2012

ANNUAL

REPORT

A year of delivery
About this Report

This 2012 Annual Report is a summary of Woodside’s operations, 

activities and financial position as at 31 December 2012. 

Woodside Petroleum Ltd (ABN 55 004 898 962) is the parent 

company of the Woodside group of companies. In this report, 

unless otherwise stated, references to ‘Woodside’ and ‘the 

Group’, ‘we’, ‘us’ and ‘our’ refer to Woodside Petroleum Ltd 

and its controlled entities, as a whole. References to ‘the 

company’ refer to Woodside Petroleum Ltd unless otherwise 

stated. The text does not distinguish between the activities 

of the parent company and those of its controlled entities. 

References in this report to a ‘year’ is to the calendar and financial 

year ended 31 December 2012 unless otherwise stated. All dollar 

figures are expressed in US currency unless otherwise stated.

Woodside is continuing efforts to reduce its environmental 

footprint associated with the production of the Annual Report. 

Printed copies of the Annual Report will only be posted to 

shareholders who have elected to receive a printed copy.

The Annual Report is also printed on an environmentally 

responsible paper manufactured under ISO 14001 

environmental management standards, using elemental 

chlorine-free pulps from sustainable, well managed forests.

Our 2012 sustainable 

development Report

This report is a summary of Woodside’s 

sustainability approach, actions and performance 

for the 12 month period ending 31 December 2012.

This report will be available in March 2013.

Report objectives

This report meets our compliance and governance requirements, 

and is designed to provide easy to read information on how 

Woodside performed in 2012 for our stakeholders, including 

shareholders, staff, customers and the community.

We aim to build on awareness of our operations and demonstrate 

how we delivered on our mission and vision while ensuring that we 

maintain our values and commitment to sustainable development.

SUCCESS IS DOING 

WHAT’S RIGHT, EVEN 

WHEN IT’S NOT EASY.

It took many people and a significant amount 

of hard work to deliver Pluto LNG. However, 

when you are committed to safety, reliability 

and doing what’s right, the outcome is very 

rewarding.

Delivering Pluto wasn’t easy and the road to 

first gas was not without its challenges. But 

at Woodside, we pride ourselves on turning 

challenges into new opportunities.

The start-up of production at Pluto and 

delivery of the first cargo in 2012 were 

defining moments in Woodside’s history, 

reflecting our world-class capability and 

expertise. 

The ingenuity and capability demonstrated at 

Pluto has been rewarded with high reliability 

and on-going strong performance. In 2012 

Pluto was also recognised at a state and 

national level, receiving the WA Engineering 

Excellence Award and the Sir William Hudson 

Award – Australia’s top engineering honour.

We have partnered with Green 

Reports TM in an initiative that ensures 

communications minimise environmental 

impact and creates a more sustainable 

future for the community.

SCS-COC-004440

ii Woodside Petroleum Ltd. | 2012 Annual Report

ON THE COVER - THE PLUTO LNG PLANT (Burrup Peninsula, Western Australia) delivers safe and reliable production in 2012:
Woodside is Australia’s largest independent oil and gas 

company, with a proud history of safe and reliable operations 

spanning decades. 

As the largest operator of oil and gas in Australia, Woodside 

produces around 900,000 barrels of oil equivalent each day 

from a portfolio of facilities which we operate on behalf of some 

of the world’s major oil and gas companies. 

We have been operating our landmark Australian project, the 

North West Shelf, for 28 years and it remains one of the world’s 

premier liquefied natural gas (LNG) facilities. 

With the successful start-up of the Pluto LNG Plant in 2012, 

Woodside now operates six of the seven LNG processing trains 

in Australia, helping to meet the demand for cleaner energy 

from our pipeline customers in Australia and LNG customers in 

the Asia Pacific region and beyond. 

Woodside also operates four oil floating production storage and 

offloading (FPSO) vessels in the Exmouth Basin, North West 

Shelf and Timor Sea.

Woodside’s international assets include deepwater production 

facilities in the Gulf of Mexico plus acreage in the USA, Brazil, 

Peru, Republic of Korea and the Canary Islands. In 2012 we 

expanded our international presence through conditional 

agreements to take equity in the Leviathan gas field in offshore 

Israel and exploration acreage in offshore Myanmar.

We strive for excellence in our safety and environmental 

performance and continue to strengthen our relationships 

with customers, co-venturers, governments and communities 

to ensure we are a partner of choice. 

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

At Woodside, we take pride in our company’s history of 

great achievement. We are also proud of the way in which 

we embrace the opportunities of the future and strive for 

continuous improvement.

This commitment to ongoing improvement underpins the 

Woodside Compass, which was established in 2012 as part 

of a company-wide review of our organisational effectiveness 

and workplace culture. 

The Woodside Compass sets out our values, guides us on our 

mission to deliver superior shareholder returns and directs us 

towards our vision of becoming a global leader in upstream oil 

and gas. 

ABOUT WOODSIDE

Our values

Integrity

Respect

Working sustainably

Working together

Discipline 

Excellence

Our mission

To deliver superior shareholder 

returns.

Our vision

Our aim is to be a global 

leader in upstream oil and gas. 

Our strategic direction 

In support of our mission, 

our strategy comprises three 

main elements: 

Maximising our core 

business; 

Leveraging our capabilities; 

and 

Growing our portfolio. 

Woodside’s capabilities cover the value chain from seismic 

through to sales.

Marine seismic surveys are critical in 

identifying prospective geological strata lying 

beneath the ocean. In 2012, we completed 

our largest ever seismic survey in the Outer 

Canning Basin, offshore Western Australia. 

Read about this technology in our 

Exploration review on page 18.

During 2012, Woodside drilled a total of six 

exploration wells in the Dampier sub-basin, 

Republic of Korea and Gulf of Mexico.

Turn to our Exploration review on 

page 18 for further information.

Prior to any development, Woodside 

undertakes community-wide consultation and 

extensive environmental studies. The Browse 

Joint Venture has commissioned the most 

comprehensive study to date of humpback 

whales off the Kimberley coast. 

See page 30 for more about 

the proposed Browse LNG 

Development.

The North Rankin Redevelopment (NR2) 

Project continued to progress in 2012, with 

the successful installation of the North 

Rankin B topsides. The redevelopment will 

recover remaining low pressure gas from 

the North Rankin and Perseus gas fields.

To read more about NR2, go to 

page 25. 

In 2012 Woodside achieved a number 

of key milestones in the delivery of the 

Pluto LNG Project. First gas entered the 

LNG processing train on 22 March, first 

production of LNG was achieved on 

29 April and the first LNG cargo departed 

on 12 May.

Find out more about Pluto LNG on 

page 26.

In 2012, the North West Shelf (NWS) Project 

delivered its 3500th LNG cargo and the 3000th

LNG cargo to Japan, and our LNG trading 

and shipping business continued to grow. In 

addition to the NWS fleet we now have an 

integrated fleet of three ships operating for 

Pluto LNG with a new vessel due in 2013.

To read more about our shipping 

business, go to the LNG Marketing 

Report on page 15.

For 28 years the NWS Project has been 

Western Australia’s largest producer of 

domestic gas. The Karratha Gas Plant 

facilities include two domestic gas trains 

that supply the majority of Western 

Australia’s total domestic gas production.

See page 24 for more about the 

Further information on the Woodside Compass is available NWS Project.

on our website www.woodside.com.au

Woodside Petroleum Ltd. | About Woodside iii
OUR AREAS OF ACTIVITY

Woodside offices and representative offices

 International production and/or exploration

Israel and Myanmar subject to conditions

Republic of Korea Canary 

Islands

Peru

Brazil

Gulf of Mexico

Houston

Beijing

Israel

Myanmar

Seoul Tokyo

Dili

iv Woodside Petroleum Ltd. | 2012 Annual Report

8

15

16

Perth

Broome

Dili

Darwin

Exmouth

Karratha

12

13

11

1

13

2

2

3

6

7

9

5

1 4

9

7 10 14

WESTERN 

AUSTRALIA

NORTHERN

TERRITORY

Our producing assets (operated) Approximate location

1 Angel platform (NWS)

135 km north-west of Karratha

2 Goodwyn A platform (NWS)

3 North Rankin A and B platforms* (NWS)

4 Okha FPSO (NWS)

5 Karratha Gas Plant (NWS) 28 km north-west of Karratha

6 Ngujima-Yin FPSO (Vincent oil) 45 km north-west of Exmouth

7 Nganhurra FPSO (Enfield oil) 40 km north-west of Exmouth

8 Northern Endeavour FPSO 

(Laminaria-Corallina oil)

550 km north-west of Darwin

9 Pluto LNG Plant and 

platform (Pluto LNG)

27 km north-west of Karratha

180 km north-west of Karratha

Our producing assets (non-operated)

10 Stybarrow Venture MV16 FPSO 

(Stybarrow oil)

50 km north-west of Exmouth

11 MODEC Venture II FPSO 

(Mutineer-Exeter oil**)

147 km north of Karratha

Our projects

12 North Rankin Redevelopment (NWS) 135 km north-west of Karratha

13 Greater Western Flank Phase 1 (NWS) 130 km north-west of Karratha

Our developments

14 Laverda oil 50 km north-west of Exmouth

15 Browse LNG 425 km north of Broome

16 Sunrise LNG 150 km south-east of Timor-Leste and 

450 km north-west of Darwin

Woodside offices and representative offices

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

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

21 December 2012 to sell the company’s 8.2% interest in the Santos 

operated Mutineer-Exeter oil project with effect from 1 July 2012.
CONTENTS

Overview

About this report ii

About Woodside iii

Mission, vision, values and strategy iii

Our areas of activity iv

Performance summary 2

Chairman’s report 4

Chief Executive Officer’s report 6

Chief Financial Officer’s report 8

Our people 10

Our health, safety and security 11

Community engagement 12

Environmental report 13

LNG market report 14

Reserves statement 16

Exploration review 18

Risk management 20

Woodside Executives 21

Business reviews 

North West Shelf 24

Pluto LNG 26

Australia Oil 28

Browse LNG 30

Sunrise LNG 32

International 34

Governance

Board of Directors 36

Corporate governance statement 38

Directors’ report 52

Remuneration report 53

2012 Financial report

Financial report contents 67

Shareholder information 

Shareholder statistics 137

Share registry: enquiries 138

Investor relations: enquiries 138

Business directory 139

Key announcements 2012 139

Events calendar 2013 139

Units, conversion factors 140

Glossary 140

Index 141

2012 summary charts 142

10 year comparative data summary 143

Information available online

You can find out more about Woodside

online at www.woodside.com.au

In this report, we have indicated where 

additional information is available online

like this .

RECORD PRODUCTION, 

SALES REVENUE AND PROFIT

UNDERPINNED BY PLUTO LNG.

 

SAFE AND SUCCESSFUL STARTUP OF PLUTO LNG WITH FIRST 

CARGO TRANSPORTED IN MAY.

EARLY VALUE FROM THE 

BROWSE GAS ASSET, ADDING

$2 BILLION IN CASH TO OUR BALANCE 

SHEET THROUGH THE SALE OF A MINORITY

PORTION OF OUR EQUITY.

IMPROVEMENT IN SAFETY

PERFORMANCE WITHOUR TOTAL 

RECORDABLE CASE FREQUENCY 

DECREASING FROM 4.78 TO 4.50 PER 

MILLION HOURS WORKED.

THE 3500TH LNG CARGO AND

THE 3000TH LNG CARGO TO JAPAN 

FROM THE NORTH WEST SHELF, WHICH 

CONTINUES TO PERFORM STRONGLY.

A SUCCESSFUL INSTALLATION OF

THE NORTH RANKIN B TOPSIDES, 

WITH THE ANTICIPATED START-UP OF THE 

NORTH RANKIN REDEVELOPMENT IN 2013.

POSITIVE RESULTS FROM OUR 

REVISED GROWTH STRATEGY

BY CAPTURING NEW VALUE-ADDING

OPPORTUNITIES. IN-PRINCIPLE

AGREEMENTS TO PARTICIPATE IN THE 

WORLD-CLASS LEVIATHAN GAS FIELD 

AND EXPLORATION OPPORTUNITIES IN

DE

MYANMAR WERE ENTERED INTO.

LIVERED...

2012 - A YEAR OF DELIVERY

Woodside Petroleum Ltd. | 2012 Annual Report 1

RECORD ANNUAL USD DIVIDEND 

OF 130 CPS, FULLY FRANKED.
Performance Summary

Sales revenue up 30%

Record annual sales 

revenue was largely a 

result of record production 

and, to a lesser extent, 

continuing strong 

commodity prices.

08 09 10 11 12

Revenue (US$ million)

5,045

3,487

4,193

4,802

6,223

Reported net profit 

after tax up 98%

Record reported net profit 

after tax was achieved 

primarily due to increased 

2012 production volume 

and the sale of a minority 

portion of Woodside’s 

Browse equity.

08 09 10 11 12

Net profit after tax (US$ million)

1,546

1,474

1,575

1,507

2,983

Underlying net profit after 

tax* up 25% 

(excluding non-recurring items)

The increased 2012 

production volume 

was the main driver for 

the record underlying 

net profit after tax.

08 09 10 11 12

Net profit after tax (US$ million)

1,823

1,052

1,418

1,655

2,061

Operating cash flow 

up 55%

Record operating cash 

flow was largely driven 

by increased receipts due 

to Pluto LNG start-up.

08 09 10 11 12

Operating cash flow (US$ million)

3,224

1,483

2,104

2,242

3,475

Return on equity, 

7.8 percentage points higher 

(including non-recurring items)

Return on equity of 19.7% 

increased primarily due to 

the partial equity sale of 

Browse. Underlying return on 

equity was 13.6% (excludes 

Browse equity sale to Japan 

Australia LNG (MIMI)).

08 09 10 11 12

Return on equity (%)

33.4

16.7

14.2

11.9

19.7

Dividends per share

(US cents per share) up 18%

With the strong 2012 net 

profit after tax the Board has 

declared a record full-year 

USD dividend of 130 cps 

(interim dividend 65 cps, 

final dividend 65 cps).

08 09 10 11 12

Dividend per share (US cents)

100

95

105

110

130

2012 was a year of record achievement underpinned by Pluto 

LNG start-up and ongoing reliability of the foundation business.

1284.9

Production up 31%

08 09 10 11

Production (MMboe)

81.3

80.9

72.7

64.6

Record annual production 

was underpinned by the 

outstanding performance 

of Pluto LNG, together 

with ongoing reliability of 

the foundation business.

With effect from 1 January 2010 Woodside adopted a US dollar functional currency. All figures in this report are in US dollars unless otherwise stated. 

Where appropriate, comparative financial information prior to 2010 in this Annual Report has been converted from Australian dollars to US dollars using 

the relevant historical exchange rate.

* Woodside’s Financial Report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS). The underlying (non-IFRS) 

profit is unaudited but is derived from audited accounts by removing the impact of non-recurring items from the reported (IFRS) audited profit. Woodside believes 

the non-IFRS profit reflects a more meaningful measure of the company’s underlying performance. 

Net debt down 62%

The drop in net debt to 

$1.9 billion was attributed 

mainly to the partial 

equity sale of Browse 

and additional cash 

flow from Pluto LNG.

08 09 10 11 12

Net debt (US$ million)

1,946

3,732

3,952

5,061

1,918

29.6 29.8

26.3 28.6

11.2

Gearing (%) 

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

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

2 Woodside Petroleum Ltd. | 2012 Annual Report

OVERVIEW BUSINESS 

REVIEWS

GOVERNANCE FiNANCIAL 

REPORT

SHAREHOLDER 

INFORMATION
100

Indexed ten year performance Brent oil price and All Ordinaries indexed to 2002 values

0

10

20

30

40

WPL share price only (A$)

50

60

70

Over the past ten years Woodside has outperformed the ASX All Ordinaries 

Index (values are indexed to base 100 from 31 December 2002). 

31/12/2002 31/12/2012

600

0

1

2

3

4

5

6

7

8

10

12

13

1 September 2004 NWS Train 4 start-up.

2 April 2005 Pluto gas discovery.

3 July 2007 Pluto FID.

4 Global financial crisis impact.

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

6 March 2009 recovery in commodity prices.

7 June 2011 Pluto Train 1 delay.

8 February 2012 global uncertainty in the oil market 

and subsequent over correction.

9 April 2012 Pluto LNG production.

10 Re-emergence of European debt crisis.

11 September 2012 sale of Browse equity completed.

12 October and December 2012 in-principle agreement 

to farm-in two blocks; offshore Myanmar PSC.

13 December 2012 in-principle agreement to acquire 

30% participating interest in petroleum licenses 

covering the Leviathan gas field, offshore Israel. 

Results for the year

2012 2011 % Change

Reported net profit after tax ($ million) 2,983 1,507 97.9

Sales revenue ($ million) 6,223 4,802 29.6

Cash flow from operating activities ($ million) 3,475 2,242 55.0

Earnings per share (cents) 366 190 92.6

Total recordable case frequency (TRCF) 4.50 4.78 5.9

5 year total shareholder return2 (TSR, %) (0.3) 4.6 n.m.3

10 year total shareholder return2 (TSR, %) 21.7 20.9 3.8

Production (MMboe) 84.9 64.6 31.4

Proved reserves (MMboe) 1,231 1,292 (4.7)

Proved plus Probable reserves (MMboe) 1,544 1,610 (4.1)

Contingent resources (MMboe) 1,745 2,137 (18.3)

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

3 n.m. - not meaningful

30%

1

Increase in sales revenue 

to a record $6,223 million. 

98%

Increase in reported 

net profit to a record 

$2,983 million.

31%

Increase in annual 

production to a record of

84.9 million barrels of oil 

equivalent (MMboe).

18%

Increase in final 

dividend to 65 cps.

55%

Increase in operating 

cash flow to a record

$3,475 million.

Highlights for the year

Safety - TRCF improved by 6%

The TRCF has improved over the 

last two years, assisted by an 

ongoing focus on safety programs 

such as the ‘Our Safety Culture’ 

campaign.

For further information refer to 

our Health, Safety and Security 

section on page 11.

08 09 10 11 12

Total recordable case frequency rate

(TRCF) per million hours worked 4.95

3.82

5.98

4.78

4.50

1 Operating revenue of 

$6,348 million includes 

$125 million for LNG 

processing services.

9 11

Brent oil price

Woodside (WPL)

ASX All Ordinaries Index

Safe and successful 

start-up, with superior 

performance and high 

reliability achieved.

Pluto LNG

Woodside Petroleum Ltd. | Performance Summary 3
Chairman’s REPORT

Record financial results

At a time when there is still much 

uncertainty in global markets, Woodside 

experienced a significant uplift in its 

financial performance in 2012, largely 

due to the successful start-up of Pluto – 

Australia’s third producing LNG plant.

The 2012 reported net profit after tax 

was a record at $2,983 million. Underlying 

net profit after tax rose to $2,061 million, 

a 25% increase on the 2011 figure.

Woodside declared a final 2012 dividend 

of 65 cents per share, following the 

interim dividend of 65 cents per share. 

The 2012 annual dividend totalled 130 

cents per share – the highest achieved 

in the company’s history. 

During the year the Board announced a 

dividend policy in which the company will 

aim to maintain a minimum payout ratio of 

50% of underlying net profit after tax.

Operational performance – from 

strength to strength

In April 2012 Woodside celebrated a 

major milestone in the company’s history 

with the safe start-up of the Pluto LNG 

Plant. Production reliability from the 

plant since start-up has exceeded all 

expectations, resulting in a step-change 

to the company’s production levels.

The strong performance of Pluto 

is testament to Woodside’s LNG 

capabilities, with the company 

having built and run six of the seven 

operating LNG trains in Australia. 

Woodside also continues to optimise 

production from existing assets, with 

projects such as the North West Shelf’s 

(NWS) North Rankin Redevelopment 

In order to deliver superior shareholder 

returns, we are committed to optimising 

our producing assets and commercialising 

value-adding growth opportunities.

Michael Chaney AO

Chairman

which will access five trillion cubic feet 

of undeveloped gas. 

As part of this project, the massive North 

Rankin B offshore platform and topsides 

were installed alongside the North Rankin A 

platform. The size of the topsides made 

installation technically challenging, but the 

team successfully achieved an installation 

record in open water, both in height and 

weight. Hook-up and commissioning 

activities are underway for a planned startup in 2013. 

The next phase of development at the 

NWS, the Greater Western Flank Project, 

also made progress during 2012 with the 

completion of Phase 1 drilling activities.

