Wirtualna Polska Holding S.A. Annual Report 2016

FY2016 Annual Report · Wirtualna Polska Holding S.A.

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ANNUAL
REPORT
2016

DELIVERING VALUE GROWTH

Woodside Petroleum Ltd | i

On the cover
The Pluto LNG Plant underpinned Woodside’s
record LNG production in 2016, contributing
40.2 MMboe. For Woodside, Pluto LNG
represents safe, highly reliable operations
backed by new technology and innovation.
This image was taken by a drone and looks
across Pluto towards the North West Shelf
Project. Drones are increasingly being used
at our onshore and offshore facilities to
conduct high-risk inspections more safely
and efficiently.

Sustainable Development
Report 2016
This report is a summary of Woodside's
sustainability approach, actions and
performance for the 12-month period ended
31 December 2016. This report will be available
on 16 March 2017.

About this report
This Annual Report 2016 is a summary of
Woodside’s operations and activities for the
12-month period ended 31 December 2016
and financial position as at 31 December 2016.
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', the 'company,' 'we', 'us' and
'our' refer to Woodside Petroleum Ltd and its
controlled entities, as a whole. The text does
not distinguish between the activities of the
parent company and those of its controlled
entities.

In this report, references to a year are to
the calendar and financial year ended
31 December 2016 unless otherwise stated.

All dollar figures are expressed in US currency,
Woodside share, unless otherwise stated.

Woodside is continuing efforts to reduce its
environmental footprint associated with the
production of the Annual Report. Printed
copies of the Annual Report will only be
posted to shareholders who have elected to
receive a printed copy.

The Annual Report is 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 2016 for
our stakeholders, including shareholders,
customers, the community and employees.

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.

Forward looking statements
This report contains forward looking
statements. Please refer to page 59
which contains a notice in respect of these
statements.

We are working with Green ReportsTM in an
initiative that ensures that communications
minimise environmental impact and create a
more sustainable future for the community.

Additional information
In this report, we have indicated where
additional information is available online and
in other sections of this report like this:

A glossary of key terms, units of measure
and conversion factors is on pages 133
and 134.

More information can be found on our
website at www.woodside.com.au.

ii Woodside Petroleum Ltd | Annual Report 2016

Contents

Overview

About Woodside

Our areas of activity

Our performance

Chairman’s report

Chief Executive Officer’s report

Organisational structure

Operating and Financial Review

Financial summary

Strategy, capital management and business model

Our 2017 priorities

Exploration

Global exploration

Australia and Asia-Pacific

Atlantic Margins

Sub-Saharan Africa

Projects and Developments

Senegal

Wheatstone LNG

Myanmar

Greater Enfield Project

NWS subsea tiebacks

Kitimat LNG

Scarborough

Browse LNG

Operations

Pluto LNG

North West Shelf Project

Australia oil

International gas production

Marketing and shipping

Corporate

People and capability

Sustainability

Community contribution

Health, safety and environment

Technology and innovation

Risk

Reserves and resources

Governance

Woodside Board

Corporate Governance Statement

Directors' Report

Remuneration Report

Financial Statements

Shareholder information

Shareholder statistics

Business directory

Key announcements 2016

Events calendar 2017

Glossary, units of measure and conversion factors

Index

Asset facts

Summary charts

Ten-year comparative data summary

129

131

132

133

135

136

137

138

Woodside Petroleum Ltd | Overview iii

Our Compass

Who we are

Where we’re going

How we’ll get there

Integrity
We are open, honest and fair. We do what we
say we will do. We have the courage to do the
right thing.

Respect

We give everyone a fair go. We listen.

Working sustainably
We are here for the long term. We look after each
other, our communities and the environment. We
keep each other safe.

Working together
We are on the same team. We build long-term
partnerships.

Discipline
We play by the rules. We set goals and we hold
ourselves to account.

Excellence
We achieve great results. We learn. We get better.

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
Maintain our leading Australian position
by optimising our producing assets and
commercialising our growth projects and other
premium opportunities.

Grow our portfolio by leveraging our core
capabilities for global upstream growth.

Partner of choice
We are the premium choice for partnerships
based on our distinctive capabilities, culture and
track record as a great partner.

Engaged people
We work for a highly regarded and successful
company. We are part of a team working together
for great results and have opportunities to
contribute and grow.

Functional excellence
We leverage our core capabilities and the latest
technology to create new opportunities and
sharpen our competitive edge.

Decision effectiveness
We make and execute decisions in line with our
business priorities and our values.

Since its launch in 2012, the Compass has
enabled Woodside to evolve and respond to
the external environment, creating an engaged
and disciplined workforce focused on delivering
superior shareholder returns.

iv Woodside Petroleum Ltd | Annual Report 2016

About Woodside

Woodside is Australia’s largest

independent oil and gas company

with a global portfolio, recognised for

our world-class capabilities – as an

explorer, a developer, a producer and

supplier of energy.

Our mission is to deliver superior shareholder
returns through realising our vision of
becoming a global leader in upstream oil
and gas.

Our global exploration portfolio includes
emerging and frontier provinces in Australia
and the Asia-Pacific region, the Atlantic
Margins and Sub-Saharan Africa.

Our assets are renowned for their safety,
reliability and efficiency, and we are
Australia’s most experienced liquefied natural
gas (LNG) operator. We operate 8% of global
LNG supply.1

Our producing assets in Australia include the
landmark North West Shelf (NWS) Project,
which has been operating since 1984. In 2012,
we commenced production from the Pluto
LNG Plant and will add additional volumes
from our non-operated Wheatstone LNG
interests in mid-2017.

Today, we continue to be at the forefront of
our industry by seeking to grow new markets
for LNG. To achieve this we are planning
for Australia’s first LNG fuel hub to capture
growing land and marine LNG fuel markets.

We also operate a fleet of floating production
storage and offloading (FPSO) facilities.
From mid-2019, we will add additional oil
production from the Greater Enfield Project
via our existing Ngujima-Yin FPSO facility.

We continue to expand our capabilities in
marketing, trading and shipping and have
enduring relationships that span more
than 25 years with foundation customers
throughout the Asia-Pacific region.

As a low-cost energy supplier with a
sustainable business model, we are pursuing
opportunities to deliver affordable energy to
the world’s growing markets.

We have significant equity interests in
high-quality development opportunities
in Australia, Senegal, Myanmar and North
America and are pursuing new concepts,
technology and contracting strategies to
enable the earliest commercialisation of these
resources in line with global demand.

We believe that technology and innovation
are essential to bringing down costs
and unlocking future growth. Today, we
are pioneering remote support and the
application of artificial intelligence and
advanced analytics across our operations.

We recognise that long-term meaningful
relationships with communities are
fundamental to maintaining our licence to
operate, and we work to build mutually
beneficial relationships.

Woodside is characterised by strong
safety and environmental performance in
all locations where we are active and we
are committed to upholding our values
of integrity, respect, working sustainably,
discipline, excellence and working together.

Our success is driven by our people and we
aim to attract, develop and retain a diverse
high-performing workforce. Our proven track
record, distinctive capabilities and ability to
manage risk and volatility are underpinned
by more than 60 years of experience, making
us a partner of choice.

1. Source: Wood Mackenzie LNG Tool, Q4 2016

Woodside Petroleum Ltd | Overview 1
Woodside Petroleum Ltd | Overview 1

Our areas of activity

SENEGAL

CANADA
KITIMAT LNG

CANADA
GRASSY POINT LNG

USA
PORT ARTHUR LNG

PERU

IRELAND

MOROCCO

GABON1

PRODUCING ASSET

PROJECTS AND DEVELOPMENTS

APPRAISAL AND EXPLORATION

Gas

Oil

Gas or oil

1. Woodside farm-in to Luna Muetse block is awaiting final Government approval.

2 Woodside Petroleum Ltd | Annual Report 2016

MYANMAR

WHEATSTONE LNG

SCARBOROUGH

NORTH WEST
SHELF PROJECT

PLUTO LNG

BROWSE
DEVELOPMENT

Karratha

6%
AUSTRALIA
OIL

AUSTRALIA OIL

GREATER ENFIELD
PROJECT

WESTERN
AUSTRALIA

SUNRISE LNG

AUSTRALIA

46%
PLUTO
LNG

48%
NWS
PROJECT

NEW ZEALAND

2016 Australian
production contribution

Perth
Woodside Headquarters

Woodside Petroleum Ltd | Overview 3

Our
performance

In 2016, Woodside achieved
operational excellence while
maintaining a strong focus on
health and safety.

Production was
driven by increased
system reliability
and 353 days of
uninterrupted
production from
the Pluto LNG
facility.

See page
36 for more
information.

Production up by 2.7 MMboe compared to 2015, our
second-highest annual production output.
This includes record LNG production of 63.7 MMboe.

We are delivering
world-class reliability.

98.7%

LNG reliability

We saved
turnarounds across our assets.

days on our schedule for major planned

This contributed to record sales volume of

MMboe,

and our revenue was $4.1 billion.

4 Woodside Petroleum Ltd | Annual Report 2016

O
V
E
R
V
E
W

We continue to drive down
our unit production costs.

e
o
b
/
$
S
U

8.4

7.5

6.9

5.0

We achieved a 28%
overall reduction in
unit production costs.
A key contributor
to this was a 40%
reduction in Pluto
unit production costs.
See page 17
for more
information.

In 2016, Pluto LNG
achieved a unit
production cost of

$3.3 per boe.

And our operations achieved
break-even cash cost of sales down 23% to

~$8.5 per boe.

While improving safety
performance across the business.

Our TRIR was
1.64, down from
1.71 in 2015.

See page
54 for more
information.

3.0

1.9

1.7

1.6

Total recordable injury rate
(TRIR) performance

This contributed to a net
profit after tax (NPAT) of

$ 868 million.

All leading to creation of value for our shareholders.
6.2%
Full-year dividend 104
83 US cents

Earnings per share

US cents

Return on average
capital employed

Woodside Petroleum Ltd | Overview 5

Our performance cont.

Managing risk and volatility is key
to responding to a challenging
external environment.

We have long-life, low-cost assets
that require low sustaining capex.

In 2016, we generated $114 million
of free cash flow.

While undertaking
acquisitions in Australia and Senegal

significant

Net debt

Cash
flow from
operations

$2,587

million

Sources

Other
Dividends

Acquisitions

Capital and
exploration
expenditure

Uses

Our acquisition of interests in Senegal and half of
BHP Billiton’s interests in the Scarborough area
assets demonstrate Woodside’s focus on value
growth and leverage our deep-water capabilities.

See pages 27 and 33 for more information.

Moody's

S&P

Baa1 & BBB+Investment grade

credit rating

and
maintaining
our investment-
grade credit
rating and
gearing.

23.3%

24.0%

9
1
3
4

8
8
6
4

2015

2016

Gearing

Net debt
($m)

As part of managing
our debt obligations,
Woodside secured
$1.4 billion in funding
at competitive rates.
Woodside’s liquidity
is $2.7 billion; gearing
remains within our target
range of 10–30%. Our
average term to maturity
of our debt portfolio is 4.6
years.

As we move into 2017,88%

of expected
LNG production is sold under oil-linked contracts.

See page 17 for
more information.

6 Woodside Petroleum Ltd | Annual Report 2016

O
V
E
R
V
E
W

We are creating and building
near-term value growth.

We discovered
of recoverable gas (2C, 100%) offshore Myanmar.

2.4 Tcf

We made back-to-back
discoveries at Thalin and
Shwe Yee Htun.

See pages 24
and 30 for more
information.

In 2016, we had low
finding and acquisition cost* of

~$1.50/boe.

We are commencing
a significant
appraisal program in

Woodside’s
appraisal program
is complemented by
exploration drilling in
Australia, Myanmar and
potentially Senegal.

See page 23 for
more information.

Senegal
and Myanmar

on the back of
recent discoveries.

15% production growth
~

And adding
from 2017 to 2020 from existing operations
and currently sanctioned projects.

Mid-2017
Wheatstone
LNG Train 1

H1 2018
Wheatstone LNG Train 2
and domestic gas

Mid-2019
Greater Enfield
Project first oil

We are well positioned to provide affordable
energy products to the world's growth markets.

*2016 exploration and acquisition investment expenditure divided by contingent resources (2C) added through 2016 exploration and acquisition activity.

Woodside Petroleum Ltd | Overview 7

Chairman’s report

Michael Chaney, AO
Chairman

It is a real pleasure to be able to report on a year of excellent performance by your

company in what was a difficult external environment for the oil and gas industry.

Oil prices fell dramatically early in the
year and, on average, were down about
20 percent on the previous year. Despite
this we generated over $2.5 billion of cash
flow from operations during 2016 through a
combination of increased production, record
sales volumes, continued reductions in our
unit production costs and improved reliability.

Net profit after tax was $868 million, a strong
result given the fall in the oil price, and one
reflecting the company's success in increasing
production and reducing costs. This compared
with a profit of $26 million in 2015, which
adjusts to $1,126 million after allowing for
one-off non-cash items (primarily 2015
impairment charges of $1,083 million).

Earnings per share increased in 2016 to
104 US cents and the directors declared
full-year dividends of 83 US cents.

Strategic acquisitions
Your company has been very active over
recent years in pursuing potential acquisition
opportunities. Our objective in this was to
create shareholder wealth and, as a result, we
walked away from numerous opportunities
which we considered overpriced. That
discipline paid off in 2016 when, with vendor
expectations falling in line with the oil price,
we acquired a major oil interest in Senegal
and a significant interest in the Scarborough,

Thebe and Jupiter gas fields on the Australian
North West Shelf. The price paid for these
quality resources was recognised as being
well below most analysts’ valuations.

Along with exploration success, these
acquisitions added 694 MMboe (16 percent)
to our contingent resources (2C) during the
year; and they provide substantial production
growth potential going forward.

Importantly, the company’s balance sheet
remains in very solid shape. Notwithstanding
major capital, exploration and acquisition
expenditure during 2016, gearing increased
only marginally from 23.3 percent to
24.0 percent and we have retained our
investment grade credit rating.

Our people
Our Chief Executive, Peter Coleman, has
built an outstanding senior management
team during his nearly six years with the
company to date. Achieving that has required
a remuneration system capable of attracting
industry-leading people from around the
world and, having done that, of motivating
and retaining them. Our system has clearly
achieved that purpose. We were disappointed
that at the 2016 Annual General Meeting,
27 percent of votes were cast against the
company’s Remuneration Report. We do,
however, appreciate the feedback provided

subsequently by shareholders and, based
on that, we have made changes to the
remuneration arrangements applying to our
senior executives. These are described in
detail in the Remuneration Report.

Government policy
Governments play an important role in
regulating industry and creating a positive
economic environment for development.

The Australian Treasurer announced recently
that the Government would be undertaking
a review of Australia’s petroleum tax regime
in response to declining fiscal revenues. It is
critical that any such review takes account
of the long-term nature of investments, the
risks that companies face and the need for
regulatory stability.

In many cases, targeted rates of return are
only achieved after decades of operation
and during that time reported profits can
be very volatile.

In recent years, we have seen in Australia
examples where a cyclical increase in
commodity prices and company profits results
in government deciding to impose a new
impost in order to increase its share of the
riches. There seems to be little appreciation of
whole-project economics, where, for example,
large profits later in a project's life fail to make
up for below-budget profits in the early years
and the investment never achieves its hurdle
rate of return. Imposing new taxes during
profitable times only exacerbates
this situation.

8 Woodside Petroleum Ltd | Annual Report 2016

O
V
E
R
V
E
W

It has been a year of excellent
performance for Woodside, with strong
cash flow being achieved through a
combination of increased production,
record sales volume, continued
reductions in our unit production costs
and improved reliability.

One such example occurred in 2008, when the
Rudd Commonwealth Government removed
the condensate excise exemption, costing the
North West Shelf participants hundreds of
millions of dollars per annum. That unilateral
action ignored the fact that the exemption
was a material factor in the initial decisions of
the participants to invest in the project.

A second example can be seen in Western
Australia currently with a proposal by the
National Party leader to increase iron ore
lease fees for two major companies by a
factor of 20 – a change that would put at
risk the international competitiveness of the
producers.

Such changes threaten to hurt Australia’s
reputation and render new investment
projects less viable. These projects are
risky enough without adding additional
country risk.

Increasing taxes at a time of low prices
is even more detrimental to investment.

Future outlook
Concerns have been raised by some
commentators about some energy resources
becoming “stranded” as a result of the
transition to renewables in coming decades.

We are confident that this will not apply to
Woodside’s assets. Gas and LNG are likely to
continue to be in strong demand for decades
because of their relatively low emissions
intensity; and our oil interests will be produced
over relatively short time horizons.

The international oil price will be the major
determinant of petroleum asset values; and
predicting it with any reliability has proved
impossible. During the course of 2016, the
major oil-producing nations took action
successfully to stabilise oil prices and it
appears that a return to the low prices of early
2016 is unlikely. In the meantime, the potential
volatility of prices reinforces the need for
prudent balance sheet management.

Board changes
The Board has an ongoing program of
succession planning and renewal and a
number of changes have taken place over the
last 12 months. We were delighted to welcome
three new directors: Ann Pickard, who joined
the Board in February 2016 with a great
breadth of experience in the international oil
and gas industry; Ian Macfarlane, who joined
us in November 2016 and who brings a wealth
of experience in government and particularly
in the resources portfolio; and Larry Archibald
who has deep experience in international
oil and gas exploration and who joined us in
February 2017. Larry was selected to replace
David McEvoy, who will retire at the Annual
General Meeting in May. David has been an
invaluable contributor to the Board during his
11-year tenure with his extensive exploration
knowledge and as Chair of the Sustainability
Committee. We thank him for that wonderful
contribution.

The Board has announced that Richard
Goyder, AO will join Woodside as an
independent, non-executive director and
Chairman-elect on 1 August 2017. In order to
ensure a smooth transition, I will step down as
Chairman at the close of next year’s Annual
General Meeting in April 2018 and be replaced
by Richard. It has been my great pleasure to
serve as Woodside’s Chairman and to lead
an exceptional Board. I am confident that
Richard’s demonstrated focus on delivering
value for shareholders and commitment to
excellence will provide outstanding leadership
through our company’s next exciting phase
of growth.

On behalf of the Board, I convey my thanks
and appreciation to our management team
for their continued dedication to ensuring that
Woodside remains an industry-leading oil and
gas company. We are well-positioned in terms
of people, petroleum resources and skills to
provide attractive returns to shareholders in
the years ahead.

Michael Chaney, AO
Chairman
1 March 2017

Woodside Petroleum Ltd | Overview 9

Chief Executive
Officer’s report

Peter Coleman
Chief Executive Officer and Managing Director

Woodside’s people and business model performed exceptionally well during 2016,

delivering strong profits while increasing production, progressing new projects and

acquiring world-class oil and gas resources in Australia and globally.

Our industry had a tough start to the year,
with crude oil prices dropping to 14-year lows,
and LNG from new projects flowing into an
over-supplied market.

Despite the external challenges, the
company’s strategy was never compromised.
Reported profit for the year was $868 million,
reflecting outstanding reliability of our
facilities, good investment decisions in
Scarborough and Senegal and a 23 percent
reduction in our break-even cash cost of sales.
Woodside is now a global leader in both the
management and cost of our facilities.

Strong cash flow, despite low
prices
Our exemplary operating performance and
low cost of production have generated solid
operating cash flow.

Even though realised prices were down almost
20 percent on the previous year, we increased
both operating cash flow and free cash flow
(after deducting investment expenditure).
Our net cash flow from operating activities
increased to $2.6 billion, and free cash flow to
$114 million. These results were achieved by
revising our expenditure plans downwards as
oil prices plunged in early 2016. We delivered
on our productivity and cost reduction
program. The positive free cash flow result
was achieved despite completing two value
accretive acquisitions during the year.

We maintained our gearing within our target
range at 24 percent, and we remain one of the
few of our peer organisations that was able
to maintain its credit rating through the low
point in the commodity cycle.

Our increased focus on cost efficiencies
and reliability was reflected in a 28 percent
reduction in our unit production costs.
Woodside’s overall production climbed to
94.9 MMboe in 2016, the second-highest level
on record, and our Pluto LNG facility achieved
record production.

Our dedication to operational excellence was
evident in the fact that the largest-ever North
West Shelf Project integrated turnaround was
executed safely and our total recordable injury
rate remained at the low level achieved in
2015. There were no major interruptions to the
operation of our facilities.

Through this disciplined approach to
managing our operations and the efficient
use of capital, we have largely funded our
expenditure from organic cash flow and
strengthened our position by progressing
projects to a final investment decision,
acquiring new assets and continuing our
exploration activities.

We have proved in 2016 that, in a challenging
environment, we can continue investing in
future supply while also distributing dividends
to shareholders. This forward-looking
approach is what makes us a leading supplier
of affordable and sustainable energy.

2016 Highlights

+ NPAT of $868 million.

+ Outstanding reliability: 94.9MMboe
of annual production, our second
highest on record.

+ A 28% reduction in unit

production costs.

+ TRIR continues to improve.

+ Acquisition of Senegal oil and

Scarborough gas interests at a cost
of approximately $1.10 per boe.

+ Announced back-to-back
discoveries in Myanmar.

+ FID on the Greater Enfield

oil project.

2017 Activities

+ Expect first LNG from Wheatstone

Train 1 in mid-2017.

+ Commence appraisal drilling in

Myanmar and Senegal and progress
exploration drilling in Australia,
Myanmar and potentially Senegal.

+ Ongoing reliable production from

existing facilities.

+ Continue commitment to global
top-quartile health and safety
performance.

+ Create a hub on the Burrup

Peninsula to maximise value from
Woodside and other assets in
the region.

+ Expand access to LNG as a

fuel source.

+ Work sustainably with our local

communities.

10 Woodside Petroleum Ltd | Annual Report 2016

O
V
E
R
V
E
W

In the past two years,
we have acquired and
discovered resources equal
to more than 30 years of
Woodside’s current annual
production, setting us up
for a strong future.

As Woodside expands its portfolio in Australia
and globally, we have reflected on how
we acquire assets, revising our processes
to maintain the rigour of our approach as
circumstances change. We have introduced
more stringent economic criteria for our
acquisitions and moved mergers and
acquisitions into the finance organisation. The
new criteria and processes are designed to
ensure our targeted acquisitions deliver the
best results for investors.

Preparing for future growth
We have been smart about the assets we
acquired, adding quality resources at a
cost of approximately $1.10 per boe.1
We have added over 690 MMboe to our
2C contingent resources through exploration
in Myanmar and acquisitions in Senegal and
the Scarborough area, off north Western
Australia. We have also matured 41 MMboe
to 2P reserves following the final investment
decision approving the development of
Greater Enfield, 60 km off the Western
Australian town of Exmouth.

In the past two years, we have acquired
and discovered resources equal to more
than 30 years of Woodside’s current annual
production, setting us up for a strong future.

We have continued to diversify our supply.
Our acquisition of deep-water oil discoveries
offshore Senegal gave Woodside a significant
position in an underexplored and highly
prospective emerging oil province.

Early in the year, there was cause for
celebration as we drilled two successful
exploration wells offshore Myanmar, where
Woodside is one of the largest acreage
holders, with interests in six blocks.

1. 2016 acquisition investment expenditure divided

by contingent resources (2C) added through 2016
acquisition activity.

We expect exciting times in 2017 as we
progress towards the commercialisation of
our assets, continue our exploration activities
and consider opportunities to accelerate
production from our existing facilities.

We look forward to growth in Myanmar and
Senegal, where further drilling operations are
planned, and we are investing in the flawless
execution of the Wheatstone start-up and the
development of Greater Enfield.

We are making our considerable
commissioning and start-up expertise
available to the Wheatstone operator to
ensure a smooth start-up ahead of the
scheduled first LNG cargo delivery from the
project in mid-2017.

New opportunities for LNG
We are proud of the role we play in providing
energy to customers in Australia and globally,
including helping to meet the growing
demand in developing countries for low-cost,
low-emissions energy. As the world attempts
to deliver on pledges to reduce emissions, we
anticipate growing demand for renewables
but also for the reliable supply of energy that
natural gas can provide.

Demand for gas globally is expected to
increase amid growing pressure for fuels that
are both greener and cleaner. Natural gas has
the dual advantage of relatively low carbon
dioxide emissions and negligible emissions of
sulphur and particulates. The switch to gas
also has benefits for air quality, allaying the
serious public health concerns associated with
heavy particulate emissions.

At Woodside, we are taking steps to develop
demand for LNG as a low-emissions transport
fuel, starting in the Pilbara. The proximity
of fuel-intensive industry to world-class
gas supplies makes the region in Western
Australia’s north the perfect place to drive this
transition. We see this as an opportunity to
grow our markets, while also responding to
concerns about air quality and climate change.

In our Sustainable Development Report, we
will have more to say about how we have
embedded our sustainability principles at
every level of our company, underpinning our
vision, mission and values.

In 2016, Woodside has acted decisively to
take advantage of a low-cost environment
and lay the groundwork for future production
growth. We have been working hard to
maximise the value of our base business,
execute our projects flawlessly, and grow
our portfolio and the value we derive from it.
We have lived within our means and achieved
everything we said we would: improving
production, lowering costs and increasing
the reliability of our operating business. In
2017, we are committed to rewarding the
faith our investors have placed in us as we
continue to deliver sustained growth in
shareholder wealth.

Peter Coleman
Chief Executive Officer
and Managing Director
1 March 2017

Woodside Petroleum Ltd | Overview 11

Organisational
structure

Peter Coleman
BEng, MBA, FATSE
Chief Executive Officer and Managing Director

Phil Loader
BSc (Geology), MBA, MSc, DIC
Executive Vice President
Global Exploration

Dr Robert Edwardes
BSc (Eng), PhD
Executive Vice President
Development

Michael Utsler
BSc (Petroleum Engineering)
Executive Vice President and
Chief Operations Officer

Reinhardt Matisons
BEng, MBA, MIE Aust, CPEng, CPA
Executive Vice President
Marketing, Trading and
Shipping

Exploration

Geoscience

International Exploration
Offices

Engineering

Projects

Production

Marketing

Drilling and Completions

Power and New Markets

Developments

Logistics

International Development
Offices

Health, Safety, Environment
and Quality

Shipping

Trading

International Marketing Offices

Global Operations Planning
and Performance

Reservoir Management

Subsea and Pipelines

Lawrie Tremaine
BBus, FCPA
Executive Vice President and
Chief Financial Officer

Shaun Gregory
BSc (Hons), MBT
Senior Vice President and
Chief Technology Officer

Michael Abbott
BJuris, LLB, BA, MBA
Senior Vice President Corporate
and Legal and General Counsel

David McLoughlin
BA (Psychology), FAHR
Senior Vice President
People and Global Capability

Development Planning

Audit

People and Capability

Information Solutions
and Services

Science

Subsurface

Technology

Facilities

Business Climate
and Energy Outlook

Corporate Affairs

Legal and Secretariat

Risk and Compliance

Security and Emergency
Management

Finance, Tax, Treasury
and Insurance

Commercial

Business Development
and Growth

Contracting and Procurement

Investor Relations

Strategy and Planning

Continuous Improvement

Mr Tremaine has indicated his intention
to leave Woodside. His successor will be
announced in due course.

12 Woodside Petroleum Ltd | Annual Report 2016

Our production performance, reduction
in operating costs, improved margins
and progress of key projects delivered
value for shareholders in 2016 despite
the challenging external environment.

$830

Benefits delivered
through the
productivity
program in 2016

Cumulative benefits now exceed $2.0 billion since 2014.

Read more on page 52.

Governance

Woodside Board

MICHAEL CHANEY, AO

PETER COLEMAN

LARRY ARCHIBALD

MELINDA CILENTO

FRANK COOPER, AO

CHRISTOPHER HAYNES,
OBE

Michael Chaney, AO
BSc, MBA, Hon LLD (UWA), FAICD

Chairman: Appointed July 2007

Term of office: Director since November 2005

Independent: Yes

Experience: Spent 22 years at Wesfarmers
Limited, including Managing Director
and CEO from 1992 to 2005. Three years
with investment bank Australian Industry
Development Corporation (1980 to 1983),
and prior to that eight years as a petroleum
geologist working on the North West Shelf
and in the USA and Indonesia. Previously
Chairman of National Australia Bank Limited
(2004 to 2015) and 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/other interests:

Chair: Wesfarmers Limited (director
since 2015).

Director: The Centre for Independent Studies
Ltd (since 2000).

Chancellor: The University of Western
Australia (since 2006).

Member: Commonwealth Science Council
(since 2014).

Directorships of other listed entities within
the past three years: National Australia Bank
Limited (2004 to 2015).

IAN MACFARLANE

DAVID MCEVOY

Peter Coleman
BEng, MBA, FATSE

CEO and Managing Director

Term of office: Director since 2011

Independent: No

Experience: More than 30 years in the
global oil and gas business, including 27
years’ experience with the ExxonMobil
group, culminating as Vice President
Development Company, with responsibility
for the development and project work in the
Asia-Pacific region. Appointed an Adjunct
Professor in Corporate Strategy by the
University of Western Australia in 2012.

