
t
n
a
r
g
t
fi
e
n
e
b
e
e
y
o
p
m
E
l
e
u
l
a
v
r
i
a
f
valuation assumptions
d
e
t
c
e
p
x
E
y
t
i
l
i
t
a
l
o
v
e
t
a
r
t
s
e
r
e
t
n
i
e
e
r
f
k
s
i
R
d
l
e
i
y
d
n
e
d
i
v
i
d
d
e
t
c
e
p
x
E
(a$/
share)
(Us$/
vPR)
(%)
(%)
(%)
-
651,488
33.88
20.77
(14,982)
582,698
30.62
15.90
(1,330)
(8,656)
309,582
42.56
21.36
30
36
36
(1,233)
(8,578)
189,591
47.20
20.02
38
(1,059)
(4,586)
152,084
36.70
14.82
36
2.9
3.9
5.7
5.3
3.6
5.0
2.5
2.5
2.5
2.5
125125
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT
27. Employee benefits (continued)
(b) Executive share plans (continued)
Pay rights(1)
Pay rights are accounted for as a share-based payment, with fair value estimated using the Binomial or Black Scholes
option pricing technique combined with a Monte Carlo simulation methodology, where relevant. Historical volatility has
been used to estimate the volatility of the share price.
e
c
n
a
m
r
o
f
r
e
P
r
a
e
y
e
t
a
d
t
n
a
r
G
g
n
i
t
s
e
v
s
e
t
a
d
t
a
e
u
s
s
i
n
O
r
a
e
y
f
o
g
n
n
n
g
e
b
i
i
2010(2) 1 June 2010
15 March 2012
17,022
15 March 2013
11,348
15 March 2014
valuation
assumptions
g
n
i
r
u
d
d
e
t
n
a
r
G
r
a
e
y
e
h
t
g
n
i
r
u
d
d
e
t
s
e
v
r
a
e
y
e
h
t
d
e
s
p
a
l
/
d
e
t
i
e
f
r
o
F
r
a
e
y
e
h
t
g
n
i
r
u
d
d
n
e
t
a
e
u
s
s
i
n
O
r
a
e
y
f
o
t
a
e
c
i
r
p
e
r
a
h
s
e
t
a
d
t
n
a
r
g
t
fi
e
n
e
b
e
e
y
o
p
m
E
l
)
3
(
e
u
l
a
v
r
i
a
f
)
3
(
y
t
i
l
i
t
a
l
o
v
d
e
t
c
e
p
x
E
(a$/share)(Us$/vPR)
(%)
-
-
-
(5,674)
11,348
(5,674)
-
5,674
43.59
43.59
21.25
21.25
41
41
)
3
(
e
t
a
r
t
s
e
r
e
t
n
i
e
e
r
f
k
s
i
R
(%)
4.5
4.5
)
3
(
d
l
e
i
y
d
n
e
d
i
v
i
d
d
e
t
c
e
p
x
E
(%)
2.5
2.5
(1) Refer to Remuneration Report 2011 for details of pay rights.
(2) Pay rights granted 1 June 2010 are RTSR-tested.
(3) Valuation assumptions and employee benefit fair values are based on weighted averages.
(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 $3 million to be held in trust for
Mr Coleman. One third of these shares will vest each anniversary after the date of his appointment (in the absence of any
accelerating event, including a change of control, in which case all shares will vest on the date of the control event).
Any unvested entitlements will be forfeited if Mr Coleman’s employment is terminated for cause or by his resignation.
Mr Coleman cannot dispose of or deal with any restricted shares until such restricted shares vest. In the event bonus
shares are allotted in respect of the sign-on shares, the bonus shares will be allotted to the Trustee and held for
Mr Coleman on the same terms and conditions as the underlying restricted shares.
The number of equity rights and movements in the CEO sign-on incentive share offer was as follows:
year
Grant date
2013
2012
2011
30 May 2011
30 May 2011
30 May 2011
On issue at
beginning
of year
44,003
66,004
-
Granted during
the year
vested during
the year
Forfeited/lapsed
during the year
On issue at
end of year
-
-
66,004
(22,001)
(22,001)
-
-
-
-
22,002
44,003
66,004
The following table lists the inputs to the Black-Scholes option pricing technique used for the year ended
31 December 2013.
valuation assumptions
Grant date
vesting date
share price
at grant date
(a$/share)
Employee
benefit fair value
(Us$/ER)(1)
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
(1) Fair value calculation is averaged over the vesting period.