Strategic direction to meet global 

demand

Despite some slowing of economic 

growth in China during the year, demand 

for LNG from the Asia Pacific region is 

forecast to grow by more than 90 million 

tonnes per annum between 2012 and 

2020. This is equivalent to the output of 

about 20 new LNG trains. Australian LNG 

projects are expected to satisfy much 

of this demand, if we are able to remain 

competitive. 

Japan is still forecast to be the world’s 

largest LNG importer by 2025, with 

demand from other traditional importers 

remaining solid. Strong demand growth 

is also forecast to come from India and 

ASEAN economies, some of whom will 

transition from LNG exporters to new 

importers in the decade ahead.

Against this backdrop, Woodside has 

adopted a strategy of optimising its 

producing assets and commercialising 

its growth opportunities. 

4 Woodside Petroleum Ltd. | 2012 Annual Report

OVERVIEW BUSINESS 

REVIEWS

GOVERNANCE FiNANCIAL 

REPORT

SHAREHOLDER 

INFORMATION
In 2012 the company realised early value 

from Browse by selling a minority portion 

of its equity in the development to Japan 

Australia LNG (MIMI Browse) Pty Ltd 

(MIMI) for $2 billion. The sale clearly 

demonstrated the value of this worldclass resource and ongoing demand for 

premium LNG. 

The proposed development of Browse 

LNG near James Price Point remains 

under evaluation, with a final investment 

decision to be considered in the first half 

of 2013.

During the year we continued engagement 

with the Timor-Leste and Australian 

Governments on the Sunrise LNG 

Development. A series of technical 

workshops commenced to help build 

mutual understanding on the development; 

further engagement will occur in 2013.

Woodside’s strategy to leverage our core 

capabilities for global upstream growth 

began to take shape in 2012 with expected 

new country entries in Myanmar and Israel.

The company reached an in-principle 

agreement to acquire a participating 

interest in the petroleum licences 

containing the Leviathan gas field in Israel. 

The field is one of the largest recent 

gas discoveries worldwide and provides 

the opportunity for Woodside to play a 

key role in the potential development of 

a liquefied natural gas industry in that 

country.

Offers were also accepted for Woodside 

to acquire an interest in Production 

Sharing Contracts for two blocks in the 

Rakhine deepwater basin, located off 

the western coast of Myanmar. Once 

finalised, the transactions will enable 

Woodside to participate in exploration 

activities in this frontier basin. 

Michael Chaney AO

20 February 2013

Maintaining our competitive edge 

Australia is experiencing rapid growth 

in the oil and gas industry with more 

than $190 billion worth of developments 

underway across the country. This 

growth is occurring within an increasingly 

competitive global gas market, with new 

energy sources emerging, including in 

North America and East Africa. 

While we do not anticipate new global 

supply to fundamentally alter the market 

dynamics in the Asia Pacific, it is clear 

we are operating in a changing global 

environment. Therefore remaining 

competitive will be vital to Australia’s 

future as an LNG supplier.

While costs and development activity 

in the Australian oil and gas industry 

have skyrocketed in recent years, labour 

and capital productivity have remained 

stagnant. 

Australia was ranked 20th in the World 

Economic Forum’s 2012 productivity 

league table.

To put that into perspective, the Business 

Council of Australia has calculated that 

productivity on Australian resource projects 

is 30-35% lower than on comparable 

projects in the USA.

The real impact of poor productivity has 

been masked by high levels of investment 

and record terms of trade. But, as the 

resources investment boom reaches its 

peak, the productivity gap will be exposed.

To close this gap, we must address 

policy challenges around workforce 

mobility and flexibility and streamline 

regulation, particularly between State and 

Commonwealth approvals processes. 

We must also ensure efficient project 

management and embrace new 

technologies where appropriate, to 

optimise development outcomes.

Board of directors changes

After ten years of service on Woodside’s 

Board of Directors, Dr Pierre Jungels 

retired in December 2012 and 

Mr Erich Fraunschiel will retire in February 

2013. Both directors have made a 

substantial contribution to the Board’s 

deliberations over the last decade – 

Dr Jungels with his wealth of experience 

in the international oil and gas industry and 

Mr Fraunschiel with his wide business 

experience and great financial acumen. 

The Board thanks them for their efforts.

Dr Sarah Ryan joined the Board in 

December as a non-executive director. 

In December Woodside also announced 

the appointment of Mr Frank Cooper to 

the board as a non-executive director 

effective 1 February 2013. We welcome 

both Dr Ryan and Mr Cooper to the Board.

Woodside’s strong performance in 2012 

is a testament to the strength of our 

people, led by Chief Executive Officer 

Peter Coleman. On behalf of the Board of 

Directors I thank them all for their ongoing 

efforts on behalf of the company.

Woodside Petroleum Ltd. | Chairman’s Report 5
2012 Key performance 

highlights

Record annual production and sales 

revenue.

Safe start-up of Pluto LNG and better 

than expected production ramp-up. 

Major projects to maximise value of 

our NWS assets progressed to budget 

and schedule.

Realisation of early value from our 

Browse assets through sale of a minority 

portion of Woodside’s equity in the 

proposed Browse LNG Development.

Conditional acceptance of Woodside’s 

offer to purchase a 30% participating 

interest in permits covering the Leviathan 

gas field.

Conditional acceptance of Woodside’s 

offers to purchase equity in two 

production sharing contracts offshore 

Myanmar.

FUTURE OBJECTIVES

Improve health and safety outcomes, 

towards our goal of achieving global top 

quartile performance by 2017. 

Progress the North Rankin Redevelopment 

and Greater Western Flank Phase 1 Projects.

Consider a final investment decision (FID) 

on the Browse LNG Development.

Continue work to progress Greater Enfield 

Area oil opportunities.

Progress front-end engineering and design 

work to develop the Xena gas field.

Continue to build momentum on the 

Sunrise LNG Development.

Finalise agreements to progress the 

Leviathan Development and Myanmar 

offshore exploration, in keeping with our 

drive to grow Woodside’s resource base. 

Maximise performance of our core business 

and continue disciplined evaluation of new 

value-add opportunities.

Outstanding performance of the Pluto LNG 

Plant since start-up, together with the ongoing 

reliability of the foundation business, delivered a 

step-change in production and revenue in 2012.

Peter Coleman

Chief Executive Officer and 

Managing Director 

The successful Pluto ramp-up has 

contributed to a significant step 

forward in Woodside’s production 

capabilities.

Production profile

08 09 10 11 12

Production (MMboe)

41.06

37.0

31.4

25.9

26.1

40.343.9

41.3

38.758.8

Liquid (Oil plus Condensate)

Gas (LNG, LPG and Pipeline gas)

Total Shareholder Return (TSR) 

performance against peers

Ten year compound 

annual return

-5

3010 year total shareholder return (%)

WPL

The excellent ten year TSR reflects the longterm sustainability of our business relative 

to our peer group which includes: Anadarko, 

Apache, BG, CNOOC, Inpex, Marathon, 

Murphy, Pioneer, Repsol, Santos and Talisman.

Source: Bloomberg. TSR is the compounded annual 

return over the specified period.

Woodside aims to be a leader in upstream 

oil and gas by optimising our producing 

assets and commercialising our growth 

projects. We will also leverage our worldclass capabilities to capture new growth 

opportunities.

Our strategic direction Value

Time

Maximise Core

Leverage Capabilities

Grow Portfolio

CHIEF EXECUTIVE OFFICER’S REPORT

6 Woodside Petroleum Ltd. | 2012 Annual Report

OVERVIEW BUSINESS 

REVIEWS

GOVERNANCE FiNANCIAL 

REPORT

SHAREHOLDER 

INFORMATION
Looking back on our achievements 

over the past year, we can describe 

2012 as a year of delivery for Woodside 

against our revised strategic direction.

We strengthened our core business, 

delivering the first cargoes from Pluto 

LNG that contributed to record annual 

production and sales revenue. 

We delivered early value from our 

premium Browse assets, adding $2 billion 

in cash to our balance sheet through 

sale of a minority portion of our equity.

And we leveraged Woodside’s worldclass capabilities and disciplined 

approach by capturing potential growth 

opportunities in Israel and Myanmar. 

These achievements, and many more 

during 2012, occurred alongside 

a significant program of cultural 

change that we are confident will set 

Woodside up for long-term success. 

Our compass for the future

In 2012, following a company-wide 

review of Woodside’s organisational 

effectiveness and workplace culture, 

we developed the Woodside Compass. 

The Compass guides us on our journey 

towards becoming a global leader in 

upstream oil and gas, by linking Woodside’s 

core values, vision, mission and strategic 

direction. It makes clear that our long-term 

success depends not only on the oil and 

gas we produce, but on doing what’s right.

To improve organisational effectiveness 

we streamlined reporting arrangements 

at senior levels and established the role 

of a Chief Operations Officer. A new 

Corporate Strategy and Planning Division 

and Technology Division were also created 

to support our revised strategic direction.

A focus on world-class safety 

performance

Woodside achieved an improvement in 

health and safety outcomes measured in 

terms of total recordable case frequency, 

but we must continue to strive for further 

improvements in this area in 2013. 

When measured against global 

benchmarks, our health and safety 

performance falls short of expectations. 

To address this, in 2013 we will 

begin implementing measures to 

achieve global top quartile health 

and safety performance by 2017.

A step-change in production

The safe start-up and better than 

expected ramp-up of Pluto LNG in 

2012 cemented Woodside’s status as 

Australia’s leading LNG operator. 

Once again we achieved strong 

operational results at the North West 

Shelf Project, with delivery of the 

3500th LNG cargo testament to the 

capacity of this world-class asset. 

Consistent high reliability from Pluto during 

the year, combined with the ongoing 

strong performance of our foundation 

business, resulted in production reaching 

84.9 MMboe for 2012. This was an 

increase of 31% on 2011 production 

and a new record for our company.

A strong balance sheet to fund 

growth

While our foundation oil and gas assets 

continued to deliver strong cash flows 

in 2012, Pluto generated $1.43 billion 

in revenue in the eight months since 

its first cargo. This took our total 2012 

sales revenue to a record figure of 

$6.22 billion (30% increase on 2011), 

and an underlying net profit of $2.06 

billion (25% increase on 2011).

This robust cash flow, combined 

with the sale of a minority portion of 

Woodside’s equity in the Browse LNG 

Development, strengthened our balance 

sheet in preparation for new growth 

opportunities while also returning value to 

shareholders through increased dividends. 

Growing our Australian portfolio

2012 was an important year for the 

proposed Browse LNG Development, 

with Shell increasing its equity and Japan 

Australia LNG (MIMI Browse) Pty Ltd 

(MIMI) purchasing a minority portion of 

Woodside’s equity. BHP Billiton Petroleum 

also announced its intention to sell its 

Browse equity share to PetroChina 

International Investment (Australia) Pty Ltd.

A disciplined evaluation to determine 

Browse LNG project costs and economics 

is nearing completion, with a FID to be 

considered in 1H 2013.

Woodside also progressed two oil 

developments during 2012. We began 

front-end engineering and design work for 

the Cimatti Development and continued 

evaluation of our Laverda field.

Woodside continued to broaden our 

dialogue with the Timor-Leste Government 

and other stakeholders on the proposed 

Sunrise LNG Development. 

Capturing new value-creating 

opportunities 

Beyond Australia, Woodside announced 

two significant country entries with 

international partners during 2012. 

Our conditional farm-ins to two blocks 

in offshore Myanmar during 2012 

provide Woodside with entry into the 

prospective Rakhine Basin, where we 

can bring our deepwater capabilities 

into play and build new partnerships 

in a promising oil and gas province.

We reached an agreement in-principle 

to take a 30% participating interest in 

permits covering the Leviathan gas 

field offshore Israel, one of the biggest 

recent gas discoveries worldwide. The 

transaction, which remains subject to 

conditions including execution of fully 

termed agreements, completion of 

due diligence and necessary approvals, 

positions Woodside to benefit from Israel’s 

strongly growing domestic gas market, 

and play a key role in the potential future 

development of an LNG industry in Israel.

Finalising the Leviathan agreement 

will provide an immediate boost to 

Woodside’s contingent resource base. 

In addition, an increase to our developed 

reserves will occur with the start-up of the 

North Rankin Redevelopment Project. 

Growing sustainably

In line with our aspiration to be a partner 

of choice, during the year we continued 

to engage closely with the communities 

where we operate. This included meeting 

the majority of our Reconciliation 

Action Plan 2012 commitments.

Our people continued to show their 

personal dedication to the community 

with our employee volunteering rates 

well above most of our peers.

During the year we launched our threeyear gender diversity strategy. Pleasingly, 

we are already making headway in this 

area, improving our gender balance in 

our 2013 graduate intake and our senior 

management succession planning.

Our values-led, disciplined approach, 

combined with our world-class portfolio 

and capabilities, will enable Woodside to 

continue delivering superior shareholder 

returns into 2013 and beyond.

Peter Coleman

20 February 2013

Woodside Petroleum Ltd. | Chief Executive Officer’s Report 7
Chief Financial Officer’s report

Woodside delivered a record financial 

performance in 2012, reporting a net profit 

of $2.98 billion, or $2.06 billion on an 

underlying basis. 

Underlying NPAT versus reported NPAT1

$ million 2012 2011

Underlying profit NPAT

(before non-recurring items)

2,061 1,655

Non-recurring items after tax

Pluto delay mitigation cost (27) (165)

Neptune impairment reversal - 17

Browse equity sale 974 -

Tax paid on sale of subsidiary (25) -

Reported profit 2,983 1,507

1

 Woodside’s Financial Report complies with 

Australian Accounting Standards and International 

Financial Reporting Standards (IFRS). The 

underlying (non-IFRS) profit is unaudited but is 

derived from audited accounts by removing the 

impact of non-recurring items from the reported 

(IFRS) audited profit. Woodside believes the nonIFRS profit reflects a more meaningful measure of 

the company’s underlying performance.

With the start-up of Pluto LNG in 2012 

and continued strong pricing, Woodside 

recorded its highest ever annual sales 

revenue of $6.22 billion.

Our 2012 financial results also benefited 

from a full year of production from the 

NWS oil facilities and improved production 

from the Vincent oil field, following infill 

development in 2011 and early 2012. This 

helped to offset field decline in our oil assets.

In 2012 we booked a $974 million gain on the 

sale of a minority share of our Browse equity.

The impact of Pluto LNG and the Browse 

equity sell down on the 2012 profit result is 

shown in the following tables.

Browse partial equity sale ($ million)

Sale proceeds 2,060

Cost base (1,303)

Income tax (186)

PRRT deferred tax write back 403

Net profit after tax 974

Pluto 2012 financial contribution

Production (MMboe) 23.97

Revenue ($ million) 1,427

Cost of sales ($ million) (785)

Gross profit ($ million) 642

Strong commodity price, but a 

change to product mix

With the introduction of Pluto LNG 

volumes in 2012 and natural field decline 

of our oil assets, we have seen a 1% 

reduction in the average realised price for 

the combined products. Although product 

specific realised prices have increased 

from 2011, the higher gas concentration 

in the product mix has lowered the overall 

average price.

Average realised price table

2012 2011 Variance

$/boe $/boe $/boe

Pipeline natural gas 26.69 26.962 (0.27)

NWS LNG 77.85 67.46 10.39

Pluto LNG 54.90 - -

Condensate 104.47 98.913 5.56

LPG 113.28 76.553 36.73

Oil 113.52 113.80 (0.27)

Average realised prices 74.26 75.11 (0.85)

2 NWS pipeline natural gas revenue includes the 

revenue from a negotiated confidential settlement 

between the NWS Domestic Gas Joint Venture 

and Alinta Sales Pty Ltd following the conclusion 

of the restructure of Alinta Energy Limited.

3 Includes Ohanet Risk Sharing Contract sales.

Effective capital management 

We invested $1.76 billion in our business 

activities in 2012, down from $3.83 billion 

in 2011. The 2012 spend comprises 

$1.50 billion in capital expenditure and 

$0.26 billion in exploration. 

This lower investment expenditure 

together with the cash flow now being 

generated by Pluto LNG, has enabled 

us to report a positive free cash flow 

this year, after several years of negative 

free cash flow due to the investment at 

Pluto. Consequently we have significantly 

reduced net debt at the end of 2012 from 

$5.06 billion to $1.92 billion.

The strengthening of the company’s 

financial profile contributed to the 

affirmation of our credit ratings 

(S&P: BBB+; Moody’s: Baa1) and a 

change in outlook to stable. 

(668)

(3,225)

(837)

(1,291)

3,636

08 09 10 11 12

(4,000)

4,000

3,000

2,000

1,000

(3,000)

(2,000)

(1,000)

0

Free cash flow ($ million)

Free cash flow

Lawrie Tremaine

Executive Vice President and

Chief Financial Officer

Woodside delivered record financial performance 

in 2012, underpinned by the start-up of Pluto and 

continuing strong pricing. Our balance sheet is 

well positioned to support our future growth. 

2012 Key performance 

highlights

Record annual sales revenue of 

$6.22 billion and underlying profit of 

$2.06 billion.

Pluto start-up resulting in revenue 

of $1.43 billion and gross profit of

$642 million.

Browse partial equity sale proceeds of 

$2.06 billion and after tax profit impact 

of $974 million.

Free cash flow positive: $3.63 billion 

compared to negative $1.29 billion in 2011.

Re-established stable credit ratings.

Record full-year dividend to shareholders 

and establishment of a Dividend Policy.

FUTURE OBJECTIVES

Value enhancement through effective 

investment decisions.

Optimise capital management to 

support growth.

Disciplined cost management. 

8 Woodside Petroleum Ltd. | 2012 Annual Report

OVERVIEW BUSINESS 

REVIEWS

GOVERNANCE FiNANCIAL 

REPORT

SHAREHOLDER 

INFORMATION
We ended the year with available funds 

of $4.12 billion ($2.42 billion cash and 

$1.70 billion undrawn debt) which 

supports our future growth opportunities. 

Re-evalution of our funding position 

will occur in 2013, pending investment 

decisions on major projects. 

Our ability to access long-term facilities 

provides Woodside with the capacity to 

develop the best value opportunities in 

our portfolio - at the right time and at a 

competitive cost of funding.

Active portfolio management

Woodside has continued to actively 

manage its asset portfolio. Late in 2012 

Woodside agreed to divest its MutineerExeter asset. In-principle agreements 

have also been achieved to farm-in to 

petroleum licences in offshore Israel 

and two Production Sharing Contracts in 

Myanmar. All of these agreements are 

expected to be finalised in 2013.

Profit drivers (2012 versus 2011) 

The following summarises the main 

drivers of the 2012 profit result and is 

represented in the above bridge chart.

Revenue volumes – increased largely 

due to Pluto start-up ($1,427 million), 

a full year of NWS oil production 

($230 million) and higher production at 

Vincent ($129 million). This was partially 

offset by field decline in oil assets.

Sales price – increase was mainly 

attributable to NWS LNG ($223 million).

Cost of sales – increased by 

$961 million. The increase was largely 

driven by Pluto ($778 million) and higher 

production at NWS oil ($127 million) and 

at Vincent ($77 million).

1

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

2

 Unit production costs have been reported in Australian dollars as the majority of expenditure is incurred in 

this currency. See glossary on page 140 for the unit production cost definition.

Bridge chart of Woodside’s 2012 reported net profit after tax (NPAT)

Woodside’s 2012 NPAT was higher than 2011 due to additional revenue associated from Pluto LNG 

and non recurring items including the partial equity sale of Browse, included in ‘other income’.

* Price/ FX includes oil price, foreign exchange rates and hedging.

** Petroleum Resource Rent Tax. Reported profit (US$ million)

1,507NPAT 2011

244Price / FX impact*

Volume impact

1,331 (29)Other revenue 

Cost of sales

(961)

733

265 540 (59) 2,983 (111) (477)

Other income

Other 

expenses

Net finance cost

Income tax

Minority interest

PRRT**

NPAT 2012

Revenue

Unit production costs

Despite the increasing unit production costs, 

our oil assets delivered a combined EBIT of 

$948 million. We continue to look at bringing 

forward value on these assets through infill 

drilling or divestment. 

Oil (A$/boe)

Gas (excluding Pluto (A$/boe)

Total gas (A$/boe)

Unit production costs (A$/boe)

11.46

14.01

16.88

19.52

3.35 3.37 4.02

5.03

4.19

09 10 11 12

Other income – increased by $733 million. 