Committee membership: Attends Board
committee meetings.

ANN PICKARD

SARAH RYAN

GENE TILBROOK

66 Woodside Petroleum Ltd | Annual Report 2016

Current directorships/other interests:

Chair: Australia-Korea Foundation (since
2014) and the Federal Government's Advisory
Group on Australia-Africa Relations
(since 2015).

Member: The University of Western Australia
Business School Board (since 2011), Executive
Committee of the Australia Japan Business
Co-operation Council (since 2011), Australia-
India Chief Executive Officers’ Forum (since
2015), Australian Institute of Company
Directors (since 2011) and Adviser to the Asia
Society since 2015.

Adviser: Monash Industry Council.

Larry Archibald
MBA, BSc (Geosciences), BA (Geology)

Term of office: Director since February 2017

Independent: Yes

Experience: Former ConocoPhillips company
executive (2008 to 2015), where he spent
eight years in senior positions including
Senior Vice President, Business Development
and Exploration, and Senior Vice President,
Exploration. Prior to this, Mr Archibald spent
29 years at Amoco (1980 to 1998) and BP
(1998 to 2008) in various positions including
leadership of exploration programs covering
many different regions of the world.

Committee membership: Audit & Risk,
Sustainability and Nominations Committees.

Current directorships/other interests:

Adviser: Guidestone Energy LLC (since 2016).

Non-executive director: MainSail Energy Plc
(since 2016).

Consultant: Warburg Pincus (since 2016).

Melinda Cilento
BA, BEc (Hons), MEc

Term of office: Director since December 2008

Independent: Yes

Experience: Significant public and private
sector experience in economic policy
development and analysis. 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: Chair of the Human
Resources & Compensation Committee.
Member of the Sustainability and Nominations
Committees.

G
O
V
E
R
N
A
N
C
E

Current directorships/other interests:

Director: Australian Unity Limited (since 2014).

Co-Chair: Reconciliation Australia (director
since 2010) and NAB Advisory Council
on Corporate Responsibility (member
since 2013).

Commissioner (part-time): Productivity
Commission (since 2014).

Member: Chief Executive Women.

Frank Cooper, AO
BCom, FCA, FAICD

Term of office: Director since February 2013

Independent: Yes

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/other interests:

Chair: Insurance Commission of Western
Australia and University of Western Australia
Strategic Resources Committee.

Director: St John of God Australia Limited
(since 2015) and South32 Limited (since 2015).

Member: Senate of the University of
Western Australia.

President: Western Australia division of the
Australian Institute of Company Directors.

Trustee: St John of God Health Care
(since 2015).

Christopher Haynes, OBE
BSc, DPhil, FREng, CEng, FIMechE

Term of office: Director since June 2011

Independent: Yes

Experience: Had a 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. Dr Haynes
retired from Shell in 2011.

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

Current directorships/other interests:

Director: WorleyParsons Limited (since 2012).

President: Energy Industries Council
(since 2015).

Ian Macfarlane
Former Australian Federal Minister (Resources;
Energy; Industry and Innovation), FAICD

Sarah Ryan
PhD (Petroleum and Geophysics), BSc
(Geophysics) (Hons 1), BSc (Geology)

Term of office: Director since 2016

Term of office: Director since 2012

Independent: Yes

Experience: Australia’s longest-serving
Federal Resources and Energy Minister
and the Coalition’s longest-serving Federal
Industry and Innovation Minister with over
14 years of experience in both Cabinet and
shadow ministerial positions. Before entering
politics, Mr Macfarlane’s experience included
agriculture, and being Presidents of the
Queensland Graingrowers Association (1991 to
1998) and the Grains Council of Australia (1994
to 1996).

Committee membership: Member of
the Human Resources & Compensation,
Sustainability and Nominations Committees.

Current directorships/other interests:

Chief Executive: Queensland Resources
Council (since 2016).

Chair: Innovative Manufacturing Co-operative
Research Centre.

Member: Toowoomba Community Advisory
Committee of the University of Queensland
Rural Clinical School.

David McEvoy
BSc (Physics), Grad Dip (Geophysics)

Term of office: Director since September
2005

Independent: Yes

Experience: Had a 34-year career with
ExxonMobil involving extensive international
exploration and development experience.

Committee membership: Chair of the
Sustainability Committee. Member of the
Audit & Risk and Nominations Committees.

Current directorships/other interests:

Director: AWE Limited (since 2006) and
Seven Group Holdings Limited (since 2015).

Ann Pickard
BA, MA

Term of office: Director since February 2016

Independent: Yes

Experience: Retired from Shell in 2016
after a 15-year tenure holding numerous
positions, including Executive Vice President
Arctic, Executive Vice President Exploration
and Production, Country Chair of Shell in
Australia, and Executive Vice President Africa.
Previously had an 11-year tenure with Mobil
prior to its merger with Exxon.

Committee membership: Member of
the Human Resources & Compensation,
Sustainability and Nominations Committees.

Current directorships/other interests:

Director: KBR Inc.

Member: Chief Executive Women, Advisory
Council of the Eurasia Foundation and Board
of Advisors of Catalyst.

Directorships of other listed entities within
the past three years: Westpac Banking
Corporation (2011 to 2014).

Experience: More than 20 years' experience
in the oil and gas industry in various technical,
operational and senior management positions,
including 15 years with Schlumberger Limited.
Currently an energy advisor for institutional
investment firm Earnest Partners, having
previously been responsible for research and
portfolio management from 2007 until 2014.

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

Current directorships/other interests:

Director: Akastor ASA (since 2014) and
Vautron Holdings Pty Ltd (since 2016).

Member: Chief Executive Women (since 2016).

Advisor to the Chairman: Saxo Bank, Denmark

Directorships of other listed entities within
the past three years: Aker Solutions ASA
(2011 to 2014).

Gene Tilbrook
BSc, MBA

Term of office: Director since 2014

Independent: Yes

Experience: Broad experience in corporate
strategy, investment and finance. Senior
executive of Wesfarmers Limited between
1985 and 2009, including roles as Executive
Director Finance and Executive Director
Business Development.

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

Current directorships/other interests:

Deputy Chair: National Board of the Australian
Institute of Company Directors (since 2016).

Director: Orica Limited (since 2013), GPT
Group Limited (since 2010) and the Bell
Shakespeare Company.

Member: Western Australia division of the
Australian Institute of Company Directors
(since 2013).

Councillor: Curtin University.

Directorships of other listed entities within
the past three years: Fletcher Building
Limited (2009 to 2015), Aurizon Holdings
Limited (2010 to 2016).

Andrew Jamieson, OBE
FREng, CEng, FIChemE

Dr Andrew Jamieson retired effective on
21 April 2016 after 11 years of service on
Woodside’s Board of Directors. Dr Jamieson
served on a number of Woodside Board
committees including as Chair of the Human
Resources & Compensation Committee and a
member of the Sustainability and Nominations
Committees.

Woodside Petroleum Ltd | Governance 67

Corporate
Governance
Statement

We believe high standards of governance and transparency are essential.

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.

Woodside’s Compass is core to our
governance framework. It sets out our
mission, vision and strategic direction and
core values of integrity, respect, working
sustainably, working together, discipline and
excellence. It is the overarching guide for
everyone who works for Woodside.

Our corporate governance model is illustrated
below. The Woodside Management System

(WMS) was updated in 2016 and describes
the Woodside way of working, enabling
Woodside to understand and manage its
business to achieve its objectives. It defines
the boundaries within which our employees
and contractors are expected to work. The
WMS establishes a common approach to how
we operate, wherever the location.

Throughout 2016, our governance
arrangements complied with the ASX
Corporate Governance Council’s Corporate
Governance Principles and Recommendations
(third edition).

Our Corporate Governance 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.

The Corporate Governance Statement
discusses arrangements in relation to our
Board of Directors, committees of the Board,
shareholders, risk management and internal
control, the external auditor relationship, and
inclusion and diversity.

Our website contains copies of Board and
committee charters and copies of many of
the policies and documents mentioned in
the Corporate Governance Statement. The
website is updated regularly to ensure that
it reflects Woodside’s most current corporate
governance information.

Woodside’s Corporate Governance
Statement can be viewed in the
Governance and Compliance section
of our website at: www.woodside.
com.au/Working-Sustainably/
governance-and-compliance.

STAKEHOLDERS

BOARD

DELEGATION

ACCOUNTABILITY

AUDIT & RISK
COMMITTEE

HUMAN RESOURCES
& COMPENSATION
COMMITTEE

CHIEF EXECUTIVE OFFICER

NOMINATIONS
COMMITTEE

SUSTAINABILITY
COMMITTEE

INDEPENDENT ASSURANCE

MANAGEMENT GOVERNANCE AND ASSURANCE

EXTERNAL AUDIT

STRATEGY

GUIDELINES

AUTHORITIES
FRAMEWORK

INTERNAL AUDIT

RISK MANAGEMENT

MAJOR PROJECT
ASSURANCE CHECKS

MANAGEMENT
REVIEW &
T
IMPROVEMENT

PROCESSES &
PROCEDURES

EXPECTATIONS

COMPASS &
POLICIES

WOODSIDE MANAGEMENT SYSTEM

OPERATING
STRUCTURE

MANAGEMENT
COMMITTEES

68 Woodside Petroleum Ltd | Annual Report 2016

G
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Directors' Report

The directors of Woodside Petroleum Ltd present their report (including the

Remuneration Report) together with the Financial Statements of the consolidated

entity, being Woodside Petroleum Ltd and its controlled entities, for the year ended

31 December 2016.

Directors
The directors of Woodside Petroleum Ltd
in office at any time during or since the end
of the 2016 financial year and information
on the directors (including qualifications
and experience and directorships of listed
companies held by the directors at any time
in the last three years) are set out on pages
66 and 67.

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 3 on page 7 of the
Corporate Governance Statement. Directors
attended all relevant Board and committee
meetings during the year.

Details of director and senior executive
remuneration are set out in the Remuneration
Report.

The particulars of directors’ interests in shares
of the company as at the date of this report
are set out on page 90.

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 $868 million ($26 million
in 2015).

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 1-63.

Significant changes in the state
of affairs
The review of operations (pages 1-63)
sets out a number of matters that 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
Since the reporting date, the directors have
declared a fully franked dividend. More
information is available in the 'Dividend'
section below. 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.

Dividend
The directors have declared a final dividend
out of profits of the company in respect of the
year ended 31 December 2016 of 49 cents per
ordinary share (fully franked) payable on
29 March 2017.

Type

2016 final

2016
interim

2015 final

Payment
date

29 March
2017

30
September
2016

8 April
2016

Period
ended

31
December
2016

30 June
2016

31
December
2015

Cents
per share

Value $
million

Fully
franked

413



286

354



The full-year 2016 dividend is 83 cents per share.

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 are provided on pages
54-55.

Through its Health, Safety, Environment and
Quality Policy, Woodside plans and performs
activities so that adverse effects on the
environment are avoided or kept as low as
reasonably practicable.

Company Secretaries
The following individuals have acted as
Company Secretary during 2016:

Michael Abbott
BJuris, LLB, BA, MBA
Senior Vice President Corporate and Legal
and General Counsel and Joint Company
Secretary

Mr Abbott joined Woodside in 2005 and was
appointed to the role of Senior Vice President
Corporate and Legal and General Counsel
in December 2014. He was appointed Joint
Company Secretary effective 3 May 2012.

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

Mr Baillie joined Woodside in 2005 and was
appointed Company Secretary effective
1 February 2012. Mr Baillie is a solicitor and
chartered secretary. He is a member of the
National Board and Vice President of the
Governance Institute of Australia.

Woodside Petroleum Ltd | Governance 69

+ 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.

The auditor independence declaration,
as required under section 307C of the
Corporations Act 2001, 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 2001.

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 Corporations (Rounding in
Financial/Directors’ Reports) Instrument
2016/191 dated 24 March 2016.

Signed in accordance with a resolution of the
directors.

M A Chaney, AO
Chairman
Perth, Western Australia
1 March 2017

P J Coleman
Chief Executive Officer and Managing Director
Perth, Western Australia
1 March 2017

Auditor’s Independence
Declaration to the Directors
of Woodside Petroleum Ltd
As lead auditor for the audit of Woodside
Petroleum Ltd for the financial year ended
31 December 2016, I declare to the best of my
knowledge and belief, there have been:

(a) no contraventions of the auditor

independence requirements of the
Corporations Act 2001 in relation to
the audit; and

(b) no contraventions of any applicable

code of professional conduct in relation
to the audit.

Directors’ relevant interests
in Woodside shares as at the date
of this report

This declaration is in respect of Woodside
Petroleum Ltd and the entities it controlled
during the financial year.

Director

L Archibald

M Chaney

M Cilento

P Coleman1

F Cooper

C Haynes

I Macfarlane

D McEvoy

A Pickard

S Ryan

G Tilbrook

Relevant interest in shares

20,000

2,311

335,208

4,928

6,119

8,040

940

4,458

7,153

Ernst & Young

T S Hammond
Partner
Perth, Western Australia
1 March 2017

1. Mr Coleman holds Variable Pay Rights under his CEO
incentive arrangements, details of which are set out in
the Remuneration Report in Table 11 on page 86.

Liability limited by a scheme approved under Professional
Standards Legislation.

Directors' Report cont.

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
E.5 to the Financial Statements.

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
2001 for the following reasons:

70 Woodside Petroleum Ltd | Annual Report 2016

Remuneration
Report

Contents

Chairman's letter

Our response to your feedback

KMP and summary of Woodside's five-year performance

Scorecard measures and outcomes

CEO and executive KMP remuneration structure

CEO and executive KMP remuneration for 2016

Other equity plans

Contracts for executive KMP

Non-executive Directors (NEDs)

Human Resources & Compensation (HR&C) Committee

Use of remuneration consultants

Reporting notes

Statutory tables

Woodside Petroleum Ltd | Governance 71

GOVERNANCE
Woodside Petroleum Ltd
Woodside Plaza

240 St Georges Terrace
Perth WA 6000 Australia

T +61 8 9348 4000
F +61 8 9348 4000
E companyinfo@woodside.com.au

woodside.com.au

1 March 2017

Dear Shareholder

On behalf of the Board, I am pleased to present Woodside’s Remuneration Report for the year ended 31 December 2016.

At the 2016 Annual General Meeting (AGM) 27.6% of votes were cast against the 2015 Remuneration Report, constituting a ‘first strike’.
That result was a catalyst for a review of our executive remuneration arrangements by the Board. The Human Resources and Compensation
(HR&C) Committee Chair, Melinda Cilento and I have spent a considerable amount of time engaging with shareholders to understand their
concerns around our remuneration policy and practice.

This year’s Report demonstrates our commitment to responding to this feedback. We have made a number of significant changes to
remuneration arrangements for the CEO and Key Management Personnel (KMP) that are reflected in the 2016 remuneration outcomes.
We have moved from fair to face value for long-term award (LTA) allocations and we have removed the second Relative Total Shareholder
Return (RTSR) test for LTA allocations (known as the ‘retest’). Woodside’s executive KMP have accepted these changes and the material
reduction in the value of their variable reward without additional payment or consideration. Further, for this year the cash component of
the CEO’s short-term award (STA) has been reduced from two-thirds to one-third, with the remaining two-thirds of STA now delivered in
Restricted Shares.

In addition, for the second consecutive year, the Board resolved that the CEO, KMP and Non-executive Directors (NEDs) would not receive
an increase to their fixed annual reward for the 2016 year, and we allocated no equity rights to executive KMP through the Woodside Equity
Plan and Supplementary Woodside Equity Plan in 2016. You will also find a number of changes to other executive remuneration measures,
including the incorporation of a Net Profit After Tax (NPAT) hurdle in the scorecard for executive KMP in 2016, replacing one-year RTSR.

Finally, the Board has increased minimum shareholding requirements for NEDs, requiring Directors to have acquired shares for a total
purchase price of at least 50% of their pre-tax base annual fee after four years on the Board. This strengthens the alignment of Director and
shareholder interests in the long-term performance of the company.

These changes reflect the commitment of the CEO, KMP and the Board to addressing shareholder sentiment with a commensurate response.
We are consulting further regarding the scope for a broader redesign of our executive remuneration.

In a challenging environment, the CEO and KMP have continued to deliver against the performance objectives set by the Board. This Report
aims to present a simple and transparent summary of the links between executive remuneration outcomes, operational and financial
performance and shareholder experience. I believe that the improvements in remuneration structures and their presentation here are an
appropriate response to feedback, and I trust shareholders will be satisfied with the resolutions we’ve reached.

Yours sincerely,

Michael Chaney, AO
Chairman
Woodside Petroleum Ltd

72 Woodside Petroleum Ltd | Annual Report 2016

The Board has listened to concerns
raised by stakeholders and
made changes to our executive
remuneration practices with the
support of executive KMP, to better
align with shareholder experience
and expectations.

Woodside Petroleum Ltd | Governance 73

GOVERNANCE
In 2016, the Chairman and HR&C Committee Chair held 53 face-to-face meetings
with key shareholders and advisers. This included three domestic and international
roadshows. This reflects the Board's commitment to developing a deep
understanding of shareholder views and in particular emerging preferences with
regard to executive remuneration, to inform its decision making.

Accordingly, following this consultation, several immediate changes were
introduced to the remuneration arrangements in place for Woodside’s executive key
management personnel (KMP). These changes seek to address shareholder concerns
and are explored in further detail throughout this report, and are summarised below:

Our response to
your feedback

ISSUE RAISED

Use of fair value in Variable Pay Rights
(VPRs) allocations for LTA

Retesting of unvested awards after first
performance period for LTA

What it looked like in 2015
The number of VPRs allocated was based on a fair value. The fair value
was determined by an independent expert.

What it looked like in 2015
Any VPRs that did not vest as a result of the first performance test (four
years) would be retested at the end of a five year period.

What has changed in 2016?
For the 2016 LTA award, the allocation price was determined using a
face value. This was determined by calculating the Volume Weighted
Average Price of Woodside shares for the trading days in the month of
December 2016. The allocation of LTA on face value resulted in the CEO
receiving 104,997 VPRs. If a fair value methodology had been applied as
per previous years, the CEO would have received 197,003 VPRs.

Why has it changed?
This improves transparency in how allocations are calculated.

What has changed in 2016?
The second RTSR test (retest) will be removed for 2016 LTA awards
for executive KMP, meaning that VPRs allocated in 2017 will lapse if the
required RTSR performance is not achieved at the end of the four-year
period.

Why has it changed?
Shareholders considered the benefit to be overly generous and is
consistent with the majority of peer companies who have moved away
from retesting in the last two years.

74 Woodside Petroleum Ltd | Annual Report 2016
74 Woodside Petroleum Ltd | Annual Report 2016

G
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ISSUE RAISED
Use of RTSR in both STA and LTA

ISSUE RAISED
Proportion of STA paid in cash to the CEO

What it looked like in 2015
The 2015 STA scorecard was based on four equally weighted
measures: RTSR, production, safety and delivery against business plan
commitments. RTSR was also the performance measure for LTA.

What has changed in 2016?
In 2016, the RTSR measure in the STA scorecard has been replaced
with an NPAT measure for executive KMP, meaning that 25% of their
scorecard contribution to the STA pool is derived from a profit-based
measure, to improve alignment between remuneration outcomes and
shareholder experience.

Why has it changed?
The move to NPAT in the corporate scorecard addressed shareholder
concerns over the dual use of RTSR.

What it looked like in 2015
The CEO received STA delivered two-thirds as cash and one-third
Restricted Shares subject to a three-year deferral period.

What has changed in 2016?
The 2016 STA award to the CEO will be delivered one-third in cash and
two-thirds in Restricted Shares. 50% of the Restricted Shares will be
subject to a two-year deferral period and the remaining 50% will be
subject to a three-year deferral period.

Why has it changed?
The increased deferral reinforces the importance of a longer term focus
from the CEO.

ISSUE RAISED
Disclosure of STA targets and the link
between performance and outcomes

What it looked like in 2015
Disclosure of high-level individual Key Performance Indicators (KPIs)
for KMP including the CEO.

What has changed in 2016?
CEO disclosure includes expanded commentary regarding performance
metrics and the CEO’s individual performance factor. Additional
disclosure of individual KMP performance indicators has been provided
where possible, subject to commercial sensitivities.

Why has it changed?
This provides increased transparency regarding the link between
company performance against defined KPIs and STA outcomes for
the CEO and executive KMP.

ISSUE RAISED
Use of RTSR as a sole metric for LTA

What it looked like in 2015
Vesting of 33% of the LTA was based on the RTSR performance against
the ASX50. Vesting of the remaining 67% was subject to an RTSR test
against an international peer group of oil and gas companies.

What has changed in 2016?
A complete review of executive incentive plans is currently being
undertaken with the intention of introducing any new arrangements at
the start of the 2018 year.

Why would it change?
An important objective of this review is to align executives’ variable
remuneration outcomes with the company's strategy and performance
and our shareholders' experience.

ISSUE RAISED

Vesting schedule for LTA commencing
at the 50th percentile

What it looked like in 2015
At 50% RTSR performance, 50% of VPRs vest. At 75% or more RTSR
performance, 100% of VPRs vest, with proportionate vesting between
these percentile points.

What has changed in 2016?
A complete review of executive incentive plans is currently being
undertaken with the intention of introducing any new arrangements at
the start of the 2018 year.

Why would it change?
An important objective of this review is to align executives’ variable
remuneration outcomes with the company's strategy and performance
and our shareholders' experience.

ISSUE RAISED

Claw back

What it looked like in 2015
There were no provisions enabling Woodside to claw back unvested
awards.

What has changed in 2016?
The Board may exercise post cessation discretion to forfeit Restricted
Shares or lapse unvested VPRs of former employees if events occur
or information becomes available after cessation which would have
impacted the decision to grant favourable treatment on cessation of
employment.

Why has it changed?
Clarifying the application of Board discretion in this scenario aligns
with shareholder expectations to appropriately manage the variable
remuneration outcomes of former employees.

Woodside Petroleum Ltd | Governance 75
Woodside Petroleum Ltd | Governance 75

Remuneration Report (audited)

KMP and summary of Woodside's five-year performance

Woodside’s key management personnel (KMP)
This Remuneration Report outlines the remuneration arrangements in place and outcomes achieved for Woodside’s KMP during 2016.

Woodside’s KMP are those people who have a meaningful capacity to shape and influence the Group’s strategic direction and performance through their
actions, either collectively (in the case of the Board) or as individuals acting under delegated authorities (in the case of the CEO and his direct reports).

The names and positions of the individuals who were KMP during 2016 are set out in Table 1.

Table 1 – KMP

Executive

Executive Director

P Coleman (Managing Director and Chief Executive Officer) (CEO)

Senior Executives

M Abbott (Senior Vice President Corporate and Legal and General Counsel)

R Edwardes (Executive Vice President Development)

S Gregory (Senior Vice President and Chief Technology Officer)

P Loader (Executive Vice President Global Exploration)

R Matisons (Executive Vice President Marketing, Trading and Shipping)

D McLoughlin (Senior Vice President People and Global Capability)

G Roder (Executive Vice President Business Development and Growth)1

L Tremaine (Executive Vice President and Chief Financial Officer)2

M Utsler (Executive Vice President and Chief Operations Officer)

1. Mr Greg Roder ceased as KMP on 29 April 2016. His employment with Woodside Energy Ltd ceased on 31 October 2016.

2. Mr Lawrie Tremaine resigned from Woodside Energy Ltd on 13 February 2017 and is currently serving a period of notice.

3. Mr Larry Archibald was appointed to the Woodside Board on 1 February 2017.

4. Dr Andrew Jamieson retired from the Woodside Board on 21 April 2016.

5. Mr Ian Macfarlane was appointed to the Woodside Board on 14 November 2016.

6. Ms Ann Pickard was appointed to the Woodside Board on 29 February 2016.

Table 2 – Five year performance
The table below outlines Woodside's performance over the last five years against key metrics.

Non-executive Directors

M Chaney (Chairman)

L Archibald3

M Cilento

F Cooper

C Haynes

A Jamieson4

I Macfarlane5

D McEvoy

A Pickard6

S Ryan

G Tilbrook

Net Profit After Tax (NPAT)1

Earnings per Share2

Dividends per Share

Share closing price (last trading day of the year)

Production

Relative TSR (1 year)

(US$ million)

(US cents)

(A$)

(MMboe)

(quartile)

1. NPAT detail is contained in the Financial Statements on pages 91 to 124.

2. Basic and diluted earnings per share from total operations.

2016

868

104

31.16

94.9

2015

109

28.72

92.2

2014

2,414

293

255

38.01

95.1

2013

1,749

213

249

38.90

87.0

2012

2,983

366

130

33.88

84.9

3rd quartile

2nd quartile

1st quartile

4th quartile

2nd quartile

Remuneration Policy
Woodside aims to be a global leader in upstream oil and gas. To do so the company must be able to attract and retain talented executives in a
globally competitive market. The Board structures remuneration so that it rewards those who perform, is valued by executives, and is strongly aligned
with the company’s strategic direction and the creation of returns to shareholders.

Fixed Annual Reward (FAR) is determined by the scope of the executive’s role and their level of knowledge, skills and experience.

Variable Annual Reward (VAR) at target is structured to reward the CEO and executive KMP for achieving challenging yet realistic targets set by
the Board.

Executive remuneration is reviewed annually having regard to individual and business performance and relevant comparative information. FAR and
VAR is benchmarked against domestic and international competitors at target, to maintain competitive advantage.

76 Woodside Petroleum Ltd | Annual Report 2016

Scorecard measures and outcomes

The Board assesses management performance on an annual basis against a balanced scorecard of measures that aim to drive business performance
and the creation of shareholder value.

The 2016 scorecard for executive KMP is based on four equally weighted measures that have been chosen because they impact long and short-
term shareholder value, with a score of one for an outcome at target and a maximum score of two on each measure. The Board sets challenging yet
realistic targets for each measure with sufficient stretch to promote continuous improvement and superior performance.

In 2016, Woodside achieved operational excellence and maintained a strong focus on improving health and safety. A sustained focus on productivity and
cost enabled a solid NPAT result to be delivered. Despite a challenging external environment, Woodside capitalised on its strong balance sheet to create
and build near-term value and growth opportunities and we are well positioned to provide affordable energy products to the world’s growth markets.
Accordingly, the Board determined a scorecard outcome of 1.54 out of a maximum of two for executive KMP for the 2016 performance year.1

NPAT
Profit after tax performance is closely aligned with short-term
shareholder value creation. NPAT is underpinned by operational
performance, oil price and foreign exchange rates. This measure
focuses management on driving exceptional operational
performance, with the Board ensuring that short-term results are
not achieved at the expense of longer term performance. NPAT
outcomes, and therefore the short-term awards, are exposed to the
upside and downside of oil price and foreign exchange fluctuations,
as are returns to shareholders.

SAFETY
Strong safety performance creates and protects value four ways;
it reduces the likelihood of major accident events and catastrophic
losses; it maintains Woodside’s licence to operate which enables the
development and sanction of its growth portfolio; it reflects efficient,
optimised and controlled business processes that generate value; and
it retains the company’s position as a partner of choice providing us
access to the best capabilities and talent. The Total Recordable Injury
Rate (TRIR) target is set with reference to the company’s aim to
achieve global top-quartile health and safety performance.

2015 NPAT
Outcome:

2016 NPAT
Outcome:

$26 million

$868 million

Scorecard
Outcome:
1.2

2015 TRIR
Outcome:
1.71

2016 TRIR
Outcome:
1.64

Scorecard
Outcome:
1.2

+ In 2015, NPAT was reduced by asset impairment
charges of $1,083 million. Despite a significant
fall in oil prices over 2016, Woodside delivered
NPAT of $868 million, a 12% increase on
budget; underpinned by an overall 28%
reduction in unit production cost; and a
break even cost of sales down 23% to $8.5
per boe, both of which demonstrate the
realised benefits of Woodside’s multi-year
productivity agenda and disciplined focus
on cost reduction.

Total scorecard

1.54

outcome

PRODUCTION
Woodside maximises revenue and generates value
from its assets when they are fully utilised in production.
Production is carefully managed throughout the year to optimise
the production value from the reservoir. The production target is set
relative to the company’s annual budget and is not revised through
the year.

2015 Production
Outcome:

2016 Production
Outcome:

Scorecard
Outcome:

92.2MMboe

94.9MMboe

+ Annual production of 94.9MMboe, the second highest for

the company, and world-class LNG reliability of 98.7% were
achieved.

+ Improved safety and environmental performance
across the business with a reduced TRIR of 1.64,
down from 1.71 in 2015, on track to achieve our

goal of top-quartile global performance.