126126
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013
27. Employee benefits (continued)
(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 2013.
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 2013 were US$11 million
(2012: US$17 million).
127127
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 27. Employee benefits (continued)
(d) superannuation plan (continued)
Defined benefit plan asset/(liability) included in the statement of financial position
Present value of the defined benefit obligation(1)
Fair value of defined benefit plan assets
net defined benefit asset/(liability) - non-current
(1) Includes any provision for contribution tax on plan surplus or deficit.
Defined benefit plan categories of plan assets
Cash
Australian equity
International equity
Fixed income
Property
Other
Defined benefit plan reconciliations
Reconciliation of the present value of the defined benefit obligation,
which is fully funded
At 1 January
Current service cost
Interest on obligation
Actuarial gain/(loss)
Plan participants’ contributions
Benefits, administrative expenses, premiums and tax paid
Currency translation differences
at 31 December
Reconciliation of the fair value of plan assets
At 1 January
Expected return on plan assets
Actuarial gain
Employer contributions
Plan participants’ contributions
Benefits, administrative expenses, premiums and tax paid
Currency translation differences
at 31 December
Defined benefit plan amounts recognised in the income statement
Current service cost
Interest on obligation
Actual return on plan assets
Net actuarial loss
Defined benefit plan expense
Defined benefit plan amounts recognised in other comprehensive income
Remeasurement gain/(losses) on defined benefit plan net of tax
128128
2013
Us$m
2012
US$m
(155)
164
9
2013
%
8
27
31
18
13
3
100
(211)
181
(30)
2012
%
7
26
29
18
15
5
100
2013
Us$m
2012
US$m
(211)
(13)
(6)
18
(2)
30
29
(155)
181
27
-
11
2
(30)
(27)
164
13
6
(16)
-
3
15
15
(184)
(12)
(7)
(17)
(3)
14
(2)
(211)
154
11
8
17
3
(14)
2
181
14
9
(13)
10
20
-
-
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 27. Employee benefits (continued)
(d) superannuation plan (continued)
Defined benefit plan principal actuarial assumptions
The principal actuarial assumptions used as at the reporting date for the purpose of calculating the present value of the
defined benefit obligation are as follows:
Discount rate – active members
Discount rate – pensioners
Expected salary increase rate
Financial year
2013
2012
4.20% p.a.
4.20% p.a.
5.00% p.a.
3.10% p.a.
3.10% p.a.
5.00% p.a.
The expected rate of return on plan assets is determined by weighting the expected long-term return for each asset
class by the benchmark allocation of assets to each class. The returns for each asset class are net of investment tax
and investment fees.
Defined benefit plan historical information
Financial year
2013
Us$m
2012
US$m
(155)
164
9
(211)
181
(30)
2011
US$m
(184)
154
(30)
2010
US$m
(160)
146
(14)
Restated
2009
US$m
(133)
119
(14)
Present value of defined benefit obligation
Fair value of plan assets
(Deficit)/surplus in plan
(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
2013
Us$m
316
31
3
350
2012
US$m
265
26
20
311
2013
Us$
2012
US$
11,749,020
12,828,321
327,362
458,505
6,582,222
3,418,775
(13,025)
-
2,250,404
355,266
20,895,983
17,060,867
129129
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 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(4)
A Jamieson
P J M H Jungels(5)