This was largely attributable to the Browse 

partial equity sale of $757 million1

.

Other expenses – decreased by 

$265 million. The decrease was largely 

the result of the impact of lower 

exploration and evaluation expense 

($195 million) and lower Pluto mitigation 

and pre-start-up costs ($218 million); 

partially offset by higher impairment 

charges ($160 million related to LaminariaCorallina, Pluto onshore expansion and 

the Panoramix wells).

Net finance costs – increased by 

$111 million as a result of Pluto start-up 

whereby previously capitalised borrowing 

costs are now expensed.

Income tax – increased by $477 million 

largely due to higher net profit before tax 

($232 million) along with Browse partial 

equity sale ($186 million).

Petroleum Resource Rent Tax – 

decreased by $540 million largely due to the 

partial equity sale of Browse ($403 million).

Unit production costs rise 

(Australian dollars)2

Total gas production costs increased by 

A$158 million to A$343 million in 2012 

largely due to the introduction of Pluto 

LNG. On a unit basis, gas unit production 

costs increased from A$4.02/boe to 

A$5.03/boe due to higher start-up costs 

at the Pluto LNG facilities.

Total oil production costs increased by 

A$44 million to A$327 million. On a unit 

basis, oil unit production costs increased 

from A$16.88/boe to A$19.52/boe. The 

increase is primarily due to Vincent FPSO 

and related transition costs, and the 

impact of lower production due mainly to 

field decline at the Greater Enfield Area oil 

assets.

Dividend Policy

In August, the Board approved a Dividend 

Policy. Consistent with recent practice, 

Woodside will aim to maintain a minimum 

dividend payment payout ratio of 50% of 

net profit (excluding non-recurring items) 

expressed in US dollars. In determining 

the appropriate dividend payment, 

Woodside will consider, among other 

things, its development profile, available 

cash flow and funding requirements. 

The full Dividend Policy can be found 

on our website.

Sensitivities

For 2013, a $1 movement in the Brent 

oil price is expected to impact NPAT by 

$22 million and a $0.01 decrease in the 

AUD:USD exchange rate is expected to 

increase NPAT by $7 million.

Outlook

Investment expenditure for 2013 is 

expected to be $2.6 billion, which is higher 

than previous guidance due to anticipated 

additional expenditures associated with 

the Leviathan and Myanmar opportunities. 

The expected investment expenditure 

amount comprises $2.1 billion capital plus 

$0.5 billion of exploration expenditure. 

This estimate does not yet include 

forecast project expenditure that would 

result from a final investment decision for 

the proposed Browse LNG Development.

Lawrie Tremaine

20 February 2013

Woodside Petroleum Ltd. | Chief Financial Officer’s Report 9
Our PEOPLE

Woodside understands that delivery of superior shareholder 

returns is dependent upon our ability to attract and retain an 

engaged, diverse and high performing workforce.

2012 Key performance 

highlights

Three-year Gender Diversity Strategy 

rolled out.

Strong diversity focus with 50% of our 

2013 graduate intake being female.

Progressed towards becoming a valuesled organisation through the roll-out 

of Our Values and Behaviours Guide 

and the introduction of values into key 

people processes.

Converted 70% Indigenous pathways 

participants to full time jobs.

FUTURE OBJECTIVES

Continue to embed Our Values and 

Behaviours into key people processes 

to support cultural change.

Review and implement a revised 

leadership and management 

competency framework to enable 

continued development of capability.

Implement a three-year Indigenous 

employment strategy to support our 

Reconciliation Action Plan (RAP). 

Put in place a development program 

for high talent women and create a job 

design toolkit to support and increase 

flexible working.

Building capability 

Woodside has maintained its focus on 

building the right level of capability in order 

to ensure we can resource for the longterm. We continued to invest in our future 

capacity through apprentice, trainee and 

graduate programs. A total of 127 trainees 

and apprentices participated in technical 

skills development through the Woodside 

Training Academy in 2012, with 117 active 

at year-end. 

There were 53 graduates new to 

Woodside, with a total of 135 graduates 

on the three-year graduate program.

Woodside achieved excellent outcomes 

in 2012 with 91% of all trainees and 

apprentices converting to permanent 

employment at the conclusion of 

their traineeship or apprenticeship. 

In 2012, we continued to develop 

our leadership capability by offering 

development programs aimed at 

improving employee engagement.

Our Leadership Development 

curriculum programs were attended by 

864 company leaders. A further 710 

leaders attended workshops on Our 

Values and Behaviours, accountabilities 

and decision effectiveness.

Developing a diverse workforce 

Woodside progressed well against its 

RAP commitments. We achieved the 

employment of 92 Indigenous people by 

the end of 2012, with our target number 

of 96 to be achieved in early 2013. The 

cumulative conversion rate since 2009 of 

70% of pathway participants transitioning 

to employment was also a positive result.

For further information on our Diversity 

Policy and RAP commitments visit our 

website.

Woodside implemented a three-year 

Gender Diversity Strategy in 2012 which 

focuses on leadership, process and 

practice, education, government and 

community engagement to improve our 

ability to attract and retain skilled people.

Outlook 

Recognising that the industry demand 

for skilled talent remains competitive, 

Woodside will continue to focus on 

internal development and training 

of our people to ensure we have an 

engaged and capable workforce.

Woodside’s global voluntary turnover 

rate increased from 6.8% in 2011 to 

8.5% in 2012, attributed in part to the 

ongoing industry demand for talent. 

* No Indigenous contractors were employed in 2012 

as a result of start-up at Pluto LNG. 

**Indigenous pathways numbers include total number 

of participants who completed a pathway during the year.

In 2012, the number of Indigenous employees 

(permanent / fixed) increased by 9.5% 

compared to 2011. The Indigenous Pathway 

participants increased by 17.2%. 

Number of employees and 

voluntary turnover#

Indigenous employment

08 09 10 11 12

Total employees

28

33

49

64

75

58

32

36

84

92

Contractors*

Pathways**

Employees - Permanent/Fixed

Above: Graduates take part in the annual 

‘Grad Day’ activities.

Woodside’s Graduate Development 

Program is a key component of the 

company’s strategy to build long-term 

capability. It is designed and implemented 

to attract and retain the best possible 

candidates.

08 09 10 11 12

Total employees

3,124

3,219

3,6503,8563,997

Voluntary turnover ratio (%)

9.4

5.2 5.4

6.8

8.5

#

In 2012, reporting of voluntary turnover is based 

on global employee turnover rather than Australian 

employee voluntary turnover, resulting in minor 

changes to the ratios reported in prior years.

10 Woodside Petroleum Ltd. | Our People

OVERVIEW BUSINESS 

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REPORT

SHAREHOLDER 

INFORMATION
Our health, safety and security

We will achieve our aspiration of ‘no-one gets hurt, no incidents’ 

by implementing our operating standards, reinforcing positive 

safety behaviours and continuous improvement.

2012 Key performance 

highlights

Achieved a 6% improvement in the 

Total Recordable Case Frequency 

compared to 2011.

As part of commitment to ‘Our 

Safety Culture’ initiative, workshops 

were held across Woodside, with 

6,000 participant packs distributed to 

employees and key contractors. 

Assurance process implemented across 

Woodside to ensure compliance with 

our revised health and safety operating 

standards.

Commenced implementation of a 

control program to address fraud and 

corruption risks, in accordance with the 

UK Anti-Bribery Act. 

FUTURE OBJECTIVES

Achieve global top quartile health 

and safety performance by 2017.

Implement targeted health and 

wellbeing interventions. 

Embed the Woodside process safety 

framework and performance metrics

Execute an enhanced health and safety 

service delivery model.

Health and safety is fundamental to 

Woodside’s licence to operate. 

We require everyone to contribute to 

building and sustaining a strong safety 

culture that delivers a healthy, safe 

and productive work environment. 

Woodside’s ‘Our Safety Culture’ 

framework, along with the Woodside 

Management System, defines our 

approach to ensuring the health and 

safety of our employees and contractors, 

and the integrity of our facilities. 

We have in place six Strategic 

Imperatives to help us achieve our 

aspiration of ‘no-one gets hurt, no 

incidents’. The Imperatives drive our 

yearly action plans and ensure our 

activities are appropriately targeted. 

Information on these imperatives 

can be found on page 30 of the 2012 

Sustainable Development Report.

2012 performance 

The number of recordable injuries 

and illnesses decreased from 140 in 

2011 to 86. The total recordable case 

frequency (TRCF) dropped to 4.50 

in 2012, compared to 4.78 in 2011, 

representing a 6% improvement.

The number of high potential incidents 

decreased to 30, compared to 35 in 

the prior corresponding period. 

There were no work-related fatalities 

in 2012.

Strengthening our safety culture

In 2012, we launched a companywide safety culture survey to provide 

an opportunity for our employees and 

key contractors to assess strengths 

and identify areas for development. 

The survey results are being used 

to strengthen ‘Our Safety Culture’ 

behaviours and to guide health and 

safety plans across the company. 

Further, to ensure compliance with 

operating standards and procedures, 

a company-wide assurance 

process was implemented. 

A total of five assurance reviews 

were conducted, with a compliance 

score of over 70% recorded. 

Protecting people and facilities

In 2012 Woodside safely progressed 

the North Rankin Redevelopment and 

safely delivered the Pluto LNG facilities.

In 2012, Woodside completed a companywide fraud and corruption risk assessment 

and commenced implementation of a 

wide ranging control plan, which will 

prepare staff for the challenges that 

may arise as we broaden our portfolio.

We completed four company-wide 

crisis exercises, and 18 facility level 

two exercises, to test and develop our 

emergency management capabilities. 

In addition, major accident prevention and 

response capabilities remains a priority. 

As part of our Corporate Oil Spill Response 

Plan we participated in a number of oil spill 

response exercises during 2012.

Outlook 

Woodside’s health and safety performs 

well when benchmarked against 

our Australian peers, however when 

compared against global benchmarks 

there is room for significant improvement.

In 2013, we will begin implementing 

measures to achieve global top quartile 

health and safety performance by 2017. 

In addition we will continue to work with 

key partners including state, federal and 

foreign governments to safely secure our 

operations in Australia and internationally. 

In line with our international expansion 

plans we will maintain our focus on 

progressing our international security, 

emergency management and anti-fraud 

and corruption processes. 

Further information on Our People 

and our Health, Safety and Security is 

available on pages 28 to 33 of the 2012 

Sustainable Development Report.

OGP Top Quartile

Woodside

Total recordable injury rate (injuries only) for 

Woodside benchmarked against top quartile 

performance of the International Association 

of Oil and Gas Producers (OGP). Woodside 

is targeting significant improvement to 

achieve top quartile performance by 2017.

Total recordable injury rate

07 09 11 13 15 17

0

1

2

3

4

5

6

Total recordable injury rate 

per million hours worked

Woodside Petroleum Ltd. | Our Health, Safety and Security 11
2012 Key performance 

highlights

We directly contributed A$9.5 million 

worth of social investment* to the 

communities in which we operate. 

Our staff contributed 5,800 volunteering 

hours, valued at A$0.96 million.

Our voluntary social investment 

contribution in 2012 equated to 0.34% 

of a three-year averaged profit before 

tax (2010 to 2012).

FUTURE OBJECTIVES

Meet our target of contributing 0.5% 

profit before tax by 2015 to community 

programs, in order to ensure communities 

benefit from our activities.

Our approach

Woodside’s strategic and integrated 

approach to corporate social investment 

is guided by our Sustainable Communities 

Policy. Our social investment strategy is 

based on a three tiered funding model 

with a theme of contributing to health 

and well-being on a personal, community 

and environmental level. Our focus 

is to contribute to communities at a 

Above: Learning about science with the 

Scitech Aboriginal Education program.

Woodside is a proud supporter of Scitech’s 

Aboriginal Education Program. In 2012 the 

program won the Leading Edge Award for 

Visitor Experience at the Association of 

Science and Technology Centres, for its 

delivery of science outreach to Western 

Australia’s most remote communities.

COMMUNITY ENGAGEMENT

The long-term relationships we have with the communities in which 

we operate are fundamental to maintaining our licence to operate. 

regional, state and national level, as well 

as investing in supporting communities 

internationally, with a particular emphasis 

on building capability and capacity. 

It is Woodside’s commitment that 

each of our operating locations has 

local community engagement and 

development programs. We recognise 

we are part of the community; we 

make commitments for the longterm and therefore look after each 

other and our communities. 

An example of this commitment is 

the Woodside operated-Sunrise Joint 

Venture and its focus on supporting 

youth development and education, by 

building the capability and capacity of 

the next generation of Timorese. 

Our major national partners are Surf 

Life Saving Australia and Conservation 

Volunteers. These partners are 

delivering programs that support 

the health and wellbeing of coastal 

communities around Australia.

In addition we initiated a new collaborative 

program with the Royal Flying Doctor 

Service, the Lions Cancer Institute and 

Royalties for Regions to deliver the 

first free skin cancer screening service 

for people living and working in the 

Kimberley region of Western Australia.

Our performance

Woodside is a member of the London 

Benchmarking Group (LBG) and uses 

its methodology to track, measure, 

benchmark and report on our social 

investment performance. Woodside has 

a social investment target of 0.5% profit 

before tax by 2015. Our direct voluntary 

social investment contribution* in 2012 

was A$9.5 million. This equates to 0.34% 

of a three-year averaged PBT (2010-2012). 

During 2012 we commissioned a 

corporate social investment review 

to determine whether key outcomes 

of our 2009-2012 social investment 

strategy had been achieved. 

The review outcomes were positive and 

opportunities for improvement were 

identified. An area of focus will be to 

improve communications regarding 

the impact and outcomes achieved by 

community partners and their programs. 

For further information on Woodside’s 

major social investment contributions 

and our Sustainable Communities 

Policy visit our website.

The Woodside-operated North West Shelf 

(NWS) Project also commissioned a separate 

review of its social investment programs in 

the Pilbara region of Western Australia.

Consistent with Woodside’s corporate 

social investment review, this NWS 

review also found stakeholders 

perceived social investment programs 

in the Pilbara to be highly regarded by 

the community. Key opportunities for 

improvement are to continue to consult 

with the community, to promote the social 

investment strategy and to investigate 

the effective long-term measurement of 

social investment program outcomes.

Employee volunteering and 

engagement 

Our contribution to communities through 

social investment is complemented by 

our employee engagement and corporate 

volunteering program. The program is 

run in collaboration with Volunteering 

WA which offers participation in social 

programs and Conservation Volunteers 

which offers participation in environmental 

programs.

Our corporate volunteering program 

provides employees with the opportunity 

to contribute 12 hours of paid volunteering 

leave each year, to support communitybased organisations. 

Outlook

In 2013, as our social investment strategy 

evolves, we expect to direct more 

investment towards one particular area 

of social need. 

In addition, we will refine our 

community engagement processes 

and policies to ensure they support 

the company’s licence to operate. 

Further information on our Community 

Engagement is available on pages 

14 to 27 of the 2012 Sustainable 

* Includes cash value, in-kind and voluntary hours Development Report.

(Woodside share).

12 Woodside Petroleum Ltd. | Community Engagement

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REPORT

SHAREHOLDER 

INFORMATION
ENVIRONMENTAL REPORT

2012 Key performance 

highlights

No reportable or recordable environmental 

incidents from Pluto LNG commissioning 

and start-up activities.

Environmental approvals received with 

minimal impact to activity schedule 

during the commencement of the new 

offshore regulatory regime. 

FUTURE OBJECTIVES

Complete energy efficiency assessments 

at the Nganhurra floating production 

storage and offloading (FPSO) vessel, 

the Northern Endeavour FPSO and 

Goodwyn A Platform.

Maintain a low level of environmental 

incidents.

Our approach 

Woodside’s approach to environmental 

management is outlined in our 

Environment Policy and the mandatory 

environmental operating standards that 

apply to all facilities. The standards set 

compulsory environmental performance 

requirements through the life-cycle 

of our projects and operations.

Information on Woodside’s 

Environment Policy can be 

found on our website.

Excellent environmental 

performance

Woodside partners with leading 

research and education institutes to 

generate information that is critical to 

support decision making and ongoing 

monitoring of our operations. Woodside 

received the 2012 APPEA Environment 

Award, in recognition of Woodside’s 

collaborative research partnerships with 

the Australian Institute of Marine Science 

and the Western Australian Museum. 

The research has improved scientific and 

industry knowledge and improved the 

broader community’s understandings 

of biodiversity and ecological function in 

Western Australia’s tropical marine areas.

Woodside did not receive any 

environmental fines or penalties in 

relation to environmental incidents in 

2012. Six incidents were reported to 

regulators, in accordance with legal 

requirements. Of these, four resulted 

in no measurable environmental impact. 

The other two resulted in a loss of 

120 litres and 200 litres of hydraulic oil 

in separate incidents on two offshore 

facilities. 

As a result of flaring reduction initiatives, 

Woodside continued to reduce the 

flaring intensity of operational facilities, 

achieving a flaring rate of 7.5 t/kt 

(excludes flaring during commissioning). 

This is a decrease of flaring intensity of 

6.5% on 2011 and 22% since 2008. 

Woodside’s rate of flaring for all facilities, 

including those in commissioning, 

was 22.9 t/kt. These rates are due 

to commissioning flaring at both the 

Okha FPSO and Pluto LNG facilities. 

During the commissioning of new 

facilities, it is often necessary to flare 

higher rates of gas in order to maintain 

safety and integrity. Once fully operational, 

it is expected that these facilities will 

operate at significantly lower flaring rates, 

due to mitigation measures incorporated 

into the design of the facility. 

Introduction of a carbon price 

Effective 1 July 2012, Woodside 

became liable for its carbon emissions 

under the Australian Government’s 

Clean Energy Legislation. For the full 

year 2012, a net expense of $17 million 

was recognised which reflects the cost 

of year-to-date emissions, net of all 

2012/13 carbon emission units granted 

by the Clean Energy Regulator.

Browse

In November 2012, the Browse LNG 

Precinct near James Price Point, received 

environmental approval from the Western 

Australian Minister for Environment. 

In granting approval for the Precinct, the 

Minister set a number of strict conditions 

in order for any development to proceed. 

Further to this, the Browse LNG 

Development was declared a derived 

proposal by the Western Australian Minister 

for Environment in December 2012. 

The final environmental decision 

on the Precinct will be made by 

the Commonwealth Environment 

Minister. Woodside will then seek 

further environmental approval from 

the State and Commonwealth to 

construct and operate LNG processing 

facilities within the Precinct.

Woodside carried out additional 

environmental studies in 2012, to further 

understand the terrestrial and marine 

environment in the Browse region. 

Outlook

In 2013, we are focused on maintaining 

a low level of environmental incidents, 

as well as looking to significantly 

reduce our rates of flaring, as facilities 

currently undergoing commissioning 

transition to normal operations.

Our success depends on our ability to understand our current 

and future operating environments, the potential impacts of our 

activities and how we best manage and mitigate such impacts. 

Flare gas and intensity 

(excludes commissioning)

Total gas flared for operated ventures 

(kilotonnes)

Woodside portion of flaring (kilotonnes)

Flared gas intensity (tonne/kilotonnes 

hydrocarbon production)

08 09 10 11 12217246 310 343 327 116150 126 79 65

9.5 9.6 9.3

8.0 7.5

Flared gas intensity is measured as tonnes 

of gas flared per kilotonne of hydrocarbon 

produced (t/kt). The reduction in intensity 

continued in 2012 largely as a result of 

increased reliability and the implementation 

of flaring reduction measures.

12

Environmental incidents

08 09 10 11

Six environmental incidents occurred in 2012. 

Since 2008 there has been a significant 

decline in the number of incidents.

66

4

8

21

Woodside Petroleum Ltd. | Environmental Report 13
Woodside executives, including 

Chief Executive Officer Peter Coleman 

(second from left) and Senior Vice 

President Commercial and President 

Marketing Reinhardt Matisons 

(second from right), meet with 

Mr Yoichi Mukae, Managing DirectorOffice of Fossil Fuel (far left) and other 

executives from Kansai Electric. 

LNG MARKET REPORT

Outlook for growth in global LNG 

demand remains strong

Global demand for LNG to 2025 is 

anticipated to continue to grow at an 

average of 4% to 5% a year, equating to 

an increase of about 200 mtpa (million 

tonnes per annum).* This is underpinned 

by an increasing role for gas in the 

primary energy mix, together with a 

growing list of countries that will import 

LNG. A recent trend in forecasts of LNG 

demand is the potential for greater use 

of LNG in transport, in particular longdistance trucking and ship bunkering. 