DELIVERY AGAINST BUSINESS PLAN
Woodside’s annual business plan commitments
aim to deliver long-term shareholder value. The
commitments are structured under four categories;

key annual imperatives; operational health (e.g.
cost project delivery, reliability, availability, utilisation,

energy efficiency, diversity, development of people,
succession planning, turnover, corporate reputation); financial
strength (e.g. capital management, discipline and efficiency, supply
chain performance); and delivery of growth agenda (e.g. quality of
exploration portfolio and growth opportunities captured).

Scorecard Outcome:
1.8

+ The vast majority of our 2016 business plan commitments were

met or exceeded, with highlights including; important acquisitions
in Australia and Senegal which provide significant additional
resources at low entry cost; announced discovery of 2.4 Tcf of
gas offshore Myanmar; forecasting approximately 15% production
growth from 2017 – 2020 from existing operations and currently
sanctioned projects,2 including FID for Greater Enfield; for the
second year in a row, lower flared gas intensity, with a
33% reduction from 2015; and maintaining our investment grade
credit rating and gearing within our target range.

1. Scorecard outcomes, including the total scorecard outcome, have been rounded for reporting purposes.

2. Based on project schedules of currently sanctioned projects including NWS subsea tiebacks, Wheatstone Project and Greater Enfield Project.

Woodside Petroleum Ltd | Governance 77

GOVERNANCE
Remuneration Report (audited) cont.

CEO and executive KMP remuneration structure

Woodside's remuneration structure for the CEO and executive KMP is comprised of three components being FAR, STA and LTA.

Challenging yet realistic annual targets are set by the Board and set out in the corporate scorecard. These targets are designed to promote short-term
and long-term shareholder value. Meeting these targets means the CEO and executive KMP being eligible for their target STA allocation, subject to
individual performance. Exceeding targets may result in an increase to STA, whereas under performance will result in a reduction in STA.

Target LTA is a set percentage of FAR, converted to VPRs with vesting subject to a relative total shareholder return test. LTA vesting is subject
to share performance with the overall value exposed to the upside or downside of the share price movement, therefore closely aligning with
shareholder interests.

The remuneration structure for executive KMP for 2016 is explained below:

Summary of executive KMP remuneration structure for 2016

Fixed Annual Reward (FAR)
How is it determined?
FAR is based on the scope of the executive’s role and their individual
level of knowledge, skill and experience.

FAR makes up 30% of the CEO’s total target remuneration and 45-50%
for other executive KMP.

When is it paid?
Monthly.

Link to Woodside strategy
FAR is benchmarked for competitiveness against comparator
organisations, to enable the company to attract and retain high quality
executives

Variable Annual Reward (VAR)

Short-term Award (STA)

How is it determined?
STA payments are based on the annual corporate scorecard result and
individual performance against KPIs during 2016.

The corporate scorecard for 2016 is based on NPAT, production, safety
and delivery against business plan commitments.

Individual KPIs vary but can include measures relating to health and
safety, environment, human resources, financial and operational
measures. See page 81 for details of the CEO’s individual KPIs and
page 80 for other executive KMP.

The Board assesses performance against the corporate scorecard.
Performance against individual KPIs is assessed by the Board in the case
of the CEO, or by the CEO in the case of other executive KMP (subject to
approval by the HR&C Committee).

Eligible executives may only receive an STA award if their individual
performance for 2016 is assessed as acceptable. Participants other than
the CEO are then divided into “Pool Groups”, with the size of the pool
determined by each participant's target STA, and then adjusted based
on the corporate scorecard result.

Each participant is then allocated a portion of the relevant pool based
on individual performance relative to other executives in the same pool.

STA makes up 30% of the CEO’s total target remuneration and 30-33%
for other executive KMP.

The CEO’s maximum STA award is two times FAR. Other executive KMP
do not have an individual maximum STA opportunity because the size
of the STA pool varies from year to year depending on performance and
other factors. However, the total size of the STA pool is capped as noted
above.

The minimum STA award that an executive can receive is zero if their
individual performance is assessed as unacceptable, or the corporate
scorecard result is zero.

When is it paid?
For the CEO, one-third of 2016 STA will be paid in cash in March 2017.
The remaining two-thirds will be delivered as a deferred equity award
of Restricted Shares, with 50% subject to a two year deferral and 50%
subject to a three year deferral.

78 Woodside Petroleum Ltd | Annual Report 2016

For executive KMP, two-thirds will be paid in cash in March 2017.
The remaining third will be delivered as a deferred equity award of
Restricted Shares, subject to a three-year deferral period.

The number of Restricted Shares is calculated by dividing the deferred
STA value by the Volume Weighted Average Price (VWAP) for
December 2016.

Generally, vesting of the deferred STA is subject to the executive’s
employment not being terminated with cause, or by resignation, for
the deferral period after allocation. The deferred STA may vest prior
to the expiry of the deferral period upon a change of control event,
or on the death or total and permanent disablement of the executive.
Deferred STA will also generally vest upon redundancy or retirement, as
determined by the Board.

The Board has discretion to claw back unvested shares held by or
on behalf of the executive. This discretion arises if, after cessation of
employment, new information has come to light about a material breach
of an executive’s obligations or other inappropriate conduct during
their employment, or their circumstances change after they cease
employment (e.g. they commence working with a competitor), and in
each case the Board considers that it is no longer appropriate for them
to retain the benefit.

A summary of unvested deferred STA awarded to KMP is provided in
Table 11 on page 86.

Link to Woodside strategy
The corporate scorecard consists of balanced measures that reflect
the values and annual goals of the organisation. The measures and
annual targets are reviewed and approved by the Board each year. The
scorecard provides a common purpose for all executives each year.

Individual KPIs are calibrated to the role of each executive. This
recognises that Woodside’s success depends upon all executives
achieving and exceeding targets within their areas of influence and
responsibility.

STA deferral ensures that awards remain subject to fluctuations in
share price over a three year period, which is intended to reflect the
sustainability of performance over the medium-term and support
increased alignment between executives and shareholders.

Long-term Award (LTA)

How is it determined?
LTA is granted in the form of VPRs.

The VPRs are divided into two portions with each portion subject to a
separate RTSR performance hurdle tested over a four year period.

One-third of the LTA will be tested against a comparator group that
comprises the entities within the ASX 50 index at 1 December 2016. The
remaining two-thirds of the VPRs will be tested against an international
group of oil and gas companies, set out in Table 10 on page 86.

TSR outcomes are calculated by an external adviser on the fourth
anniversary of the allocation of the VPRs. The outcome of the test is
measured against the schedule below. For 2016 LTA awards, any VPRs
that do not vest will lapse and are not retested.

Woodside RTSR percentile position
within peer group

Less than 50th percentile

Equal to 50th percentile

Equal to or greater than 75th percentile

Vesting between these percentile points is on a pro rata basis.

Vesting of VPRs

no vesting

50% vest

100% vest

The CEO’s annual LTA entitlement is set at 133% of his fixed
remuneration and makes up 40% of his total target remuneration. LTA
makes up 20-22% of total target remuneration for other executive KMP.

When is it paid?
LTA may vest after four years, subject to performance against the
relevant peer group.

The number of VPRs allocated at the start of the performance period
is calculated on a face value basis by dividing the LTA value by the
Volume Weighted Average Price (VWAP) for December 2016.

VPRs lapse if the executive’s employment is terminated with cause, or
by resignation, prior to vesting.

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 redundancy, retirement
or the cessation of a fixed term employment contract of a participant,
VPRs continue in the plan and remain subject to the normal
performance measures.

The Board has discretion to claw back the unvested VPRs of former
employees in certain circumstances, as outlined above in relation to
deferred STA.

A summary of unvested VPRs awarded to executive KMP is provided in
Table 11 on pages 86-88.

Link to Woodside strategy
LTA is directly linked to shareholder returns over the longer term. For
LTA to vest, Woodside must deliver better shareholder outcomes than
at least half of the companies in the relevant comparator group. In this
way, shareholder interests are embedded directly into the remuneration
structure.

The LTA has been designed to align with company strategy through
peer groups that include both competitors for shareholder funds, and
domestic and overseas oil and gas players (recognising that Woodside
competes globally for resources, investment, and people). The relative
weightings reflect our vision of becoming a global leader in upstream oil
and gas.

The LTA performance period is tested after four years as Woodside
operates in a capital intensive industry with long investment timelines.
It is imperative that executives take decisions in the long-term interest
of shareholders, focused on value creation across the commodity price
cycles of the oil and gas industry.

CEO and executive KMP remuneration for 2016

CEO Short-term Award (STA)
The CEO’s remuneration is governed by his contract of employment.

The CEO’s STA award is determined by multiplying the CEO’s FAR by the
corporate scorecard result and the CEO’s individual performance factor
as determined by the Board. The award is subject to an overall cap of two
times FAR.

CEO Long-term Award (LTA)
Under his contract, the CEO’s annual LTA opportunity is set at 133% of
his FAR.

The LTA entitlement for the 2016 performance year was allocated
in February 2017 at face value and will be subject to RTSR testing in
February 2021. There will be no retest.

Each year the Board determines and documents the metrics that will be
used to assess the annual individual performance of the CEO for the year.

The vesting conditions for the LTA allocation reflect those outlined on
page 78.

KMP Executive Incentive Plan (EIP)
The EIP is used to deliver STA and LTA to executive KMP, other than
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.

As shown in the 'Our response to your feedback' section on pages
74 and 75 several changes have been introduced for the 2016
performance year, impacting executive KMP.

Table 3 below illustrates how EIP awards for executive KMP will be
determined for the 2016 performance year, as well as their lifecycle in
future years.

For 2016, the individual performance of the CEO was reviewed by the
Board against five equally weighted measures:

+ Growth agenda: Assesses the alignment of growth opportunities to

shareholder return; portfolio balance; and the achievement of
challenging business objectives.

+ Effective execution: Assesses the maintenance, operation and

profitability of existing assets; project delivery to achieve budget,
schedule and stated performance; cost reduction; and achievement of
health, safety and community expectations.

+ Enterprise capability: Assesses leadership development; workforce

planning; succession; Indigenous participation and diversity; effective
risk identification and management.

+ Culture and reputation: Assesses performance culture and emphasis

on values; engagement and enablement; improved employee
climate; and Woodside’s brand as a partner of choice.

+ Shareholder focus: Assesses whether decisions are made with
a long-term shareholder return focus; effective and timely
communication to shareholders, market analysts and fund managers;
and the focus on shareholder return throughout the organisation.

These metrics were chosen because successful performance in each area
is a key driver of superior shareholder returns.

At the completion of the year, each NED independently contributes to
the review of the CEO’s performance for that year. The CEO is given an
overall individual performance factor of between 0.8 and 1.4.

Woodside Petroleum Ltd | Governance 79

GOVERNANCE
Remuneration Report (audited) cont.

Table 3 – Overview of the EIP for executive KMP (excluding the CEO)

2016

2017

2018 2019

2020

2021

PERFORMANCE YEAR

Executives must be employed for at least
part of the Performance Year and achieve
at least an acceptable level of performance
in their individual performance assessment
to be eligible for an EIP award.

F
O
S
T
S
I
S
N
O
C
R
A
V

ELIGIBLE EXECUTIVES RECEIVE
A VAR UNDER THE EIP
VAR for a Performance Year is
calculated as a percentage of FAR,
which is determined by the Board
taking into account relevant data
on levels of variable reward being
offered in the market.

60% STA
Adjusted in accordance with the
STA pooling and performance
assessment process. Two-thirds of
the STA is paid in early 2017 as cash
while the other third is awarded as
Restricted Shares.

40% LTA
Awarded as VPRs.

RESTRICTED
SHARES

Subject to a
three-year deferral
period ending on
27 February 2020.

VPRS
Subject to RTSR
performance over a
four-year period up
to the vesting date
on 27 February 2021
with no retest.

Individual KPIs for 2016 STA
KPIs are tailored to reflect the individual responsibilities of executives who participate in the STA, and are chosen to align individual performance with the
achievement of Woodside’s business plan and objectives.

Examples of the individual KPIs for each of the executive KMP are shown in Table 4.

Table 4 – Individual KPIs for 2016 STA

KMP

Key Performance Indicator

KMP

Key Performance Indicator

Executive Vice President and
Chief Operating Officer

Production

Operating expense

Executive Vice President and
Chief Financial Officer

Executive Vice President
Development

Unit production costs

Total recordable injury rate

Process safety events

Energy efficiency

Capital expense

Portfolio cost competitiveness

Portfolio maturation

Portfolio development imperatives

Executive Vice President Global
Exploration

Exploration expense

Discovered resource volumes

Senior Vice President and
Chief Technology Officer

Senior Vice President Corporate
and Legal and General Counsel

Commercial finding costs

Exploration prospects

Senior Vice President People and
Global Capability

Executive Vice President Marketing
Trading and Shipping

Sales

Trading/performance

NPAT

Corporate development

Return on capital employed

Corporate operating expense

Productivity benefits

Unit technical cost reduction

Innovation capability

Data science value

IS&S service and cost

Regulatory compliance

Corporate affairs management

Management system deployment

Voluntary and regret staff turnover

Succession health

Gender and Indigenous diversity

80 Woodside Petroleum Ltd | Annual Report 2016

Remuneration outcomes for 2016
A summary of the remuneration outcomes for executive KMP in 2016 is set out below.

Fixed Annual Reward

CEO and Managing Director
In January 2016, Woodside conducted a review of the CEO's
remuneration based on benchmarking data against a defined peer
group. This data confirmed the CEO's remuneration was in line with the
market median. This supported the Board's decision to not award the
CEO an increase to FAR for the second consecutive year.

Executive KMP
Executive KMP were not awarded an increase to their FAR for the
second consecutive year.

Short-term incentives

STA pool
The STA pool for 2016 was $25,729,525 for 100 participants including
the executive KMP and the CEO.

CEO and Managing Director
The CEO’s performance outcomes against his individual performance
indicators are as follows:

Shareholder focus: assessed as 1.2 out of a maximum of 1.4; highlighted
by outstanding operational performance in our base business and
domestic and international growth opportunities; strong focus on
productivity, driving down costs to maintain profitability in a low price
environment; and disciplined approach to acquisitions and capital
management.

The CEO's overall individual performance factor for 2016 was 1.19,
resulting in an STA award of 92% of maximum.

The CEO’s 2012 deferred STA vested on 22 February 2016, resulting in
him receiving 33,720 shares.

Executive KMP
The Board approved STA to executive KMP based on the scorecard
result and their individual performance assessment. Two-thirds of STA
was delivered in cash, and one-third in Restricted Shares subject to a
three-year deferral period.

Executive KMPs 2012 deferred STA vested on 22 February 2016, which
resulted in the following:

+ Growth agenda: assessed as 1.25 out of a maximum of 1.4. Highlighted

+ 2,284 restricted shares vested to Mr Abbott.

by a disciplined and timely acquisition of quality assets including
Scarborough and offshore Senegal; successfully rebalancing the
exploration portfolio to increase exposure to oil and emerging
basins; announced the discovery of 2.4Tcf of gas (2C, 100%) offshore
Myanmar; acquiring over 35,000 km2 of seismic data in Myanmar
and Ireland; and forecast approximately 15% production growth
from 2017-2020 from existing operations and currently sanctioned
projects.1

+ Effective execution: assessed as 1.22 out of a maximum of 1.4.

Highlighted by world-class LNG reliability of 98.7%; exceeding our
original production forecast by 5.4 MMboe; realised $830 million
in benefits through the productivity program; and operating
expenditure below target.

+ Enterprise capability: assessed as 1.12 out of a maximum of 1.4;
highlighted by an increase to our Indigenous participation from
2.7% in 2015 to 3% in 2016; a reduction in Indigenous turnover from
3.2% in 2015 to 2.9%; increasing our female participation to 28.4%,
almost double the industry average; decreasing female voluntary
turnover from 5.3% in 2015 to 3.6%; continuing to attract high-quality
graduates; and achieving gender balance in graduate recruitment.

+ Culture and reputation: assessed as 1.15 out of a maximum of 1.4,
highlighted by our A$15.7 million worth of social investment to
our host communities and contributing A$1.8 million towards nine
early childhood development initiatives through the Woodside
Development Fund. Creation of significant economic value through
A$1 billion in remuneration and associated taxes through employing
people in the communities in which we operate; $3.5 billion in
expenditure with over 2,000 global suppliers.

1. Based on project schedules of currently sanctioned projects including NWS subsea tiebacks,

Wheatstone Project and Greater Enfield Project.

+ 4,710 restricted shares vested to Mr Edwardes.

+ 2,694 restricted shares vested to Mr Gregory.

+ 3,569 restricted shares vested to Mr Matisons.

+ 3,829 restricted shares vested to Mr Roder.

+ 6,933 restricted shares vested to Mr Tremaine.

Long-term incentives

CEO and Managing Director
There were no LTA vestings for the CEO in 2016.

Executive KMP
There were no LTA vestings for executive KMP in 2016.

Other

Woodside Equity Plan (WEP)
Executive KMPs 2013 WEP equity rights vested on 1 October 2016, which
resulted in the following:

+ 1,550 rights vested to Mr Abbott.

+ 3,100 rights vested to Mr Gregory.

+ 1,550 rights vested to Mr Matisons.

+ 3,100 rights vested to Mr Tremaine.

Supplementary Woodside Equity Plan (SWEP)
There were no vestings under the SWEP for executive KMP in 2016.

Woodside Petroleum Ltd | Governance 81

GOVERNANCE
Remuneration Report (audited) cont.

Remuneration outcomes for 2016 (cont.)
The table below provides a valuation summary of the VAR for the CEO and executive KMP for the 2016 and 2015 performance years.

Table 5 – Valuation Summary of CEO and executive KMP VAR for 2016 and 2015

Name

P Coleman

M Abbott

R Edwardes

S Gregory

P Loader

R Matisons

D McLoughlin

G Roder4

L Tremaine5

M Utsler

Year

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

STA Cash1
$

$1,085,317

$2,007,413

$240,312

$200,654

$434,721

$440,297

$316,815

$260,580

$395,538

$337,364

$251,333

$232,188

$98,688

$176,800

$151,403

$296,609

$380,224

$414,316

$615,447

$455,769

STA Deferred2
$

$2,103,092

$1,492,241

$111,478

$149,146

$201,659

$327,293

$146,953

$193,691

$183,473

$250,789

$116,573

$172,602

$45,769

$132,045

$220,480

$176,373

$307,980

$285,492

$338,787

LTA3
$

$1,265,214

$2,675,156

$83,711

$163,901

$159,385

$337,001

$85,266

$180,282

$122,127

$258,224

$87,893

$185,864

$83,711

$122,913

$119,295

$302,708

$144,407

$288,378

$169,375

$339,262

Total EIP
$

$4,453,623

$6,174,810

$435,501

$513,701

$795,765

$1,104,591

$549,034

$634,553

$701,138

$846,377

$455,799

$590,654

$228,168

$431,758

$270,698

$819,797

$701,004

$1,010,674

$1,070,314

$1,133,818

1. Represents the short-term incentive earned in the respective year, which is actually paid in the following year. Amounts were translated to USD using closing spot rate on 31 December 2016.

2. The number of shares allocated under the STA was calculated by dividing the amount of the executive’s entitlement by the face value of Woodside shares. The USD fair value of Restricted Shares as
at their date of grant has been determined by reference to the share price at acquisition. The fair value is not related to or indicative of the benefit (if any) that individual executives may ultimately
realise should these equity instruments vest.

3. The number of shares allocated under the LTA for 2016 was calculated by dividing the amount of the executive's entitlement by the face value of Woodside shares. The USD fair value shown above
has been determined at the date of grant by applying the binomial valuation method combined with a Monte Carlo simulation. The amount included above is not related to or indicative of the
benefit (if any) that individual executives may ultimately receive should these equity instruments vest.

4. Mr Roder ceased being KMP on 29 April 2016 and ceased employment with Woodside on 31 October 2016. His deferred STA was granted as cash of A$104,578 classified as a termination benefit.

5. Mr Tremaine's Restricted Shares and VPR awards for the 2016 service year represent those estimated to be allocated as at 31 December 2016. Mr Tremaine resigned on 13 February 2017 which has

resulted in the subsequent forfeiture of all unvested Restricted Shares and VPRs.

Other equity plans

Woodside has a history of providing employees with the opportunity to
participate in ownership of shares in the company and using equity to
support a competitive base remuneration position.

No awards were made to executive KMP in 2016 under Woodside’s
other equity plans, but details of prior year allocations are provided in
Table 11 on pages 86-88.

Woodside Equity Plan (WEP)
The WEP is available to all Australian based permanent employees
including executives, other than the CEO. 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 determined by the Board, and based on individual performance as
assessed under the performance review process as described for STA
on page 78. There are no further ongoing performance conditions.
The linking of performance to an allocation allows Woodside to
recognise and reward eligible employees for high performance.

Each ER entitles the participant to receive a Woodside share on the
vesting date three years after the effective grant date.

82 Woodside Petroleum Ltd | Annual Report 2016

Supplementary Woodside Equity Plan (SWEP)
In October 2011, the Board approved a remuneration strategy which
includes the use of equity to support a competitive base remuneration
position. To this end, the Board approved the establishment of the
SWEP to enable the offering of targeted retention awards of ERs for key
capability. The SWEP was designed to be offered to a small number of
employees identified as being retention critical. The SWEP awards have
service conditions and no performance conditions. Each ER entitles the
participant to receive a Woodside share on the vesting date three years
after the effective grant date.

There were no awards issued under the SWEP in 2016.

ERs under both the WEP and the SWEP 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 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.

Table 11 on pages 86-88 includes a summary of executive KMP’s
interests in ERs.

Contracts for executive KMP

All KMP have a contract of employment. Table 6 below contains a summary of the key contractual provisions of the contracts of employment for the
executive KMP.

Table 6 – Summary of contractual provisions for executive KMP

Employing company

Contract Duration

Termination notice
period company1, 2

Termination notice
period executive

P Coleman

Woodside Petroleum Ltd

Unlimited

M Abbott

Woodside Energy Ltd

Unlimited

R Edwardes

Woodside Energy Ltd

Fixed Term Contract until
31 December 2018

S Gregory

Woodside Energy Ltd

Unlimited

R Matisons

Woodside Energy Ltd

Unlimited

D McLoughlin

Woodside Energy Ltd

Unlimited

P Loader

Woodside Energy Ltd

Fixed Term Contract until
1 July 2018

L Tremaine

Woodside Energy Ltd

Unlimited

M Utsler

Woodside Energy Ltd

Fixed Term Contract until
2 December 2018

12 months

6 months

12 months

6 months

12 months

6 months

3 months

6 months

3 months

6 months

3 months

1. Termination provisions – Woodside may choose to terminate the contract immediately by making a payment in lieu of notice equal to the fixed remuneration the executive would have received

during the ‘Company Notice Period’. In the event of termination for serious misconduct or other nominated circumstances, executives are not entitled to this termination payment. Any payments
made in the event of a termination of an executive contract will be consistent with the Corporations Act 2001.

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.

Non-executive Directors (NEDs)

Remuneration Policy
Woodside’s Remuneration Policy for 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.

+ the responsibilities and work requirements of Board members.

Fees paid to NEDs are recommended by the HR&C Committee based on
advice from external remuneration consultants, and determined by the
Board, subject to an aggregate limit of A$3.75 million per financial year,
which was approved by shareholders at the 2014 AGM.

The Woodside minimum shareholding requirement for NEDs increased
in 2016, with NEDs now required to have acquired shares for a total
purchase price of at least 50% of their pre-tax annual fee after four
years on the Board. 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.

NEDs remuneration structure
NEDs remuneration consists of base Board fees and committee fees,
plus statutory superannuation contributions or payments in lieu
(currently 9.5%). Other payments may be made for additional services
outside the scope of Board and committee duties. NEDs do not earn
retirement benefits other than superannuation and are not entitled to
any form of performance-linked remuneration.

For the second consecutive year, NEDs received no increase in their
fees. Table 7 below 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. NEDs are not entitled to compensation
on termination of their directorships.

Board fees are not paid to the CEO, as the time spent on Board work
and the responsibilities of Board membership are considered in
determining the remuneration package provided as part of the normal
employment conditions.

The total remuneration paid to, or in respect of, each NED in 2016 is set
out in Table 12 on page 89.

Woodside Petroleum Ltd | Governance 83

GOVERNANCE
Remuneration Report (audited) cont.

Table 7 – Annual base Board and Committee fees for NEDs

Position

Chairman of the Board2

Non-executive Directors3

Committee Chair

Committee Member

Board

A$1

723,3004

212,7004

Audit & Risk
Committee

Human Resources
& Compensation
Committee

Sustainability
Committee

Nominations
Committee

A$1

56,0004

27,9004

47,4004

23,7004

47,4004

23,7004

A$1

Nil

1. NEDs receive Board and committee fees plus statutory superannuation (or payments in lieu for overseas based NEDs).

2. Inclusive of committee work.

3. Board fees paid to NEDs, other than the Chairman.

4. Annual fee from 1 July 2014.

Human Resources & Compensation (HR&C) Committee

The HR&C 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 section 3.4 of the Corporate Governance Statement, available on Woodside's website.

Use of remuneration consultants

The Committee directly engages independent external advisers to provide input to the process of reviewing NEDs and executive remuneration. The
Committee receives executive remuneration recommendations directly from external independent remuneration consultants. Table 8 below shows
the fees payable to independent external remuneration consultants during 2016.

Under communications and engagement protocols adopted by the company, the market data reports and the recommendations were provided
directly to the Committee Chair, 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 Egan Associates were free from undue influence by KMP.

Table 8 – Fees paid to remuneration consultants

Remuneration consultant

Services provided

Fees

Egan Associates

Remuneration recommendations (including market data) for the 2017 CEO remuneration review

A$27,489

Reporting notes

Reporting in United States dollars
In this report, the remuneration and benefits reported have been presented in US dollars, unless otherwise stated. This is consistent with the functional
and presentation currency of the company.

Compensation for Australian-based employees and all KMP 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.

84 Woodside Petroleum Ltd | Annual Report 2016

Statutory tables

Table 9 - Compensation of executive KMP for the year ended 31 December 2016 and 2015

Fixed Annual Reward

Variable Annual
Reward

Short-term

Post

Short-term

s
e
e
f

,
s
e
i
r
a
a
S

s
e
c
n
a
w
o

l
l

a
d
n
a

s
e
c
n
a
w
o

l
l

g
n
d
u
l
c
n
i
(

d
n
a

s
t
fi
e
n
e
B

1
)
y
r
a
t
e
n
o
m
-
n
o
n

y
n
a
p
m
o
C

n
o
i
t
a
u
n
n
a
r
e
p
u
s

o
t

s
n
o
i
t
u
b
i
r
t
n
o
c

m
r
e
t
-
t
r
o
h
S

)
h
s
a
C
(
d
r
a
w
a

Share
based
payments

3
s
n
a
p
e
r
a
h
S

e
v
a
e

e
c
i
v
r
e
s
g
n
o
L

s
t
fi
e
n
e
b

n
o
i
t
a
n
m
r
e
T

a
t
o
T

4
n
o
i
t
a
r
e
n
u
m
e
r

5
d
e
t
a
e
r

e
c
n
a
m
r
o
f
r
e
P

P Coleman,
Chief Executive Officer

2016

1,809,295

25,158

14,461

1,085,317 3,673,472

98,772

- 6,706,475

8,949,491

2015

1,829,049

152,493

14,304 2,007,413 3,488,469

63,088

M Abbott,
Senior Vice President Corporate and
Legal and General Counsel

2016

340,806

15,320

63,205

240,312

271,499

29,379

2015

310,743

15,526

83,106

200,654

257,297

42,601

R Edwardes,
Executive Vice President
Development6

S Gregory,
Senior Vice President and Chief
Technology Officer

2016

769,232

13,254

14,461

434,721

607,645

34,846

2015

786,031

25,630

14,304

440,297

379,166

22,304

2016

414,999

19,282

14,461

316,815

357,328

(17,489)

2015

421,790

14,388

14,304

260,580

346,471

15,924

P Loader,
Executive Vice President Global
Exploration7, 8

2016

642,876

27,487

2015

656,081

64,635

395,538

563,058

24,145

337,364

442,557

16,465

R Matisons,
Executive Vice President Marketing,
Trading and Shipping

D McLoughlin,
Senior Vice President People and
Global Capability

G Roder,
Executive Vice President Business
Development and Growth9

L Tremaine,
Executive Vice President and
Chief Financial Officer10

2016

348,924

18,253

90,494

251,333

351,166

18,269

2015

352,674

67,703

96,831

232,188

348,562

16,396

2016

399,768

17,744

14,461

98,688

99,405

15,502

2015

336,031

16,738

13,416

176,800

61,839

7,650

2015

671,396

43,930

59,258

296,609

542,504

20,073

2016

606,228

13,053

16,942

380,224

692,987

39,820

2015

607,197

13,131

17,124

414,316

706,360

22,838

M Utsler,
Executive Vice President and
Chief Operations Officer7, 11

2016

946,540

23,643

2015

954,838

40,625

615,447

666,580

35,982

455,769

511,756

22,775

7,554,816 9,968,190

960,521

1,292,954

909,927

1,204,838

1,874,159

2,518,405

1,667,732

2,207,854

1,105,396

1,488,227

1,073,457

1,420,345

1,653,104 2,220,352

1,517,102 2,008,670

1,078,439

1,449,595

1,114,354

1,474,617

645,568

869,059

612,474

817,477

1,633,770

2,161,451

1,749,254 2,346,527

1,780,966

2,352,977

2,288,192 3,079,492

1,985,763

2,630,912

2016

219,107

10,406

14,291

151,403

661,126

(10,606)

425,219

1,470,946

1,983,499

1. Reflects the value of allowances and non-monetary benefits (including travel, health insurance, car parking and any associated fringe benefit tax).