D I McEvoy
M Cilento
C Haynes
S Ryan(6)
F C Cooper(7)
Executives
P Coleman
L Tremaine
R Cole
V Santostefano(8)
L Della Martina(9)
P Moore(10)
F Ahmed(11)
G Roder
R Edwardes(12)
S Gregory(13)
M Utsler(14)
P Loader(15)
20,000
81,930
4,235
-
8,040
2,086
1,333
-
-
55,004
5,972
28,502
38,164
-
13,149
6,886
-
543
2,300
-
-
)
3
(
P
s
D
E
n
-
-
1,145
-
-
-
1,064
918
860
2013
/
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,720
8,378
12,481
12,512
-
6,835
7,670
3,829
4,710
2,694
-
-
-
(81,930)
-
-
-
-
-
-
-
-
-
-
(50,676)
-
(19,984)
(14,556)
-
-
-
-
-
20,000 20,000
- 81,930
3,000
9,205
7,924
5,380
-
8,040
2,086
2,397
918
860
1,382
186
-
-
88,724 66,004
14,350
2,224
40,983 15,174
- 28,051
- 54,884
6,190
-
2,500
-
-
3,829
-
5,253
-
4,994
-
-
-
-
2012
/
n
o
i
t
i
s
u
q
c
A
i
)
l
a
s
o
p
s
d
(
i
-
-
-
-
-
-
-
-
-
-
e
g
n
a
h
c
t
e
N
r
e
h
t
o
-
-
-
(9,205)
-
-
-
-
-
)
3
(
P
S
D
E
N
-
-
1,235
-
116
704
1,147
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(11,000)
3,748
13,328
10,113
5,739
6,959
4,386
-
-
-
-
-
-
-
-
-
(60,623)
-
-
-
543
-
-
-
i
g
n
s
o
C
l
i
g
n
d
o
h
l
20,000
81,930
4,235
-
8,040
2,086
1,333
-
-
55,004
5,972
28,502
38,164
-
13,149
6,886
-
543
-
-
-
(1) Personally related entities include a KMP’s spouse, dependants or
entities over which they have direct control or significant influence.
(2) Opening holding represents amounts carried forward in respect of KMP
or amounts held by KMP who commenced during the year.
(3) Relates to participation in the Non-Executive Directors’ Share Plan
(NEDSP).
(4) Mr Fraunschiel departed Woodside on 28 February 2013.
(5) Dr Jungels departed Woodside on 7 December 2012.
(6) Dr Ryan was appointed a Non-Exectutive Director of Woodside on
6 December 2012.
(7) Mr Cooper was appointed a Non-Exectutive Director of Woodside on
1 February 2013.
(8) Mr Santostefano ceased to be KMP on 30 November 2013 and will leave
employment with Woodside on 30 June 2014.
(9) Mr Della Martina departed Woodside on 10 May 2012.
(10) Mr Moore departed Woodside on 1 August 2013.
(11) Mr Ahmed departed Woodside on 31 July 2013.
(12) Mr Edwardes commenced with Woodside on 7 May 2012.
(13) Mr Gregory did not meet the definition of KMP for the years prior to
2013. Comparative figures are not shown.
(14) Mr Utsler commenced with Woodside on 2 December 2013.
(15) Mr Loader commenced with Woodside on 1 July 2013.
130130
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013
28. Key management personnel compensation (continued)
(c) Executives’ interests in variable pay rights (vPR) and equity rights (ER)
VPR and ER holdings of key management personnel
2013
name
P Coleman
L Tremaine
R Cole
V Santostefano (1)
L Della Martina(2)
P Moore (3)
F Ahmed(4)
G Roder
R Edwardes(5)
S Gregory (6)
M Utsler (7)
P Loader (8)
2012
Name
P Coleman
L Tremaine
R Cole
V Santostefano
L Della Martina
P Moore
F Ahmed
G Roder
R Edwardes
at 1 January
2013
allocated in
2013
vested in
2013
net change -
other
at 31 December
2013
66,560
25,117
41,524
36,542
-
25,688
33,264
-
-
12,016
-
-
150,665
17,731
19,430
21,359
-
10,788
16,503
5,774
11,923
7,747
-
-
-
(1,445)
(4,599)
(3,786)
-
(4,269)
(3,692)
-
-
(937)
-
-
-
-
-
(54,115)
-
(32,207)
(46,075)
-
-
-
-
-
217,225
41,403
56,355
-
-
-
-
5,774
11,923
18,826
-
-
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
-
-
(1) Mr Santostefano ceased to be a KMP on 30 November 2013 and will leave employment with Woodside on 30 June 2014.
(2) Mr Della Martina departed Woodside on 10 May 2012.