The largest regional LNG market is Asia 

Pacific, representing approximately 

two-thirds of global trade, based around 

the core markets of Japan, Korea and 

Taiwan. Growth will be driven by the 

key markets of China and India, with 

a range of emerging import countries 

playing an increasingly important role. 

New LNG importing countries include 

Thailand, Indonesia and Malaysia, 

with Singapore to follow in 2013.

A key uncertainty remains the outlook 

for Japanese demand. Following a 

rapid increase in the wake of the 2011 

Fukushima nuclear incident, demand 

steadied in 2012. The recently elected 

Liberal Democratic Party Government has 

a more positive view on nuclear energy 

and supports restarting idled reactors 

once their safety has been confirmed. 

However, the future primary energy mix 

role of nuclear power generation for the 

country remains unclear. We will continue 

to monitor policy developments in 2013.

*Various consultants, including WoodMackenzie, 

FACTS Global Energy and Poten & Partners.

2011 2025

Operational projects

Projects under construction

Possible developments

WoodMackenzie demand (Nov 2012)

CERA demand: Global redesign (Oct 2012

FACTS demand (Oct 2012)

500

0mtpa

Global LNG supply and demand

Minimal new global LNG supply 

until 2016

Post-Fukushima the Asia Pacific market 

tightened and significant volumes of Atlantic 

supply are being diverted to Asian markets 

to meet demand. As a consequence spot 

LNG prices remain relatively high. There is 

very little new supply due on-line before the 

middle of the decade, and uncommitted 

volumes from operating projects in this 

period will be highly prized.

From 2016 to 2019 approximately 

90 mtpa of new LNG capacity currently 

under construction is expected to be 

phased into the market. The market is not 

expected to move back towards a more 

balanced supply/demand position until 

this is completed. Start-up delays may 

extend the period of supply tightness 

and underscore the value of Woodside’s 

uncommitted production from the North 

West Shelf (NWS) Project and Pluto LNG.

Australia is home to seven of the 13 

projects globally under construction and 

is destined to become the world’s largest 

supplier before the end of the decade. 

The next wave of supply will 

include some new LNG exporting 

regions, but these will face 

challenges

Towards the end of the decade additional 

new supply is required to meet growth 

in demand and replace the decline in 

some legacy projects. Globally there 

are many proposed projects, both 

brownfield expansions and greenfield, 

that are competing to secure new longterm sales beginning around 2020. 

During 2012, a final investment decision 

(FID) was taken on the first US LNG 

export project supported by domestic 

shale gas deposits. There are many other 

North American export projects currently 

proposed, but most are speculative at this 

stage. The proposals in the US are mainly 

based on brownfield re-development 

of existing re-gasification terminals. 

Canadian LNG projects are more aligned 

to typical greenfield developments in 

Australia in terms of cost structure and 

risk profiles. The general view is that US 

14 Woodside Petroleum Ltd. | 2012 Annual Report

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INFORMATION
exports of LNG are expected to make 

up less than 10% of global supply by 

2025, compared to approximately 25% 

from Australia and 20% from Qatar.

East Africa is also emerging as a 

new supply region following recent 

large offshore gas discoveries, but 

will likely face a range of greenfield 

development risks and other 

country specific challenges.

Long-term LNG pricing in Asia 

Pacific is robust

The outcomes of recent price 

negotiations in Asia Pacific for 

existing supplies indicate that the 

long-term oil-linked price is relatively 

stable with average pricing indexed 

to 85-90% of oil price movements. 

Woodside anticipates prices will remain 

predominantly oil-linked at close to the 

current level to support investment 

in new greenfield supply projects.

US brownfield projects have given rise 

to some alternative pricing mechanisms, 

with some sales linked to the Henry Hub 

natural gas benchmark plus a terminal 

capacity charge and transportation costs. 

It is expected that Asian buyers will 

initially limit the amount of US supply in 

their portfolios, with its volatile alternative 

price index and exposure to different 

contractual risks. The influence on 

Asian pricing will ultimately depend on 

the proportion of Asian sales captured 

by US LNG and the extent to which 

US supplies become and remain the 

marginal supply choice for the region. 

Woodside has strong price 

protection for its long-term 

LNG sales

Woodside’s Sale and Purchase 

agreements (SPAs) typically provide for 

periodic price discussions over the term of 

the contract. The impact of price reviews 

and Price Out of Range negotiations is 

to recalibrate contract pricing to reflect 

market trends. Woodside staggers 

the timing of price reviews within its 

current portfolio of more than 18 longterm SPAs to the extent possible. 

Between 2011 and 2014 the majority of 

Woodside’s equity volumes will be subject 

to some form of price renegotiation, 

which is expected to generate incremental 

value due to the tightness of the market 

and the benchmark contracts that will be 

used to calibrate prices during this period. 

Woodside’s equity LNG has 

doubled with the start-up of Pluto

A key milestone was reached when Pluto 

LNG loaded its inaugural cargo in May. 

Better than forecast LNG production 

at Pluto also enabled higher than planned 

deliveries to key long-term customers and 

resulted in further sales of additional LNG 

cargoes into a high demand spot market. 

In 2012 Woodside delivered 39 cargoes 

from Pluto, compared to a total of 

247 cargoes from the NWS Project.

Pricing discussions are underway for 

Pluto, targeting similar market price 

outcomes as other relevant Australian 

benchmarks for deliveries of long-term 

volumes into Japan.

NWS LNG continues to be highly 

valued in the market, with the extension 

of a long-term contract and a strong 

outcome for a recent price review with 

Japanese customers. These have set a 

solid platform for new sales following 

the sanction of the Greater Western 

Flank Phase 1 offshore development.

Woodside actively marketing 

Browse LNG

Woodside is actively engaged with a 

broad base of premium customers in 

Asia to secure Browse foundation sales 

to be in a position to consider a FID in 

2013. Sales into Japan and North Asia are 

underwritten through a joint marketing 

effort with Japan Australia LNG 

(MIMI Browse) Pty Ltd (MIMI), following 

the combined off-take and equity transfer 

deal announced in May. This effectively 

places approximately 3.3 mtpa of 

Browse volumes into the premium Asian 

market, with joint marketing affording 

us market priority. In other regions, 

Woodside is also progressing its own 

equity sales and these are at various 

stages of maturity to support a FID.

New developments will deliver an 

extended range of markets and 

customers

Woodside’s planned participation 

in the Leviathan field in the Eastern 

Mediterranean and its entry into 

Myanmar could lead to new LNG and 

domestic gas market opportunities. 

Woodside is preparing for timely 

engagement with relevant markets to 

underpin these proposed new supply 

projects. We will leverage our longterm experience in both pipeline gas 

and LNG marketing, together with our 

customer relationships to introduce 

the new supply to the relevant markets 

and secure foundation customers. 

Woodside to expand its LNG 

trading and shipping business

Central to our success is Woodside’s LNG 

shipping position. Woodside manages an 

integrated fleet of three ships on behalf 

of Pluto and has utilised these ships 

for project deliveries and optimisation 

with other suppliers, end users and 

traders. Pluto took a major investment 

decision in 2012 to expand its fleet to 

include a dedicated long-term fourth 

ship via a time charter (commencing 

mid 2013). This will allow further fleet 

integration and materially reduce operating 

costs. The vessel will support term 

and spot sales from Pluto, including 

any potential trading opportunities.

Focused on consolidation, 

optimisation and new opportunities

As the major Australian supplier, 

Woodside’s key strengths are its 

reputation for reliability, long-term 

relationships with key buyers, proximity 

to premium Asian markets, and the 

stable political and fiscal regime in 

which it operates. We monitor the 

changing market and will remain 

competitive in securing long-term 

and short-term sales opportunities. 

Woodside’s marketing efforts in 2013 

will be focused on the consolidation 

and optimisation of LNG sales from 

operating assets and also on generating 

revenue from other shipping and 

trading activities. Woodside’s recent 

developments represent an opportunity 

to expand into new markets and to extend 

the existing broad base of premium 

Asian customers. Woodside is ready to 

leverage its strong marketing position 

and capability to support its Australian 

and international growth plans.

Woodside Petroleum Ltd. | LNG Market Report 15
Reserves statement

The developed portion of Proved plus Probable reserves 

increased by 132% in 2012 due to the start-up of Pluto LNG.

2012 Key POINTS

Developed Proved plus Probable 

reserves increased 430.3 MMboe 

largely due to achieving first production 

from Pluto LNG.

Net Contingent Resource in the 

Greater Browse region decreased by 

427.8 MMboe largely due to a positive 

revision at Calliance (+40.8 MMboe) and 

the sale of a minority portion of equity in 

the proposed Browse LNG Development 

(-468.8 MMboe).

Net Contingent Resource in the Greater 

Pluto Region increased 36.1 MMboe 

due to discovery of the Ragnar gas field.

Woodside’s reserves(1) overview 2012 2011 Change%

Proved(2) MMboe 1,230.6 1,292.4 (4.8)

Developed Proved(3) MMboe 533.5 248.1 115.1

Proved plus Probable(4) MMboe 1,543.6 1,610.2 (4.1)

Developed Proved plus Probable MMboe 755.6 325.3 132.3

Contingent resources(5) MMboe 1,745.2 2,136.5 (18.3)

Key metrics Proved Proved plus 

Probable

2012 reserves replacement ratio(6) % 30 25

Organic 2012 reserves replacement ratio(7) % 30 25

Three year reserves replacement ratio % 71 52

Three year organic reserves replacement ratio % 88 82

Reserves life(8) Years 14 17

Annual production(9) MMboe 88.4 88.4

Net acquisitions and divestments MMboe 0.0 0.0

Proved reserves annual reconciliation by product*

Dry gas(10) Condensate(11) Oil Total

Bcf(12) MMbbl(13) MMbbl MMboe(14)

Reserves at 31 December 2011 6,406 117.2 51.4 1,292.4

Revision of previous estimates(15) 59 (0.2) 12.7 22.9

Extensions and discoveries(16) 18 0.5 0.0 3.7

Acquisitions and divestments 0 0.0 0.0 0.0

Annual production (358) (8.8) (16.8) (88.4)

Reserves at 31 December 2012 6,125 108.8 47.3 1,230.6

Best estimate contingent resources annual reconciliation by product*

Dry gas Condensate Oil Total

Bcf MMbbl MMbbl MMboe

Contingent resources at 31 December 2011 9,788 288.6 130.7 2,136.5

Transfer to reserves (7) (0.2) (3.7) (5.1)

Revision of previous estimates 82 3.6 5.7 23.7

Extensions and discoveries 285 2.5 6.5 59.0

Acquisitions and divestments (2,312) (63.2) (0.0) (468.8)

Contingent resources at 31 December 2012 7,836 231.2 139.3 1,745.2

Proved plus Probable reserves summary by region* 

Project Dry gas Condensate Oil Total

Bcf MMbbl MMbbl MMboe

Greater Pluto 4,856 70.8 0.0 922.7

North West Shelf 2,644 60.1 31.4 555.4

Greater Exmouth 0 0.0 53.2 53.2

United States of America 5 0.0 6.7 7.7

Other Australia 0 0.0 4.6 4.6

Reserves 7,505 130.9 95.9 1,543.6

Proved reserves summary by region*

Project Dry gas Condensate Oil Total

Bcf MMbbl MMbbl MMboe

Greater Pluto(17) 3,641 54.2 0.0 692.9

North West Shelf(18) 2,480 54.6 19.8 509.6

Greater Exmouth(19) 0 0.0 21.7 21.7

United States of America(20) 4 0.0 3.9 4.5

Other Australia(21) 0 0.0 1.8 1.8

Reserves 6,125 108.8 47.3 1,230.6

12

Developed Proved reserves 

increased 285.4 MMboe 

by year-end, largely due to 

the successful start-up of 

Pluto LNG.

Proved reserves*

08 09 10 11

Proved reserves (MMboe)

1,3281,2961,3081,2921,231

12

Due to Pluto LNG start-up, 

developed Proved plus 

Probable reserves increased 

430.3 MMboe. 

Proved plus Probable 

reserves*

08 09 10 11

Proved plus Probable Reserves (MMboe)

1,7031,6511,680

1,610

1,544

*Small differences are due to rounding to first decimal place. Developed Proved reserves (MMboe) Developed Proved plus Probable reserves (MMboe)

377

495 444 354 325

756

331 264 248

533

16 Woodside Petroleum Ltd. | 2012 Annual Report

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REPORT

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Governance and Assurance

Woodside, as an Australian company listed 

on the Australian Securities Exchange, 

reports its petroleum resource estimates 

using definitions and guidelines consistent 

with the 2007 Society of Petroleum 

Engineers (SPE)/World Petroleum Council 

(WPC)/American Association of Petroleum 

Geologists (AAPG)/Society of Petroleum 

Evaluation Engineers (SPEE) Petroleum 

Resources Management System (PRMS).

In accordance with the PRMS guidelines, 

Woodside uses crude oil price forecasts and, 

where applicable, individual project production 

sales contract terms or other financial products 

for the purpose of reserves estimation. 

Unless otherwise stated, all petroleum resource 

estimates are quoted as net Woodside share 

at standard oilfield conditions of 14.696 psi 

(101.325 kPa) and 60 degrees Fahrenheit 

(15.56 deg Celsius). 

Woodside has several processes to provide 

assurance for reserves reporting, including 

the Woodside Reserves Policy, the Petroleum 

Resources Management Operating Standard, 

staff training and minimum competency levels 

and external reserves audits. On average, 

more than 95% of Woodside’s Proved 

Reserves have been externally verified by 

independent review over the past four years.

Best estimate contingent resources summary by region*

Project Dry gas Condensate Oil Total

Bcf MMbbl MMbbl MMboe

Greater Browse(22) 4,987 136.4 0.0 1,011.4

Greater Sunrise(23) 1,717 75.6 0.0 376.7

Greater Pluto 851 13.2 0.0 162.5

North West Shelf 99 3.0 21.4 41.7

Greater Exmouth 93 0.5 103.1 119.9

United States of America 2 0.0 1.8 2.1

Other Australia 66 0.5 8.4 20.4

Other International(24) 22 2.1 4.5 10.5

Total 7,836 231.2 139.3 1,745.2

The Reserves Statement has been compiled by Mr Ian F. Sylvester, Woodside’s 

Chief Reservoir Engineer who is a full-time employee of the company. Mr Sylvester’s 

qualifications include a Master of Engineering (Petroleum Engineering) from Imperial 

College, University of London, England, and more than 20 years of relevant experience. 

Mr Sylvester has consented in writing to the inclusion of this information in this report.

1 ‘Reserves’ are estimated quantities of petroleum 

that have been demonstrated to be producible 

from known accumulations in which the company 

has a material interest from a given date forward, 

at commercial rates, under presently anticipated 

production methods, operating conditions, prices 

and costs. Woodside reports reserves net of the 

upstream (offshore) gas required for production, 

processing and transportation to a reference point 

defined as the inlet to the downstream (onshore) 

processing facility. Downstream fuel and flare 

represents 11.9% of total Proved reserves, and 

11.8% of total Proved plus Probable reserves.

2 ‘Proved reserves’ are those reserves which analysis 

of geological and engineering data suggests, to 

a high degree of certainty (90% confidence), are 

recoverable. There is relatively little risk associated 

with these reserves.

3 ‘Developed reserves’ are those reserves that are 

producible through currently existing completions 

and installed facilities for treatment, compression, 

transportation and delivery, using existing operating 

methods and standards.

4 ‘Probable reserves’ are those reserves which analysis 

of geological and engineering data suggests are 

more likely than not to be recoverable. There is at 

least a 50% probability that the quantities actually 

recovered will exceed the sum of estimated Proved 

plus Probable reserves.

5 ‘Contingent resources’ are those quantities of 

petroleum estimated, as of a given date, to be 

potentially recoverable from known accumulations, 

but the applied project(s) are not yet considered 

mature enough for commercial development 

due to one or more contingencies. Contingent 

resources may include, for example, projects 

for which there are currently no viable markets, 

or where commercial recovery is dependent on 

technology under development, or where evaluation 

of the accumulation is insufficient to clearly assess 

commerciality. Woodside reports contingent 

resources net of the upstream (offshore) fuel and 

non-hydrocarbons not present in sales products. 

Contingent resource estimates may not always 

mature to reserves and do not necessarily represent 

future reserves bookings. All contingent resource 

volumes are reported at the ‘Best Estimate’ (P50) 

confidence level.

6 The ‘reserves replacement ratio’ is the reserves 

change during the year, before the deduction of 

production, divided by production during the year. 

The ‘three-year reserves replacement ratio’ is 

the reserves change over three years, before the 

deduction of production for that period, divided by 

production during the same period. 

7 The ‘organic annual reserves replacement ratio’ 

is the reserves change during the year, before 

the deduction of production and adjustment for 

acquisition and divestments, divided by production 

during the year.

8 The ‘reserves life’ is the total reserves (developed 

and undeveloped) divided by production during the 

year.

9 ‘Annual production’ is the volume of dry gas, 

condensate and oil (see Notes 10 and 11) produced 

during the year and converted to ’MMboe’ (see Note 

12) for the specific purpose of reserves reconciliation 

and the calculation of reserves replacement ratios. 

The ‘Reserves Statement’ annual production differs 

from production volumes reported in the company’s 

annual and quarterly reports due to differences in 

the sales product definitions, reserves reported 

gross of downstream fuel and flare and the ‘MMboe’ 

conversion factors applied.

10 ’Dry gas’ is defined as ‘C4 minus’ petroleum 

components including non-hydrocarbons. These 

volumes include LPG (propane and butane) 

resources. Dry gas reserves include ‘C4 minus’ 

hydrocarbon components and non-hydrocarbon 

volumes that are present in sales product. 

11 ‘Condensate’ is defined as ‘C5 plus’ petroleum 

components.

12 ‘Bcf’ means Billions (109

) of cubic feet of gas at 

standard oilfield conditions of 14.696 psi (101.325 

kPa) and 60 degrees Fahrenheit (15.56 degrees 

Celsius).

13 ‘MMbbl’ means millions (106

) of barrels of oil and 

condensate at standard oilfield conditions of 14.696 

psi (101.325 kPa) and 60 degrees Fahrenheit (15.56 

degrees Celsius).

14 ‘MMboe’ means millions (106

) of barrels of oil 

equivalent. Consistent with international practice, dry 

gas volumes are converted to oil equivalent volumes 

via a constant conversion factor, which for Woodside 

is 5.7 Bcf of dry gas per 1 MMboe. Volumes of oil and 

condensate are converted from MMbbl to MMboe 

on a 1:1 ratio.

15 ‘Revision of previous estimates’ are changes in 

previous estimates of reserves or contingent 

resources, either up or down, resulting from new 

information normally obtained from development 

drilling and production history or resulting from a 

change in economic factors.

16 ‘Extensions and discoveries’ represent additions to 

reserves or contingent resources that result from 

increased areal extensions of previously discovered 

fields, discovery of reserves in new fields or new 

reservoirs in old fields.

17 The ‘Greater Pluto’ region comprises the Greater 

Pluto Central, Inner, Ragnar and Claudius Hubs. 

18 The ‘North West Shelf’ (NWS) includes all oil and gas 

fields within the North West Shelf Project Area. As 

the NWS consists of a portfolio of fields, probabilistic 

aggregation is more appropriate than arithmetic 

summation as inter-field dependencies reflecting 

different reservoir characteristics between fields are 

incorporated. Probabilistic aggregation of individual 

fields in the NWS accounts for 12% of NWS 

Proved dry gas reserves and 16% of NWS Proved 

condensate reserves.

19 The ‘Greater Exmouth’ region comprises Vincent, 

Enfield, Cimatti, Stybarrow-Eskdale and Greater 

Laverda fields

20 Woodside’s resources in the United States of 

America include the Neptune and PowerPlay fields. 

21 ‘Other Australia’ includes the Mutineer-Exeter, 

Laminaria-Corallina and Argus fields.

22 ‘Greater Browse’ comprises the Brecknock, Calliance 

and Torosa fields. Woodside completed the sale 

of a minority portion of the company’s equity in 

the proposed Browse LNG Development to Japan 

Australia LNG Pty Ltd. Net resources are subject to 

future unitisation outcomes.

23 ‘Greater Sunrise’ comprises the Sunrise and 

Troubadour fields.