2. The amount represents the short-term incentive earned in the respective year, which is actually paid in the following year. Amounts were translated to USD using closing spot rate on

31 December 2016.

3. ‘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. 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. The Total Remuneration in AUD is converted from USD using exchange rates on the date of each transaction. This non-IFRS information is included for the purposes of showing the total annual cost

of benefits to the company in Australian dollars for the service period.

5. Performance related outcomes are calculated using the USD total remuneration figure.

6. Mr Edwardes' 2014, 2015 and 2016 share based payment amortisation expenses have been accelerated based on his contract end date of 31 December 2018.

7. As non-residents for Australian tax purposes Mr Loader and Mr Utsler 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.

8. Mr Loader's 2014, 2015 and 2016 share based payment amortisation expenses have been accelerated based on his contract end date of 1 July 2018.

9. Mr Roder ceased being KMP on 29 April 2016 and ceased employment with Woodside on 31 October 2016. All share based payment amortisation expenses have been accelerated accordingly.

10. Mr Tremaine’s Restricted Share and VPR awards for the 2016 service year represent those estimated to be allocated as at 31 December 2016. Mr Tremaine resigned on 13 February 2017 which has

resulted in the subsequent forfeiture of all unvested Restricted Shares and VPRs.

11. Mr Utsler’s 2014, 2015 and 2016 share based payment amortisation expenses have been accelerated based on his contract end date of 2 December 2018.

Woodside Petroleum Ltd | Governance 85

GOVERNANCE

Remuneration Report (audited) cont.

Table 10 - LTA peer group, international oil and gas companies

Anadarko Petroleum Corporation

Apache Corporation

BG Group PLC1

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 Inc2

Tullow Oil PLC

1. BG Group was acquired by Royal Dutch Shell in February 2016.

2. Talisman Energy Inc was acquired by a wholly owned subsidiary of Repsol in May 2015.

Table 11 – Summary of CEO and executive KMP’s allocated, vested or lapsed equity

Type of equity1

Grant date

Allocation date

Vesting date2,3

Awarded
but not
vested

Vested in
2016

% of total
vested

Lapsed in
2016

Fair
Value of
Equity4,5,6

Restricted Shares

1 January 2012

22 February 2013 22 February 2016

33,720

100

Restricted Shares

1 January 2013

21 February 2014 21 February 2017

Restricted Shares

1 January 2014

20 February 2015 20 February 2018

Restricted Shares

1 January 2015

19 February 2016 19 February 2019

Restricted Shares

16 December 2016 27 February 2017 27 February 2019

P Coleman

Restricted Shares

1 January 2016

27 February 2017 27 February 2020

RTSR Tested VPRs

1 January 2012

22 February 2013 22 February 2017

RTSR Tested VPRs

1 January 2013

21 February 2014 21 February 2018

19,924

45,334

47,905

48,225

150,665

156,940

RTSR Tested VPRs

1 January 2014

20 February 2015 20 February 2019

167,316

RTSR Tested VPRs

1 January 2015

19 February 2016 19 February 2020

153,833

RTSR Tested VPRs

1 January 2016

27 February 2017 27 February 2021

104,997

Restricted Shares

1 January 2012

22 February 2013 22 February 2016

2,284

100

Restricted Shares

1 January 2015

19 February 2016 19 February 2019

Restricted Shares

1 January 2016

27 February 2017 27 February 2020

M Abbott7

RTSR Tested VPRs

1 January 2015

19 February 2016 19 February 2020

RTSR Tested VPRs

1 January 2016

27 February 2017 27 February 2021

4,788

5,339

9,425

6,947

WEP Equity Rights

1 October 2013

WEP Equity Rights

1 October 2015

1 October 2016

1,550

1 October 2018

2,300

R Edwardes

Restricted Shares

1 January 2012

22 February 2013 22 February 2016

4,710

Restricted Shares

1 January 2013

21 February 2014 21 February 2017

Restricted Shares

1 January 2014

20 February 2015 20 February 2018

Restricted Shares

1 January 2015

19 February 2016 19 February 2019

Restricted Shares

1 January 2016

27 February 2017 27 February 2020

RTSR Tested VPRs

1 January 2012

22 February 2013 22 February 2017

RTSR Tested VPRs

1 January 2013

21 February 2014 21 February 2018

RTSR Tested VPRs

1 January 2014

20 February 2015 20 February 2019

RTSR Tested VPRs

1 January 2015

19 February 2016 19 February 2020

RTSR Tested VPRs

1 January 2016

27 February 2017 27 February 2021

5,075

9,717

10,507

9,658

11,923

19,780

21,078

19,379

13,227

100

30.98

35.18

34.80

31.15

22.73

20.88

15.90

20.77

17.45

17.39

12.05

30.98

31.15

20.88

17.39

12.05

30.47

18.07

30.98

35.18

34.80

31.15

20.88

15.90

20.77

17.45

17.39

12.05

86 Woodside Petroleum Ltd | Annual Report 2016

Table 11 – Summary of CEO and Executive KMP’s allocated, vested or lapsed equity (cont.)

Type of equity1

Grant date

Allocation date

Vesting date2,3

Awarded
but not
vested

Vested in
2016

% of total
vested

Lapsed in
2016

Fair
Value of
Equity4,5,6

Restricted Shares

1 January 2012

22 February 2013 22 February 2016

2,694

100

Restricted Shares

1 January 2013

21 February 2014 21 February 2017

Restricted Shares

1 January 2014

20 February 2015 20 February 2018

Restricted Shares

1 January 2015

19 February 2016 19 February 2019

Restricted Shares

1 January 2016

27 February 2017 27 February 2020

2,566

5,198

6,218

7,038

RTSR Tested VPRs

1 January 2013

21 February 2014 21 February 2018

10,000

RTSR Tested VPRs

1 January 2014

20 February 2015 20 February 2019

RTSR Tested VPRs

1 January 2015

19 February 2016 19 February 2020

RTSR Tested VPRs

1 January 2016

27 February 2017 27 February 2021

11,276

10,367

7,076

S Gregory

WEP Equity Rights

1 October 2013

WEP Equity Rights

1 October 2014

WEP Equity Rights

1 October 2015

1 October 2016

1 October 2017

1 October 2018

Restricted Shares

1 January 2013

21 February 2014 21 February 2017

Restricted Shares

1 January 2014

20 February 2015 20 February 2018

Restricted Shares

1 January 2015

19 February 2016 19 February 2019

Restricted Shares

1 January 2016

27 February 2017 27 February 2020

P Loader

RTSR Tested VPRs

1 January 2013

21 February 2014 21 February 2018

RTSR Tested VPRs

1 January 2014

20 February 2015 20 February 2019

RTSR Tested VPRs

1 January 2015

19 February 2016 19 February 2020

RTSR Tested VPRs

1 January 2016

27 February 2017 27 February 2021

SWEP Equity Rights

1 October 2014

1 October 2017

3,100

100

2,300

1,450

7,445

8,051

8,787

7,536

16,150

14,849

10,135

11,960

Restricted Shares

1 January 2012

22 February 2013 22 February 2016

3,569

100

Restricted Shares

1 January 2015

19 February 2016 19 February 2019

Restricted Shares

1 January 2016

27 February 2017 27 February 2020

R Matisons8

RTSR Tested VPRs

1 January 2015

19 February 2016 19 February 2020

RTSR Tested VPRs

1 January 2016

27 February 2017 27 February 2021

WEP Equity Rights

1 October 2013

WEP Equity Rights

1 October 2015

1 October 2016

1 October 2018

Restricted Shares

1 January 2015

19 February 2016 19 February 2019

Restricted Shares

1 January 2016

27 February 2017 27 February 2020

D McLoughlin

RTSR Tested VPRs

1 January 2015

19 February 2016 19 February 2020

RTSR Tested VPRs

1 January 2016

27 February 2017 27 February 2021

WEP Equity Rights

1 October 2015

1 October 2018

Restricted Shares

1 January 2012

22 February 2013 22 February 2016

Restricted Shares

1 January 2013

21 February 2014 21 February 2017

Restricted Shares

1 January 2014

20 February 2015 20 February 2018

Restricted Shares

1 January 2015

19 February 2016 19 February 2019

G Roder9

RTSR Tested VPRs

1 January 2012

22 February 2013 22 February 2017

RTSR Tested VPRs

1 January 2013

21 February 2014 21 February 2018

RTSR Tested VPRs

1 January 2014

20 February 2015 20 February 2019

RTSR Tested VPRs

1 January 2015

19 February 2016 19 February 2020

RTSR Tested VPRs

1 January 2016

27 February 2017 27 February 2021

5,541

5,583

10,688

7,294

1,550

100

2,300

4,239

2,192

7,068

6,947

2,300

5,774

17,940

18,932

17,407

9,900

3,829

4,603

8,728

7,078

100

30.98

35.18

34.80

31.15

20.88

20.77

17.45

17.39

12.05

30.47

31.26

18.07

35.18

34.80

31.15

20.88

20.77

17.45

17.39

12.05

31.26

30.98

31.15

20.88

17.39

12.05

30.47

18.07

31.15

20.88

17.39

12.05

18.07

30.98

35.18

34.80

31.15

15.90

20.77

17.45

17.39

12.05

Woodside Petroleum Ltd | Governance 87

GOVERNANCE
Remuneration Report (audited) cont.

Table 11 – Summary of CEO and Executive KMP’s allocated, vested or lapsed equity (cont.)

Type of equity1

Grant date

Allocation date

Vesting date2,3

Awarded
but not
vested

Vested in
2016

% of total
vested

Lapsed in
2016

Fair
Value of
Equity4,5,6

Restricted Shares

1 January 2012

22 February 2013 22 February 2016

6,933

100

L Tremaine10

Restricted Shares

1 January 2013

21 February 2014 21 February 2017

Restricted Shares

1 January 2014

20 February 2015 20 February 2018

Restricted Shares

1 January 2015

19 February 2016 19 February 2019

Restricted Shares

1 January 2016

27 February 2017 27 February 2020

RTSR Tested VPRs

1 January 2012

22 February 2013 22 February 2017

RTSR Tested VPRs

1 January 2013

21 February 2014 21 February 2018

RTSR Tested VPRs

1 January 2014

20 February 2015 20 February 2019

RTSR Tested VPRs

1 January 2015

19 February 2016 19 February 2020

RTSR Tested VPRs

1 January 2016

27 February 2017 27 February 2021

WEP Equity Rights

1 October 2013

WEP Equity Rights

1 October 2014

WEP Equity Rights

1 October 2015

SWEP Equity Rights

1 October 2014

1 October 2016

1 October 2017

1 October 2018

1 October 2017

Restricted Shares

1 January 2013

21 February 2014 21 February 2017

Restricted Shares

1 January 2014

20 February 2015 20 February 2018

Restricted Shares

1 January 2015

19 February 2016 19 February 2019

Restricted Shares

1 January 2016

27 February 2017 27 February 2020

M Utsler

RTSR Tested VPRs

1 January 2013

21 February 2014 21 February 2018

RTSR Tested VPRs

1 January 2014

20 February 2015 20 February 2019

RTSR Tested VPRs

1 January 2015

19 February 2016 19 February 2020

RTSR Tested VPRs

1 January 2016

27 February 2017 27 February 2021

SWEP Equity Rights

1 October 2014

1 October 2017

4,249

10,393

9,887

8,447

14,631

16,560

18,036

16,583

11,984

3,100

100

2,300

11,960

322

12,228

10,876

13,673

1,676

21,219

19,509

14,056

14,350

30.98

35.18

34.80

31.15

20.88

15.90

20.77

17.45

17.39

12.05

30.47

31.26

18.07

31.26

35.18

34.80

31.15

20.88

20.77

17.45

17.39

12.05

31.26

1. For valuation purposes all VPRs and equity rights are treated as if they will be equity settled.

2. Vesting date and exercise date are the same. Vesting is subject to satisfaction of vesting conditions. Full details of the vesting conditions for all prior year equity grants to KMP are included in the

remuneration report for the relevant year. 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 equity instruments awarded.

3. Any RTSR-tested VPRs allocated prior to 2017 that do not vest as a result of the first test will be retested over a five year performance period. RTSR-tested VPRs allocated in 2017 and future years

will not be retested. The second test date for earlier VPR allocations is one year after the listed in the table.

4. In accordance with the requirements of AASB 2 Share-based Payment, the fair value of variable pay 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. The amount included as remuneration is not related to or indicative of the benefit (if any) that individual
executives may ultimately realise should these equity instruments vest.

5. The fair value of Equity Rights and Restricted Shares as at their date of grant has been determined by reference to the share price at acquisition. The fair value is not related to or indicative of the

benefit (if any) that individual executives may ultimately realise should these equity instruments vest.

6. Of the changes made to the 2016 EIP (discussed in 'Our response to your feedback'), the removal of the LTA retest was the only change that represented a modification to fair value under the

plan as defined by AASB 2. The fair value of the awards allocated in February 2017 at the grant date based on the original terms was $12.05. At the modification date of 17 August 2016, the USD
equivalent share price was $21.78. The fair value under the original terms was $13.01 and the fair value after the modification was $11.44. As the impact of the modification was an incremental
decrease in fair value at modification date, the value of the VPRs for accounting purposes remains as the original grant date fair value in accordance with the AASB 2.

7. Mr Abbott did not meet the definition of KMP under AASB 124 for years prior to 2015. Previous years comparative figures are not shown.

8. Mr Matisons did not meet the definition of KMP under AASB 124 for years prior to 2015. Previous years comparative figures are not shown.

9. Mr Roder ceased being KMP on 29 April 2016 and ceased employment with Woodside on 31 October 2016.

10. Mr Tremaine’s Restricted Share and VPR awards for the 2016 service year represent those estimated to be allocated as at 31 December 2016. Mr Tremaine resigned on 13 February 2017 which has

resulted in the subsequent forfeiture of all unvested Restricted Shares, VPRs and equity rights.

88 Woodside Petroleum Ltd | Annual Report 2016

Table 12 - Total remuneration paid to NEDs in 2016 and 2015

The following table provides a detailed breakdown of the components of remuneration for each of the company’s NEDs.

Non-executive director

Salaries, fees and allowances

Company contributions to superannuation

Cash salary and fees

Pension super

M Chaney

M Cilento

F Cooper

C Haynes

A Jamieson1

I Macfarlane2

D McEvoy

A Pickard3

S Ryan

G Tilbrook

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

1. Dr Jamieson ceased being a director with Woodside on 21 April 2016.

2. Mr Macfarlane was appointed as a director on 14 November 2016.

3. Ms Pickard was appointed as a director on 29 February 2016.

537,452

543,228

205,449

195,346

217,270

219,604

215,047

217,358

69,634

233,393

25,233

214,000

236,848

163,184

196,390

198,500

196,390

198,500

51,058

51,607

19,518

18,558

20,641

20,862

1,206

20,330

12,677

18,657

18,858

15,015

15,176

Total

588,510

594,835

224,967

213,904

237,911

240,466

215,047

217,358

69,634

233,393

26,439

234,330

236,848

175,861

215,047

217,358

211,405

213,676

Woodside Petroleum Ltd | Governance 89

GOVERNANCE
Remuneration Report (audited) cont.

Table 13 - KMP share and equity holdings
Details of shares held by KMP including their personally related entities1 for the 2016 financial year are as follows:

Opening
holding at
1 January
20162

Type of equity

Rights
allocated in
2016

Rights vested
in 2016

Restricted
shares
granted

Net changes -
other

NEDSP3

Closing
holding at 31
December
20164

Non-executive Directors

M Chaney

M Cilento

F Cooper

C Haynes

A Jamieson

I Macfarlane

D McEvoy

A Pickard

S Ryan

G Tilbrook

Executives

P Coleman

M Abbott

R Edwardes

S Gregory

P Loader

R Matisons

D McLoughlin

G Roder

L Tremaine

M Utsler

Equity Rights

20,000

2,086

3,304

4,623

7,778

8,040

3,045

7,153

474,921

209,153

25,510

10,948

52,781

20,045

33,623

18,008

35,646

8,895

37,648

43,981

2,658

158

42,646

17,160

68,887

47,640

37,245

12,550

225

1,624

1,496

568

940

1,413

153,833

9,425

19,379

10,367

14,849

10,688

7,068

17,407

16,583

19,509

(1,550)

1,550

(3,100)

3,100

(1,550)

1,550

(3,100)

3,100

47,905

(16,800)

4,788

10,507

6,218

8,051

5,541

4,239

7,078

9,887

10,876

(10,794)

(11,034)

20,000

2,311

4,928

6,119

8,346

8,040

940

4,458

7,153

628,754

240,258

33,385

17,286

72,160

30,552

40,890

16,532

50,495

16,946

46,786

40,038

9,726

4,397

60,053

24,238

82,370

60,627

56,754

23,426

1. Personally related entities include a KMP's spouse, dependents or entities over which they have direct control or significant influence.

2. Opening holding represents amounts carried forward in respect of KMP.

3. Related to participation in the Non-executive Directors' Share Plan (NEDSP).

4. Closing equity rights holdings represents unvested options and rights held at the end of the reporting period. There are no options and rights vested but unexercised as at 31 December 2016.

90 Woodside Petroleum Ltd | Annual Report 2016

Financial
Statements

OPERATIONAL EXCELLENCE | MANAGING RISK AND VOLATILITY | NEAR-TERM VALUE GROWTH

Contents

Financial statements

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 the financial statements

About these statements

A. Earnings for the year

A.1 Segment revenue and expenses

A.2 Finance costs

A.3 Dividends paid and proposed

A.4 Earnings per share

A.5 Taxes

B. Production and growth assets

B.1 Segment production and growth assets

B.2 Exploration and evaluation

B.3 Oil and gas properties

B.4 Impairment of oil and gas properties

B.5 Significant production and growth asset acquisitions

100

102

104

105

106

107

108

109

C. Debt and capital

C.1 Cash and cash equivalents

C.2 Interest-bearing liabilities

C.3 Financing facilities

C.4 Contributed equity

C.5 Other reserves

D. Other assets and liabilities

D.1 Receivables

D.2 Inventories

D.3 Payables

D.4 Provisions

D.5 Segment assets and liabilities

E. Other items

E.1 Contingent liabilities and assets

E.2 Leases

E.3 Employee benefits

E.4 Related party transactions

E.5 Auditor remuneration

E.6 Events after the end of the reporting period

E.7 Joint arrangements

E.8 Parent entity information

E.9 Subsidiaries

E.10 Other accounting policies

Directors’ declaration

Independent audit report

110

111

112

113

114

115

116

117

119

120

121

123

125

126

Significant changes in the current reporting period
The financial performance and position of the Group was particularly affected by the following events and transactions during the reporting period:

• The sale of the Group’s interests in the Laminaria-Corallina joint operation in April 2016. The transaction resulted in an after tax gain on sale of

US$2 million.

• The purchase of 100% of the shares in ConocoPhillips Senegal B.V. on 28 October 2016, for a total purchase consideration of US$446 million. For more

detail, refer to Note B.5.

• The purchase of interests in BHP Billiton’s Scarborough area assets on 14 November 2016, for a total purchase consideration of US$252 million. For more

detail, refer to Note B.5.

92 Woodside Petroleum Ltd | Annual Report 2016

F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2016

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 (PRRT) benefit/(expense)

Income tax expense

Profit after tax

Profit attributable to:

Equity holders of the parent

Non-controlling interest

Profit for the year

Basic and diluted earnings per share attributable to equity holders of the parent (US cents)

The accompanying notes form part of the financial statements.

Notes

A.1

A.2

A.5

E.9

A.4

2016
US$m

4,075

(2,234)

1,841

(514)

1,388

(56)

1,340

177

(544)

973

868

105

973

104.0

2015
US$m

5,030

(3,073)

1,957

(1,547)

441

(89)

356

(131)

(112)

113

3.2

Woodside Petroleum Ltd | Financial Statements 93

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2016

Profit for the year

Other comprehensive income

Items that may be reclassified to profit or loss in subsequent periods:

Gain on available-for-sale financial assets reclassified to profit or loss

Exchange differences reclassified to profit or loss

Loss on cash flow hedges

Items that will not be reclassified to profit or loss in subsequent periods:

Remeasurement (losses)/gains 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 statements.

Notes

C.5

2016
US$m

973

2015
US$m

113

(12)

(2)

976

871

105

976

142

94 Woodside Petroleum Ltd | Annual Report 2016

F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2016

Notes

2016
US$m

2015
US$m

Current assets

Cash and cash equivalents

Receivables

Inventories

Tax receivable

Other assets

Disposal group held for sale

Total current assets

Non-current assets

Receivables

Inventories

Other financial assets

Other assets

Exploration and evaluation assets

Oil and gas properties

Other plant and equipment

Deferred tax assets

Total non-current assets

Total assets

Current liabilities

Payables

Interest-bearing liabilities

Other financial liabilities

Other liabilities

Provisions

Tax payable

Liabilities associated with disposal group held for sale

Total current liabilities

Non-current liabilities

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 statements.

C.1

D.1

D.2

A.5

D.1

D.2

B.2

B.3

A.5

D.3

C.2

D.4

A.5

C.2

A.5

D.4

C.4

C.5

E.9

285

446

149

122

489

170

106

145

900

1,079

172

3,228

19,376

965

23,853

24,753

546

202

963

4,897

1,578

1,561

8,128

9,091

2,528

19,236

770

22,760

23,839

813

215

156

1,304

4,364

1,390

1,653

7,510

8,814

15,662

15,025

6,919

(30)

979

6,971

14,839

823

15,662

6,547

(27)

963

6,743

14,226

799

15,025

Woodside Petroleum Ltd | Financial Statements 95

CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2016

Notes

2016
US$m

2015
US$m

973

113

Cash flows from operating activities

Profit after tax for the period

Adjustments for:

Non-cash items

Depreciation and amortisation

Impairment of oil and gas properties

Loss on disposal of exploration and evaluation assets

Gain on disposal of oil and gas properties

Loss on disposal of investment

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/(increase) in trade and other receivables

Decrease in inventories

Increase in provisions

Increase in other assets and liabilities

(Decrease)/increase in trade and other payables

Cash generated from operations

Purchases of shares and payments relating to employee share plans

Interest received

Dividends received

Borrowing costs relating to operating activities

Income tax paid

PRRT received/(paid)

Payments for restoration

Payments for carbon tax

Net cash from operating activities

Cash flows used in investing activities

Payments for capital and exploration expenditure

Borrowing costs relating to investing activities

Payments for disposal of oil and gas properties

Payments for acquisition of joint arrangements net of cash acquired

B.5

Net cash used in investing activities

Cash flows from/(used in) financing activities

Proceeds from borrowings

Borrowing costs relating to financing activities

Contributions to non-controlling interests

Proceeds from underwriters of Dividend Reinvestment Plan (DRP)

Dividends paid (net of DRP)

Dividends paid outside of DRP

Net cash from/(used in) financing activities

Net increase/(decrease) in cash held

Cash and cash equivalents at the beginning of the period

Effects of exchange rate changes

Cash and cash equivalents at the end of the period

The accompanying notes form part of the financial statements.

C.1

96 Woodside Petroleum Ltd | Annual Report 2016

1,346

(23)

367

(7)

(81)

2,809

(54)

(172)

(25)

1,539

1,083

(3)

243

131

(28)

(30)

3,323

(45)

(20)

(768)

(10)

(16)

(2)

2,587

2,475

(1,608)

(153)

(14)

(698)

(2,473)

545

(18)

(193)

277

(274)

(286)

165

122

(2)

285

(1,819)

(99)

(3,637)

(5,555)

1,867

(33)

(162)

(1,730)

(58)

(3,138)

3,268

(8)

122

F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

g
n

i
l
l

o
r
t
n
o
c
-
n
o
N

t
s
e
r
e
t
n

E.9
US$m

799

105

(81)

823

783

y
t
i
u
q
e

a
t
o
T

US$m

15,025

973

976

372

(54)

(721)

15,662

16,659

113

142

(45)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2016

d
a
p
y

l
l

u
f
d
n
a
d
e
u
s
s
I

s
e
r
a
h
s

s
n
a
p
e
r
a
h
s

e
e
y
o
p
m
e

r
o
f
d
e
v
r
e
s
e
r

s
e
r
a
h
S

s
t
fi
e
n
e
b
e
e
y
o
p
m
E

e
v
r
e
s
e
r

e
v
r
e
s
e
r
n
o
i
t
a
l
s
n
a
r
t

y
c
n
e
r
r
u
c
n
g
e
r
o
F

e
g
d
e
h
w
o
fl
h
s
a
C

e
v
r
e
s
e
r

e
u
a
v

r
i
a
f

t
n
e
m
t
s
e
v
n

e
v
r
e
s
e
r

s
g
n
n
r
a
e
d
e
n
a
t
e
R

e
h
t

f
o
s
r
e
d
o
h
y
t
i
u
q
E

t
n
e
r
a
p

C.4
US$m

C.5
US$m

US$m

6,547

(27)

187

776

372

6,919

6,547

(54)

(30)

(38)

(45)

6,547

(27)

(2)

(51)

198

161

(56)

187

793

773

776

(12)

6,743

14,226

868

871

372

(54)

(640)

6,971

(640)

14,839

(14)

8,447

15,876

(45)

Notes

At 1 January 2016

Profit for the year

Other comprehensive income/(loss)

Total comprehensive income/(loss) for the year

Dividend Reinvestment Plan

Employee share plan purchases

Employee share plan redemptions

Share-based payments

Dividends paid

At 31 December 2016

At 1 January 2015

Profit for the year

Other comprehensive income

Total comprehensive income for the year

Employee share plan purchases

Employee share plan redemptions

Share-based payments

Dividends paid

At 31 December 2015

(1,730)

6,743

14,226

(71)

799

(1,801)

15,025

The accompanying notes form part of the financial statements.

Woodside Petroleum Ltd | Financial Statements 97

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2016

About these statements

Woodside Petroleum Ltd (Woodside or the Group) is a for-profit entity
limited by shares, incorporated and domiciled in Australia. Its shares
are publicly traded on the Australian Securities Exchange. The nature of
the operations and principal activities of the Group are described in the
Directors’ Report and in the segment information in Note A.1.

The financial statements were authorised for issue in accordance with
a resolution of the directors on 22 February 2017.

Statement of compliance
The financial statements are general purpose financial statements,
which have been prepared in accordance with the requirements of
the Corporations Act 2001, Australian Accounting Standards (AASBs)
and other authoritative pronouncements of the Australian Accounting
Standards Board. The financial statements comply with International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.

The accounting policies are consistent with those disclosed in the Financial
Report 2015, except for the impact of all new or amended standards and
interpretations. With the exception of AASB 2014-3, the adoption of these
standards and interpretations did not result in any significant changes to
the Group’s accounting policies. The change in policy has had no impact on
the financial statements as there were no such acquisitions in the period.

Currency
The functional and presentation currency of Woodside Petroleum Ltd and
all its subsidiaries is US dollars.

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.

Rounding of amounts
The amounts contained in these financial statements have been rounded
to the nearest million dollars under the option available to the Group under
Australian Securities and Investments Commission (ASIC) Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191 dated
24 March 2016, unless otherwise stated.

Basis of preparation
The financial statements have been prepared on a historical cost basis,
except for derivative financial instruments and certain other financial
assets and financial liabilities, which have been measured at fair value or
amortised cost adjusted for changes in fair value attributable to the risks
that are being hedged in effective hedge relationships.

The financial statements comprise the financial results of the Group and its
subsidiaries as at 31 December each year (refer to Section E). 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 the Group
ceases to have control.

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.

The consolidated financial statements provide comparative information in
respect of the previous period. A reclassification of items in the financial
statements of the previous period have been made in accordance with the
classification of items in the financial statements of the current period.

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.