(3) Mr Moore departed Woodside on 1 August 2013.
(4) Mr Ahmed departed Woodside on 31 July 2013.
(5) Mr Edwardes commenced with Woodside on 7 May 2012.
(6) Mr Gregory did not meet the definition of KMP for the years prior to 2013. Comparative figures are not shown. Amount includes 937 shares that were settled
in cash with a fair value of $34.91.
(7) Mr Utsler commenced with Woodside on 2 December 2013.
(8) Mr Loader commenced with Woodside on 1 July 2013.
131131
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 28. Key management personnel compensation (continued)
(d) summary of Executives’ interests in shares under the woodside share Purchase Plan (wsPP)
The WSPP was completed in 2012.
name
year
Opening
balance
shares
purchased
under wsPP
matching
shares
shares
vested
net change -
other
closing
balance
P Coleman
L Tremaine
R Cole
V Santostefano
L Della Martina(1)
P Moore
F Ahmed
G Roder
R Edwardes(2)
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
-
-
-
-
-
-
-
(1) Mr Della Martina departed Woodside on 10 May 2012.
(2) Mr Edwardes commenced with Woodside on 7 May 2012.
-
-
-
-
-
-
-
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
-
-
-
-
-
-
-
132132
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 29. Events after the end of the reporting period
Dividends
Since the reporting date, the directors have declared a fully franked dividend of US$1.03 (2012: US$0.65), payable on
26 March 2014. The amount of this dividend will be US$849 million (2012: US$536 million). No provision has been made for this
dividend in the Financial Report as the dividend was not declared or determined by the directors on or before the end of the
financial year.
30. Related party disclosures
(a) Transactions with related parties
The following table provides the total amount of transactions that were entered into with related parties for the relevant
financial year:
sales to
related parties
Purchases from
related parties
Us$m
Us$m
Outstanding
balances
receivable from/
(payable to)
related parties
Us$m
commitments
Us$m
Entities with significant influence
over the Group
Royal Dutch Shell Group (Shell Group)
Shell Company of Australia Ltd
- purchases of goods
Other members of Shell Group
- purchases of services
Other members of Shell Group
- sales of goods
2013
2012
2013
2012
2013
2012
-
-
-
-
146
313
39
70
24
27
-
-
2
(1)
-
-
4
6
-
-
7
12
-
-
Shell Energy Holdings Australia Ltd is deemed a related party through its 23.1% (2012: 23.1%) interest of
190,119,364 ordinary shares (2012: 190,119,364 ordinary shares) in the shareholding of the Group.
The Group and Shell have common interests in joint ventures (refer to Note 33(a)).
(b) Terms and conditions of transaction with related parties
Sales to and purchases from related parties are made at arm’s length on normal market prices and on normal commercial
terms. Applicable insurance premiums are negotiated at arm’s length with lead insurers via Woodside’s insurance brokers
with Solen Versicherungen AG following the terms set by the lead insurers.
Outstanding balances at year end are unsecured, interest-free and settlement occurs in cash.
No guarantees are provided or received for any related party receivables or payables.
No provision for doubtful debts has been recognised on any outstanding balances and no expense has been recognised
in respect of bad or doubtful debts due from related parties.
(c)
Transactions with directors
No transactions with directors occurred outside of their normal Board and committee duties in 2013 (2012: nil).
133133
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT
31. contingent liabilities and contingent assets
contingent liabilities at the reporting date
Not otherwise provided for in the Financial Report
Contingent liabilities(1)
Guarantees(2)
2013
Us$m
2012
US$m
18
7
25
17
7
24
(1) Contingent liabilities relate predominantly to actual or potential litigation of the Group for which amounts are reasonably estimated but the liability is not probable
and therefore the Group has not provided for such amounts in this Financial Report. Additionally, there are a number of other claims and possible claims that
have arisen in the course of business against entities in the Group, the outcome of which cannot be foreseen at present, and for which no amounts have been
included in the table above.
(2) The Group has issued guarantees relating to workers compensation liabilities.