24 ‘Other International’ includes fields in Brazil. 

Notes to the reserves statement

Developed and undeveloped 

(Proved plus Probable reserves)

As projects are brought into production, 

additional value is derived for the company. 

At year-end 2012, 49% of the Proved plus 

Probable reserves were categorised as 

developed, up from 20% in 2011.

%

Developed 49.0

Greater Pluto undeveloped 27.3 

NWS undeveloped 22.6

Other undeveloped 1.1

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

Woodside Petroleum Ltd. | Reserves Statement 17
Argus

Vincent / Enfield

Laverda

NWS

Pluto

WA-397-PWA-396-P

WA-429-P

WA-432-P

Torosa

Calliance

Brecknock

WA-466-P

WA-416-P

WA-415-P

WA-417-P

WA-434-P

WA-472-P

WA-449-P

WA-462-P

WA-464-P

WA-473-P

WA-467-P

WA-389-P WA-465-P

WA-404-P

WA-447-P

WA-348-P

AC/P48

WA-347-P

WA-269-P WA-451-P

WA-433-P

WA-478-P

WA-275-P

WA-430-P

Vucko-1

Ananke-1

Ragnar-1

Banambu Deep-1

Derby

Broome

Exmouth

Karratha

Port Hedland

James Price Point

EXPLORATION REVIEW

In 2012, we pursued new international growth opportunities that 

align with our strategy and capabilities. These provide greater 

diversity and broader balance to our portfolio, positioning the 

company to deliver long-term value growth for shareholders.

2012 Key performance 

highlights

Strengthened our portfolio with 

new permit entries in Australia and 

preliminary agreements for permit 

entries in Myanmar and Israel.

Acquired Woodside’s largest ever 

seismic survey in the Outer Canning 

Basin, offshore Western Australia.

Gas discovered at Ragnar-1A.

FUTURE OBJECTIVES

In 2013 Woodside plans to drill up 

to eight wells offshore Australia and 

acquire seismic data in Australia, 

Myanmar and potentially Peru. 

Test the prospectivity of the underexplored Outer Canning Basin.

Progress drilling in offshore Israel.

Strengthen and mature our exploration 

portfolio.

Exploration results 

In 2012, Woodside drilled six exploration 

wells, resulting in a gas discovery at 

Ragnar-1A in WA-430-P in the Carnarvon 

Basin. Three dry holes were drilled in 

Australia (Vucko-1, Banambu Deep-1 

and Ananke-1), one in the Republic of 

Korea (Jujak-1) and one in the Gulf of 

Mexico (Innsbruck-1). Exploration risk was 

managed by farming out equity in three 

Australian permits prior to drilling. This 

included farming out 35% equity in WA433-P to Sasol Petroleum, 40% equity 

in WA-389-P to BHP Billiton Petroleum, 

and 16.67% equity in WA-269-P to Japan 

Australia LNG. Exploration expenditure 

was lower in 2012 due to these farmout decisions and a planned slowdown 

in exploration drilling during a time of 

portfolio replenishment. 

Portfolio renewal 

The 2012 exploration drilling results 

were disappointing, and reflect the need 

for Woodside to continue to rebuild 

and refocus its exploration portfolio. 

Consistent with this goal, in 2012 we 

acquired three new exploration permits 

in Australia and over 15,000km2

 of new 

three dimensional (3D) seismic data, 

including Woodside’s largest ever seismic 

survey, to prepare for future exploration 

campaigns. This included the acquisition 

of the 11,530 km2

 Curt 3D seismic survey 

in the Outer Canning area, where risks 

are high but prospect sizes are large. 

In addition, we substantially increased 

our international new ventures team, 

conducted regional studies and pursued 

new acreage. 

In line with our revised exploration 

strategy to re-balance our portfolio, we 

have shifted our emphasis from mature 

basins with a predominant focus on 

Australia, to a balance between mature, 

emerging and frontier basins in Australia 

and also internationally. In Myanmar, 

subject to final agreements and approvals, 

we will add two new exploration permits 

in the offshore Rakhine Basin. We are 

looking forward to working with our 

experienced local partners to mature 

this acreage by acquiring 3D seismic 

data in 2013. 

Woodside has significant acreage in prospective exploration areas

0 100 200

kilometres

Horizontal Datum: GDA 1994

Woodside permits

WEL owned/participant 

2012 acquired permits 

Woodside fields

Gas 

 Oil 

Woodside permits

WEL owned/participant 

2012 acquired permits 

Woodside fields

Gas 

 Oil 

18 Woodside Petroleum Ltd. | 2012 Annual Report

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In Israel as part of the Leviathan purchase agreement, which 

is also subject to final approvals, we have the opportunity to 

participate in an offshore exploration well, targeting a deep oil play.

Woodside will continue to use appropriate technology as we 

pursue opportunities that align with our strategy and capabilities. 

Woodside anticipates exploration expenditure will increase to 

around $480 million in 2013, up from $260 million in 2012.

2012 exploration drilling results

Six exploration wells were drilled during 2012, with a 190 m gross 

gas column encountered at Ragnar-1A, located approximately 

33 km north west of Laverda.

WA-430-P, Ragnar hub

Woodside 70% (operator)

Ragnar-1A was finalised during early 2012 with the well 

encountering gas within the objective Triassic Mungaroo 

Formation. The follow-up Gumbo prospect is planned to be 

drilled in WA-430-P in early 2013.

WA-433-P, Ragnar hub

Woodside 45% (operator)

Vucko-1 was drilled to test a Triassic fault block north-west of the 

Ragnar discovery; however, no hydrocarbons were encountered. 

WA-389-P, Greater Pluto

Woodside 25% (operator)

Banambu Deep-1 was drilled to test an incised channel system 

within the Mungaroo Formation; however, no hydrocarbons were 

encountered. 

WA-269-P, Greater Pluto, Inner Hub

Woodside 50% (operator)

Ananke-1 was drilled to test an Oxfordian stratigraphic trap; 

however, the well was unsuccessful. 

Block 8/6-1N, Ulleung Basin, Republic of Korea

Woodside 50% (operator)

Jujak-1 was drilled as the first deepwater well in the frontier 

Ulleung Basin. The well explored a Miocene fan complex within 

a four way dip closure. The well found excellent reservoir at the 

objective section, but no hydrocarbons were encountered.

Mississippi Canyon Block 993, Gulf of Mexico

Woodside 15% (non-operator)

Innsbruck-1 tested an oil prospect to the south of the Gunflint 

discovery in the deepwater Gulf of Mexico. No commercial 

hydrocarbons were encountered.

Australian outlook 

In 2013, Woodside will resume its Australian exploration 

drilling with up to eight wells planned in Australia, subject to rig 

availability. Two to three wells target oil prospects in the Greater 

Exmouth Area; three are in support of our existing gas assets, 

and two wells are in pursuit of a new LNG hub in the Outer 

Canning Basin. 

Over 10,000 km2

 of 3D seismic acquisition is planned in the 

Beagle Sub-Basin and in the North West Shelf Joint Venture 

area, which will allow for the maturation of drilling candidates 

for subsequent years.

International outlook 

In the deepwater Gulf of Mexico, Woodside will continue to 

mature our exploration portfolio and, subject to joint venture 

participation, expects to participate in drilling operations in 2013.

Conditional on final agreements and approvals, we plan to acquire 

3D seismic in Myanmar in 2013 over exploration permits A-6 

and AD-7, with options to drill exploration wells in subsequent 

exploration periods.

The in-principle agreement to acquire a 30% participating 

interest in the Leviathan field, offshore Israel, also provides the 

opportunity for Woodside to participate in an exploration well 

in 2014.

In Peru, Woodside has a 20%, non-operated interest in onshore 

block 108, which is currently under force majeure conditions. 

Once the force majeure conditions cease, the Joint Venture plans 

to acquire up to 800 km of 2D seismic. 

In the Canary Islands, Woodside holds a 30% interest in blocks 

1-9 operated by Repsol. Full rights to the permit activity have been 

reinstated following the issue of a Royal Decree on 16 March 

2012; however, the Royal Decree is currently the subject of legal 

proceedings initiated by third party interest groups.

2012 exploration expenditure by category 2012 exploration expenditure by country

Drilling expenditure was reduced from the 

previous year due to fewer wells and cost 

savings from farm-outs. Expenditure on 

studies and data purchases was increased, 

associated with rebuilding the exploration 

portfolio. 

Australia remained the focus for exploration 

expenditure, but there was an increased 

emphasis on international ventures. 

%

Drilling 37

Seismic 29

Studies and other 34

%

Australia 57

USA 13

International excluding USA 30

Woodside Petroleum Ltd. | Exploration Review 19
RISK MANAGEMENT

Active risk management 

Woodside’s approach to risk is focused on enhancing 

opportunities, reducing threats and sustaining our 

competitive advantage. Central to this is the consistent 

application of our process for the recognition and 

management of risks across Woodside’s business. 

Key roles and responsibilities

The Board Audit and Risk Committee (A&RC) has oversight 

of the Risk Management Policy and is responsible 

for ensuring that management has developed and 

implemented a sound risk management system.

Management at all levels has responsibility for managing risk 

in their area of control. Support is provided to management 

by the Risk and Insurance function to ensure Woodside’s 

risk management operating standard is consistently 

and effectively applied throughout the business.

Risk professionals are embedded within the business units, 

functions and major projects to support management in the 

consistent application of the risk management process. 

The risk team maintains Woodside’s corporate risk profile 

and regularly reports to the A&RC on the effectiveness 

of the management of Woodside’s material risk.

Further information on Woodside’s risk management roles 

and responsibilities can be found in the Corporate Governance 

Statement on pages 47 and 48. 

Woodside’s risk management system

Woodside operates a standardised enterprise-wide system 

which provides an over-arching and consistent process 

for the recognition and management of material risk. 

Woodside’s risk management process is aligned to ISO 

31000, the international standard for risk management. 

Woodside’s Risk Management Policy outlines the 

principles which underpin our approach to risk. Our risk 

management operating standard is part of the Woodside 

management system and sets out clearly defined criteria 

to evaluate and report on material risk. We systematically 

assess the consequence of risks in areas such as: 

health and safety;

environmental;

financial;

legal and compliance;

reputation and brand; and

social and cultural impacts.

In the Woodside context, we routinely consider our oil and gas 

exploration, development and operational risks and continually 

seek to improve our risk management framework to more 

effectively manage these industry-wide risks. We also consider 

incidents and issues in the global energy industry to ensure 

that Woodside is responding appropriately to similar risks. 

Our most significant material risks, and how they are being 

managed, are summarised in the corporate risk profile. 

Operational and project risks are continuously reviewed and 

summarised in the corporate register for twice yearly review 

by the executive management team and the A&RC. These 

reviews consider the effectiveness of the actions taken 

by Woodside to manage risk. During 2012, an extensive 

review of Woodside’s risk categories was completed.

The success of our risk management system relies 

on our employees, at all levels, proactively identifying, 

managing, reviewing and reporting on risk.

For information regarding Woodside’s identification and 

response to key sustainability risks and issues refer to pages 9, 

12 and 13 of the 2012 Sustainable Development Report.

We recognise that risk is inherent to our business and are 

committed to managing all risk in a proactive and effective manner. 

The risk management process 

Establish the 

context

Risk analysis

Risk identification

Risk assessment

Risk evaluation

Communication and consultation 

Monitor, review and report 

Risk treatment 

The Woodside risk management process is outlined 

above. Effective communication and consultation is 

essential to ensuring appropriate identification, analysis, 

evaluation and treatment of risk.

20 Woodside Petroleum Ltd. | Risk Management

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WOODSIDE EXECUTIVES

He joined Woodside in December 

2006 and transitioned into his 

current role as Executive Vice 

President and Chief Financial 

Officer in January 2011. In this 

role Lawrie is responsible for 

a range of functions including 

finance, investor relations, 

risk management, information 

technology and supply chain.

Vince Santostefano

Chief Operations Officer

BEng (Civil)

Vince has more than 33 

years experience in the oil 

and gas sector working 

across a range of disciplines 

including drilling, operations 

and structural/civil design. 

Vince joined Woodside in 1999 

and has worked in variety of 

roles, including Project Manager, 

Director of the Australian 

Business Unit and Executive 

Vice President Production. 

In his current role as Chief 

Operations Officer, Vince 

oversees the producing Business 

Units and the Production Function 

covering the operations of all 

Woodside’s producing facilities.

Dr Peter Moore 

Executive Vice President 

Exploration 

BSc (Hons 1), PhD, MBA

Peter joined Woodside in 1998 

as the Geological Manager. 

He has since held a range 

of roles, including Head of 

Evaluation and Exploration 

Manager Gulf of Mexico.

Peter was appointed to the role 

of Executive Vice President 

Exploration in March 2009, 

which sees him responsible for 

all of Woodside’s exploration 

efforts worldwide. 

Dr Robert Edwardes

Executive Vice President 

Development

BSc (Eng), PhD

Robert has 35 years of resources 

industry experience spanning the full 

breadth of operations and projects, 

including HSE and operations 

integrity, production technology, 

development planning and delivery 

of major capital projects.

In his role as Executive Vice 

President Development, 

Robert is responsible for the 

delivery of onshore and offshore 

capital projects, in addition to 

drilling, subsea and reservoir 

management operations.

Dr Michael Hession

Senior Vice President, Browse

BSc, MBA, PhD

Michael is Senior Vice President 

of the proposed Browse LNG 

Development, a position 

he has held since 2009. 

Michael is responsible for the 

safe and successful delivery of the 

Browse LNG Development, which 

Woodside operates on behalf 

of the Browse Joint Venture.

Dr Greg Roder

Executive Vice President 

Corporate Strategy and 

Planning

BSc (Hons), PhD, MBL

Greg has over 25 years 

experience in energy resources, 

infrastructure investment, 

funds management, equity 

capital markets and operational 

asset management.

His role of Executive Vice 

President Corporate Strategy and 

Planning sees Greg responsible 

for setting and coordinating 

Woodside’s growth path in line 

with the agreed strategic themes 

the company is pursuing. 

Feisal Ahmed

Executive Vice President 

Technology

BSc Mechanical Engineering

Feisal has more than 36 years 

global oil and gas experience 

in exploration, development, 

production, gas marketing and new 

business development, including 

25 years with ExxonMobil.

In his role as Executive Vice 

President Technology, he is 

responsible for the development 

of distinctive technologies to 

facilitate new growth opportunities 

and enhancement of technical 

capabilities across the company. 

His prior roles were Executive 

Vice President Development 

and Senior Vice President 

Middle East and Africa.

c)

g)

h)

i)

d)

e)

Peter Coleman

Chief Executive Officer and Managing Director 

BEng (Civil and Computing), MBA

Peter has 28 years experience in the global oil and 

gas industry, and was appointed Chief Executive 

Officer and Managing Director of Woodside 

upon joining the company in May 2011.

Peter began his career at Esso Australia (later to 

become part of the ExxonMobil group) following 

graduation from Monash University, and stayed 

with ExxonMobil until joining Woodside.

Robert Cole

Executive Director and Executive Vice President, 

Corporate and Commercial

BSc LLB (Hons) 

Robert joined Woodside in 2006 as General Counsel after 

a 21 year career with law firm Mallesons Stephen Jaques.

Robert was appointed to the Woodside Board in the role 

of Executive Director in early 2012. In this role, Robert 

is responsible for an array of corporate and commercial 

functions including legal and company secretariat, audit, 

commercial, corporate affairs, security and emergency 

management, health and safety, human resources and 

environment and heritage.

Lawrie Tremaine

Executive Vice President and Chief Financial Officer

BBus, FCPA

Lawrie has more than 20 years finance leadership 

experience in the resource and minerals processing industry. 

a)

b)

f)

a

d

g

b

e

h

c

f

i

Woodside Petroleum Ltd. | Woodside Executives 21
WE BELIEVE INNOVATION 

MEANS TURNING 

CHALLENGES INTO 

NEW OPPORTUNITIES

 In April 2012, the North Rankin 

Redevelopment (NR2) Project 

successfully installed the North 

Rankin B topsides on the platform’s 

substructure.

THE NORTH RANKIN REDEVELOPMENT

 The 260 m long Heerema H-851

barge, the largest oil and gas 

industry transport barge in the 

world, was used to transport and 

install the topsides.

 The topsides, weighing more than 

24,000 tonnes and positioned 

100 m from the North Rankin A 

production facility, were installed 

using the float-over method. 

 Significant challenges were 

overcome by the NR2 team 

to safely deliver this result. 

Accomplishing this milestone 

was not easy. It required detailed 

analysis, disciplined planning, 

extensive risk analysis, rigorous 

attention to detail and above all – 

teamwork. 

22 Woodside Petroleum Ltd. | 2012 Annual Report

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The successful use of the float-over method 

at North Rankin B to install the 24,000 tonne 

topsides, set an installation record for both 

height and weight in open water. 

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

Woodside Petroleum Ltd. 23
2012 2011

Sales revenue ($ million) 3,300 2,989

Net gas 

production (MMboe) 36.7 37.8

Net liquids 

production (MMbbl) 10.8 8.9

Proved plus 

Probable 

reserves

(MMboe) 555.4 581.2

NWS key metrics (Woodside share)

North West Shelf

2012 Key performance 

highlights

Delivery of the 3500th LNG cargo and 

3000th LNG cargo to Japan.

Record revenue and profit for the 

project. 

Safe installation of the 24,000 tonne 

NRB topsides.

FUTURE OBJECTIVES

Safe start-up of NRB platform.

LNG Train 2 refurbishment. 

Acquire new seismic data to refresh 

exploration portfolio.

North West Shelf Project

Interest NWS Venture

Domestic Gas JV

Incremental Pipeline JV

China LNG JV

CWLH (crude oil)

16.67%

50.00%*

16.67%*

12.50%

33.33%

Operator Woodside

Facilities North Rankin A platform

Goodwyn A platform 

Angel platform

Okha FPSO

Karratha Gas Plant

Location Offshore facilities ~135 km 

north-west of Karratha, WA

Water 

depth 80 - 130 metres

Products LNG, pipeline gas, 

condensate, crude oil and LPG

First 

production 1984 (pipeline gas)

*During 2012 Woodside’s average share of 

pipeline gas production was approximately 

45%. Woodside’s exact share of domestic 

gas production depends on the quantities and 

aggregate rate of production.

NWS contribution to Woodside's 

total production (MMboe)

During 2012 the NWS operations 

continued to provide the majority of 

Woodside’s production.

%

NWS gas and condensate 52

NWS oil 4

Woodside other 44

The execution of significant 

development milestones including 

the safe installation of the 

North Rankin B (NRB) topsides 

demonstrates Woodside’s 

capability as a leading operator 

and is paving the way for the 

North West Shelf (NWS) Project 

to deliver strong performance 

for decades to come.

The Karratha Gas Plant is one of 

the most advanced integrated gas 

production systems in the world. The 

facility includes five LNG processing 

trains, two domestic gas trains, six 

condensate stabilisation units, three 

LPG fractionation units as well as 

storage and loading facilities for LNG, 

LPG and condensate.

24 Woodside Petroleum Ltd. | 2012 Annual Report

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In 2012, the NWS Project achieved two major cargo milestones. 

In August, the 3500th LNG cargo was loaded from the Karratha 

Gas Plant (KGP) and in November the 3000th LNG cargo was 

delivered to Japan. 

These milestones reinforce the long standing relationships the 

NWS Project has with its customers in the Asia Pacific region. 

These achievements demonstrate our reputation as a major LNG 

exporter, where safety, reliability and strong performance are 

fundamentals. 

As operator, Woodside has been instrumental in establishing 

and maintaining that reputation, and today we are developing 

a new generation of projects on the back of that success. 

Since 2008 the NWS Project has committed more than A$9 billion 

in reserves and infrastructure development, including the North 

Rankin Redevelopment, North West Shelf Oil Redevelopment 

and more recently the Greater Western Flank Phase 1 Project. 

Woodside continues to enhance the value of the NWS Project 

through our strategic objectives of operational excellence, 

and seeking opportunities to extend the NWS business.

Operational excellence

Strong performance from the KGP and offshore 

facilities has led to record revenue and profit.

The NWS Project continues to underpin Woodside’s 

financial performance, delivering a record profit of $1.6 billion 

(2011 $1.4 billion) and contributing approximately 53% of 

Woodside’s sales revenue during the year.

In 2012, Woodside’s share of production from the NWS 

Project was 47.5 million barrels of oil equivalent (boe). 