98 Woodside Petroleum Ltd | Annual Report 2016

Key estimates 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 known
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 found in the following notes:

Note A.5

Note B.2

Note B.3

Note B.4

Note D.4

Note E.7

Taxes

Exploration and evaluation

Oil and gas properties

Page 103

Page 106

Page 107

Impairment of oil and gas properties Page 108

Provisions

Joint arrangements

Page 115

Page 120

Financial and capital risk management
The Board of Directors has overall responsibility for the
establishment and oversight of the Group’s risk management
framework, including review and the approval of the Group’s risk
management strategy, policy and key risk parameters. The Board
of Directors and the Audit & Risk Committee have oversight of
the Group’s internal control system and risk management process,
including the oversight of the internal audit function.

The Group’s management of financial and capital risks is aimed
at ensuring that available capital, funding and cash flows are
sufficient to:

• meet the Group’s 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 management of exposures relating to trading activities, the
purchase of reserves and the underpinning of the economics of a
new project. It is, and has been throughout the period, the Group
Treasury policy that no speculative trading in financial instruments
shall be undertaken. Refer to the risk section of the Operating and
Financial Review on page 58 for more information on the Group’s
objectives, policies and processes for managing financial risk.

The below risks arise in the normal course of the Group’s business.
Risk information can be found in the following sections:

Section A

Section C

Section D

Commodity price risk

Foreign exchange risk

Capital risk

Liquidity risk

Interest rate risk

Credit risk

Page 99

Page 110

Page 113

N
O
T
E
S
T
O
T
H
E
F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

NOTES TO THE FINANCIAL STATEMENTS A. EARNINGS FOR THE YEAR
for the year ended 31 December 2016

In this section

This section addresses financial performance of the Group for the reporting period including, where applicable, the accounting policies applied and the key
estimates and judgements made. The section also includes the tax position of the Group for and at the end of the reporting period.

A.1

A.2

A.3

A.4

A.5

Earnings for the year

Segment revenue and expenses

Page 100

Finance costs

Dividends paid and proposed

Earnings per share

Taxes

Page 102

Key financial and capital risks in this section

Commodity price risk management
The Group’s revenue is exposed to commodity price fluctuations, in particular oil and gas prices are measured 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.

As at the reporting date, the Group had no financial instruments with material exposure to commodity price risk.

Foreign exchange risk management
Foreign exchange risk arises from future commitments, financial assets and financial liabilities that are not denominated in US dollars. The majority of the
operations’ revenue is denominated in US dollars. The Group is exposed to foreign currency risk arising from operating and capital expenditure incurred in
currencies other than US dollars, particularly Australian dollars.

Measuring the exposure to foreign exchange risk is achieved by regularly monitoring and performing sensitivity analysis on the Group’s financial position.

A reasonably possible change in the exchange rate of the US dollar to the Australian dollar (+10%/-10%), with all other variables held constant, would not
have a material impact on the Group’s equity or the profit or loss in the current period. Refer to Notes C.1, C.2, D.1 and D.3 for detail of the denomination of
cash and cash equivalents, interest-bearing liabilities, receivables and payables held at 31 December 2016.

In order to hedge the foreign exchange risk and interest rate risk (refer to Section C) of a Swiss Franc (CHF) denominated medium term note, Woodside
entered into a cross-currency interest rate swap during the period. The aim of this hedge is to convert the fixed interest CHF bond into variable interest
US dollar debt.

Woodside Petroleum Ltd | Financial Statements 99

NOTES TO THE FINANCIAL STATEMENTS A. EARNINGS FOR THE YEAR
for the year ended 31 December 2016

A.1 Segment revenue and expenses

Operating segment information
The Group has identified its operating segments based on the internal
reports that are reviewed and used by the executive management team in
assessing performance and in determining the allocation of resources.

Management monitors the operating results of the segments 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 and is
measured in accordance with the Group’s accounting policies.

Financing requirements, including cash and debt balances, finance income,
finance costs and taxes are managed at a Group level.

Geographical information

Revenue from external
customers1

2016
US$m

501

3,513

2015
US$m

532

4,207

214

Non-current assets2

2016
US$m

2015
US$m

21,048

20,763

1,285

491

1,171

Australia

Asia

USA

Canada

Other

Consolidated

4,075

5,030

22,888

21,990

Operating segments outlined below are identified by management based
on the nature and geographical location of the business or venture.

1. Revenue is attributable to geographic location based on the location of the customers.

2. Non-current assets exclude deferred tax of US$965 million (2015: US$770 million).

Major customer information
The Group has two major customers which account for 21% and 17% of the
Group’s external revenue. The sales are generated by the Pluto and North
West Shelf operating segments (2015: two customers; 18% and 16%).

Producing
North West Shelf Project – 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 LNG – Exploration, evaluation, development, production
and sale of liquefied natural gas and condensate in assigned
permit areas.

Australia Oil – Exploration, evaluation, development, production
and sale of crude oil in assigned permit areas (Enfield, Vincent,
Stybarrow and Balnaves).

Development
Browse – Exploration, evaluation and development of liquefied
natural gas and condensate in the Browse area.

Wheatstone LNG – Exploration, evaluation and development of
liquefied natural gas and condensate.

Other
Other segments – This segment comprises trading and shipping
activities and activities undertaken in the United States, Canada,
Senegal, Myanmar and other international locations.

Unallocated items – Unallocated items comprise primarily
corporate 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.

Recognition and measurement

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.

• Revenue from sale of produced hydrocarbons

Revenue from the sale of produced hydrocarbons is recognised when
the significant risks and rewards of ownership have passed to the
customer, which is typically at the point that title passes. This policy
is applied to the Group’s different operating arrangements.

Revenue is recognised on the basis of the Group’s working interest
in a producing field (the entitlement method).

Revenue from take or pay contracts is recognised in earnings when the
product has been drawn by the customer and recorded as unearned
revenue when not drawn by the customer.

• Other operating revenue

Revenue earned from LNG processing, ship chartering and other
services is recognised as the services are rendered.

Trading revenue earned from sales of third party products is
recognised when the risks and rewards of ownership of the products
are transferred to the customer.

Expenses
• 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.

• Depreciation and amortisation

Refer to Note B.3 for details on depreciation and amortisation.

•

Impairment
Refer to Note B.4 for details on impairment.

• Leases

Refer to Note E.2 for details on leases.

• Employee benefits

Refer to Note E.3 for details on employee benefits.

100 Woodside Petroleum Ltd | Annual Report 2016

NOTES TO THE FINANCIAL STATEMENTS A. EARNINGS FOR THE YEAR
for the year ended 31 December 2016

A.1 Segment revenue and expenses (cont.)

Producing

Development

Other

Pluto

Australia Oil

Browse

Wheatstone

Other
segments

Unallocated
items

Consolidated

2016
US$m

2015
US$m

2016
US$m

2015
US$m

2016
US$m

2015
US$m

2016
US$m

2015
US$m

2016
US$m

2015
US$m

2016
US$m

2015
US$m

Liquefied natural gas

Pipeline natural gas

Condensate

Oil

Liquefied petroleum gas

Revenue from sale of produced
hydrocarbons

Processing and services revenue

Trading revenue

Other revenue

Operating revenue

Production costs

Royalties and excise

Carbon costs

Insurance

Inventory movement

Onerous lease provision

Costs of production

Land and buildings

Transferred exploration and
evaluation

North West
Shelf

2016
US$m

2015
US$m

801

1,028

2015
US$m

2016
US$m
1,950 2,067

295

291

134

130

292

279

140

258

510

1,450

1,788 2,084 2,197

258

510

202

180

202

180

1,450

1,788 2,286 2,377

258

510

(196)

(186)

(145)

(206)

(118)

(237)

(179)

(215)

(6)

(2)

(7)

(15)

(11)

(16)

(12)

(31)

(3)

(6)

(3)

(23)

(128)

(375)

(425)

(172)

(245)

(127)

(391)

(7)

(46)

(71)

(5)

(6)

(49)

(36)

(1)

(4)

Plant and equipment

(261)

(315)

(820)

(746)

(103)

(303)

Marine vessels and carriers

(7)

Oil and gas properties depreciation
and amortisation

(280)

(335)

(915)

(853)

(104)

(307)

Shipping and direct sales costs

(34)

(39)

(93)

(100)

(34)

(39)

(93)

(100)

(2)

(689)

(799) (1,180) (1,198)

(231)

(700)

Trading costs

Other cost of sales

Cost of sales

Trading intersegment adjustments

(65)

(42)

Gross profit/(loss)

761

989

1,041

1,137

(190)

Other income

Exploration and evaluation
expenditure

Amortisation

Write-offs

Exploration and evaluation

General, administrative and
other costs

Impairment of oil and gas properties
Depreciation of other plant
and equipment

Other1

Other costs

Other expenses

Profit/(loss) before tax
and net finance costs

(4)

(3)

(1)

(4)

(3)

(1)

(5)

(33)

(38)

(9)

(18)

(11)

(200)

(1)

(6)

(8)

(202)

(12)

(205)

(32)

(35)

(27)

(9)

(10)

(11)

354

355

2,751 3,095

303

413

302

296

421

650

3,803 4,496

202

272

180

354

534

4,075 5,030

(1)

(2)

(9)

(472)

(639)

(1)

(2)

(14)

(5)

(179)

(215)

(18)

(16)

(28)

(69)

(128)

(14)

(685)

(1,077)

(53)

(78)

(55)

(46)

(1,184) (1,364)

(7)

(1,299) (1,495)

(9)

(141)

(109)

(9)

(250)

(148)

(353)

(501)

(23) (2,234) (3,073)

(109)

(353)

(109)

(351)

(120)

(353)

(14)

(23)

1,841

1,957

(8)

(208)

(240)

(26)

(54)

(22)

(98)

(288)

(360)

(216)

(249)

(26)

(54)

(22)

(131)

(296)

(402)

(23)

(14)

(90)

(57)

(133)

(28)

(865)

(1,083)

(1)

(5)

(19)

(31)

(865)

(29)

(14)

(140)

(865)

(317)

(374)

(140)

(21)

(7)

(85)

(21)

(64)

(22)

(12)

(218)

(1,145)

(514)

(1,547)

759

797

1,010

1,156

(204)

(865)

(291)

(327)

(148)

(116)

1,388

441

1. Other comprises foreign exchange gains and losses, losses on disposals of investments, restructuring costs as well as other expenses not associated with the ongoing operations of the business.

Woodside Petroleum Ltd | Financial Statements 101

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS A. EARNINGS FOR THE YEAR
for the year ended 31 December 2016

A.2 Finance costs

A.5 Taxes

Interest on interest-bearing liabilities

Accretion charge

Other finance costs

Less: Interest capitalised

A.3 Dividends paid and proposed

(a) Dividends paid during the financial year

Prior year fully franked final dividend US$0.43, paid on
8 April 2016 (2015: US$1.44, paid on 25 March 2015)

Current year fully franked interim dividend US$0.34,
paid on 30 September 2016 (2015: US$0.66, paid on
23 September 2015)

2016
US$m

2015
US$m

163

(163)

132

(110)

2016
US$m

2015
US$m

354

1,186

286

640

544

1,730

(b) Dividend declared subsequent to the reporting
period end (not recorded as a liability)

Final dividend US$0.49 (2015: US$0.43)

413

354

Franking credits available for the subsequent periods

Current year dividends per share (US cents)

1,887

2,808

109

A.4 Earnings per share

(a) Tax expense comprises

PRRT

Current tax benefit

Deferred tax (benefit)/expense

PRRT (benefit)/expense

Income tax

Current year

Current tax expense

Deferred tax expense/(benefit)

Adjustment to prior years

Current tax benefit

Deferred tax expense

Income tax expense

Tax expense

(b) Reconciliation of income tax expense

Profit before tax

PRRT benefit/(expense)

Profit before income tax

Income tax expense calculated at 30%

Non-deductible items

Foreign expenditure not brought to account

Adjustment to prior years

Foreign exchange impact on tax expense

Income tax expense

Profit before tax

Non-PRRT assessable profits

2016

2015

PRRT projects (loss)/profit before tax

Profit attributable to equity holders of the
parent (US$m)

868

Weighted average number of shares on issue

835,011,896 822,943,960

Basic and diluted earnings per share (US cents)

104.0

3.2

Earnings per share is calculated by dividing net profit for the year
attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares on issue during the year. The weighted
average number of shares makes allowance for shares reserved for
employee share plans.

Performance rights of 9,384,302 (2015: 9,305,660) are considered to be
contingently issuable and have not been allowed for in the diluted earnings
per share calculation.

There have been no transactions involving ordinary shares between the
reporting date and the date of completion of these financial statements.

PRRT (benefit)/expense calculated at 40%

Augmentation

Derecognition of quarantined exploration expenditure

Other

PRRT (benefit)/expense

(d) Deferred tax income statement reconciliation

PRRT

Production and growth assets

Provisions

Augmentation for current year

Derecognition of quarantined exploration expenditure

Laminaria-Corallina PRRT impact

Other

PRRT deferred tax (benefit)/expense

Income tax

Oil and gas properties

Provisions

PRRT liabilities

Exploration and evaluation assets

Unused tax losses and tax credits

Other

Income tax deferred tax expense/(benefit)

Deferred tax expense

2016
US$m

2015
US$m

(5)

(172)

(177)

368

176

(10)

544

367

1,340

177

1,517

456

(2)

(9)

544

1,340

(1,452)

(112)

(45)

(170)

(177)

(36)

(170)

(172)

200

(49)

(119)

186

(29)

160

131

283

(168)

(23)

112

243

356

(131)

225

(2)

(50)

112

356

(341)

(226)

363

(12)

131

(56)

(226)

363

160

(183)

(42)

(30)

(148)

102 Woodside Petroleum Ltd | Annual Report 2016

NOTES TO THE FINANCIAL STATEMENTS A. EARNINGS FOR THE YEAR
for the year ended 31 December 2016

2016
US$m

2015
US$m

Current taxes
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.

A.5 Taxes (cont.)

(e) Deferred tax balance sheet reconciliation

Deferred tax assets

PRRT

Production and growth assets

Augmentation for current year

Provisions

Other

Deferred tax liabilities

PRRT

Production and growth assets

Provisions

Other

Income tax

Oil and gas properties

Provisions

Exploration and evaluation assets

PRRT liabilities

Unused tax losses and tax credits

Other1

(f) Tax (payable)/receivable reconciliation

PRRT receivable

Income tax (payable)/receivable

(g) Effective income tax rate: Australian and global
operations

Effective income tax rate2

Australia3

Global

(h) Current year income tax payable reconciliation

Profit before income tax

Income tax at the statutory tax rate of 30%

Non-temporary differences4

Temporary differences: deferred tax

Current year income tax payable

626

170

187

(18)

965

436

(135)

1,438

(524)

299

197

(119)

(26)

365

226

197

(18)

770

437

(138)

1,238

(560)

348

141

(88)

1,578

1,390

(91)

(89)

106

30.5%

35.9%

31.5%

49.8%

1,517

456

(176)

379

225

168

332

1. US$0.2 million (2015: US$3 million) movement recognised in other comprehensive income.

2. Effective income tax rate = Income tax expense / Profit before income tax.

3. Excludes foreign exchange impact on tax expense.

4. Primarily expenditure in respect of foreign activities and operations.

Tax transparency code
Woodside has adopted the Board of Taxation’s voluntary Tax
Transparency Code (TTC). The TTC requires additional tax disclosures
in two parts. The Part A disclosure requirements are addressed in the
tables in this note. Part B disclosure requirements will be addressed in the
Sustainable Development Report 2016.

Recognition and measurement
Current tax assets and liabilities are measured at the amount expected to
be recovered from or paid to the taxation authorities. 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. The tax
rates and laws used to determine the amount are based on those that have
been enacted or substantially enacted by the end of the reporting period.
Income taxes relating to items recognised directly in equity are recognised
in equity.

Deferred taxes
Deferred tax expense is the movements in the temporary differences
between the carrying amount of an asset or liability in the statement of
financial position and its tax base.

Deferred tax liabilities are recognised for all taxable temporary differences.
Deferred tax assets are recognised for deductible temporary differences,
unused tax losses and tax credits only if it is probable that sufficient future
taxable income will be available to utilise those temporary differences
and losses.

Deferred tax is 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
accounting profit nor the taxable profit.

In relation to PRRT, the impact of future augmentation on expenditure is
included in the determination of future taxable profits when assessing the
extent to which a deferred tax asset can be recognised in the statement of
financial position.

Offsetting deferred tax balances
Deferred tax assets and liabilities are offset only if there is a legally
enforceable right to offset current tax assets and liabilities and when they
relate to income taxes levied by the same taxation authority on either the
same taxable entity or different taxable entities that the Group intends to
settle its current tax assets and liabilities on a net basis. Refer to Notes E.9
and E.10 for detail on the tax consolidated group.

Key estimates and judgements

(a) Income tax classification
Judgement is required when determining whether a particular tax is
an income tax or another type of tax. Accounting for deferred tax is
applied to income taxes as described above, but is not applied to other
types of taxes, e.g. North West Shelf royalties and excise. Such taxes
are recognised in the income statement on an appropriate basis. PRRT
is considered, for accounting purposes, to be an income tax.

(b) Deferred tax asset recognition
Australian tax losses: A deferred tax asset of US$119 million has been
recognised from carry forward unused tax losses of US$108 million
(2015: nil) and carry forward unused tax credits of US$11 million (2015:
nil). The Group has determined that it is probable that sufficient future
taxable income will be available to utilise those losses and credits.

Foreign tax losses: Deferred tax assets of US$407 million (2015:
US$334 million) relating to unused foreign tax losses that are available
for offset against future taxable profits are not recognised. The Group
has determined it is not probable that the assets will be utilised based
on current planned activities in those regions.

PRRT: Deferred tax assets of US$4,622 million (2015: US$3,894 million)
on the deductible temporary differences have not been recognised on
the basis that deductions from future augmentation of the deductible
temporary difference will be sufficient to offset future taxable profit.
US$3,592 million (2015: US$3,028 million) relates to the transition of the
North West Shelf Project, US$425 million (2015: US$363 million) relates
to the quarantined exploration spend of the Pluto Project and US$605
million (2015: US$503 million) relates to the general expenditure of the
Wheatstone Project. Future taxable profits were determined using the
same assumptions disclosed in Note B.4 and a long-term bond rate of
2.2% (2015: 2.7%) for the purposes of augmentation.

Had an alternative approach been used to assess recovery of the
deferred tax assets, whereby future augmentation was not included
in the assessment, the estimated deferred tax assets would be
recognised, with a corresponding benefit to income tax expense. It was
determined that the approach adopted provides the most meaningful
information on the implications of the PRRT regime, whilst ensuring
compliance with AASB 112 Income Taxes.

Woodside Petroleum Ltd | Financial Statements 103

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS B. PRODUCTION AND GROWTH ASSETS
for the year ended 31 December 2016

In this section

This section addresses the strategic growth (exploration and evaluation) and core producing (oil and gas properties) assets’ position of the Group at the end
of the reporting period including, where applicable, the accounting policies applied and the key estimates and judgements made. The section also includes
the impairment position of the Group at the end of the reporting period.

B.1

B.2

B.3

B.4

B.5

Production and growth assets

Segment production and growth assets

Exploration and evaluation

Oil and gas properties

Impairment of oil and gas properties

Page 105

Page 106

Page 107

Page 108

Significant production and growth asset acquisitions

Page 109

104 Woodside Petroleum Ltd | Annual Report 2016

NOTES TO THE FINANCIAL STATEMENTS B. PRODUCTION AND GROWTH ASSETS
for the year ended 31 December 2016

B.1 Segment production and growth assets

Producing

Development

Other

North West
Shelf

Pluto

Australia Oil

Browse

Wheatstone

Other
segments

Unallocated
items

Consolidated

2016
US$m

2015
US$m

2016
US$m

2015
US$m

2016
US$m

2015
US$m

2016
US$m

2015
US$m

2016
US$m

2015
US$m

2016
US$m

2015
US$m

2016
US$m

2015
US$m

2016
US$m

2015
US$m

Balance as at 31 December

Oceania

Asia

Africa

The Americas

Europe

396

402

192

397

373

Total exploration and evaluation

396

402

192

397

373

562

308

486

1,286

1,173

- 2,398

1,534

Balance as at 31 December

Land and buildings

Transferred exploration and evaluation

Plant and equipment

Marine vessels and carriers

Projects in development

460

368

539

417

2,499 2,532 10,932 11,589

276

359

122

283

129

339

142

379

293

572

271

284

- 3,727

2,811

(4)

- 3,998 3,095

(4)

Total oil and gas properties

2,986 3,075

11,820 12,687

Additions to exploration and evaluation

Exploration

Evaluation

Restoration

(6)

(1)

(6)

131

(5)

126

122

862

1,072

(13)

943

1,269

Additions to oil and gas properties

Oil and gas properties additions

239

151

111

234

154

Capitalised borrowing costs additions1

Restoration

(52)

192

(144)

(35)

(16)

223

(7)

147

755 3,755

157

(13)

109

899 3,960

1. Borrowing costs capitalised were at a weighted average interest rate of 3.5% (2015: 3.9%).

Refer to Note A.1 for descriptions of the Group’s segments.

1,392

1,302

486

1,286

1,173

1 3,228 2,528

489

425

575

465

- 13,981 14,767

122

129

- 4,359 3,300

- 19,376 19,236

187

(25)

908

1,206

(25)

977

1,463

1,200 4,294

163

(97)

110

(58)

1,266 4,346

Woodside Petroleum Ltd | Financial Statements 105

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS B. PRODUCTION AND GROWTH ASSETS
for the year ended 31 December 2016

B.2 Exploration and evaluation

Year ended 31 December 2016

Carrying amount at 1 January 2016

Additions

Amortisation of licence acquisition costs

Expensed

Transferred exploration and evaluation

Carrying amount at 31 December 2016

Year ended 31 December 2015

Carrying amount at 1 January 2015

Additions

Amortisation of licence acquisition costs

Expensed

Transferred exploration and evaluation

Carrying amount at 31 December 2015

Exploration commitments

Year ended 31 December 2016

Year ended 31 December 2015

Oceania
US$m

Asia
US$m

Africa
US$m

The Americas
US$m

Europe
US$m

Total
US$m

1,302

325

(38)

(197)

1,392

1,231

221

(100)

(50)

1,302

142

(4)

(6)

(16)

130

478

(11)

486

(2)

(12)

183

1,173

139

(10)

(16)

1,286

1,179

(10)

1,173

124

(1)

(4)

(3)

2,528

977

(26)

(54)

(197)

3,228

1,268

1,463

(22)

(131)

(50)

2,528

350

474

Recognition and measurement
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 commitments
The Group has exploration expenditure obligations which are contracted
for, but not provided for in the financial statements. These obligations may
be varied from time to time and are expected to be fulfilled in the normal
course of operations of the Group.

Areas of interest are based on a geographical area. All exploration and
evaluation expenditure, including general permit activity, geological and
geophysical costs and new venture activity costs, is expensed as incurred
except for the following:

• where the expenditure relates to an exploration discovery that, at
the reporting date, has not been recognised as an area of interest,
because an assessment of the existence or otherwise of economically
recoverable reserves is not yet complete; or

• where the expenditure relates to a recognised area of interest 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 acquiring interests in new evaluation and exploration
licences are capitalised. 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.
Subsequent to the recognition of an area of interest, all further evaluation
costs relating to that area of interest are capitalised.

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.

In the statement of cash flows, those cash flows associated with capitalised
exploration and evaluation expenditure, including unsuccessful wells, are
classified as cash flows used in investing activities.

Key estimates and judgements

(a) Area of interest

An area of interest (AOI) is defined by the Group as an individual
geographical area whereby the presence of hydrocarbons is
considered favourable or proved to exist. The Group has established
criteria to recognise and maintain an AOI. There is separate
guidance for conventional and unconventional AOIs.

(b) Impairment of exploration and evaluation assets

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 AOI.

Each potential or recognised AOI 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 continued carry forward of
capitalised costs. Where a potential impairment is indicated,
assessment is performed using a fair value less costs to dispose
method to determine the recoverable amount for each AOI to which
the exploration and evaluation expenditure is attributed.

This assessment requires management to make certain estimates
and apply judgement in determining 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.

106 Woodside Petroleum Ltd | Annual Report 2016

NOTES TO THE FINANCIAL STATEMENTS B. PRODUCTION AND GROWTH ASSETS
for the year ended 31 December 2016

B.3 Oil and gas properties

Year ended 31 December 2016

Carrying amount at 1 January 2016

Additions

Disposals at written down value

Depreciation and amortisation

Completions and transfers

Carrying amount at 31 December 2016

At 31 December 2016

Historical cost

Accumulated depreciation and impairment

Net carrying amount

Year ended 31 December 2015

Carrying amount at 1 January 2015

Additions

Disposals at written down value

Depreciation and amortisation

Impairment loss

Completions and transfers

Carrying amount at 31 December 2015

At 31 December 2015

Historical cost

Accumulated depreciation and impairment

Net carrying amount

Land and
buildings
US$m

Transferred
exploration and
evaluation
US$m

Plant and
equipment
US$m

Marine vessels
and carriers
US$m

Projects in
development
US$m

575

(86)

489

1,092

(603)

489

652

(78)

575

1,092

(517)

575

465

(55)

425

823

(398)

425

413

(3)

(46)

101

465

872

(407)

465

14,767

(90)

(3)

(1,192)

499

13,981

24,566

(10,585)

13,981

15,568

(119)

(4)

(1,364)

(218)

904

14,767

24,181

(9,414)

14,767

129

(7)

122

401

(279)

122

135

(7)

129

401

(272)

129

3,300

1,364

(305)

4,359

5,282

(923)

4,359

766

4,465

(865)

(1,066)

3,300

4,223

(923)

3,300

Total
US$m

19,236

1,274

(3)

(1,340)

209

19,376

32,164

(12,788)

19,376

17,534

4,346

(7)

(1,495)

(1,083)

(59)

19,236

30,769

(11,533)

19,236

Recognition and measurement
Oil and gas properties are stated at cost less accumulated depreciation
and impairment charges. Oil and gas properties include initial cost to
acquire, construct, install or complete production and infrastructure
facilities such as pipelines and platforms, capitalised borrowing costs,
transferred exploration and evaluation assets, development wells and the
estimated 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.

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.

Transferred evaluation and exploration and offshore plant and equipment
are depreciated using the unit of production basis over proved reserves
or proved plus probable reserves. Onshore plant and equipment is
depreciated using a straight-line basis over the lesser of useful life and the
life of proved plus probable reserves. On a straight-line basis the assets
have an estimated useful life of 5-50 years.

All other items of oil and gas properties are depreciated using the straight-
line method over their useful life. They are depreciated as follows:

• Buildings – 24-40 years;
• Marine vessels and carriers – 10-40 years;
• Other plant and equipment – 5-15 years; and
• Land is not depreciated.

Impairment
Refer to Note B.4 for details on impairment.

Capital commitments
The Group has capital expenditure commitments contracted for,
but not provided for in the financial statements of US$553 million
(2015: US$520 million).

Key estimates and judgements

Reserves and resources
The estimations of reserves require significant management
judgement and 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.

Estimates of oil and natural gas reserves are used to calculate
depreciation, depletion and amortisation charges for the Group’s
oil and gas properties. Judgement is used in determining the
reserve base applied to each asset. Typically, late life oil assets
use proved reserves.

Estimates are reviewed at least annually or when there are changes
in the economic circumstances impacting specific assets or asset
groups. These changes may impact depreciation, asset carrying
values, restoration provisions and deferred tax balances. If proved
reserves estimates are revised downwards, earnings could be
affected by higher depreciation expense or an immediate
write-down of the asset’s carrying value.

For more information regarding reserve assumptions, refer
to the reserves and resources statement at page 60 of the
Annual Report.

Woodside Petroleum Ltd | Financial Statements 107

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS B. PRODUCTION AND GROWTH ASSETS
for the year ended 31 December 2016

B.4 Impairment of oil and gas properties

Recognition and measurement

Impairment testing
The carrying amounts of oil and gas properties are assessed half-yearly
to determine whether there is an indication of impairment. Indicators
of impairment include changes in future selling prices, future costs and
reserves. When assessing potential indicators of impairment a range of
possible future commodity prices is considered. If any such indication
exists, the asset’s recoverable amount is estimated.

Oil and gas properties are assessed for impairment on a cash generating
unit (CGU) basis. CGUs are determined on a field by field basis, except for
Pluto and Wheatstone which are single CGUs respectively, and North West
Shelf, which is split into an oil CGU and a gas CGU.

Impairment calculations
The recoverable amount of an asset or CGU 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 it to its present value using an
appropriate discount rate.

If the carrying amount of an asset or CGU exceeds its recoverable amount,
the asset or CGU is written down and an impairment loss is recognised in
the income statement.

Impairment reversals
The carrying amount of oil and gas properties which have previously been
impaired are assessed half-yearly to determine if there is an indication
of impairment reversal. Such indications include material increases in
future selling prices or beneficial changes in future costs and reserves.
When assessing potential indicators of reversal a range of possible future
commodity prices is considered. If such an indication exists, the asset’s
recoverable amount is estimated.

If the recoverable amount exceeds the carrying amount, the impairment
loss is reversed. The carrying amount of the asset or CGU 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.