32. auditor remuneration
Fees of the auditors of the company for:
Audit and review of financial reports
Ernst & Young
Audit
Non-audit services
Ernst & Young
Other assurance/advisory services
Other services
2013
Us$’000
2012
US$’000
1,638
1,638
1,731
1,731
875
381
1,256
1,960
30
1,990
134134
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013
33. Joint arrangements
(a)
Joint operation interests
The Group's interests in joint operations as at 31 December 2013 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 operations
australasia
Producing and Developing Assets
North West Shelf Joint Venture
Enfield and Vincent
Laminaria–Corallina
Stybarrow
Pluto
Exploration and Evaluation Assets
Bonaparte Basin
Browse Basin
Canning Offshore Basin
Carnarvon 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
Myanmar
Group interest %
Related party interest %
12.5 - 50.0
60.0
59.9 - 66.7
50.0
90.0
26.7 - 35.0
17.0 - 75.0
55.0
15.8 - 90.0
30.0
20.0
12.5 - 65.0
12.5
20.0
50.0
40.0 - 50.0
8.3 - 16.7
-
-
-
-
25.0 - 33.3
25.0 - 35.0
45.0
15.8
-
-
-
-
-
-
-
135135
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 33. Joint arrangements (continued)
(b)
Joint operations
The aggregate of the Group’s interest in all joint operations is as follows:
current assets
Receivables
Inventories
Other assets
non-current assets
Inventories
Exploration and evaluation assets
Oil and gas properties
(c) commitments through joint operations
The aggregate of the Group’s commitments through joint operations is as follows:
Capital
Exploration commitments
(d)
Joint ventures
Interests in joint ventures are as follows:
2013
Us$m
2012
US$m
4
50
7
61
7
689
9,369
10,065
10,126
2013
Us$m
95
434
529
14
48
5
67
9
652
9,640
10,301
10,368
2012
US$m
153
534
687
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
Group interest %
2013
16.67
16.67
16.67
16.67
2012
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 %
2013
16.67
2012
16.67
136136
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013
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
Woodside Natural Gas, Inc
Woodside Energy (Peru) Pty Ltd
Woodside Energy (Myanmar) Pte Ltd
Woodside Energy Mediterranean Pty Ltd
Woodside Energy (Ireland) Pty Ltd
Woodside Energy (Algeria) Pty Ltd
Metasource Pty Ltd
Woodside Guangdong Shipping (One) Pty Ltd
Woodside Guangdong Shipping (Two) 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 Shipping Singapore Pte Ltd
Woodside Energy Trading Singapore 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 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)
(4,10)
(2,4)
(4)
(2,4,6)
(2,4,7)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(4)
(4)
(4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(5)
(5)
(5)
(4)
(4)
(4)
(8,4)
(9,4)
(2,4)
(4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
(2,4)
Australia
Australia
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
Singapore
Singapore
Australia
Brazil
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 2013.
(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
the 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) Woodside Energy Mediterranean Pty Ltd was incorporated on 1 March 2013.
(7) Woodside Energy (Ireland) Pty Ltd was incorporated on 22 July 2013.
(8) Woodside Energy Shipping Singapore Pte Ltd was incorporated on 9 September 2013.
(9) Woodside Energy Trading Singapore Pte Ltd was incorporated on 9 September 2013.
(10) The dissolution of Woodside Natural Gas Inc was effective on 31 July 2013.