We are focused on capacity utilisation to maximise performance 

from reservoir to market and are continuing to implement our 

Reliability Improvement Plan. 

The annual May shutdown was one of the largest at KGP 

with more than 1,500 people on site. The shutdown 

was successfully completed without a recordable safety 

incident. The scope of work included routine and integrity 

maintenance and aligned the LNG Train 4 shutdown with 

the refurbishment of the Trunkline Onshore Terminal 1. 

Woodside delivered 247 cargoes of LNG in 2012, of which 

18 were sold on the spot market. Woodside’s share of total 

LNG sales volumes for 2012 is 2.41 million tonnes. 

Pipeline gas production continued to meet customer demand in 

2012 with 100% reliable delivery of 13.78 MMboe to customers 

in Western Australia.

The Okha Floating Production Storage Offloading (FPSO) 

vessel completed its first full year of production in 2012, with a 

focus on safely completing project commissioning and closing 

out the NWS Oil Redevelopment Project. Commissioning 

of the gas export systems in addition to flareless operation 

was achieved. The Okha FPSO produced 10.3 MMbbl 

compared to a planned volume of 9.1 MMbbl (100% share).

Extending the NWS business

NRB topsides set installation record

The North Rankin Redevelopment Project is a major undertaking 

on a global scale and one of the most complex developments 

Woodside has undertaken. At year-end the Project’s overall 

progress was 98% and it remains on budget and is scheduled 

for start-up in 2013. 

In February the piling of the NRB jacket was completed and 

the production and pedestrian bridges connecting North 

Rankin A and North Rankin B platforms were installed. 

The 24,000 tonne topsides were placed on the jacket in April 

2012 and set an installation record, for both height and weight 

in open water. Following the installation of the topsides, hook 

up and commissioning activities commenced. The NRB 

permanent living quarters were finished in May 2012. 

The North Rankin Redevelopment Project will recover low 

pressure gas from the North Rankin and Perseus gas fields and 

is expected to cost approximately A$5 billion (A$840 million 

Woodside share).

Greater Western Flank (GWF) Phase 1 progresses

During 2012, the GWF Phase 1 Project awarded major contracts 

and continued fabrication work. At year-end overall progress 

was 41%. 

Progress on engineering, fabrication and delivery activities is in 

line with scheduled project start-up in early 2016. 

The Ocean America drill rig completed the GH reservoir drilling 

activities in December 2012 and well heads were installed. 

The GWF Phase 1 Project represents the next major development 

for the NWS Project. It will develop the Goodwyn GH and 

Tidepole fields, via a subsea tie-back to the existing Goodwyn 

A Platform. The total investment for the GWF Phase 1 Project 

is approximately A$2.5 billion (A$425 million Woodside share). 

Further tie-backs and exploration planned

We are advancing the development of Persephone field on 

the Eastern Flank of the NWS acreage as a potential tie-back 

to North Rankin and are looking at subsequent Greater Western 

Flank phases. 

The NWS Project will continue exploration in 2013, acquiring 

seismic data to provide future drilling opportunities. Additionally, 

Woodside plans to drill the Goodwyn North exploration well 

during 2013.

Outlook

Maintaining safe and reliable production has been Woodside’s 

focus for the past 28 years and remains key to sustaining our 

exceptional return on invested capital. 

We will continue to strive for operational excellence and invest 

in our infrastructure in order to maintain our world class assets. 

Major refurbishment will continue at the KGP with refurbishment 

of LNG Train 2 (deferred from 2012) and the Domestic Gas Plant. 

The KGP will also execute significant projects on fractionation 

unit 2 and complete an upgrade of our quality measurement 

equipment. The NWS Project will aim to maximise production 

and return on invested capital within these constraints.

A number of shutdowns will be required in 2013 to integrate the 

NRB platform into the NWS system. 

We will continue to develop reserves and maintain supply 

deliverability from the NWS to extend the life of the project. 

Woodside Petroleum Ltd. | North West Shelf 25
2012 PERFORMANCE

HIGHLIGHTS

Safe and successful start-up of 

Pluto LNG.

Better than forecast ramp-up, 

contributing 24 MMboe to full year 

production.

39 LNG cargoes delivered and sold to 

customers.

Strong performance underpinning 

Woodside’s full year revenue and 

cash flow.

FUTURE OBJECTIVES

Add fourth vessel to the Pluto LNG fleet.

Finalise ancillary site project work and 

commissioning activities.

Focus on steady state production and 

continued reliability.

Progress development of Xena gas field.

Target improved LNG train performance.

PLUTO LNG

Pluto LNG

Interest* WA-34-L

WA-350-P

WA-404-P

90% 

90%

100%

Operator Woodside

Location Pluto and Xena fields, 190 km 

north-west of Karratha, WA

Water depth 400 - 1,000 metres

Greater Pluto 

Proved + 

Probable 

Reserves^

4,856 Bcf dry gas,

70.8 MMbbl condensate

* As a result of organisational changes, permits 

have been reassigned to the Exploration 

business unit.

^ Woodside share.

First production from Pluto LNG 

marked the beginning of a new 

era for Woodside enabling the 

company to continue to build 

on its previous experience and 

enhance its specialist capabilities.

Woodside representatives with the West 

Australian Minister for Environment, 

Circle of Elders representatives, 

Murujuga Aboriginal Corporation (MAC)

representatives and the Pilot Ranger team.

The MAC, sponsored by Pluto LNG, 

has implemented a Pilot Ranger Project 

to care for the Burrup Peninsula. The 

Rangers are working co-operatively 

with the departments of Environment 

and Conservation and Indigenous 

Affairs to share their long-term vision 

for managing the area. 

2012 2011

Operating 

revenue ($ million) 1,427 -

Net gas 

production (MMboe) 22.0 -

Net liquids 

production (MMbbl) 1.9 -

Proved plus 

Probable 

reserves

(MMboe) 922.7 950.2

Pluto key metrics (Woodside share)

Actual utilisation

Target utilisation

Target utilisation for the Pluto LNG Train 

was based on the start-up performance of 

North West Shelf LNG trains 4 and 5. Actual 

utilisation exceeded the target for each month 

in 2012, as shown in the graph.

Dec

Pluto LNG utilisation 2012

May Jun Jul Aug Sep Oct Nov

Percentage

2012

0

100

Pluto LNG contribution to Woodside's 

total production (MMboe)

During 2012 Pluto LNG contributed 

24 MMboe to full-year production.

%

Pluto LNG 26

Pluto condensate 2

Rest of business 72

26 Woodside Petroleum Ltd. | 2012 Annual Report

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Safe start-up and production in 2012

During the first half of 2012, Pluto LNG safely achieved start-up, 

commenced LNG and condensate production and loaded its 

first LNG cargo.

Commissioning was substantially completed in 2012 with some 

activities remaining in 2013.

Achieving these milestones, particularly first production, marked 

the beginning of a new era for Woodside enabling the company 

to continue to build on its previous experience and enhance its 

specialist capabilities.

Strong production performance

Superior performance and high reliability in the ramp-up phase of 

Pluto LNG contributed to two upward revisions of 2012 production 

guidance. In 2012 Pluto contributed 24 MMboe to full year 

production.

A total of 2.15 million tonnes of LNG was delivered in the second 

half of 2012 (100% project). 

This production performance resulted in 39 cargoes of LNG being 

delivered to customers. Of those 39 cargoes delivered during 

2012, seven cargoes were sold at prices higher than the normal 

contracted pricing formula.

Financial contribution

The Woodside share of LNG revenue resulting from the strong 

production performance from Pluto LNG was $1,164 million 

for 2012. Revenue from condensate sales also contributed 

$138 million to Woodside’s revenue.

Safety culture delivers positive results

There were no significant personal injuries during the Pluto LNG 

start-up campaign, reflecting Woodside’s strong safety culture.

During start-up, focus remained on integrity and process 

safety. A proactive monitoring program was undertaken by the 

engineering, operations and maintenance teams, allowing for 

early identification and resolution of commissioning issues.

Approximately 19.24 million hours were worked in 2012 compared 

with 29.26 million hours in 2011, representing a reduction 

in activity levels of 34% as a result of construction reaching 

completion in early 2012.

Continued support for Indigenous Western Australians

Developing Pluto LNG on the Burrup Peninsula presented 

Woodside with a unique opportunity, not only to build a 

world-class LNG facility, but also to adopt a new approach to 

cultural heritage management and Indigenous participation and 

engagement. 

The goals and targets established for construction of Pluto LNG 

covered Indigenous training, employment and conservation and 

were purposefully set to create new benchmarks of achievement 

for the company in community contribution.

Woodside achieved these targets and, with the start-up of Pluto 

LNG, remains committed to building Indigenous participation 

outcomes.

Under the A$34 million Pluto LNG Conservation Agreement 

with the Australian Government, Woodside currently supports 

three projects. One of these projects is the Pilot Ranger Project, 

which currently employs eight local Indigenous people to manage 

country. To date Woodside has invested over A$7 million of 

Conservation Agreement funding in local community projects, 

tracking well on overall spend for the ten year period of the 

agreement. 

Additionally, Woodside is the only resource company in the Pilbara 

that has an office in Roebourne, with permanent employees 

working closely with the local community.

Further information on Woodside’s engagement with the 

Indigenous community, including the Pluto LNG Conservation 

Agreement, is available on pages 24 and 25 of the 2012 

Sustainable Development Report. 

Pluto LNG expansion opportunities

In 2012 exploration continued in the Ragnar Hub, located 

south-west of the Pluto field. The Ragnar-1 well (WA-430-P) 

successfully intersected gas over a gross interval of 190 metres. 

Vucko-1, Banambu Deep-1 and Ananke-1 (WA-389-P and 

WA-269-P) were drilled and were unsuccessful.

Woodside completed a 25% farm-down in WA-433-P to Sasol. 

Woodside maintained a high equity position (45%) in addition 

to holding operatorship of the permit. The equity holding in 

WA-433-P is now Woodside 45%, Sasol 35% and Mitsui 20%.

Woodside decided to pause its drilling program to allow for 

evaluation of well results and to rebuild the exploration portfolio. 

Woodside continues to pursue Pluto LNG expansion opportunities.

Outlook

Woodside will continue to identify opportunities to enhance 

production levels and efficiency.

The first significant planned maintenance shutdown is scheduled 

for the first half of 2013 as part of normal operation cycles. 

The planned shutdown also presents an opportunity to efficiently 

resolve any outstanding commissioning activities.

In 2013, a fourth LNG tanker will be added to the Pluto LNG fleet, 

allowing for greater capacity to meet customer needs and to take 

advantage of the demand outlook in the LNG spot market. 

Basis of Design work for the Xena gas field was completed in 

2012 and planning is underway to enter front-end engineering 

and design in 2013.

Woodside Petroleum Ltd. | Pluto LNG 27
Australia (non-NWS) 

contribution to Woodside’s 

total production (MMboe)

Australia Oil (non-NWS) key 

metrics (Woodside share)

2012 2011

Sales revenue ($ million) 1,545 1,677

Net gas 

production (MMboe) 0.0 0.0

Net liquids 

production (MMbbl) 12.5 15.0

Proved plus 

Probable 

reserves

(MMboe) 57.8 70.2

2012 PERFORMANCE

HIGHLIGHTS

Record monthly production achieved for 

Vincent field in May 2012.

Significant production milestones in 

August 2012 with the combined oil 

production from the Enfield and Vincent 

fields exceeding 100 MMbbls (100%). 

Total Laminaria - Corallina production has 

exceeded 200 MMbbls (100%) since 

start-up.

Successful Vincent Phase III infill well.

Completed purchase and transition of 

Ngujima-Yin floating production storage 

and offloading (FPSO) facility from 

Maersk to Woodside.

FUTURE OBJECTIVES

Successfully complete dry dock works 

for Ngujima-Yin FPSO to enhance asset 

reliability.

Continue work to progress Greater 

Enfield Area oil opportunities.

Determine concept selection for Laverda.

Progress Vincent Phase IV and Phase V 

infill well opportunities.

Develop and endorse LaminariaCorallina ‘end of field life’ strategy.

Drill the Minarelli (operated) and Rydal 

(non-operated) exploration wells.

Australia Oil

In 2012 we achieved significant 

production milestones across 

our oil assets and continued to 

advance growth opportunities.

Oil from Enfield is produced through 

five subsea wells connected to the 

floating production storage and 

offloading vessel, the Nganhurra. 

The vessel has a maximum storage 

capacity of about 900,000 barrels of oil.

%

Enfield 3

Laminaria-Corrallina 2

Stybarrow 3

Mutineer–Exeter <1

Vincent 7

Woodside other 85

28 Woodside Petroleum Ltd. | 2012 Annual Report

OVERVIEW BUSINESS 

REVIEWS

GOVERNANCE FiNANCIAL 

REPORT

SHAREHOLDER 

INFORMATION
Since start-up in 2006, Enfield has 

produced 68.9 MMbbls of oil with 2012 

production 4.6 MMbbls (2.8 MMbbls 

Woodside share).

The Enfield Development currently 

includes eight oil-production wells, eight 

water-injection wells and two gas-injection 

wells tied back to the Nganhurra FPSO.

During 2012, as a growth opportunity 

for Enfield, basis of design activities 

were completed for the Cimatti 

oil field and front-end engineering 

design studies commenced.

Stybarrow oil field

Interest WA-32-L 50%

Operator BHP Billiton

Facilities Stybarrow Venture FPSO

Location ~50 km off the 

North West Cape, WA

Water depth 825 metres

Products Crude oil

First production November 2007

Stybarrow has produced 55.1 MMbbls 

of oil since start-up in 2007. Production 

in 2012 was 4.5 MMbbls (2.2 MMbbls 

Woodside share).

Facility reliability and availability remained 

strong through 2012.

In 2013 we will continue to assess high 

value exploration tie-back opportunities.

Mutineer oil field

Interest WA-26-L; WA-27-L 8.20%

Operator Santos

Facilities MODEC Venture II FPSO

Location ~147 km north of 

Karratha, WA

Water depth ~165 metres

Products Crude oil

First production March 2005

Mutineer-Exeter has produced 57.5 

MMbbls of oil since start-up in 2005, 

and produced 1.8 MMbbls in 2012 

(0.1 MMbbls Woodside share).

Woodside signed a sale and purchase 

agreement with Santos on 21 December 

2012 to sell our entire 8.2% interest in 

the Santos operated Mutineer Exeter 

oil project with effect from 1 July 2012. 

Subject to the satisfaction or waiver of 

certain conditions, the agreement is 

expected to be completed in early 2013. 

Laminaria - Corallina oil field

Interest Laminaria

Corallina

AC/L5

59.90%*

66.67% 

Operator Woodside

Facilities Northern Endeavour FPSO

Location Timor Sea, 550 km 

north-west of Darwin

Water depth ~340 metres

Products Crude oil

First production 1999

*Interests on a post-unitisation basis, i.e. after 

agreeing to pool Woodside’s interest with other 

field owners and to exploit the field as a single 

venture.

The Northern Endeavour FPSO achieved a 

significant milestone with total oil 

production exceeding 200 MMbbls from 

the Laminaria-Corallina fields since starting 

production in 1999. Production in 2012 was 

2.2 MMbbls (1.4 MMbbls Woodside share).

In 2013 we will optimise operating costs 

based on planning for end of field life.

Laverda development 

Interest WA-36-R 60%

Operator Woodside

Location ~50 km off the 

North West Cape, WA

Water depth ~800 metres

Following successful appraisal, the 

Laverda development team has focused 

on field development, engineering and 

environmental studies in 2012 to underpin 

a concept selection decision.

Outlook

Woodside will continue to improve the 

understanding of its oil reservoirs to look 

for infill opportunities to extend the life 

and value of its oil assets. In addition, we 

will evaluate tie-backs to existing facilities 

and, in-line with our strategy, advance 

value-adding growth opportunities.

Ongoing integrity and reliability 

improvements are planned for the 

Ngujima-Yin FPSO while off-station 

during 1H 2013. Oil production in 2013 

will be impacted by field decline and the 

Ngujima-Yin FPSO being off-station. 

In 2012 the Australian oil assets provided 

a significant financial contribution to 

Woodside’s revenue through the ability 

to attract a price premium for our 

products. 

Australia Oil generated $1,545 million 

in sales revenue at an average realised 

price greater than $120/bbl. Woodside 

achieved premiums to the Brent oil price 

benchmark for its heavy sweet crudes 

from the Greater Enfield area. These 

premiums are due to strong regional 

demand for diesel.

While unit operating costs increased, we 

continued to focus on the reliability and 

integrity of our assets to maximise value. 

Vincent oil field

Interest WA-28-L 60%

Operator Woodside

Facilities Ngujima-Yin FPSO

Location 45 km off the 

North West Cape, WA

Water depth 350-400 metres

Products Crude oil

First production August 2008

Vincent has produced 37.1 MMbbls 

of oil since start-up in 2008, with 

2012 production of 10.1 MMbbls 

(6.0 MMbbls Woodside share).

The Vincent field performed well in 2012, 

with Vincent Phase III wells completed. 

In particular, the new VNB-H7 infill 

well has shown good deliverability. 

In May 2012 the Vincent oil field 

achieved the highest monthly volume of 

1.38 MMbbls (0.83 MMbbls Woodside 

share) since production began in 2008. 

The joint purchase of the Ngujima-Yin 

FPSO with our co-venturer Mitsui E&P 

Australia Pty Ltd occurred in late 2011. The 

final handover from Maersk to Woodside 

was completed on 30 September 2012. 

Enfield oil field

Interest WA-28-L 60%

Operator Woodside

Facilities Nganhurra FPSO

Location ~40 km off the 

North West Cape, WA

Water depth 400 - 500 metres

Products Crude oil

First production July 2006

Woodside Petroleum Ltd. | Australia Oil 29
WA-275-P

WA-29-R

WA-28-R

Argus

Torosa

Calliance

Brecknock

TR/5

AC/RL8

WA-275-P

WA-30-R

WA-32-R

WA-31-R

WA-28-R

R 2

Derby

Broome

Wyndham

Kununurra

James Price Point

Location of Woodside’s permits in the Browse area

Browse LNG

2012 PERFORMANCE

HIGHLIGHTS

FEED studies completed.

Tender bids for upstream and 

downstream infrastructure received 

and under evaluation.

State environmental approvals secured.

Japan Australia LNG (MIMI Browse) Pty 

Ltd (MIMI) purchased a minority portion 

of Woodside’s equity in Browse LNG 

Development for $2 billion.

FUTURE OBJECTIVES

Complete preparations to be in a 

position to consider a final investment 

decision (FID) in 1H 2013.

Finalise project environmental and 

heritage approvals.

Complete marketing activities for 

LNG offtake.

Browse

Interest* TR/5; R2; WA-30-R 

WA-31-R; WA-32-R 

WA-28-R; WA-29-R 

WA-275-P

AC/RL8

34%

34%

17%

17%

60%

Operator Woodside

Location Offshore 425 km 

north of Broome, WA

Water depth 400 - 800 metres

Contingent 

Resources^

4,987 Bcf dry gas, 

136.4 MMbbl condensate

* As a result of organisational changes, permits 

have been reassigned to the Exploration 

business unit.

^ Woodside share. Net resources are subject to 

unitisation outcomes.

Woodside has engaged senior 

Traditional Owners to complete 

detailed anthropological and 

archaeological surveys of the proposed 

Browse LNG Precinct. Traditional 

Owners are providing us with ongoing 

support by monitoring our approved 

site activities, to ensure we follow the 

correct cultural directions. 

The completion of a high quality 

front-end engineering and design 

(FEED) along with the receipt and 

ongoing disciplined evaluation 

of tender bids has Browse 

on track to consider a final 

investment decision in 1H 2013.

Woodside permits

WEL owned/participant 

Woodside fields

Gas 

30 Woodside Petroleum Ltd. | 2012 Annual Report

OVERVIEW BUSINESS 

REVIEWS

GOVERNANCE FiNANCIAL 

REPORT

SHAREHOLDER 

INFORMATION
Developing a world-class resource

Woodside is the operator of the Browse 

Joint Venture, which is seeking to 

commercialise the Brecknock, Calliance and 

Torosa fields in the Browse basin, located 

approximately 425 km north of Broome 

in Western Australia. The three fields 

collectively hold a world-class gas resource 

of approximately 15.5 Tcf and 417 million 

barrels of condensate (100% project). 