Inputs to impairment calculation
Future cash flow information used for the value in use calculation is based
on the Group’s latest budget, five-year plan and project economic plans.
Key estimates are disclosed in the ‘Key estimates and judgements’ section.

Recognised impairment and impairment reversal
The Group assessed each CGU to determine whether an indicator of
impairment or impairment reversal existed. All impairment losses and
reversals are recognised in other expenses. Refer to Note A.1.

Australia oil

Enfield

Laminaria-Corallina

Vincent

Balnaves

NWS oil

Wheatstone

Impairment
charge/
(reversal)

Recoverable
amount

2015
US$m

(95)

200

865

1,083

109

220

224

3,094

3,655

No impairments or impairment reversals were recognised in 2016.

All impairment losses are recognised against plant and equipment, with the exception of
Wheatstone which is recognised against projects in development.

Key estimates and judgements

Recoverable amount calculation key assumptions
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. These estimates require significant management
judgement and are subject to risk and uncertainty, and hence changes
in economic conditions can also affect the assumptions used and the
rates used to discount future cash flow estimates. In 2015, Laminaria-
Corallina was assessed using the fair value less costs to dispose
method, all other assets were assessed in 2015 and 2016 using the
value in use method. The basis for the estimates used for value in use
assessments are set out below:

•

Inflation rate – an inflation rate of 2.0% has been applied
(2015: 2.0%).

• Foreign exchange rates – based on the forward exchange rates

at the date of assessment for three years, reverting to management’s
assumptions, including $0.76 AUD:USD (2015: $0.75) after
five years.

• Discount rate – a range of pre-tax discount rates have been applied

between 9% and 11% (2015: 9% and 13%).

• LNG price – based on the terms set out in the relevant contracts
between the Group and its customers. The majority of LNG sales
contracts are linked to an oil price marker, accordingly the LNG
prices used are consistent with oil price assumptions.

• Natural gas price – based on the terms set out in the relevant

contracts between the Group and its customers.

• Oil price – oil prices were derived from forward price curves and

long-term views of global supply and demand, building upon past
experience of the industry and consistent with external sources.
Prices are adjusted based on premiums and discounts applied
to the oil price marker based on the nature and quality of the
product produced at the field. The unadjusted oil prices (US$/bbl)
used were:

2017

2018

2019

2020

2021

2022

2016

2015

58.35

58.36

57.87

70.68

77.57

84.46

47.58

51.90

65.68

74.24

82.81

84.46

Prices from 2022 onwards are escalated at 2%.

108 Woodside Petroleum Ltd | Annual Report 2016

NOTES TO THE FINANCIAL STATEMENTS B. PRODUCTION AND GROWTH ASSETS
for the year ended 31 December 2016

B.5 Significant production and growth

asset acquisitions

(a) Senegal
On 28 October 2016, Woodside completed the acquisition of 100% of
the shares in ConocoPhillips Senegal B.V. for a purchase price of US$350
million plus a closing adjustment of US$92 million. The closing adjustment
represents reimbursement of ConocoPhillips’ share of net expenditure in
the Senegal Joint Arrangement between the effective date, 1 January 2016,
and closing. In addition to the purchase cash consideration, transaction
costs of US$4 million have been capitalised relating to the acquisition.

Under the terms of the Purchase and Sale Agreement, Woodside has
acquired a 35% interest in a Joint Operation containing three offshore
exploration blocks, which include the SNE and FAN deep water oil
discoveries in Senegal.

(b) Scarborough
On 14 November 2016, Woodside completed the acquisition of half of BHP
Billiton’s Scarborough area assets in the Carnarvon Basin for an aggregate
purchase price of US$250 million plus a closing adjustment of US$1 million.
Transaction costs of US$1 million have been capitalised in relation to
the acquisition. In addition, a US$150 million payment is contingent on a
positive final investment decision to develop the Scarborough field. Under
the terms of the Sale and Purchase Agreement, Woodside has acquired
the following interests in Joint Operations:

• a 25% interest in WA-1-R and a 50% interest in WA-62-R, which

together contain the Scarborough gas field;

• a 50% interest in WA-61-R which contains the Jupiter gas field; and

• a 50% interest in WA-63-R which contains the Thebe gas field.

The acquisition of the interests in the Scarborough assets and Senegal
interests have been accounted for as asset acquisitions. The interests
acquired have been classified as Joint Operations.

The consolidated financial statements include the results of the Joint
Operations for periods from the acquisition dates of Senegal (28 October
2016) and Scarborough (14 November 2016).

Assets acquired and liabilities assumed
The identifiable assets and liabilities acquired as at the date of the
acquisition inclusive of transaction costs were:

Exploration and evaluation assets

Net other assets and liabilities acquired

Total identifiable net assets at acquisition

Cash flows on acquisition

Purchase cash consideration

Transaction costs

Total purchase consideration

Net cash outflows on acquisition

Senegal
US$m

Scarborough
US$m

447

(1)

446

252

Senegal
US$m

Scarborough
US$m

442

446

251

252

Woodside Petroleum Ltd | Financial Statements 109

NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS C. DEBT AND CAPITAL
for the year ended 31 December 2016

In this section

This section addresses cash, debt and capital position of the Group at the end of the reporting period including, where applicable, the accounting policies
applied and the key estimates and judgements made.

C.1

C.2

C.3

C.4

C.5

Debt and capital

Cash and cash equivalents

Interest-bearing liabilities

Financing facilities

Contributed equity

Other reserves

Page 111

Page 112

Key financial and capital risks in this section

Capital risk management
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. A stable capital base is maintained 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.

The Dividend Reinvestment Plan (DRP) was approved by shareholders at the Annual General Meeting in 2003 for activation as required to fund future
growth. The DRP was reactivated and fully underwritten for the 2015 final dividend.

A range of financial metrics is monitored, including gearing and cash flow leverage, and Treasury policy breaches and exceptions.

Liquidity risk management
Liquidity risk arises from financial liabilities of the Group and the Group’s subsequent ability to meet its 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.

The Group’s liquidity position is continually reviewed including cash flow forecasts to determine the forecast liquidity position and maintain appropriate
liquidity levels. At 31 December 2016, the Group has a total of US$2,679 million (2015: US$1,722 million) available undrawn facilities and cash at its disposal.
The maturity profile of interest-bearing liabilities is disclosed in Note C.2, and trade and other payables are disclosed in Note D.3. Financing facilities available
to the Group are disclosed in Note C.3.

Interest rate risk management
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 manages 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. During the period, Woodside entered into a
cross-currency interest rate swap to hedge the foreign exchange risk (refer to section A) and interest rate risk of a CHF denominated medium term note.

At the reporting date, the Group was exposed to various benchmark interest rates that were not designated in cash flow hedges, US$285 million
(2015: US$122 million) on cash and cash equivalents, US$1,533 million (2015: US$2,166 million) on interest-bearing liabilities (excluding transaction costs)
and US$3 million (2015: nil) on cross currency interest rate swaps.

A reasonably possible change in the USD London Interbank Offered Rate (LIBOR) (+1.0%/-1.0%), with all variables held constant, would not have a material
impact on the Group’s equity or the income statement in the current period.

110 Woodside Petroleum Ltd | Annual Report 2016

NOTES TO THE FINANCIAL STATEMENTS C. DEBT AND CAPITAL
for the year ended 31 December 2016

C.1 Cash and cash equivalents

Unused facilities
As at the reporting date, the Group had the following facilities that were
undrawn at balance date:

2016
US$m

2015
US$m

Cash and cash equivalents

Cash at bank

Total cash and cash equivalents

285

122

Debt facilities

2016
US$m

2,394

2015
US$m

1,600

Recognition and measurement
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.

Maturity profile of interest-bearing liabilities
The table below presents the undiscounted cash flows associated with
the Group’s interest-bearing liabilities, representing principal and interest.
The figures will not necessarily reconcile with the amounts disclosed in the
consolidated statement of financial position.

Foreign exchange risk
The Group held US$23 million of cash and cash equivalents at 31 December
2016 (2015: US$58 million) in currencies other than US dollars.

Due for payment in:

1 year or less

1-2 years

2-3 years

3-4 years

4-5 years

2016
US$m

2015
US$m

More than 5 years

Amounts exclude transaction costs.

2016
US$m

2015
US$m

264

962

1,078

197

880

2,631

6,012

236

237

1,127

1,387

155

2,137

5,279

C.2 Interest-bearing liabilities

(a) Interest-bearing liabilities (current)

Debt facilities

(b) Interest-bearing liabilities (non-current)

Medium term notes

Bonds

Debt facilities

366

3,087

1,444

4,897

2,289

2,075

4,364

Recognition and measurement
All borrowings are initially recognised at fair value less transaction costs.
Borrowings are subsequently carried at amortised cost. 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.

The CHF denominated medium term note designated as a hedged item
is measured at amortised cost adjusted to record changes in the fair
value of risks that are being hedged in fair value hedges. The changes in
the fair value risks of the hedged item resulted in a gain of US$12 million
being recorded, offset by a loss of US$15 million recorded on the hedging
instrument.

All bonds and 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 period.

Foreign exchange risk
All interest-bearing liabilities are denominated in US dollars, excluding the
CHF175 million medium term note.

Fair value
The carrying amount of interest-bearing liabilities approximates their fair
value, with the exception of the Group’s four unsecured bonds (2015: three
unsecured bonds) which have a carrying amount of US$3,087 million
(2015: US$2,289 million) and a fair value of US$3,151 million (2015: US$2,310
million). The fair value of the bonds and notes was determined using
quoted prices in an active market, classified as Level 1 on the fair value
hierarchy. The Group’s repayment obligations remain unchanged.

C.3 Financing facilities

Details of loan facilities at the reporting date are as follows:

Medium Term Notes
On 28 August 2015, the Group established a US$3,000 million Global
Medium Term Notes Programme on the Singapore Stock Exchange. Two
notes have been issued under this program as set out below:

•

the 2022 US$200 million medium term note has a floating three month
USD LIBOR rate and matures on 15 July 2022; and

the 2023 CHF175 million medium term note has a fixed rate coupon of
1.00% p.a. and matures on 11 December 2023.

The unutilised program is not considered to be an unused facility.

Bonds
The Group has four unsecured bonds issued in the United States of
America as defined in Rule 144A of the US Securities Act as set out below:

•

the 2019 US$600 million bond has a fixed rate coupon of 8.75% p.a. and
matures on 1 March 2019;

the 2021 US$700 million bond has a fixed rate coupon of 4.60% p.a.
and matures on 10 May 2021;

the 2025 US$1,000 million bond has a fixed rate coupon of 3.65% p.a.
and matures on 5 March 2025; and

the 2026 US$800 million bond has a fixed rate coupon of 3.70% p.a.
and matures on 15 September 2026.

Interest on the bonds is payable semi-annually in arrears.

Woodside Petroleum Ltd | Financial Statements 111

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS C. DEBT AND CAPITAL
for the year ended 31 December 2016

C.3 Financing facilities (cont.)

(b) Shares reserved for employee share plans

Year ended 31 December 2016

Opening balance

Purchases during the year

Vested during the year

Amounts at 31 December 2016

Year ended 31 December 2015

Opening balance

Purchases during the year

Vested during the year

Amounts at 31 December 2015

Number of
shares

US$m

985,802

2,515,145

(2,349,772)

1,151,175

937,442

1,880,385

(1,832,025)

985,802

(27)

(54)

(30)

(38)

(45)

(27)

Recognition and measurement

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.

C.5 Other reserves

Other reserves

Employee benefits reserve

Foreign currency translation reserve

Cash flow hedge reserve

2016
US$m

2015
US$m

198

793

(12)

979

187

776

963

Reserve

Employee benefits
reserve

Foreign currency
translation reserve

Nature and purpose
Used to record share-based payments
associated with the employee share plans and
remeasurement adjustments relating to the
defined benefit plan.

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.

Used to record gains and losses on hedges
designated as cash flow hedges. Gains and losses
accumulated in the cash flow hedge reserve
are taken to the income statement in the same
period during which the hedged expected cash
flows affect the income statement.

Bi-lateral loan facilities
The Group has 17 bi-lateral loan facilities totalling US$2,144 million
(2015: US$2,100 million). Details of bi-lateral loan facilities at the reporting
date are as follows:

Number of
facilities

Term (years)

Currency

USD

Extension
option

Evergreen

Interest rates are based on USD LIBOR and margins 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.

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 USD 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.

Syndicated facility
On 3 July 2015, the Group executed an unsecured US$1,000 million
syndicated loan facility. The syndicated loan facility comprises two
tranches with tenors of three and five years at interest rates of USD LIBOR
plus 0.9% and USD LIBOR plus 1.15%, respectively. Interest is paid at
the end of the drawdown period. On 22 March 2016, the company
exercised an option to increase the US$1,000 million syndicated
facility to US$1,200 million.

C.4 Contributed equity

(a) Issued and fully paid shares

Year ended 31 December 2016

Opening balance

DRP underwriting agreement

Ordinary shares issued at A$26.70 (2015
final dividend)

13,631,075

277

DRP

Ordinary shares issued at A$26.40 (2015
final dividend)

Share issue costs (net of tax)

Amounts at 31 December 2016

Year ended 31 December 2015

Opening and closing balance

4,903,171

842,444,903

6,919

823,910,657

6,547

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 relation to its issued shares.

112 Woodside Petroleum Ltd | Annual Report 2016

Number of shares

US$m

823,910,657

6,547

Cash flow hedge reserve

NOTES TO THE FINANCIAL STATEMENTS D. OTHER ASSETS AND LIABILITIES
for the year ended 31 December 2016

In this section

This section addresses other assets and liabilities position at the end of the reporting period including, where applicable, the accounting policies applied and
the key estimates and judgements made.

D.1

D.2

D.3

D.4

D.5

Other assets and liabilities

Receivables

Inventories

Payables

Provisions

Segment assets and liabilities

Page 114

Page 115

Key financial and capital risks in this section

Credit risk management
Credit risk is the risk that a counterparty will not meet its obligation under a financial instrument or customer contract, leading to 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.

Woodside Petroleum Ltd | Financial Statements 113

NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS D. OTHER ASSETS AND LIABILITIES
for the year ended 31 December 2016

D.1 Receivables

D.3 Payables

2016
US$m

2015
US$m

The following table shows the Group’s payables balances and maturity
analysis.

Year ended 31 December 2016

Trade payables1

Other payables1

Interest payable2

Total payables

Year ended 31 December 2015

Trade payables1

Other payables1

Interest payable2

Total payables

< 30
days
US$m

30-60
days
US$m

> 60
days
US$m

Total
US$m

114

301

418

197

493

692

123

119

197

301

546

283

493

813

Interest-free and normally settled on 30-day terms.

2. Details regarding interest-bearing liabilities are contained in Note C.2.

Recognition and measurement
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 reporting period.

Fair value
The carrying amount of payables approximates their fair value.

Foreign exchange risk
The Group held US$373 million of payables at 31 December 2016 (2015:
US$507 million) in currencies other than US dollars (predominantly
Australian dollars).

(a) Receivables (current)

Trade receivables1

Other receivables1

Loans receivable2

Dividend receivable

(b) Receivables (non-current)

Loans receivable2

Defined benefit plan asset

198

142

104

446

162

172

227

186

489

Interest-free and settlement terms are usually between 14 and 30 days.

2. Loans receivable are due from non-controlling interests.

Recognition and measurement
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.

The Group’s customers are required to pay in accordance with agreed
payment terms. Depending on the product, settlement terms are 14 to
30 days from the date of invoice or bill of lading and customers regularly
pay on time. There are no overdue trade receivables as at the end of the
reporting period (2015: nil).

Fair value
The carrying amount of trade and other receivables approximates their
fair value.

Foreign exchange risk
The Group held US$101 million of receivables at 31 December 2016
(2015: US$123 million) in currencies other than US dollars (predominantly
Australian dollars).

D.2 Inventories

(a) Inventories (current)

Petroleum products

Goods in transit

Finished stocks

Warehouse stores and materials

(b) Inventories (non-current)

Warehouse stores and materials

2016
US$m

2015
US$m

149

170

Recognition and measurement
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, being the
estimated selling price less selling costs.

114 Woodside Petroleum Ltd | Annual Report 2016

NOTES TO THE FINANCIAL STATEMENTS D. OTHER ASSETS AND LIABILITIES
for the year ended 31 December 2016

D.4 Provisions

Year ended 31 December 2016

At 1 January 2016

Change in provision

Unwinding of present
value discount

Carrying amount at
31 December 2016

Current

Non-current

Net carrying amount

Year ended 31 December 2015

At 1 January 2015

Change in provision

Unwinding of present
value discount

Transfer to liabilities held
for sale

Carrying amount at
31 December 2015

Current

Non-current

Net carrying amount

Restoration
of operating
locations
US$m

Employee
benefits
US$m

Other
US$m

Total
US$m

1,574

(170)

1,442

1,407

1,442

1,724

(37)

(156)

1,574

1,548

1,574

141

155

126

155

172

(31)

141

114

141

153

1,868

(143)

166

1,763

125

166

105

202

1,561

1,763

1,944

(156)

153

1,868

153

215

1,653

1,868

Recognition and measurement
Provisions are recognised when the Group has a present obligation (legal
or constructive) as a result of a past event, it is probable that an outflow
of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the
obligation.

Restoration of operating locations
Provision is made for the obligation to restore operating locations. The
provision is first recognised 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.

Restoration provisions are updated annually, with the corresponding
movement recognised against the related exploration and evaluation
assets or oil and gas properties.

Over time, the liability is increased for the change in the present value
based on a pre-tax discount rate appropriate to the risks inherent in
the liability. The unwinding of the discount is recorded as an accretion
charge within finance costs. The carrying amount capitalised in oil and gas
properties is depreciated over the useful life of the related asset (refer to
Note B.3).

Costs incurred that relate to an existing condition caused by past
operations and do not have a future economic benefit are expensed.

Employee benefits
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.

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. 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.

Key estimates and judgements

(a) 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. The proportion of the non-current balance not expected to
be settled within 15 years is 61%.

(b) Long service leave
Long service leave is measured at the present value of benefits
accumulated up to the end of the reporting period. The liability
is discounted using an appropriate discount rate. Management
requires judgement to determine key assumptions used in the
calculation including future increases in salaries and wages, future
on-cost rates and future settlement dates of employees’ departures.

D.5 Segment assets and liabilities

(a) Segment assets

NWS

Pluto

Australia Oil

Browse

Wheatstone

Other segments

Unallocated items

(b) Segment liabilities

NWS

Pluto

Australia Oil

Browse

Wheatstone

Other segments

Unallocated items

2016
US$m

2015
US$m

3,191

3,417

12,684

13,455

599

393

4,018

2,490

1,378

764

368

3,165

1,599

1,071

24,753

23,839

2016
US$m

2015
US$m

663

378

614

188

179

743

456

789

293

267

7,058

9,091

6,228

8,814

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.

Refer to Note A.1 for descriptions of the Group’s segments. Unallocated
assets mainly comprise cash and cash equivalents and the Group’s
deferred tax assets. Unallocated liabilities mainly comprise interest-bearing
liabilities and deferred tax liabilities.

Woodside Petroleum Ltd | Financial Statements 115

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS E. OTHER ITEMS
for the year ended 31 December 2016

In this section

This section addresses information on items which require disclosure to comply with Australian Accounting Standards and the Australian Corporations
Act 2001, however, are not considered critical in understanding the financial performance or position of the Group. This section includes group structure
information and other disclosures.

E.1

E.2

E.3

E.4

E.5

E.6

E.7

E.8

E.9

Other items

Contingent liabilities and assets

Leases

Employee benefits

Related party transactions

Auditor remuneration

Events after the end of the reporting period

Joint arrangements

Parent entity information

Subsidiaries

E.10

Other accounting policies

Page 117

Page 119

Page 120

Page 121

Page 123

116 Woodside Petroleum Ltd | Annual Report 2016

NOTES TO THE FINANCIAL STATEMENTS E. OTHER ITEMS
for the year ended 31 December 2016

E.1 Contingent liabilities and assets

E.3 Employee benefits

2016
US$m

2015
US$m

(a) Employee benefits

Employee benefits for the reporting period are as follows:

Contingent liabilities at the reporting date

Not otherwise provided for in the financial
statements

Contingent liabilities

Guarantees

Employee benefits

Share-based payments

Defined contribution plan costs

Defined benefit plan expense

2016
US$m

239

299

2015
US$m

239

294

Contingent liabilities relate predominantly to actual or potential claims 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 these financial statements. 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.

The Group has issued guarantees relating to workers’ compensation
liabilities.

E.2 Leases

Operating lease commitments

Rents payable on non-cancellable operating
leases, due:

Within one year

After one year but not more than five years

Later than five years

2016
US$m

2015
US$m

194

660

1,299

2,153

399

557

779

1,735

Subject to the joint operation that utilises the lease, the Group’s share
of actual payments made under operating leases may be lower than the
value of commitments disclosed.

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 Group. 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$332 million during the year (2015: US$567 million).
A portion of this amount relates to arrangements containing non-lease
elements, which are not practicable to separate.

Recognition and measurement
Operating lease payments are recognised as an expense in the income
statement on a straight-line basis over the lease term. Lease incentives
received are recognised in the income statement as a part of total
lease expense.

Recognition and measurement
The Group’s accounting policy for employee benefits other than
superannuation are set out in Note D.4. The policy relating to share-based
payments is set out in Note E.3(c).

All employees of the Group are entitled to benefits on retirement, disability
or death from the Group’s superannuation plan. The majority of employees
are party to a defined contribution scheme and receive fixed contributions
from Group companies and the Group’s legal or constructive obligation
is limited to these contributions. Contributions to defined contribution
funds are recognised as an expense as they become payable. Prepaid
contributions are recognised as an asset to the extent that a cash refund or
a reduction in the future payment is available. The Group also operates a
defined benefit superannuation scheme, the membership of which is now
closed. The asset for the defined benefit plan at 31 December 2016 was
US$10 million (2015: US$13 million).

(b) 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

2016
US$

2015
US$

10,651,173

12,202,619

242,776

312,647

7,944,266

7,084,981

268,620

250,114

425,219

19,532,054

19,850,361

The Group provides benefits to its employees (including KMP) in the form
of share-based payments whereby employees render services for shares
(equity-settled transactions).

Woodside equity plan (WEP) and supplementary Woodside
equity plan (SWEP)
WEP is available to all Australian-based employees including executives,
other than the CEO and any executive directors. 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 the Group to recognise and reward eligible employees
for high performance. The ERs have no further ongoing performance
conditions after allocation, and do not require participants to make any
payment in respect of the ERs at grant or at vesting. SWEP is available to
a number of employees identified as being retention critical. Participants
do not make any payment in respect of the ERs at grant or at vesting. Each
ER entitles the participant to receive a Woodside share on the vesting date
three years after the grant date.

Woodside Petroleum Ltd | Financial Statements 117

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS E. OTHER ITEMS
for the year ended 31 December 2016

E.3 Employee benefits (cont.)

Executive incentive plans (EIP)

Short term awards (STA)
The STA are delivered in the form of restricted shares to executives,
including all executive KMP. Restricted shares entitle their holder to
receive dividends. There are no further performance conditions for vesting
of deferred STA. Participants are not required to make any payments in
respect of STA awards at grant or at vesting.

Long term awards (LTA)
LTA is granted in the form of Variable Pay Rights (VPRs) to executives,
including all executive KMP. Vesting of LTA is subject to achievement
of relative total shareholder return (RTSR) targets, with 33% measured
against the ASX 50 and the remaining 67% tested against an international
group of oil and gas companies. Modifications were made to the 2016
award for the executive KMP. These modifications reduced the value
of the VPRs.

Participants are not required to make any payments in respect of LTA
awards at grant or at vesting.

Year ended 31 December 2016

Opening balance

Granted during the year1,2

Vested during the year

Forfeited during the year

Performance rights at 31 December 2016

Fair value of rights granted during the year

Year ended 31 December 2015

Opening balance

Granted during the year1,2

Vested during the year

Forfeited during the year

Performance rights at 31 December 2015

Fair value of rights granted during the year

Recognition and measurement
All compensation under WEP, SWEP and executive share plans is
accounted for as share-based payments to employees for services
provided. 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 of share-based payments is
recognised, together with the corresponding increase in equity, over the
period in which the vesting conditions are fulfilled, ending on the date on
which the relevant employee becomes fully entitled to the shares. At each
balance sheet date, the Group reassesses the number of awards that are
expected to vest based on service conditions. The expense recognised
each year takes into account the most recent estimate.

The fair value of the benefit provided for the WEP and SWEP are
estimated using the Black-Scholes option pricing technique. The fair
value of the restricted shares is estimated as the closing share price at
grant date. The fair value of the benefit provided for the RTSR VPRs was
estimated using the Binomial or Black-Scholes option pricing technique
combined with a Monte Carlo simulation methodology, where relevant,
using historical volatility to estimate the volatility of the share price in
the future.

The number of performance rights and movements for all share plans are
summarised as follows:

Number of performance rights

Employee plans

Executive plans

WEP

SWEP

STA

LTA

6,116,840

1,925,944

(2,190,958)

(338,923)

5,512,903

US$m

38,270

US$m

784,270

303,699

(198,818)

(7,230)

881,921

2,366,280

587,156

(2,228)

2,951,208

US$m

Number of performance rights

Employee plans

Executive plans

WEP

SWEP

STA

LTA

6,286,402

1,974,741

(1,603,731)

(540,572)

6,116,840

US$m

38,270

US$m

626,123

267,645

(78,417)

(31,081)

784,270

US$m

2,232,777

610,410

(154,143)

(322,764)

2,366,280

US$m

1. For the purpose of valuation, the share price on grant date for the 2016 WEP and SWEP allocations was US$28.86 (2015: US$20.89).

2. For the purpose of valuation, the share price on grant date for the 2016 STA and LTA allocations was US$20.88 (2015: US$31.15).

For more detail on these share plans and performance rights issued to KMPs, refer to the Remuneration Report on pages 78-79 and pages 86-88.

118 Woodside Petroleum Ltd | Annual Report 2016

NOTES TO THE FINANCIAL STATEMENTS E. OTHER ITEMS
for the year ended 31 December 2016

E.4 Related party transactions

E.7 Joint arrangements

Transactions with directors

(a) Interest percentage in joint operations

There were no transactions with directors during the year other than those
disclosed in Note E.3(b).

E.5 Auditor remuneration

The auditor of Woodside Petroleum Ltd is Ernst & Young (EY)

2016
US$’000

2015
US$’000

(a) Amounts received or due and receivable for an audit or review of the
financial statements of the entity and any other entity in the Group by:

EY Australia

Other EY firms

1,526

144

1,670

1,532

143

1,675

(b) Amounts received or due and receivable for non-audit services in relation
to the entity or any other entity in the Group by:

EY Australia for other assurance services

EY Australia for other advisory services

EY Australia for taxation services

Other EY firms for other assurance services

437

151

149

762

742

400

139

1,284

E.6 Events after the end of the reporting

period

Since the end of the financial year and to the date of this report, no
matter or circumstance has arisen that has significantly affected, or
may significantly affect, the operations of the company, the results
of the company or the state of affairs of the company in subsequent
financial periods.

Producing and developing assets

Oceania

North West Shelf

Enfield and Vincent

Laminaria-Corallina

Stybarrow

Balnaves

Pluto

Wheatstone

Exploration and evaluation assets

Oceania

Browse Basin

Carnarvon Basin1

Bonaparte Basin

Outer Canning Basin

New Zealand

Africa

Morocco

Gabon2

Cameroon

Senegal

The Americas

Peru

Kitimat

Nova Scotia3

Asia

Republic of Korea

Myanmar

Europe

Ireland

Canary Islands4

Group interest %

2016

2015

12.5 - 50.0

60.0

59.9 - 66.7

50.0

65.0

90.0

50.0

65.0

90.0

13.0 - 65.0

30.6 - 60.0

30.6 - 75.0

15.8 - 75.0

26.7 - 35.0

55.0

70.0

25.0

40.0

35.0

50.0

20.0

55.0

70.0

25.0 - 75.0

40.0

30.0

35.0

50.0

20.0

50.0

40.0 - 55.0

60.0 - 90.0

30.0

1. The acquisition of 25% - 50% interests in Scarborough from BHP is included within the

Carnarvon Basin.

2. As at 31 December 2016, the Luna Muetse No G4-246 block farm-in is pending final

Government approval and subsequent execution of the documents.

3. The decision was made in November 2016 to release the interest in the Nova Scotia block.
At 31 December 2016, Woodside still has tenure of the permit subject to the Canadian
Ministry approval.

4. Permit relinquishment is awaiting formal approval by the Spanish Ministry.

The principal activities of the joint operations above are exploration,
development and production of hydrocarbons.

Woodside Petroleum Ltd | Financial Statements 119

NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS E. OTHER ITEMS
for the year ended 31 December 2016

E.7 Joint arrangements (cont.)