137137
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT
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
2013
Us$m
1,221
(276)
945
7,149
(1,738)
6,356
2012
US$m
2,325
(1,129)
1,196
6,932
(979)
7,149
138138
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013 35. subsidiaries (continued)
(b) Deed of cross Guarantee and closed Group (continued)
closed Group consolidated statement of financial position
2013
Us$m
2012
US$m
current assets
Cash and cash equivalents
Receivables
Inventories
Other financial assets
Other assets
Total current assets
non-current assets
Inventories
Other financial assets
Other assets
Exploration and evaluation assets
Oil and gas properties
Other plant and equipment
Deferred tax assets
Total non-current assets
Total assets
current liabilities
Payables
Tax payable
Other financial liabilities
Other liabilities
Provisions
Total current liabilities
non-current liabilities
Payables
Deferred tax liabilities
Other financial liabilities
Other liabilities
Provisions
Total non-current liabilities
Total liabilities
net assets
Equity
Issued and fully paid shares
Shares reserved for employee share plans
Other reserves
Retained earnings
Total equity
64
692
112
-
19
887
6
18,216
1
851
4,673
79
-
23,826
24,713
555
257
37
26
151
1,026
8,334
597
10
114
950
10,005
11,031
13,682
6,550
(42)
818
6,356
13,682
34
500
187
4
13
738
6
17,809
1
777
4,870
59
14
23,536
24,274
520
542
26
24
166
1,278
6,844
767
7
165
812
8,595
9,873
14,401
6,547
(44)
749
7,149
14,401
139139
FINANCIAL REPORTNOTEs TO ANd FORmINg PART OF ThE FINANCIAL REPORTFor the year ended 31 December 2013WOODSIDE PETROLEUM LTD FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 35. subsidiaries (continued)
(c)
interests in subsidiaries with material non-controlling interest (nci)
The Group has the following subsidiaries with material non-controlling interest:
name of entity
Principal place
of business
% held by
non-controlling
interest
Profit/(loss)
allocated to nci
Us$m
accumulated
nci
Us$m
Dividends
paid to nci
Us$m
Burrup Train 1 Pty Ltd
Burrup Facilities Company Pty Ltd
Australia
Australia
10%
10%
28
37
269
464
-
-
The country of incorporation is the same as the principal place of business, unless stated otherwise.
summarised financial information about subsidiaries with material non-controlling interest.
Summarised financial information including goodwill on acquisition and consolidation adjustments but before
intercompany eliminations of subsidiaries with material non-controlling interests is as follows:
summarised statement of financial position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
net assets
summarised statement of comprehensive income
Revenue
Profit/(Loss)(1)
Burrup Facilities company
Pty Ltd
Burrup Train 1 Pty Ltd
2013
Us$m
45
5,113
(71)
(445)
4,642
2012
US$m
268
5,359
(147)
(1,154)
4,326
2013
Us$m
142
3,283
(175)
(561)
2,689
2012
US$m
348
3,404
(266)
(1,023)
2,463
Burrup Facilities company
Pty Ltd
Burrup Train 1 Pty Ltd
2013
Us$m
877
370
2012
US$m
735
360
2013
Us$m
1,498
285
2012
US$m
1,251
250
(1) Amount excludes finance costs which have been eliminated at Group consolidation level.
The sale or disposal of all, or substantially all, of the assets of Burrup Facilities Company Pty Ltd and of Burrup Train 1 Pty
Ltd require the unanimous resolution of the Shareholders.
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.
140140
Notes to aNd formiNg part of the fiNaNcial reportFor the year ended 31 December 2013OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013WOODSIDE PETROLEUM LTD ANNUAL REPORT 2013
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 2013 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 2013 and of the performance of the Group for the financial year ended 31 December 2013;
(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 2013.
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
19 February 2014
19 February 2014
141
FINANCIAL REPORTWOODSIDE PETROLEUM LTD FINANCIAL REPORT 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 2013, the consolidated income statement, the consolidated statement of comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended,
notes comprising a summary of significant accounting policies and other explanatory information, 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 complied with 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.
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 2013 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 61 to 73 of the Directors’ Report for the year ended 31 December
2013. 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 2013, complies with section
300A of the Corporations Act 2001.
Ernst & young
142
R J curtin, Partner
Perth, Western Australia
19 February 2014
Liability limited by a scheme approved under Professional Standards Legislation.
OVERVIEWOpERatIng & FInancIal REVIEWgOVERnancEFInancIal REpORtSHaREHOlDER InFORMatIOnWOODSIDE pEtROlEUM ltD annUal REpORt 2013 sHAREHOLdER INFORMATION
As at 12 February 2014
Number of shareholdings
There were 217,383 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
159,017
51,828
4,459
1,976
103
217,383
Number of
shares
61,820,416
103,785,220
30,677,120
39,749,286
587,878,615
823,910,657
There were 2,832 members holding less than a marketable parcel of shares in the company.
Twenty largest shareholders
size of shareholding
Shell Energy Holdings Australia Limited
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
National Nominees Limited
Citicorp Nominees Pty Limited
JP Morgan Nominees Australia Limited
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