Under the proposed development, 

gas and liquids from the fields will 

be extracted using offshore facilities 

then brought to an onshore facility for 

processing at the Western Australian 

Government’s proposed multi-user 

Browse LNG Precinct, near James Price 

Point, about 60 km north of Broome. 

The planned onshore production and 

export facilities include three processing 

trains capable of processing 12 million 

tonnes of liquefied natural gas per annum, 

with a potential expansion capacity of up 

to 25 mtpa. 

In April 2012, variations to the Browse 

Basin retention leases were approved, 

which included extending the timetable 

for readiness for a FID to the 1H 2013. 

FEED studies were completed in 2012. 

Fully costed technical proposals from 

upstream FEED contractors were 

received during the first half of 2012 

while downstream bids were obtained 

in 2H 2012.

The contract assurance and commercial 

evaluation phase commenced in late 

2012 and is expected to be completed 

in 1H 2013. 

Woodside successfully completed 

the 2012 program of geotechnical and 

environmental studies at the Browse 

LNG Precinct at James Price Point. Some 

additional studies are planned for 2013 

to further inform work undertaken during 

FEED. Offshore, a seismic survey of the 

Torosa field was successfully completed 

in Q4 2012.

Several changes to the equity 

arrangements within the Browse Joint 

Venture occurred in 2012. Woodside sold 

a minority portion of its equity in Browse 

LNG Development to Japan Australia 

LNG (MIMI Browse) Pty Ltd (MIMI) which 

delivered early value, adding $2 billion in 

cash to our balance sheet.

Chevron sold its equity share in Browse 

to Shell Development Australia and BHP 

Billiton Petroleum announced its intention 

to sell its equity share to PetroChina 

International Investment (Australia) Pty Ltd. 

These equity changes are a positive 

endorsement of the value of the resource.

Woodside’s minority equity sale to MIMI 

in Q3 includes a sales and purchase 

agreement with MIMI for 1.5 million 

tonnes of LNG a year for 15 years from 

the Browse LNG Development, as well as 

a joint marketing agreement under which 

Woodside and MIMI will jointly market 

comingled LNG volumes to Japanese 

customers. Both parties were actively 

engaged with potential customers in Q4.

Securing primary approvals

The Western Australian Environmental 

Protection Authority (EPA) recommended 

conditional approval of the State 

Government’s proposed LNG Precinct 

in July 2012. The Western Australian 

Environment Minister subsequently 

approved the Precinct and set the final 

environmental conditions for it to proceed. 

The Precinct requires approval from the 

Commonwealth Environment Minister, 

which is expected in 1H 2013.

In December 2012, the EPA and the 

WA Environment Minister approved 

Woodside’s proposal to build and operate 

a LNG processing facility and associated 

infrastructure within the Precinct.

The public review of the Browse 

LNG Development’s Draft Upstream 

Environmental Impact Statement (EIS) 

was completed and final information is 

expected to be submitted to regulators 

for approval in Q1 2013.

Heritage approvals are progressing and 

Woodside is working closely with senior 

Traditional Owners to identify and carefully 

manage Aboriginal culture and heritage 

at the site of the proposed Browse LNG 

Precinct.

World-class environmental research

In 2012, Woodside continued its program 

of environmental studies in the vicinity of 

the Browse LNG Precinct and offshore 

to better understand the surrounding 

environment and ensure any potential 

impacts from the proposed development 

can be mitigated.

As part of its environmental assessment 

of the marine environment, the Browse 

Joint Venture commissioned the most 

comprehensive study to date of humpback 

whales off the Kimberley coast. 

Between 2009 and 2012, various research 

methods have been employed to improve 

our understanding of this species 

including line transect vessel surveys, 

vessel-based behavioural surveys, photo 

identification, aerial transect surveys, sea 

noise loggers and satellite tagging.

This world-class program – one of 

Australia’s largest investments in whale 

research – provides Woodside and 

its Joint Venture participants a robust 

understanding of whale distribution, 

abundance and behaviour in the North 

West of WA. 

Woodside is committed to ensuring any 

potential impacts on the environment 

arising from the development of an LNG 

precinct on the Dampier Peninsula can be 

minimised and managed effectively.

For further information on the economic, 

social and environmental impacts of the 

proposed Browse LNG Development 

refer to pages 26 and 27 of the 2012 

Sustainable Development Report.

Our commitment to Indigenous 

people

Under the Native Title Agreement 

between Woodside, the Western 

Australian Government and the 

Goolarabooloo Jabirr Jabirr claim group, 

Woodside will aim to meet a target 

whereby at least 300 Indigenous people 

are to be employed during construction 

of the onshore facilities with at least 15% 

of the workforce being Indigenous during 

normal operations.

Throughout the year, more than 100 

Indigenous people were involved in 

training and up-skilling programs and 

pathways or employed directly on Browse 

by Woodside and its contractors. Most of 

those involved were from the Kimberley 

and included people engaged as Traditional 

Owner environmental/heritage monitors. 

A number of Indigenous businesses in 

the Kimberley also provided products and 

services to the development.

Since 2011, the humpback whale aerial 

survey program has incorporated an 

Indigenous training component which 

provides marine mammal observer 

training for Traditional Owners. Woodside 

was pleased that in 2012, one of these 

trainees was the first Indigenous person 

to take up a primary observer role in the 

annual aerial surveys.

Outlook

LNG marketing activities will continue 

in 1H 2013 in line with Woodside’s joint 

marketing agreement with MIMI.

Woodside’s primary focus for 2013 will 

be on completing the work necessary to 

be in a position to consider a FID for the 

development.

The Browse Joint Venture aims to complete 

the substantial commercial and technical 

evaluation and assurance process for the 

Browse LNG Development in 1H 2013 in 

line with the Browse Basin retention lease 

conditions, which are founded on locating 

the development’s processing facilities at 

the State Government’s proposed LNG 

Precinct at James Price Point. 

Woodside Petroleum Ltd. | Browse LNG 31
JPDA

JPDA 03-20

JPDA 03-19

 NT/RL 2

Argus

Torosa

Calliance

Brecknock

Sunrise

Troubadour

Dili

Darwin

Wyndham

Kununurra

Sunrise LNG

2012 PERFORMANCE

HIGHLIGHTS

Productive technical workshops with 

the Timor-Leste Government.

Active participation in a trilateral 

workshop with representatives 

from the Timor-Leste and Australian 

governments.

Delivered positive social development 

outcomes in Timor-Leste. 

Sunrise

Interest PSC JPDA 03-19; 

PSC JPDA 03-20; 

NT/RL2; NT/RL4

33.44% 

(unitised)

Operator Woodside

Location Offshore 150 km south-east 

of Timor-Leste and 450 km 

north-west of Darwin, Australia 

Water depth Less than 100 metres to 

greater than 600 metres

Contingent 

Resources*

1,717 Bcf dry gas, 

75.6 MMbbl condensate

*Woodside share.

Location of Woodside’s permits in the Greater Sunrise area

Woodside and the Sunrise Joint 

Venture are actively engaging 

with both the Timor-Leste and 

Australian governments to 

achieve an aligned development 

outcome for Greater Sunrise.

Ba Futuru students wearing their 

traditional dress.

Woodside has committed to supporting 

Ba Futuru (meaning ‘for the future’) 

which provides education and training 

programs in Timor-Leste.

Image courtesy of James Collins.

FUTURE OBJECTIVES

Deliver an aligned outcome for the 

development of Greater Sunrise. 

Continue to build on our positive 

stakeholder relationships with 

the Australian and Timor-Leste 

governments and the broader 

community.

Deliver increased social development 

outcomes in Timor-Leste. 

0 100 200

kilometres

Horizontal Datum: GDA 1994

Woodside permits

WEL owned/participant 

Woodside fields

Gas 

32 Woodside Petroleum Ltd. | 2012 Annual Report

OVERVIEW BUSINESS 

REVIEWS

GOVERNANCE FiNANCIAL 

REPORT

SHAREHOLDER 

INFORMATION
The Sunrise and Troubadour gas and condensate fields, 

collectively known as the Greater Sunrise fields, are located 

approximately 150 km south-east of Timor-Leste and 450 km 

north-west of Darwin, Northern Territory.

The fields were discovered in 1974 and hold a total contingent 

resource of 5.13 Tcf of dry gas and 225.9 million barrels of 

condensate. These volumes were independently certified in 2010 

and would add significantly to Woodside’s reserves should a 

positive final investment decision be achieved.

According to the International Unitisation Agreement, signed by 

Australia and Timor-Leste, approximately 20% of the Greater 

Sunrise fields are attributed to the Joint Petroleum Development 

Area which is jointly administered by the governments of Australia 

and Timor-Leste, with the remaining 80% attributed to Australia. 

The Sunrise Joint Venture undertook a detailed technical and 

commercial evaluation of three concepts, namely Floating LNG, 

a brownfield expansion of Darwin LNG and a greenfield gas 

plant located in Timor-Leste. 

Discussions are currently underway between Timor-Leste, 

Australia and the Sunrise Joint Venture to agree on a development 

concept for Greater Sunrise.

Momentum in 2012

Following positive meetings with key Timor-Leste Government 

stakeholders in late 2011, Woodside’s CEO Peter Coleman met 

with the Timor-Leste Prime Minister Xanana Gusmao in Darwin in 

February 2012, to continue discussions and start working towards 

an aligned development outcome.

At the request of the Timor-Leste Government, the Sunrise Joint 

Venture provided a range of technical data to the Timor-Leste and 

Australia governments with regards to Greater Sunrise. Following 

the provision of technical data, further discussions were held 

in Timor-Leste in September and were followed by two joint 

technical workshops, the first in October in Timor-Leste and the 

second in November in Perth.

In December, the Sunrise Joint Venture participated in a 

workshop organised by the Australian and Timor-Leste Sunrise 

Commissioners regarding the Greater Sunrise development. The 

workshop allowed all parties to discuss a range of commercial, 

technical, legal and political matters related to the development.

Further discussions with both governments have been agreed 

and will occur in early 2013.

Community development

Woodside is committed to continuing our program of meaningful 

social investment via long-term partnerships with the 

communities of Timor-Leste.

Woodside and the Sunrise Joint Venture’s social investment and 

sponsorship program focuses on:

Developing capability.

Supporting health and wellbeing.

Connecting, engaging and building relationships with 

communities. 

The Sunrise Joint Venture places strong emphasis on supporting 

initiatives which help local organisations to develop skills and 

resources to deliver services that in turn develop capabilities and 

contribute to the health and wellbeing of communities.

Recent examples of social investment and sponsorship initiatives 

supported by Woodside and the Sunrise Joint Venture include:

Instituto Catolico Para Formacao Professores (ICFP) Baucau 

Teachers College: the progression of Timorese ICFP tutors 

through the Australian Catholic University’s Master of Education 

program.

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

Organisation, for the construction of a Childhood Development 

Centre and training initiative.

Hiam Health: a Timor-Leste Non Government Organisation, to 

support and help develop their existing Family and Community 

Nutrition Garden’s initiative.

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

sponsorship of event and presentation by Woodside’s staff.

2012 Dili Marathon: Sponsorship of the National Marathon Team.

1st International Congress of Geology in Timor-Leste: 

sponsorship of event.

At an appropriate time Woodside together with the Sunrise Joint 

Venture will work with the Timor-Leste Government and other 

industry partners to identify specific local content opportunities 

that help to create sustainable economic growth. 

Further information on Community Engagement in Timor-Leste 

is available on page 17 of the 2012 Sustainable Development 

Report.

Timor-Leste Professional Development Program

In 2012, Woodside launched the Timor-Leste Professional 

Development Program.

The pilot program commenced on 26 November and enables its 

five participants, who are currently studying at Australian-based 

universities, to gain valuable technical, business and career 

development skills over 12 weeks of vacation employment with 

Woodside. 

The program demonstrates Woodside’s commitment to 

professional development and capability building in the 

communities in which we operate and hold business interests. 

Outlook

In 2013, Woodside looks to expand its level of engagement and 

work collaboratively with both the Timor-Leste and Australian 

governments. This will build a better understanding of the issues 

of importance to all parties and move towards a shared vision of 

the Greater Sunrise development.

Woodside believes there remains an opportunity to agree on 

a development which satisfies the requirements of all parties. 

The key to reaching this goal is regular, open and constructive 

dialogue between the parties.

Woodside plans to continue to build relationships and our 

understanding of issues concerning the communities of TimorLeste and further expand our program of meaningful social 

development.

Woodside Petroleum Ltd. | Sunrise LNG 33
International

*The Ohanet Risk Sharing Contract expired on 

27 October 2011. Consequently there was no 

production from this region in 2012.

Gulf of Mexico key metrics 

(Woodside share)

2012 2011

Sales revenue ($ million) 76 93

Net production (MMboe) 0.8 1.1

Proved plus 

Probable 

reserves

(MMboe) 7.7 8.5

International key metrics, excluding 

Gulf of Mexico (Woodside share)

2012* 2011

Sales revenue ($ million) 0.0 43

Net production (MMboe) 0.0 1.8

Proved plus 

Probable 

reserves

(MMboe) 0.0 0.0

2012 PERFORMANCE

HIGHLIGHTS

Reached an in-principle agreement to 

acquire a 30% participating interest in 

licences covering the Leviathan gas 

field, offshore Israel.

Obtained in-principle agreements to 

farm-in to exploration blocks, offshore 

Myanmar (AD-7 and A-6).

Increased production at Neptune via 

recompletion.

FUTURE OBJECTIVES

Mature and drill high-graded Gulf of 

Mexico (GoM) exploration portfolio.

Secure final approval for Leviathan 

transaction and progress development. 

Secure final approval for farm-ins 

offshore Myanmar, begin seismic 

programs. 

Drill the Panoramix-3 appraisal well in 

Brazil.

Continue to assess new value-creating 

opportunities.

In 2012 we secured new 

international growth 

opportunities that align with 

our strategy and capabilities.

Gulf of Mexico

During 2012 GoM operations contributed 

0.8 MMboe to Woodside’s production from 

gas, condensate and oil volumes.

%

Gulf of Mexico production 1

Woodside other 99 

The semi-submersible drill rig, the 

Maersk Developer, mobilises to a drill 

location in the Gulf of Mexico. The 

Maersk Developer was used to drill 

the Innsbruck well in which Woodside 

participated during 2012 (refer to page 

19). Woodside continues to explore and 

expand its international portfolio.

34 Woodside Petroleum Ltd. | 2012 Annual Report

OVERVIEW BUSINESS 

REVIEWS

GOVERNANCE FiNANCIAL 

REPORT

SHAREHOLDER 

INFORMATION
Neptune oil field

Interest AT 573-575;

617; 618

WI 20%

NRI 17.5%

Operator BHP Billiton

Location Atwater Valley, 220 km 

offshore Louisiana, USA

Water depth ~ 2,000 metres

Products Oil and gas

First production July 2008

WI - Working interest , NRI - Net revenue interest

Neptune is a multi-well subsea 

development tied back to a stand-alone 

tension leg platform. The Neptune field 

produced first oil in 2008. 

A successful recompletion and bottom 

hole pressure reduction campaign has 

reduced the effects of natural field 

decline. 

The near-term development plan for 

Neptune includes the drilling of one 

appraisal well.

Power Play oil field

Interest GB 302

WI 20%

NRI 16.3%

Operator Anadarko

Location Garden Banks, 200 km 

offshore Louisiana, USA

Water depth 700 metres

Products Oil and gas

First production June 2008

WI - Working interest , NRI - Net revenue interest

Power Play began production in 2008 as a 

subsea tieback to the deepwater Baldpate 

facility. During 2012, the current producing 

zone at the Power Play well continued to 

outperform expectations. Development 

work at Power Play confirmed flow rates 

of a higher zone. 

The near-term development plan for 

Power Play includes movement to 

the higher rate zone once the current 

producing zone is depleted, or suitable 

conditions exist.

Outlook

In 2013, the operator plans to drill one 

appraisal well at Neptune as well as focus 

on reducing the effects of natural field 

decline for its GoM properties. 

Woodside anticipates participating in 

exploratory drilling operations in the 

deepwater GoM in 2013, subject to 

joint venture participation.

Broadening the portfolio

Israel

Woodside 30% (non-operator)*

In December 2012 Woodside reached 

an in-principle agreement to acquire a 

30% participating interest in each of 

the 349/Rachel and 350/Amit petroleum 

licences which contain the Leviathan 

gas field offshore Israel. 

Leviathan is one of the largest recent 

gas discoveries worldwide, estimated 

to contain approximately 17 Tcf of 

recoverable natural gas.

The agreement positions Woodside to 

grow its portfolio in the emerging Eastern 

Mediterranean Basin, and play a key role 

in the potential development of Israel’s 

LNG industry.

Under the agreement Woodside will be 

the operator of any LNG development 

of the field, while Noble Energy will 

remain upstream operator. Noble Energy 

targets initial production to the domestic 

gas market in 2016. A pre-front-end 

engineering and design assessment for 

an LNG project is underway. 

The agreement is subject to various 

conditions and will allow Woodside 

to participate in further exploration 

opportunities in the Leviathan licences. 

Myanmar

AD-7 Woodside 40% (non-operator)*

A-6 Woodside 50% (non-operator)*

In late 2012 Woodside obtained inprinciple agreements to farm-in to two 

Production Sharing Contracts (PSCs) for 

blocks AD-7 and A-6 in the Rakhine Basin, 

located in the western offshore area 

of the Republic of the Union of Myanmar.

The Rakhine Basin is a prospective 

frontier exploration area that aligns with 

Woodside’s strong deepwater capabilities.

Woodside’s offer to take a 40% 

participating interest in the PSC covering 

block AD-7 was accepted by Daewoo 

International Corporation (Daewoo) 

in October 2012. Daewoo remains as 

operator of the PSC. 

The agreement provides the opportunity 

for Woodside and Daewoo to undertake 

a 3D seismic acquisition program in 2013. 

The transaction also provides the option 

to drill an exploration well in a subsequent 

exploration period.

In December 2012, MPRL E&P Pte Ltd 

(MPRL) accepted Woodside’s offer to take 

a 50% participating interest in the PSC 

covering block A-6. MPRL will remain 

operator of Block A-6 for the current term 

of the exploration period. 

The proposal provides the opportunity for 

Woodside and MRPL to undertake a 3D 

seismic survey program in the block and 

also provides an option for future drilling. 

The proposed agreement also provides 

Woodside and MPRL with the opportunity 

to participate jointly in future deepwater 

bid rounds.

Other

Brazil

Woodside holds a 12.5% interest in one 

concession agreement covering 314 km2

in the Santos Basin of Brazil. Woodside 

continues to evaluate the Panoramix oil 

field. The Joint Venture is preparing to drill 

the Panoramix-3 appraisal well in 2013 and 

is considering a Vampira drill stem test.

Canary Islands

Woodside holds a 30% interest in blocks 

1-9 operated by Repsol. Full rights to 

the permit activity have been reinstated 

following the issue of a Royal Decree 

on 16 March 2012; however, the Royal 

Decree is currently the subject of legal 

proceedings initiated by third party interest 

groups.

Peru

Woodside has a 20%, non-operated 

interest in onshore block 108, which is 

currently under force majeure conditions. 

Once force majeure conditions cease, the 

Joint Venture plans to acquire 800 km of 

2D seismic.

Republic of Korea

Jujak-1 was drilled as the first deepwater 

well in the frontier Ulleung Basin. The well 

explored a Miocene fan complex within 

a four way dip closure. The well found 

excellent reservoir at the objective section, 

but no hydrocarbons were encountered.

* Subject to conditions including execution of fully-termed agreements, completion of due diligence, and 

necessary government and other approvals.

Woodside Petroleum Ltd. | International 35
a b c d e

Michael A Chaney, AO

Chairman - BSc, MBA, Hon LLD (UWA), FAICD

Director since November 2005, 

Chairman since July 2007

Independent: Yes

Age: 62

Residence: Perth, Australia

Experience

22 years with Wesfarmers Limited, 

including Managing Director and CEO 

from 1992 to 2005. Three years with 

investment bank Australian Industry 

Development Corporation (1980 to 

1983) and eight years as a petroleum 

geologist working on the North West 

Shelf and in the USA and Indonesia. 

Previously a non-executive director of 

BHP Billiton Limited (1995 to 2005) 

and BHP Billiton Plc (2001 to 2005).

Committee membership

Chair of the Nominations Committee. 

Attends other Board committee meetings.

Current directorships 

Chair: National Australia Bank Limited 

(director since 2004) and Gresham 

Partners Holdings Limited 

(director since 1985).