E.8 Parent entity information

Group interest %

2016

2015

16.67

Woodside Petroleum Ltd:

Current assets

Non-current assets

Current liabilities

Non-current liabilities

16.67

Net assets

2016
US$m

2015
US$m

278

7,732

(571)

7,439

373

7,073

(368)

7,078

Issued and fully paid shares

6,919

6,547

16.67

Shares reserved for employee share plans

16.67

Foreign currency translation reserve

Employee benefits reserve

Retained earnings

Total shareholders' equity

Profit of parent entity

Total comprehensive income of parent entity

(30)

127

296

127

7,439

635

(27)

129

296

133

7,078

1,783

1,776

Guarantees
Woodside Petroleum Ltd and Woodside Energy Ltd (a subsidiary
company) are parties to a Deed of Cross Guarantee as disclosed in
Note E.9. 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 C.3. Woodside Petroleum Ltd has guaranteed certain obligations
of subsidiaries to unrelated parties on behalf of their performance in
contracts. No liabilities are expected to arise from these guarantees.

(b) Interest percentage in joint ventures

Entity

Principal activity

North West Shelf Gas Pty Ltd Marketing services for

North West Shelf Liaison
Company Pty Ltd

China Administration
Company Pty Ltd

North West Shelf Shipping
Service Company Pty Ltd

ventures in the sale of gas
to the domestic market.

Liaison for ventures in
the sale of LNG to the
Japanese market.

Marketing services for
ventures in the sale of LNG
to international markets.

LNG vessel fleet advisor.

North West Shelf Lifting
Coordinator Pty Ltd

Coordinator for venturers
for all equity liftings.

16.67

Recognition and measurement
Joint arrangements are arrangements in 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.

Key estimates and judgements

Accounting for interests in other entities
Judgement is required in assessing the level of control obtained in
a transaction to acquire an interest in another entity; depending
upon the facts and circumstances in each case, Woodside may
obtain control, joint control or significant influence over the entity
or arrangement. Judgement is applied when determining the
relevant activities of a project and if joint control is held over them.
Relevant activities include, but are not limited to, work program
and budget approval, investment decision approval, voting rights in
joint operating committees, amendments to permits and changes
to joint arrangement participant holdings. Transactions which
give Woodside control of a business are business combinations. If
Woodside obtains joint control of an arrangement, judgement is
also required to assess whether the arrangement is a joint operation
or a joint venture. If Woodside has neither control nor joint control,
it may be in a position to exercise significant influence over the
entity, which is then accounted for as an associate.

The Group’s interest in the Scarborough and Senegal exploration
assets were assessed to be joint operations based upon the
respective joint operating agreements.

120 Woodside Petroleum Ltd | Annual Report 2016

NOTES TO THE FINANCIAL STATEMENTS E. OTHER ITEMS
for the year ended 31 December 2016

Notes

Name of entity

E.9 Subsidiaries

(a) Subsidiaries

Name of entity

Ultimate Parent Entity

Woodside Petroleum Ltd

Subsidiaries

Company name

Woodside Energy Ltd

Woodside Browse Pty Ltd

Woodside Burrup Pty Ltd

Burrup Facilities Company Pty Ltd

Pluto LNG Pty Ltd

Burrup Train 1 Pty Ltd

Woodside Energy (Algeria) Pty Ltd

Woodside Energy Australia Asia Holdings Pte Ltd y

Woodside Energy (Carbon Capture) Pty Ltd

Woodside Energy Holdings International Pty Ltd

Woodside Energy Mediterranean Pty Ltd

Woodside Energy International (Canada) Limited t

Woodside Energy (Canada LNG) Limited t

Woodside Energy (Canada PTP) Limited t

KM LNG Operating General Partnership t

KM LNG Operating Ltd t

Woodside Energy Holdings Pty Ltd

Woodside Energy Holdings (USA) Inc q

Woodside Energy (USA) Inc q

Gryphon Exploration Company q

Woodside Energy (Cameroon) SARL n

Woodside Energy (Gabon) Pty Ltd

Woodside Energy (Ireland) Pty Ltd

Woodside Energy (Korea) Pte Ltd y

Woodside Energy (Myanmar) Pte Ltd y

Woodside Energy (Morocco) Pty Ltd

Woodside Energy (New Zealand) Limited z

Woodside Energy (New Zealand 55794) Limited z

Woodside Energy (Peru) Pty Ltd

Woodside Energy (Senegal) Pty Ltd

Woodside Energy (Tanzania) Limited ¥

Woodside Energy Holdings (South America) Pty Ltd

Woodside Energia (Brasil) Investimento em Exploracao
de Petroleo Ltda l

Woodside Energy Holdings (UK) Pty Ltd

Woodside Energy (UK) Limited p

Woodside Energy Holdings (Senegal) Limited p

Woodside Energy (Senegal) B.V. 

Woodside Energy (France) SAS £

Woodside Energy Iberia S.A. º

Woodside Energy (N.A.) Ltd p

Woodside Energy (Julimar) Pty Ltd

Woodside Energy (Kenya) Pty Ltd

Woodside Energy (M.E.) Pty Ltd

Woodside Energy Middle East and Africa Pty Ltd

Woodside Energy (Norway) Pty Ltd

Woodside Energy (SL) Pty Ltd

Woodside Energy Technologies Pty Ltd

Woodside Energy Trading Singapore Pte Ltd y

WelCap Insurance Pte Ltd y

Woodside Energy Shipping Singapore Pte Ltd y

(1,2,3)

(2,3,4)

(2,4)

(5)

(2,4)

(4)

(2,4)

(4)

(4,8)

(4)

(2,4)

(4)

(2,4)

(4)

(2,4)

(4)

(2,4)

(2,4,9)

(6)

(2,4)

(7)

(2,4)

(4)

(4,9)

(4,10)

(4)

(2,4)

(4)

Woodside Guangdong Shipping (One) Pty Ltd

Woodside Guangdong Shipping (Two) Pty Ltd

Woodside West Africa Pty Ltd

Metasource Pty Ltd

Woodside Finance Limited

Woodside Petroleum (Northern Operations) Pty Ltd

Woodside Petroleum (Timor Sea 19) Pty Ltd

Woodside Petroleum (Timor Sea 20) Pty Ltd

Woodside Petroleum (W.A. Oil) Pty Ltd

Woodside Petroleum Holdings Pty Ltd

Mermaid Sound Port and Marine Services Pty Ltd

Notes

(2,4)

(2,4,11)

(2,4)

(2,4,11)

(2,4)

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 2016.

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 those referred to in Notes 5, 6, 7 and 8.

5. Kansai Electric Power Australia Pty Ltd and Tokyo Gas Pluto Pty Ltd each hold a 5% interest in the

shares of these subsidiaries. These subsidiaries are controlled.

6. As at 31 December 2016, Woodside Energy Holdings Pty Ltd held a 99.99% interest in the shares
of Woodside Energy (Tanzania) Limited and Woodside Energy Ltd held the remaining 0.01%
interest.

7. As at 31 December 2016, Woodside Energy Holdings (South America) Pty Ltd held a 99.99%

interest in the shares of Woodside Energia (Brasil) Investimento em Exploracao de Petroleo Ltda
and Woodside Energy Ltd held the remaining 0.01% interest.

8. As at 31 December 2016, Woodside Energy International (Canada) Limited and Woodside Energy
(Canada LNG) Limited were the general partners of the KM LNG Operating General Partnership
holding a 99.99% and 0.01% partnership interest, respectively.

9. Woodside Energy (Senegal) Pty Ltd was incorporated on 27 January 2016 and Woodside Energy

Holdings (Senegal) Limited was incorporated on 22 June 2016.

10. This subsidiary was acquired on 28 October 2016. It changed its name from ConocoPhillips

Senegal B.V. to Woodside Energy (Senegal) B.V. on 26 January 2017.

11. These subsidiaries are under external administration and will be wound up voluntarily.

All subsidiaries were incorporated in Australia unless identified with one of
the following symbols:

l Brazil

 The Netherlands

¥ Tanzania

n Cameroon

z New Zealand

t Canada

£ France

y Singapore

º Spain

p UK

q USA

Recognition and measurement
Subsidiaries are all the entities over which the Group has the power over
the investee such that the Group is able to direct the relevant activities,
has exposure, or rights, to variable returns from its involvement with the
investee and has the ability to use its power over the investee to affect the
amount of the investor’s returns.

Woodside Petroleum Ltd | Financial Statements 121

NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS E. OTHER ITEMS
for the year ended 31 December 2016

E.9 Subsidiaries (cont.)

(b) Subsidiaries with material non-controlling interests

The Group has two Australian subsidiaries with material non-controlling
interests (NCI).

Name of entity

Burrup Facilities Company Pty Ltd

Burrup Train 1 Pty Ltd

Principal place of
business

Australia

% held
by NCI

10%

Closed Group Consolidated Income Statement and
Statement of Retained Earnings

(Loss)/profit before tax

Taxes

(Loss)/profit after tax

The consolidated income statement and statement of financial position of
the members of the Closed Group are set out below:

The NCI in both subsidiaries is 10% held by the same parties (refer to
footnote 5 above for details).

The summarised financial information (including consolidation adjustments
but before intercompany eliminations) of subsidiaries with material NCI is
as follows:

Retained earnings at the beginning of the financial year

Dividends

Retained earnings at the end of the financial year

Closed Group Consolidated Statement
of Financial Position

2016
US$m

2015
US$m

Current assets

Cash and cash equivalents

Burrup Facilities Company Pty Ltd

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Net assets

Accumulated balance of NCI

Revenue

Profit

Profit allocated to NCI

Dividends paid to NCI

Operating

Investing

Financing

673

5,609

(647)

(468)

5,167

517

1,187

607

(50)

920

(7)

(913)

579

5,343

(431)

(427)

5,064

506

1,076

533

(44)

813

(10)

(803)

Net increase/(decrease) in cash
and cash equivalents

Burrup Train 1 Pty Ltd

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Net assets

Accumulated balance of NCI

Revenue

Profit

Profit allocated to NCI

Dividends paid to NCI

Operating

Investing

Financing

698

3,244

(544)

(334)

3,064

306

2,017

442

(31)

672

(9)

(663)

483

3,151

(395)

(305)

2,934

293

1,796

337

(27)

519

(16)

(503)

Receivables

Inventories

Tax receivable

Assets held for sale

Total current assets

Non-current assets

Inventories

Other financial 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

Other financial liabilities

Other liabilities

Provisions

Liabilities held for sale

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

Net increase/(decrease) in cash
and cash equivalents

Issued and fully paid shares

Shares held for employee share plan

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 ASIC Class Order 98/1418. The
two entities represent a Closed Group for the purposes of the Class Order.

Other reserves

Retained earnings

Total equity

122 Woodside Petroleum Ltd | Annual Report 2016

2016
US$m

2015
US$m

(578)

(127)

(705)

4,061

(640)

2,716

210

(56)

154

5,637

(1,730)

4,061

1,288

882

182

145

1,420

1,367

25,920

24,949

945

3,581

879

3,476

30,542

29,412

31,962

30,779

302

112

476

396

131

156

751

19,638

17,208

422

878

21,024

21,500

10,462

364

936

18,611

19,362

11,417

6,919

6,547

(30)

857

2,716

10,462

(27)

836

4,061

11,417

NOTES TO THE FINANCIAL STATEMENTS E. OTHER ITEMS
for the year ended 31 December 2016

E.10 Other accounting policies

(a) Summary of other significant accounting policies

Derivative financial instruments
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.

Derivatives that are designated within qualifying hedge relationships are
initially recognised at fair value on the date the contract is entered into.
For relationships designated as fair value hedges, subsequent fair value
movements of the derivative are recognised in the income statement.
For relationships designated as cash flow hedges, subsequent fair value
movements of the derivative for the effective portion of the hedge are
recognised in other comprehensive income and accumulated in reserves
in equity; fair value movements for the ineffective portion are recognised
immediately in the income statement. Amounts accumulated in equity are
reclassified to profit or loss in the periods when the hedged item affects
profit or loss.

Financial guarantees
Financial guarantee contracts issued by the Group are those contracts
that require a payment to be made to reimburse the holder for a loss it
incurs because the specified debtor fails to make a payment when due
in accordance with the terms of a debt instrument. Financial guarantee
contracts are recognised initially as a liability at fair value, adjusted for
transaction costs that are directly attributable to the issuance of the
guarantee. Subsequently, the liability is measured at the higher of the best
estimate of the expenditure required to settle the present obligation at the
reporting date and the amount recognised less cumulative amortisation.

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 in Note E.9.

The tax expense/(benefit), 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.

Entities within the tax consolidated group have entered into a tax funding
arrangement and a tax sharing agreement with the head entity. Under
the tax funding agreement, Woodside Petroleum Ltd and each of the
entities in the tax consolidated group have agreed to pay or receive a tax
equivalent payment to or from the head entity, based on the current tax
liability or current tax asset of the entity.

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.

(b) New and amended standards and interpretations issued

but not yet effective

A number of new standards, amendment of standards and interpretations
have recently been issued but are not yet effective and have not been
adopted by the Group as at the financial reporting date.

The Group has reviewed these standards and interpretations, and with the
exception of the items listed below for which the final impact is yet to be
determined, none of the new or amended standards will significantly affect
the Group’s accounting policies, financial position or performance.

Title
AASB 15 Revenue
from Contracts with
Customers

Application date
of the standard
Periods beginning on
or after 1 January 2018

AASB 16 Leases

Periods beginning on
or after 1 January 2019

Summary
AASB 15 provides a single, principles-based five-step model to be applied to all contracts with
customers. Guidance is provided on topics such as the point at which revenue is recognised,
accounting for variable consideration, costs of fulfilling and obtaining a contract and various related
matters. New disclosures regarding revenue are also introduced.

Based on an initial impact assessment, the new standard is not expected to significantly impact
revenue recognition.

AASB 16 provides a new lessee accounting model which requires a lessee to recognise assets and
liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value.
A lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities
similarly to other financial liabilities. Assets and liabilities arising from a lease are initially measured
on a present value basis. The measurement includes non-cancellable lease payments (including
inflation-linked payments), and also includes payments to be made in optional periods if the lessee is
reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate
the lease. AASB 16 contains disclosure requirements for lessees.

Woodside Petroleum Ltd | Financial Statements 123

NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS E. OTHER ITEMS
for the year ended 31 December 2016

E.10 Other accounting policies (cont.)

The following Australian Accounting Standard will be adopted early by the Group as of 1 January 2017:

Title
AASB 9 Financial
Instruments

Application date
of the standard
Early adopted as at
1 January 2017

Summary
AASB 9 replaces AASB 139 and includes a model for classification and measurement, a single ‘expected loss’
impairment model and a substantially redesigned approach to hedge accounting.

On adoption of AASB 9, there are no expected material changes in the classification of financial assets and
liabilities. Fair value changes resulting from credit risk are not expected to have a significant impact on future
results. The introduction of the expected loss impairment model for determining credit provisions is not
expected to have a material impact.

The adoption of AASB 9 will mean the following key changes to Woodside’s hedge accounting:

a) The cost of hedging on the cross currency interest rate swap will be separated from the hedging

arrangement, recognised in other comprehensive income and amortised to the income statement over the
remaining life of the hedging instrument.

b) Effectiveness measurement testing will only be performed on a prospective basis.

As a result of adopting AASB 9, the accounting policies for financial instruments and hedging will be updated to
align with AASB 9 and are applicable from 1 January 2017.

The Group will apply AASB 9 on a retrospective basis.

124 Woodside Petroleum Ltd | Annual Report 2016

D
R
E
C
T
O
R
S

’

D
E
C
L
A
R
A
T
O
N

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 2016 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 2016 and of the

performance of the Group for the financial year ended 31 December 2016;

(c) the financial statements and notes thereto also comply with International Financial Reporting Standards as disclosed in the ‘About this report’ section

within the notes to the 2016 Financial Statements;

(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 E.9 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 2016.

For and on behalf of the Board

M A Chaney, AO
Chairman
Perth, Western Australia
1 March 2017

P J Coleman
Chief Executive Officer and Managing Director
Perth, Western Australia
1 March 2017

Woodside Petroleum Ltd | Financial Statements 125

INDEPENDENT AUDIT REPORT

Independent auditor’s report to the Shareholders of Woodside Petroleum Ltd

Report on the Audit of the Financial Report

We have audited the financial report of Woodside Petroleum Ltd (the Company), including its subsidiaries (the Group), which comprises the consolidated statement of financial
position as at 31 December 2016, 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.

Opinion

In our opinion:

the financial report of the Group is in accordance with the Corporations Act 2001, including:

(i)

(ii)

giving a true and fair view of the Group’s financial position as at 31 December 2016 and of its consolidated financial performance for the year ended on that date;
and

complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia; and we
have fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each
matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report, including in relation to these matters.
Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results
of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report.

Impairment of Non-current Assets

Why significant

How our audit addressed the key audit matter

Under Australian Accounting Standards, an entity shall assess throughout the
reporting period whether there is any indication that an asset may be impaired.
If any such indication exists, the entity shall estimate the recoverable amount of
the asset. At year end, the Group has concluded that there were no indicators of
impairment or reversal of impairment arising from its impairment trigger tests
for any of its Cash Generating Units (CGUs). As a result no impairment or
reversal of impairment was recognised during the year.

We evaluated the assumptions, methodologies and conclusions used by the
Group, in particular, those relating to the determination of CGUs, forecast cash
flows and inputs used to formulate them. This included assessing, in
conjunction with our valuation specialists, the discount rates, foreign exchange
rates and commodity prices with reference to market prices (where available),
market research, market practice, market indices, broker consensus and
historical performance.

The assessment of indicators of impairment and reversal of impairment is
complex and highly judgmental, and includes modelling a range of assumptions
and estimates that are affected by expected future performance and market
conditions.

Key assumptions, judgements and estimates used in the Group’s assessment of
impairment and reversal of impairment of non-current assets are set out in the
financial report in notes B.3 and B.4.

In accordance with Australian Auditing Standards, we relied on the work of
management’s experts with respect to the hydrocarbon reserve assumptions
used in the cash flow forecasts. This included understanding the reserve
estimation processes carried out, Woodside’s internal certification process for
technical and commercial experts who are responsible for reserves, the design
of Woodside’s Petroleum Resources Management procedures and its alignment
with the guidelines prepared by the Society of Petroleum Engineers. We
checked that the updated reserves and resources estimates were included in
the assessment of impairment triggers, calculation of depreciation, depletion
and amortisation and decommissioning provisions. We also examined the
qualifications, objectivity and experience of management’s experts, and
assessed that key reserves economics assumptions were consistent with other
operational information. We agreed cost assumptions to the latest approved
budgets and forecasts.

We also focused on the adequacy of the financial report disclosures regarding
those assumptions, to which the Group’s assessment of impairment and
reversal of impairment of non-current assets are most sensitive, being those
that would have the most significant effect on the determination of the
recoverable amount where a trigger is identified. This has been disclosed in
Note B.4.

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

A member firm of Ernst & Young Global Limited

126 Woodside Petroleum Ltd | Annual Report 2016

Accounting for Petroleum Resources Rent Tax (PRRT) Assets

Why significant

How our audit addressed the key audit matter

N
D
E
P
E
N
D
E
N
T
A
U
D
T
R
E
P
O
R
T

The consolidated financial statements of the Group include deferred tax assets
arising from PRRT and associated PRRT tax benefits. The determination of the
quantum, likelihood and timing of the realisation of deferred tax assets arising
from PRRT is highly judgemental and assessed on a basis consistent with the
impairment assumptions set out above as well as other factors such as the long
term bond rate applied to the assessment of augmentation of deductible
expenditure.

The Group’s disclosures about PRRT are included in the summary of significant
accounting policies in Note A.5.

Information Other than the Financial Statements and Auditor’s Report

We assessed the application of the judgements and methodologies used by the
Group to estimate the utilisation of deferred tax assets in the future. In
particular we assessed those judgements and methodologies relating to the
estimation of future PRRT assessable profits, the interpretation of PRRT
legislation and the consistency in application of forecasted performance with
other forecasts made, such as impairment modelling.

The Directors are responsible for the other information. The other information comprises the information in the Group’s Annual Report for the year ended 31 December 2016, but
does not include the financial report and the auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based upon the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Directors’ Responsibilities 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 control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.

In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

►

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

►

Obtain an understanding of internal control relevant to the audit 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 control.

►

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

►

Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting in the preparation of the financial report. We also conclude, based on the audit
evidence obtained, whether a material uncertainty exists related to events and conditions that may cast significant doubt on the entity’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report to the disclosures in the financial report about the material
uncertainty or, if such disclosures are inadequate, to modify the opinion on the financial report. However, future events or conditions may cause an entity to cease to continue
as a going concern.

Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express and opinion on the financial
report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.

We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

Woodside Petroleum Ltd | Financial Statements 127

Independent audit report (cont.)

From the matters communicated to the Directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 76 to 90 of the Directors' Report for the year ended 31 December 2016. In our opinion, the Remuneration Report of
Woodside Petroleum Ltd for the year ended 31 December 2016, complies with section 300A of the Corporations Act 2001.

Responsibilities

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.

Ernst & Young

T S Hammond
Engagement Partner
Perth
1 March 2017

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

A member firm of Ernst & Young Global Limited

128 Woodside Petroleum Ltd | Annual Report 2016

As at 14 February 2017

Shareholder statistics

Number of shareholdings
There were 213,041 shareholders. All issued shares carry voting rights on a one-for-one basis.

Distribution of shareholdings

Size of shareholding

1 - 1,000

1,001 - 5,000

5,001 - 10,000

10,001 - 100,000

100,001 - 9,999,999,999

Total

*Small differences are due to rounding.

Number of holders

Number of shares

% of issued capital

154,211

52,150

4,608

1,972

100

213,041

60,596,349

106,549,332

32,017,708

38,861,734

604,419,780

842,444,903

7.19

12.65

3.80

4.61

71.75

100.00

Unmarketable parcels
There were 3,060 members holding less than a marketable parcel of shares in the company.

Twenty largest shareholders

HSBC Custody Nominees (Australia) Limited

Shell Energy Holdings Australia Limited

J P Morgan Nominees Australia Limited

Citicorp Nominees Pty Limited

National Nominees Limited

BNP Paribas Nominees Pty Ltd

BNP Paribas Noms Pty Ltd

Citicorp Nominees Pty Limited

AMP Life Limited

Pacific Custodians Pty Limited

Citicorp Nominees Pty Limited

Australian Foundation Investment Company Limited

HSBC Custody Nominees (Australia) Limited

RBC Investor Services Australia Nominees Pty Limited

Argo Investments Limited

Navigator Australia Ltd

RBC Investor Services Australia Nominees Pty Limited

Nulis Nominees (Australia) Limited

HSBC Custody Nominees (Australia) Limited

UBS Nominees Pty Ltd

Total

Shares held

% of issued capital

200,596,797

111,847,852

109,865,607

66,831,299

26,985,691

15,636,301

10,507,114

8,208,634

4,074,203

3,862,752

3,524,448

3,282,886

3,141,116

2,132,331

1,700,873

1,445,831

1,345,445

1,217,938

1,193,768

1,151,294

23.81

13.28

13.04

7.93

3.20

1.86

1.25

0.97

0.48

0.46

0.42

0.39

0.37

0.25

0.20

0.17

0.16

0.14

578,552,180

68.68

Substantial shareholders as disclosed in substantial shareholder notices given to the company are as follows:

Shell Energy Holdings Australia Limited

111,847,852

13.58

Shell Energy Holdings Australia Limited’s most recent notice of change of interests of substantial shareholder was given on 23 June 2014.

Woodside Petroleum Ltd | Shareholder Information 129

SHAREHOLDER INFORMATION
Dividend payments
Woodside declares its dividends in US dollars
as this is our functional and presentation
currency. Woodside pays its dividends in
Australian dollars, unless a shareholder’s
registered address is in the United Kingdom
(UK), where they are paid in UK pounds
sterling, or in the United States of America
(USA), where they are paid in US dollars.

Shareholders may have their dividends paid
directly into any bank or building society
account in Australia, the USA or the UK.
Payments are electronically credited on the
dividend payment date and confirmed by
payment advice. To request direct crediting of
dividend payments, please contact the share
registry or visit the share registry website
(www.investorcentre.com/wpl).

Shareholders must make an election to alter
their dividend currency by the business day
after the record date for the dividend.

Shareholders who reside outside of the USA,
the UK and Australia may elect to receive
their dividend electronically in their local
currency using the share registry’s Global
Wire Payment Service. For a list of currencies
offered and how to subscribe to the service,
please contact the share registry.

American Depositary Receipts
Citbank (Citi) sponsors a level-one American
Depositary Receipts (ADR) program in the
USA. One Woodside share equals one ADR
and trades over the counter under the symbol
‘WOPEY’.

ADR holders should deal directly with Citi on
all matters related to their ADRs.

Enquiries should be directed to:
Citibank Shareholder Services
PO Box 43077
Providence, Rhode Island 02940-3077

Contact information
USA Toll Free Number: 1-877-CITI-ADR
Number for international callers:
1-781-575-4555
Facsimile: 1-201-324-3284
Email: Citibank@shareholders-online.com

Investor Relations: enquiries
Requests for specific information on
the company can be directed to
Investor Relations:

Investor Relations
Woodside Petroleum Ltd
Woodside Plaza
240 St Georges Terrace
Perth, WA 6000

The history of dividends paid by the
company can be found on the company’s
website.

Postal address:
GPO Box D188
Perth, WA 6840

Telephone: +61 8 9348 4000
Facsimile: +61 8 9214 2777

Email: investor@woodside.com.au
Website: www.woodside.com.au

Change of address or banking
details
Shareholders should immediately notify the
share registry of any change to their address
or banking arrangements for dividends
electronically credited to a bank account.

Changes can be made online
at the share registry website
www.investorcentre.com/wpl

Australian Securities
Exchange listing
Woodside Petroleum Ltd securities are listed
on the ASX under the code WPL.

Annual General Meeting
The 2017 Annual General Meeting (AGM)
of Woodside Petroleum Ltd will be held at
10.00 am (AWST) on 5 May 2017, at the Perth
Convention & Exhibition Centre, 21 Mounts Bay
Road, Perth, Western Australia. Details of the
business of the meeting will be provided in the
AGM notice.

The AGM will be webcast live on the internet.
An archive version of the webcast will be
placed on the Woodside website to enable the
proceedings to be viewed at a later time.

Copies of the Chairman’s and the
CEO’s speeches will be available on the
company’s website.

Share registry: enquiries
Investors seeking information about
their shareholdings should contact the
company’s share registry:

Computershare Investor Services
Pty Limited

Level 11, 172 St Georges Terrace
Perth, WA 6000

Postal address: GPO Box D182
Perth, WA 6840

Telephone: 1300 558 507 (within Australia)
+61 3 9415 4632 (outside Australia)

Facsimile: +61 3 9473 2500

Email: web.queries@computershare.com.au
Website: www.investorcentre.com/wpl

The share registry can assist with queries
on share transfers, dividend payments, the
Dividend Reinvestment Plan, notification
of tax file numbers and changes of name,
address or bank account details.

Details of shareholdings can be
checked conveniently and simply by
visiting the share registry website at
www.investorcentre.com/wpl

For security reasons, you will need your
Security Reference Number (SRN) or
Holder Identification Number (HIN) when
communicating with the share registry.

The share registry website allows shareholders
to make changes to address and banking
details online.

130 Woodside Petroleum Ltd | Annual Report 2016

Business directory

Dakar
Woodside Energy (Senegal) Ltd
1st Floor SIA Building
Route de Ngor
Les Almadies, Dakar
SENEGAL

T: +221 338 397 050

Dili
Palm Business and Trade Centre
Block E01-06 Sur kmas, Fatumeta
BairroPite Dili
TIMOR-LESTE

T: + 670 3310804

Dublin
28 Fitzwilliam Place
Dublin 2
IRELAND

Houston
Sage Plaza
5151 San Felipe, Suite 980
Houston TX 77056
USA

T: +1 713 401 0000
F: +1 713 401 0088

Karratha
3747 Balmoral Road
Karratha WA 6714
AUSTRALIA

T: 1800 634 988

Postal address:
Woodside Energy Ltd
PO Box 517
Karratha WA 6714
AUSTRALIA

Registered Office
Perth
Woodside Petroleum Ltd
240 St Georges Terrace
Perth WA 6000
AUSTRALIA

T: +61 9348 4000

Postal address:
GPO Box D188
Perth WA 6840
AUSTRALIA

Beijing
32/F, Full Tower, 3206
No. 9 East Third Ring Road
Chaoyang District
Beijing 100020
CHINA

T: +8610 8591 0577
F: +8610 8591 0579

Broome
29 Coghlan Street
Broome WA 6725
AUSTRALIA

T: 1800 036 654

Postal address:
Woodside Energy Ltd
PO Box 2751
Broome WA 6725
AUSTRALIA

Calgary
Woodside Energy International (Canada) Ltd
Suite 3750
421-7th Avenue SW
Calgary Alberta T2P 4K9
CANADA

T: +1 855 956 0916

Postal address:
Woodside Energy (International) Canada
Limited
PO Box 22240 Bankers Hall
Calgary Alberta T2P 4J6
CANADA

London
3rd Floor, Pollen House
10-12 Cork Street
London W1S 3NP
UNITED KINGDOM

T: + 44 20 7009 3900

Seoul
11F Kwanghwamun Building
211, Sejong-daero, Jongno-gu
Seoul 110-730
KOREA

T: +822 739 3290
F: +822 739 3293

Singapore
12 Marina View
Asia Square Tower 2 #18-03
Singapore 018961
SINGAPORE

T: +65 6709 8000

Tokyo
Imperial Tower
1-1 Uchisaiwaicho 1-Chome
Chiyoda-ku
Tokyo 100-0011
JAPAN

T: +813 3501 7031
F: +813 3581 2689

Wellington
Level 16
Vodafone on the Quay
157 Lambton Quay
Wellington 6011
NEW ZEALAND

Yangon
70/LA2 Golden Valley Road
Bahan Township
Yangon
MYANMAR (BURMA)

Woodside Petroleum Ltd | Shareholder Information 131
Woodside Petroleum Ltd | Shareholder Information 131

SHAREHOLDER INFORMATION

Key announcements 2016

January

February

Woodside discovers gas offshore Myanmar

Update on Wheatstone schedule

Woodside makes second gas discovery in Myanmar

Woodside full-year 2015 results

Appointment of non-executive director (Pickard)

Browse development update

Woodside signs HOA for long-term LNG supply to Pertamina

Woodside books contingent resource in Myanmar

2016 Investor Briefing Day

Greater Enfield oil development approved

Woodside agrees to acquire ConocoPhillips’ Senegal interests

Woodside records first-half profit of US$340m

March

April

May

June

July

August

September

Woodside agrees to acquire half of BHP Billiton’s Scarborough assets

October

Wheatstone cost update

Woodside completes acquisition of interests in Senegal from ConocoPhillips

November

Woodside completes acquisition of half of BHP Billiton's Scarborough area assets

Appointment of non-executive director (Macfarlane)

December

Appointment of non-executive director (Archibald)

Events calendar 2017

Key calendar dates for Woodside shareholders in 2017.

Please note dates are subject to review.

February

March

April

May

June

July

August

October

22 Full-year 2016 results

Annual Report 2016 released

Ex-dividend date for final dividend

Record date for final dividend

Sustainable Development Report 2016 released

29 Payment date for final dividend

20 First quarter 2017 report

3 Annual General Meeting Proxy returns close at 10.00 am (AWST)

5 Annual General Meeting

2017 Investor Briefing Day

30 Half-year end

20 Second quarter 2017 report

16 Half-year 2017 report

Third quarter 2017 report

December

31 Year-end 2017

132 Woodside Petroleum Ltd | Annual Report 2016

Glossary, units of measure and
conversion factors

Glossary
$, $m

Acquisition costs

US dollars unless otherwise stated, millions
of dollars

Gross margin

Proved reserves

Best Estimate of Contingent resources

Proved plus Probable reserves

2016 acquisition expenditure divided by
contingent resources (2C) added through
2016 acquisition activity

AGM

Annual General Meeting

Appraisal well

A well drilled to follow up a discovery and
evaluate its commercial potential

ASX

AUD

Boe

Break-even cash
cost of sales

Brent

Condensate

Cps

Crude oil

Australian Securities Exchange

Australian dollars

Barrels of oil equivalent

Break-even cash cost of sales includes production
costs, royalty and excise, shipping and direct
sales costs, carbon costs and insurance; excludes
exploration and evaluation, general administrative
and other costs, depletion, depreciation and
amortisation, PRRT and income tax

Intercontinental Exchange (ICE) Brent Crude
deliverable futures contract (oil price)

Hydrocarbons that are gaseous in a reservoir but
that condense to form liquids as they rise to
the surface

Cents per share

Oil that is produced from a reservoir after any
associated gas has been removed

Development well A well drilled for the purpose of recovering

Gross profit divided by operating revenue.
Gross profit excludes income tax, PRRT, net
finance costs, other income and other expenses
(refer to section A.1 of the Financial Statements
for data)

GWF

HoA

Greater Western Flank

Heads of Agreement

Infill well

Drilled for the purpose of increasing production

IOGP

ISO

JCC

KGP

LHS

LIBOR

LNG

LPG

LTIF

International Association of Oil and Gas Producers

International Organisation for Standardisation

The Japan Customs-cleared Crude is the average
price of customs-cleared crude oil imports into
Japan as reported in customs statistics (also
known as ‘Japanese Crude Cocktail’) and is used
as the reference price for long-term supply
LNG contracts

Joint venture

Karratha Gas Plant

Left hand side

London Inter-Bank Offer Rate

Liquefied natural gas

Liquefied petroleum gas

Lost time injury frequency

Net debt

Total debt less cash and cash equivalents

NPAT

NWS

PEP

PRRT

PSC

PSE

Net profit after tax

North West Shelf

Petroleum exploration permit

Petroleum Resources Rent Tax

Production sharing contract

Process safety event

DRP

EBIT

EEP

EPS

hydrocarbons

Dividend Reinvestment Plan

Employee equity plan

Earnings per share

EBIT is calculated as a profit before income tax,
PRRT and net finance costs

Q1, Q2, Q3, Q4

Quarters of the calendar year (Q1 is 1 January to
31 March, Q2 is 1 April to 30 June, Q3 is 1 July to
30 September, Q4 is 1 October to 31 December)

RAP

Woodside’s Reconciliation Action Plan

Exploration licence A licence to explore for oil or gas in a particular
area issued to a company by a governing state

Return on equity

Farm-in

FEED

FEL

FID

Where one company acquires an interest in an
exploration permit or production licence by
paying some of the past or future costs of another
company that is relinquishing its interest

Front-end engineering and design. Preliminary
design and cost and schedule confirmation before
a FID

Frontier Exploration Licence

Final investment decision

Finding and
acquisition costs

2016 exploration and acquisition investment
expenditure divided by contingent resources (2C)
added through 2016 exploration and acquisition
activity

RHS

ROACE

SPA

Tier 1 PSE

Tier 2 PSE

First half, second
half

Halves of the calendar year (i.e. H1 is 1 January to
30 June, H2 is 1 July to 31 December)

TRIR

Flaring

FLNG

FPSO

Free cash flow

Gas-Up and
Cool-Down

Gearing

The controlled burning of gas found in oil and
gas reservoirs

Floating liquefied natural gas

Floating production storage and offloading

Cash flow from operating activities less cash flow
from investing activities

An operation to cool a vessel’s LNG tanks prior
to loading

Net debt divided by net debt and equity
attributable to the equity holders of the parent

Return on shareholder funds is calculated as
NPAT (excluding non-controlling interests)
divided by equity attributable to the equity
holders of the parent

Right hand side

Return on average capital employed is calculated
as EBIT divided by average non-current liabilities
and average equity attributable to equity holders
of the parent

Sales and purchase agreement

A typical Tier 1 PSE is loss of containment of
hydrocarbons greater than 500 kg (in any
one-hour period)

A typical Tier 2 PSE is loss of containment of
hydrocarbons greater than 50 kg but less than
500 kg (in any one-hour period)

Total recordable injury rate. The number of
recordable injuries (fatalities + lost workday cases
+ restricted workday cases + medical treatment
cases) per 1,000,000 hours worked

TSR

Total shareholder return

Unit production
costs

Production costs ($ million) divided by production
volume (MMboe)

USA

USD

United States of America

US dollars

Western Australia

Woodside Petroleum Ltd | Shareholder Information 133

SHAREHOLDER INFORMATION
Glossary, units of measure and conversion factors cont.

Glossary of key terms used in the
Remuneration Report

Term
Committee

EIP

Executive

Meaning
The Human Resources & Compensation
Committee

The Executive Incentive Plan

Equity Right. ERs are awarded under the WEP
and SWEP and each one entitles participants
to receive a fully paid share in Woodside on the
vesting date (or a cash equivalent in the case of
international assignees). No amount is payable by
the Executive on the grant or vesting of an ER

A senior employee whom the Board has
determined to be eligible to participate in the EIP

Executive Director Peter Coleman

Executive KMP

The Executive Director and senior executives
listed in Table 1

KMP

KPI

LTA

NED

Key management personnel

Key performance indicator

Long-term award

Non-executive director

NEDSP

The Non-executive Director Share Plan

Performance Year The year to which an EIP award relates

Restricted Shares Woodside ordinary shares that are awarded to
Executives as the deferred component of their
STA. No amount is payable by the Executive on
the grant or vesting of a Restricted Share

RTSR

Scorecard

STA

SWEP

VAR

VPR

Relative total shareholder return

A corporate scorecard of key measures that aligns
with Woodside’s overall business performance

Short-term award

The Supplementary Woodside Equity Plan

Variable Annual Reward

Variable Pay Right. Each VPR is a right to receive
a fully paid ordinary share in Woodside (or, at the
Board’s discretion, as cash equivalent). No amount
is payable by the Executive on the grant or vesting
of a VPR

WEP

The Woodside Equity Plan

Units of measure
bbl

Bcf

BCM

boe

kPa

Mcf

MMbbl

MMboe

MMBtu

MPa

Mtpa

psi

Tcf

barrel

billion cubic feet

billion cubic metres

barrel of oil equivalent

thousands of Pascals

thousand cubic feet

million barrels

million barrels of oil equivalent

million British thermal units

millions of Pascals

million tonnes per annum

pounds per square inch

tonnes

trillion cubic feet

terajoules

Conversion factors

Product
Australian Pipeline Natural Gas

Factor
1 TJ

Conversion factors1
163.6 boe

Liquefied Natural Gas (LNG)

1 tonne

8.9055 boe

Condensate

Oil

1 bbl

1.000 boe

Liquefied Petroleum Gas (LPG)

1 tonne

8.1876 boe

Gulf of Mexico Pipeline Natural Gas

1 MMBtu

0.1724 boe

1. Minor changes to some conversion factors can occur over time due to gradual changes in

the process stream.

134 Woodside Petroleum Ltd | Annual Report 2016

Index

A
American Depositary Receipts (ADR)
Annual General Meeting (AGM)
Anti-bribery and corruption
Areas of activity
Australia Oil
B
Balance sheet
Balnaves
Board of Directors
Brent oil price
Browse LNG

C
Cameroon
Canada

Canary Islands
CEO remuneration
Chairman’s report
Compass (workplace culture)
Compliance

Contingent resources
Conversion factors
Corporate governance
Credit rating
D
Directors’ declaration
Diversity
Dividend
Dividend Reinvestment Plan
Drilling

E
Effective income tax
Emissions
Employees

Events calendar 2017
Exchange rate
Executives
External auditor relationship
F
Financial position
Financial Statements

Floating LNG (FLNG)
Free cash flow
G
Gabon
Gearing
Global exploration
Goodwyn A
Graduates
Greater Enfield
Greater Western Flank
Gulf of Mexico
H
Health and safety
I
Indigenous
K
Karratha Gas Plant (KGP)
Kitimat LNG
L
Laminaria-Corallina
Long-term award (LTA)

130
72, 83, 110, 130, 132, 133
50, 59
2
40, 41, 100, 101, 105, 115, 136, 138

17, 103, 118, 138
100, 108, 136
67, 98
17
33, 61, 63, 100, 101, 105, 115, 119,
121, 132, 136

119, 121
32, 33, 41, 61, 62, 63, 100, 121, 131,
136, 137
119
84
8
iv, 68
ii, 12, 33, 40, 50, 58, 59, 68, 69,
98, 103
33, 60, 61
ii, 63
68, 69
6, 18, 98, 113

125
44, 48, 49, 57, 68
5, 18, 69, 98, 102, 110, 130
110, 130
7, 12, 18, 23, 24, 25, 31, 32, 36, 58,
63, 106, 117

16, 138
59
48, 56, 68, 75, 79, 82, 84, 115, 117,
118, 138
132
17, 99
76, 80, 90, 117, 118, 134
68

ii, 98, 99, 103, 110, 111, 122, 123
17, 69, 70, 76, 91, 92, 93, 94,
95, 96, 97, 98, 102, 106, 107, 109,
112, 117, 119, 123, 125, 133
33
6, 133

25, 121
133, 138
137
31, 38, 56
48, 52
31, 132, 136, 137
31, 39, 133, 136
134

4, 50, 58, 78

48, 49, 53, 79, 80, 81

38, 56, 133
32, 56

92, 102, 108, 119
72

M
Morocco
Myanmar
N
Net profit after tax (NPAT)
New Zealand
Nganhurra FPSO
North Rankin Complex
North West Shelf Project
O
Okha FPSO
Operating and Financial Review
Outer Canning
P
Payout ratio
Peru
Pluto LNG
Production
Production Sharing Contract
Proved plus probable reserves
Proved reserves
R
Realised prices
Reconciliation Action Plan (RAP)
Remuneration Report
Reserves and resource statement
Reserves replacement ratio
Return on equity
Risk management
S
Sales revenue
Scarborough

Security
Seismic
Senegal

Sensitivities
Shareholdings: distribution
Share plans
Share registry: enquiries
Short-term award (STA)
Spain (Canary Islands)
Strategy
Sunrise
T
Tanzania
Technology
Timor-Leste
Total recordable injury rate (TRIR)
Total shareholder return (TSR)
Turnaround
Turnover
U
United States of America (USA)
V
Vincent
Vision
Volume weighted average
Volunteering
W
Wheatstone

24, 121
24, 56, 57, 121, 132, 136

133
24, 121
40
31, 38
100, 103, 133

136
59, 98
119

18
121
36, 56, 100, 112, 121
133, 137, 138
133
63, 107, 133, 137
107, 133

16
48, 133
78, 80, 82, 84, 86, 88, 90
63
60, 63
16, 133
58, 68, 98, 99, 110, 113

137
3, 6, 8, 10, 11, 21, 33, 60, 61, 63,
81, 92, 109, 119, 120, 132, 136
12, 130
18, 23, 24, 25, 36, 56, 57
1, 6, 7, 10, 11, 17, 20, 23, 24, 25, 27,
60, 61, 63, 81, 92, 100, 109, 120,
121, 132, 136, 137
17, 75
129
117
130
72, 78, 79, 118
121
12, 23, 66
33, 61, 63, 136

121
12, 32, 48, 56, 57, 67, 76, 85
33
5, 54, 55, 80, 133
72, 133, 134
17, 31, 36, 38, 39
49, 80

66, 100, 111, 121, 130, 131, 133, 136

40, 63, 100, 108, 119
ii, iv, 23, 50, 68
16
52

7, 17, 28, 41, 61, 62, 63, 100, 101,
103, 105, 108, 115, 119, 132, 136, 137

X
Xena

Woodside Petroleum Ltd | Shareholder Information 135

SHAREHOLDER INFORMATION

Asset facts

PRODUCING FACILITIES
Australia

International

North West
Shelf

Karratha Gas
Plant

North Rankin
Complex

Goodwyn A
Platform

Angel Platform Okha FPSO

Canada Kitimat LNG

Role Operator

Equity 16.67%

Operator

16.67%

Operator

16.67%

Operator

16.67%

Product LNG, pipeline

natural gas,
condensate
and LPG

LNG, pipeline
natural gas,
condensate
and LPG

Operator

33.33%

Condensate
and Oil

Role Non-operator

Equity 50%

Product Pipeline natural gas

Pluto LNG Pluto LNG

Platform

Role Operator

Equity 90%

Product LNG and

condensate

Pluto LNG
Plant

Operator

90%

LNG and
condensate

Australia Oil Ngujima-Yin

FPSO

Nganhurra
FPSO

Armada Claire
FPSO1

Northern Endeavour FPSO2

Operator

60%

Oil

60%

Oil

65%

Oil

59.9-66.7%

Oil

PROJECTS
Australia

Persephone
Project

Greater
Western Flank
Phase 2 Project

Wheatstone
LNG

Julimar Project Greater Enfield

Project

Role Operator

Equity 16.67%

Operator

16.67%

Non-operator Operator

Operator

13%

65%

60%

Oil

Product LNG, pipeline

natural gas and
condensate

LNG, pipeline
natural gas and
condensate

DEVELOPMENTS

Australia

International

Browse
Development

Sunrise LNG

Scarborough

USA Port Arthur
LNG

Canada Kitimat LNG

Senegal SNE

Role Operator

Operator

Operator and
non-operator

Equity 30.60%

33.44%

25%–50%

Role Non-operator

Project
Development
Agreement

Equity 50%

Equity 35%

EXPLORATION
Australia and Asia-Pacific

Australia Various titles3

New Zealand PEP-55793 and

Myanmar AD-5 and A-7 AD-74 and A-6 AD-2 and A-4

Role Operator and
non-operator

Equity Various equities

Product Oil or gas prone
basin

PEP-55794

Operator

70%

Oil or gas prone
basin

Operator

Joint-operator Non-operator

55% and 45%

40%

45%

Gas prone
basin

Atlantic Margins

Senegal Rufisque Offshore, Sangomar
Offshore and Sangomar Deep
Offshore

Role Non-operator

Equity 35%

Product Oil prone basin

Sub-Saharan Africa

Gabon5 F15 Doukou
Dak and E13
Luna Muetse

Role Non-operator

Equity 40%

Product Oil prone basin

Morrocco Rabat Deep
I-VI

Non-operator

25%

Oil prone basin

Ireland FEL 3/14, 4/14, 5/13, 5/14 & LO

16/14

Operator

60%–100%

Oil or gas prone basin

Latin America

Peru Block 108

Role Non-operator

Equity 35%

Product Oil prone basin

1. Operations ceased at the Balnaves oilfield in March 2016, with the permanent departure of the Armada Claire FPSO facility in early April 2016.
2. In September 2015, Woodside entered into a conditional agreement to sell interests in the Laminaria-Corallina Joint Venture. This transaction was completed in April 2016.
3. For further information on Woodside’s Australian titles, please refer to the titles register website (neats.nopta.gov.au).
4. Operator for deep-water drilling.
5. Woodside farm-in to Luna-Muetse Block is awaiting final Government approval.

136 Woodside Petroleum Ltd | Annual Report 2016

Summary charts

Product view

Regional view

Investment

Gas and condensate*

Oil*

Exploration and other

2016

63%

24%

13%

2015

89%

*Indicative only as some assets produce oil
and gas.

Investment

Australia

Canada

Rest of World

2016

69%

24%

2015

80%

18%

Our investment expenditure was primarily directed towards
Wheatstone LNG as well as acquisitions in Senegal and Australia.

Capital investment in 2016 was primarily in the north-west of
Australia, with the majority of the remainder in Canada and Senegal.

Production

Natural gas*

Oil

Condensate

2016

83%

10%

2015

78%

13%

Production

Australia

Canada

Rest of World

2016

98%

2015

99%

<1%

* Includes LNG, LPG and pipeline gas.

The majority of our production is from natural gas at the NWS and
Pluto LNG. The proportion of natural gas increased in 2016 due to
continued strong production at the NWS and Pluto LNG.

Australian assets continue to provide the majority of Woodside’s
production volumes.

Sales revenue

Natural gas*

Oil

Condensate

2016

81%

11%

2015

76%

15%

* Includes LNG, LPG and pipeline gas.

Australia

Canada

Rest of World

2016

99%

<1%

2015

99%

<1%

Gas continues to provide the majority of our sales revenue. The
contribution of natural gas and condensate increased in 2016 due to
continued strong production at the NWS and Pluto LNG.

The majority of our revenue is currently derived from Australia.

Reserves (Proved plus Probable)

Dry gas

Oil

Condensate

2016

86%

2015

88%

Australia

Canada

Rest of World

2016

99%

2015

99%

Gas represents the largest portion of Woodside’s Proved plus
Probable reserves. Oil reserves increased in 2016 with the decision
to develop the Greater Enfield Project.

The majority of Woodside’s Proved plus Probable reserves are
located in Australia. We anticipate a greater diversity in the future
resulting from our global exploration and business development
activities.

Woodside Petroleum Ltd | Shareholder Information 137

SHAREHOLDER INFORMATION

Ten-year comparative data summary

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

Profit and
Loss
(USDm)1

Balance
Sheet
(USDm)1

Cash Flow
(USDm)
and Capital
Expenditure
(USDm)1

Volumes

Other ASX
Data

Operating Revenues
Australia Pipeline Gas
Australia LNG
Australia LPG
Australia Condensate
Australia Oil
Australia LNG Processing Revenue
Australia Trading Revenue
Other International
Total
EBITDAX
EBITDA2
EBIT
Exploration and Evaluation
Depreciation and Amortisation
Amortisation of Licence Acquisition Costs
Impairment/(Impairment Reversal)
Net Finance Costs
Tax Expense
Non-controlling Interest
Reported NPAT
Reported EPS (cents)3
DPS (cents)
Total Assets
Debt
Net Debt
Shareholder Equity
Cash flow from Operations
Cash flow from Investing
Cash flow from Financing
Capital Expenditure
Exploration and Evaluation
Oil and Gas Properties and Property, Plant
and Equipment
ROACE4
Return on Equity
Gearing
Sales (million boe)
Australia Pipeline Gas
Australia LNG
Australia LPG
Australia Condensate
Australia Oil
Other International
Total (million boe)
Production (million boe)
Australia Pipeline Gas
Australia LNG
Australia LPG
Australia Condensate
Australia Oil
Other International
Total (million boe)
Reserves (Proved plus Probable) Gas (Tcf)
Reserves (Proved plus Probable) Condensate
(MMbbl)
Reserves (Proved plus Probable) Oil (MMbbl)
Other
Employees
Shares

(%)
(%)

High (A$)
Low (A$)
Close (A$)
Number (000’s)

Number of Shareholders
Market Capitalisation (USD equivalent
at reporting date)
Market Capitalisation (AUD equivalent
at reporting date)
Finding Costs ($/boe) (3 year average)5
Reported Effective Income Tax Rate
Net Debt/Total Market Capitalisation

292
2,751
34
413
302
202
70
11
4,075
3,004
2,734
1,388
270
1,320
26
-
48
367
105
868
104
83
24,753
4,973
4,688
14,839
2,587
(2,473)
51

965

1,214

6.2
5.8
24.0

12.9
63.6
0.7
9.3
6.9
1.6
95.0

12.9
63.7
0.7
9.3
6.7
1.6
94.9
7.09

124.2

74.4

295
3,095
34
421
650
180
354
1
5,030
3,443
3,063
441
380
1,517
22
1,083
85
243
87
26
3
109
23,839
4,441
4,319
14,226
2,475
(5,555)
(58)

1,305

4,309

2.0
0.2
23.3

13.2
57.6
0.7
8.5
12.5
0.2
92.7

13.1
57.5
0.7
8.4
12.3
0.2
92.2
7.59

133.5

42.6

376
4,563
80
901
1,133
198
161
23
7,435
5,853
5,568
3,672
285
1,441
21
434
163
993
102
2,414
293
255
24,082
2,586
(682)
15,824
4,785
(617)
(3,119)

366
3,347
88
1,000
896
150
-
79
5,926
4,460
4,188
2,538
272
1,218
45
387
179
545
65
1,749
213
249
23,770
3,764
1,541
15,225
3,330
(1,059)
(2,470)

367
2,834
125
903
1,918

125
-
76
6,348
5,528
5,162
3,795
366
1,184
26
157
137
614
61
2,983
366
130
24,810
4,340
1,918
15,148
3,475
161
(1,252)

375
1,509
127
860
1,795

-
-
136
4,802
3,423
2,864
2,212
559
627
28
(3)
26
677
2
1,507
190
110
23,231
5,102
5,061
12,658
2,242
(3,533)
362

309
1,310
115
708
1,579

-
-

172
4,193
3,431
3,126
2,256
305
749
24
97
(18)
697
2
1,575
204
105
20,196
4,915
3,952
11,091
2,104
(2,941)
608

378
769
94
571
1,496

-
-

179
3,487
3,427
3,209
2,303
218
752
35
119
12
823
(6)

320
1,007
112
669
2,685

-
-

252
5,045
4,017
3,765
2,852
252
732
49
132
19
1,287

1,474
210
95
17,753
4,939
3,732
8,812
1,483
(4,708)
4,207

1,546
225
100
10,317
2,044
1,946
4,633
3,224
(3,892)
684

227
619
92
577
1,521
-
-
325
3,361
2,598
2,241
1,560
357
541
83
57
8
687
-
864
128
91
8,515
903
782
4,458
2,082
(1,700)
(522)

261

425

17.5
15.3
(4.5)

13.3
58.3
0.8
9.4
11.2
0.2
93.2

13.3
60.3
0.8
9.1
11.4
0.2
95.1
6.65

117.1

54.1

166

420

12.0
11.5
9.2

14.0
52.4
0.9
9.5
8.0
0.9
85.7

13.9
53.6
0.9
9.5
8.2
0.9
87.0
7.09

383

1,145

18.3
19.7
11.2

13.9
42.6
1.1
8.6
16.8
0.8
83.8

13.8
43.9
1.1
9.3
16.0
0.8
84.9
7.51

778

2,651

11.8
11.9
28.6

14.0
22.4
1.1
7.8
15.7
2.9
63.9

14.0
22.6
1.2
7.9
16.0
2.9
64.6
7.80

703

273

418

2,933

3,992

4,031

13.5
14.2
26.3

14.8
22.7
1.3
9.1
19.8
4.5
72.2

14.8
23.2
1.4
9.1
19.7
4.5
72.7
8.02

19.0
16.7
29.8

18.4
21.3
1.5
9.7
24.3
5.5
80.7

18.4
21.5
1.5
9.5
24.5
5.5
80.9
7.79

147.8

37.1
33.4
29.6

18.9
17.0
1.2
7.9
29.8
5.4
80.2

18.9
17.4
1.2
7.9
30.5
5.4
81.3
7.90

151.4

447

1,965

24.3
19.4
14.9

16.4
17.0
1.2
7.8
20.4
6.9
69.7

16.4
17.4
1.2
8.0
20.5
7.1
70.6
7.80

152.1

125.2

130.9

138.7

154.7

67.0

95.9

108.5

117.5

136.1

168.8

170.2

3,511
31.88
23.94
31.16
842,445
214,350

3,456
38.33
26.20
28.72
823,911
225,138

3,803
44.23
33.71
38.01
823,911
227,798

3,896
3,997
3,856
39.54
38.16
50.85
33.29
30.09
29.76
38.90
33.88
30.62
805,672
823,911
823,911
217,383 208,277 205,868

3,650
49.28
40.56
42.56
783,402
201,134

3,219
53.87
31.19
47.20
748,599
175,257

3,124
70.51
26.81
36.70
698,553
141,035

2,981
56.66
34.81
50.39
688,331
131,460

18,922

17,250

25,664

28,579

28,983

25,287

33,745

31,567

17,717

30,353

26,251

39.06
35.9
24.8

(%)
(%)

23,663

31,317

32,050

27,914

24,670

33,342

35,334

25,637

34,685

107.45
49.8
25.0

44.09
30.1
(2.7)

30.43
29.8
5.4

14.09
27.2
6.6

12.67
30.5
20.0

6.12
25.2
11.6

5.71
33.7
11.8

3.35
32.6
11.0

3.60
35.8
2.6

1. Comparative financial information prior to 2010 has been converted on a consistent basis in accordance with Note 1(o) to the 2010 Financial Report. Cash flow and capital expenditure have been converted

using a consistent approach adopted on a conversion of expenses.

2. The calculation for EBITDA has been updated to exclude impairment and amortisation of licence acquisition costs. 2007 to 2013 EBITDA numbers have been restated to reflect this change in calculation.

EBIT is calculated as a profit before income tax, PRRT and net finance costs.

3. Earnings per share has been calculated using the following weighted average number of shares:

2016: 835,011,896; 2015: 822,943,960; 2014: 822,771,118; 2013: 822,983,715; 2012: 814,751,356; 2011: 791,668,973; 2010: 773,388,154; 2009: 703,310,697; 2008: 685,179,496; 2007: 671,447,950.
4. The calculation for ROACE has been revised in 2014 to use EBIT as the numerator, in addition to a change in the composition of capital employed. ROACE for 2007 to 2013 has been restated

to include this change.

5. Finding cost methodology is in accordance with the FAS69/SEC industry standard.

138 Woodside Petroleum Ltd | Annual Report 2016

Annual Report 2016

Head Office:
Woodside Petroleum Ltd
240 St Georges Terrace
Perth WA 6000

Postal address:
GPO Box D188
Perth WA 6840
Australia

T: +61 8 9348 4000
F: +61 8 9214 2777
E: companyinfo@woodside.com.au

Woodside Petroleum Ltd
ABN: 55 004 898 962

woodside.com.au