Chancellor: The University of Western 

Australia (since 2006).

Director: The Centre for Independent 

Studies Ltd (since 2000).

Member: JP Morgan International Council.

Peter J Coleman

CEO and Managing Director - BEng, MBA

Director since May 2011

Independent: No

Age: 52

Residence: Perth, Australia

Experience

28 years experience with the 

ExxonMobil group in the global oil 

and gas business, culminating as Vice 

President Development Company, with 

responsibility for leading development 

and project work in the Asia Pacific.

Committee membership

Attends Board committee meetings.

Current directorships

Member: The University of Western 

Australia Business School Board (since 

2011) and the Executive Committee 

of the Australia Japan Business 

Co-operation Council (since 2011).

Commissioner: West Australian 

Football Commission (since 2012).

Robert J Cole

Executive Director and Executive Vice President,

Corporate and Commercial - BSc, LLB (Hons)

Director since February 2012

Independent: No

Age: 50

Residence: Perth, Australia

Experience

Joined Woodside as General Counsel 

in April 2006. Executive Vice President 

Corporate Centre and General Counsel 

(2008 to 2010). Executive Vice President 

Commercial and General Counsel (2010 

to 2012), until he was appointed to his 

current role of Executive Director. Prior 

to joining Woodside, Mr Cole had more 

than 21 years experience in corporate, 

energy and resources law, including three 

years as partner in charge of the Perth 

office of Mallesons Stephen Jaques.

Committee membership 

Attends Board committee meetings.

Current directorships

Vice Chair: Australian Petroleum 

Production and Exploration Association 

(since 2011). 

Director: Committee for Perth (since 2011).

Melinda A Cilento

BA, BEc (Hons), MEc

Director since December 2008

Independent: Yes

Age: 47

Residence: Melbourne, Australia

Experience

Significant public and private sector

experience in economic analysis, 

policy development and advice. 

Deputy Chief Executive (2006 to 

2010) and Chief Economist

(2002 to 2010) of the Business Council of

Australia. Previously worked with County

Investment Management (now Invesco)

as Head of Economics, the Department of

Treasury and the International Monetary

Fund.

Committee membership

Member of the Human Resources

& Compensation, Sustainability and

Nominations Committees.

Current directorships

Director: Wesfarmers General Insurance

Limited (since 2010).

Co-chair: Reconciliation Australia (director

since 2010, co-chair since 2011).

Councillor: Victorian Division of the

Australian Institute of Company Directors.

Member: Advisory Panel of the Australian

Scholarships Foundation and Advisory

Council of the Global Foundation.

Frank C Cooper1

BCom, FCA

Director since February 2013

Independent: Yes

Age: 57

Residence: Perth, Australia

Experience

More than 35 years experience in 

corporate tax, specialising in the 

mining, energy and utilities sector, 

including most recently as a partner 

of PricewaterhouseCoopers. Director 

of Alinta Infrastructure Limited 

and Alinta Funds Management 

Limited (2005 to 2006).

Committee membership

Member of the Audit & Risk, Human 

Resources & Compensation and

Nominations Committees.

Current directorships

Chair: Insurance Commission of Western 

Australia, University of Western Australia 

Strategic Resources Committee and 

West Australian Football Commission.

Member: Senate of the University of 

Western Australia and State Health 

Research Adivisory Council.

a)

b)

c)

d)

e)

36 Woodside Petroleum Ltd. | 2012 Annual Report

BOARD OF DIRECTORS

OVERVIEW BUSINESS 

REVIEWS

GOVERNANCE FiNANCIAL 

REPORT

SHAREHOLDER 

INFORMATION
Erich Fraunschiel2

BCom (Hons)

Director since December 2002

Independent: Yes

Age: 67

Residence: Perth, Australia

Experience

More than 18 years experience 

in senior executive positions with 

Wesfarmers Limited, including 10 

years as CFO and Executive Director.

Committee membership

Chair of the Audit & Risk Committee.

Member of the Sustainability and 

Nominations Committees.

Current directorships

Chair: Wesfarmers General Insurance 

Limited (since 2003). 

Director: WorleyParsons 

Limited (since 2003).

Christopher M Haynes, OBE

BSc, DPhil, CEng, FIMechE

Director since June 2011

Independent: Yes

Age: 65

Residence: United Kingdom

Experience

38 year career with Shell including as

Executive Vice President, Upstream

Major Projects within Shell’s Projects

and Technology Business, General

Manager of Shell’s operations in Syria and

a secondment as Managing Director of

Nigeria LNG Ltd. From 1999 to 2002

Dr Haynes was seconded to Woodside

as General Manager of the North West

Shelf Venture. Retired from Shell on

31 August 2011.

Committee membership

Member of the Audit & Risk, 

Sustainability and

Nominations Committees.

Current directorships

Director: WorleyParsons Limited

(since 2012).

Andrew Jamieson, OBE

FREng, CEng, FIChemE

Director since February 2005

Independent: Yes

Age: 65

Residence: United Kingdom

Experience

Former Executive Vice President Gas

and Projects of Shell Gas and Power

International BV with more than 30

years experience with Shell in Europe,

Australia and Africa. From 1997 to 1999.

Dr Jamieson was seconded to Woodside

as General Manager North West Shelf

Venture. Retired from Shell in June 2009.

Committee membership

Chair of the Human Resources 

& Compensation Committee. 

Member of the Sustainability and 

Nominations Committees.

Current directorships

Chair: Seven Energy International Limited 

(director since 2011, chair since 2012).

Director: Leif Hoegh & Co Ltd (since 2009) 

and Oxford Catalysts Group PLC 

(since 2010). 

David I McEvoy

BSc (Physics), Grad Dip (Geophysics)

Director since September 2005

Independent: Yes

Age: 66

Residence: Sydney, Australia

Experience

34 year career with ExxonMobil involving

extensive international exploration and

development experience.

Committee membership

Chair of the Sustainability Committee.

Member of the Audit & Risk and

Nominations Committees.

Current directorships

Director: AWE Limited (since 2006).

Directorships of other listed entities 

within the past three years: Acer Energy 

Limited (2002 to November 2012) and

Po Valley Energy Ltd (2004 to May 2012).

Sarah E Ryan

PhD (Petroleum and Geophysics), BSc 

(Geophysics) (Hons 1), BSc (Geology)

Director since December 2012

Independent: Yes

Age: 46

Residence: Sunshine Coast, Australia

Experience

More than 20 years international 

experience in the oil and gas industry in 

various technical, operational and senior 

management positions, including 15 years 

with Schlumberger Limited. Dr Ryan 

also served as Chief Operating Officer 

of MTEM Ltd, an oilfield technology 

company. Dr Ryan is Director, Equity 

Investment at institutional investment 

firm Earnest Partners where she is 

responsible for research and portfolio 

management in the global energy sector. 

Committee membership

Member of the Audit & Risk, Sustainability 

and Nominations Committees.

Current directorships

Director: Aker Solutions ASA (since 2011).

Not pictured

Pierre JMH Jungels, CBE

PhD (Geophysics and Hydraulics)

Dr Pierre Jungels retired with effect on 

7 December 2012 after ten years 

of service on Woodside’s Board 

of Directors. Dr Jungels served 

on a number of Woodside Board 

committees including the Human 

Resources & Compensation, Audit & 

Risk and Nominations Committees. 

f g h i j

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

2 Mr Fraunschiel will retire on 28 February 2013.

f)

g)

h)

i)

j)

Woodside Petroleum Ltd. | Board of Directors 37
WE BELIEVE high 

standards of 

governance and 

transparency 

are essential.

Corporate governance at Woodside 39

Board of Directors 39

Committees of the Board 43

Shareholders 45

Promoting responsible and ethical 

behaviour 46

Risk management and internal 

control 47

External auditor relationship 48

Diversity 49

ASX Corporate Governance Council 

recommendations checklist 51

CONTENTS

CORPORATE GOVERNANCE STATEMENT

38 Woodside Petroleum Ltd. | 2012 Annual Report

OVERVIEW BUSINESS 

REVIEWS

GOVERNANCE FiNANCIAL 

REPORT

SHAREHOLDER 

INFORMATION
1 Corporate governance at 

Woodside

Woodside is committed to a high level 

of corporate governance and fostering 

a culture that values ethical behaviour, 

integrity and respect. We believe that 

adopting and operating in accordance with 

high standards of corporate governance 

is essential for sustainable long-term 

performance and value creation. 

This statement reports on Woodside’s 

key governance principles and practices. 

These principles and practices are 

reviewed regularly and revised as 

appropriate to reflect changes in law and 

developments in corporate governance.

Woodside’s corporate governance model 

is illustrated below. The Woodside 

Management System (WMS) sets out 

how Woodside provides management 

governance and assurance. It defines 

how Woodside will deliver its business 

objectives and the boundaries within which 

Woodside employees and contractors are 

expected to work. The WMS establishes 

a common approach to how we operate, 

wherever the location. 

The company, as a listed entity, must 

comply with the Corporations Act 2001 

(Cwlth) (Corporations Act), the Australian 

Securities Exchange (ASX) Listing Rules 

(ASX Listing Rules) and other Australian 

and international laws. The ASX Listing 

Rules require the company to report on 

the extent to which it has followed the 

Corporate Governance Recommendations 

contained in the ASX Corporate 

Governance Council’s (ASXCGC) second 

edition of its Corporate Governance 

Principles and Recommendations 

(August 2007). Woodside believes that, 

throughout the 2012 year and to the 

date of this report, it has complied with 

all the ASXCGC Recommendations. A 

checklist cross-referencing the ASXCGC 

Recommendations to the relevant 

sections of this statement and the 

Remuneration Report is provided on 

page 51.

Information on Woodside’s governance 

framework is also provided in the 

corporate governance section of 

Woodside’s website.

The website contains copies of Board and 

committee charters and copies of many 

of the policies and documents mentioned 

in this statement. The website is updated 

regularly to ensure it reflects Woodside’s 

most current corporate governance 

information.

2 Board of directors

2.1 Board role and responsibilities

ASXCGC Recommendations 1.1, 1.3

The Constitution provides that the 

business and affairs of the Company are 

to be managed by or under the direction 

of the Board. The Board has approved a 

formal Board Charter which details the 

Board’s role, powers, duties and functions. 

Other than as specifically reserved to the 

Board in the Board Charter, responsibility 

for the management of Woodside’s 

business activities is delegated to the 

CEO who is accountable to the Board. 

The Board Charter and the delegation of 

Board authority to the CEO are reviewed 

regularly.

The central role of the Board is to set the 

company’s strategic direction, to select 

and appoint a CEO and to oversee the 

company’s management and business 

activities.

In addition to matters required by law to 

be approved by the Board, the following 

powers are reserved to the Board for 

decision:

the appointment and removal of the 

CEO and the Company Secretary and 

determination of their remuneration and 

conditions of service;

Woodside Corporate Governance Model

Shareholders

Board

Human Resources 

& Compensation

Committee

Sustainability 

Committee

Audit & Risk 

Committee

External 

Auditors

Internal 

Audit

Major Project 

Assurance Checks

Nominations Chief Executive Officer Committee

Management Governance and Assurance Independent 

Assurance

Mission

Vision

Values

Policies

Management Standards

Operating Standards

Management 

Committees

Operating

Structure

Authorities 

Framework Strategy

Risk 

Management

Management Review 

and Improvement

Woodside Management System

Delegation

Accountability

Woodside Petroleum Ltd. | Corporate Governance Statement 39
approving the appointment and, where 

appropriate, the removal of executives 

who report directly to the CEO together 

with their remuneration and conditions 

of service;

approving senior management 

succession plans and significant 

changes to organisational structure;

authorising the issue of shares, options, 

equity instruments or other securities;

authorising borrowings, other than 

in the ordinary course of business, 

and the granting of security over the 

undertaking of the company or any of 

its assets;

authorising expenditures which exceed 

the CEO’s delegated authority levels;

approving strategic plans and budgets;

approving the acquisition, 

establishment, disposal or cessation 

of any significant business of the 

company;

approving annual and half-year reports 

and disclosures to the market that 

contain or relate to financial projections, 

statements as to future financial 

performance or changes to the policy or 

strategy of the company;

approving policies of company-wide or 

general application;

the appointment of directors who will 

come before shareholders for election 

at the next annual general meeting 

(AGM); and

establishing procedures which ensure 

that the Board is in a position to 

exercise its powers and to discharge its 

responsibilities as set out in the Board 

Charter.

A copy of the Board Charter is available 

in the corporate governance section of 

Woodside’s website.

2.2 Board composition

ASXCGC Recommendations 2.1, 2.2, 

2.3, 2.6

The Board is comprised of eight nonexecutive directors, the CEO and the 

Executive Director and Executive Vice 

President, Corporate and Commercial. 

Mr Erich Fraunschiel will retire with 

effect on 28 February 2013, reducing 

the number of non-executive directors to 

seven. Details of the directors, including 

their qualifications, experience, date of 

appointment and independent status, are 

set out on pages 36 and 37.

The Board and its committees actively 

seek to ensure that the Board continues to 

have the right balance of skills, knowledge 

and experience necessary to direct 

the company in accordance with high 

standards of corporate governance. In 

assessing the composition of the Board, 

the directors have regard to the following 

principles:

the Chairman should be non-executive, 

independent and an Australian citizen or 

permanent resident;

the role of the Chairman and the CEO 

should not be filled by the same person;

the CEO should be a full-time employee 

of the company;

the majority of the Board should 

comprise directors who are both nonexecutive and independent;

the Board should represent a broad 

range of qualifications, diversity, 

experience and expertise considered of 

benefit to the company; and

the number of Shell-nominated 

directors, as a proportion of the Board, 

should normally be in the proportion 

that Shell’s holding of fully paid ordinary 

shares in the company bears to all of 

the issued fully paid ordinary shares in 

the company.

Section 2.6 on Board succession planning 

provides further information on the mix 

of skills and diversity the Board seeks to 

achieve in membership of the Board.

The Board considers that collectively 

the directors have the range of skills, 

knowledge and experience necessary to 

direct the company. The non-executive 

directors contribute operational and 

international experience, an understanding 

of the industry in which Woodside 

operates, knowledge of financial markets 

and an understanding of the health, safety, 

environmental and community matters 

that are important to the company. The 

CEO and the Executive Director and 

Executive Vice President, Corporate 

and Commercial bring an additional 

perspective to the Board through a 

thorough understanding of Woodside’s 

business. The directors on the Board 

represent a diverse range of nationalities 

and backgrounds. Dr Sarah Ryan was 

appointed as a non-executive director 

effective 6 December 2012, increasing the 

number of women on the Board to two. 

The Board recognises that there is still a 

gender imbalance, and that an opportunity 

exists to address this upon future 

retirements of non-executive directors.

The Constitution provides that the 

company is not to have more than ten, nor 

less than three, directors.

2.3 Chairman

ASXCGC Recommendations 2.2, 2.3

The Chairman of the Board, Mr Michael 

Chaney, is an independent, non-executive 

director and a resident Australian citizen. 

The Chairman is responsible for leadership 

and effective performance of the Board 

and for the maintenance of relations 

between directors and management 

that are open, cordial and conducive to 

productive cooperation. The Chairman’s 

responsibilities are set out in more detail in 

the Board Charter.

A copy of the Board Charter is available 

in the corporate governance section of 

Woodside’s website.

Mr Chaney is also chairman of National 

Australia Bank Limited (NAB). The Board 

considers that neither his chairmanship of 

NAB, nor any of his other commitments 

(listed on page 36), interfere with the 

discharge of his duties to the company. 

The Board is satisfied that Mr Chaney 

commits the time necessary to discharge 

his role effectively.

2.4 Director independence

ASXCGC Recommendations 2.1, 2.6

The independence of a director is 

assessed in accordance with Woodside’s 

Policy on Independence of Directors.

A copy of the Policy on Independence 

of Directors is available in the corporate 

governance section of Woodside’s 

website.

In accordance with the policy, the Board 

assesses independence with reference to 

whether a director is non-executive, not a 

member of management and who is free 

of any business or other relationship that 

could materially interfere with, or could 

reasonably be perceived to materially 

interfere with, the independent exercise of 

their judgement. 

In making this assessment, the 

Board considers all relevant facts and 

circumstances. Relationships that the 

Board will take into consideration when 

assessing independence are whether a 

director:

is a substantial shareholder of the 

company or an officer of, or otherwise 

associated directly with, a substantial 

shareholder of the company;

is employed, or has previously been 

employed in an executive capacity 

by the company or another Group 

member, and there has not been a 

period of at least three years between 

ceasing such employment and serving 

on the Board;

40 Woodside Petroleum Ltd. | 2012 Annual Report

OVERVIEW BUSINESS 

REVIEWS

GOVERNANCE FiNANCIAL 

REPORT

SHAREHOLDER 

INFORMATION
has within the last three years been 

a principal of a material professional 

adviser or a material consultant to the 

company or another Group member, or 

an employee materially associated with 

the service provided; 

is a material supplier or customer of the 

company or other Group member, or 

an officer of or otherwise associated 

directly or indirectly with a material 

supplier or customer; or 

has a material contractual relationship 

with the company or another Group 

member other than as a director.

The test of whether a relationship or 

business is material is based on the nature 

of the relationship or business and on 

the circumstances and activities of the 

director. Materiality is considered from the 

perspective of the company and its Group 

members, the persons or organisations 

with which the director has an affiliation 

and from the perspective of the director. 

To assist in assessing the materiality 

of a supplier or customer the Board 

has adopted the following materiality 

thresholds:

a material customer is a customer of 

Woodside which accounts for more 

than 2% of Woodside’s consolidated 

gross revenue; and

a supplier is material if Woodside 

accounts for more than 2% of the 

supplier’s consolidated gross revenue.

The Board reviews the independence of 

directors before they are appointed, on an 

annual basis and at any other time where 

the circumstances of a director change 

such as to require reassessment. The 

Board has reviewed the independence of 

each of the directors in office at the date 

of this report and has determined that 

eight of the ten directors are independent. 

The directors that are not considered 

independent are Mr Peter Coleman and 

Mr Robert Cole as they are both executive 

directors and members of management.

Dr Christopher Haynes and Dr Andrew 

Jamieson were nominated to the 

Woodside Board by Shell and were both 

previously executives of Shell. Dr Haynes 

and Dr Jamieson retired from Shell 

on 31 August 2011 and 30 June 2009 

respectively and continue to serve on the 

Woodside Board.

The Board is satisfied that Dr Haynes 

and Dr Jamieson have no continuing 

association with Shell that would 

interfere with their independent exercise 

of judgement, and that each is an 

independent director.

Mr Fraunschiel and Dr Haynes serve on 

the board of directors of WorleyParsons 

Limited, a supplier of engineering services 

to Woodside. The value of services 

provided by the WorleyParsons Limited 

group of companies to Woodside in 

2012 exceeded the Board’s materiality 

threshold relating to suppliers. The Board, 

having regard to the nature and value of 

the commercial relationship between 

Woodside and WorleyParsons Limited, 

is satisfied that Mr Fraunschiel and 

Dr Haynes remain independent. Where a 

matter involving WorleyParsons Limited 

comes before the Board, the Directors’ 

Conflict of Interest Guidelines apply (refer 

section 2.5 below).

Certain non-executive directors hold 

directorships or executive positions in 

companies with which Woodside has 

commercial relationships. Details of other 

directorships and executive positions held 

by non-executive directors are set out on 

pages 36 and 37.

Four of the non-executive directors have 

been employed by Woodside in the 

past and a significant period of time has 

elapsed since they ceased employment. 

Dr Haynes and Dr Jamieson were both 

seconded to Woodside as General 

Manager of the North West Shelf Venture 

from 1999 to 2002 and from 1997 to 1999 

respectively. Dr Ryan was employed by 

Woodside as a member of the North 

West Shelf petroleum production team 

from 1993 to 1996. Mr Chaney was 

employed by Woodside as a petroleum 

geologist in the 1970s. 

The independent status of directors 

standing for election or re-election is 

identified in the notice of AGM. If the 

Board’s assessment of a director’s 

independence changes, the change is 

disclosed to the market.

2.5 Conflicts of interest

The Board has approved Directors’ 

Conflict of Interest Guidelines which apply 

if there is, or may be, a conflict between 

the personal interests of a director, or 

the duties a director owes to another 

company, and the duties the director 

owes to Woodside. Directors are required 

to disclose circumstances that may affect, 

or be perceived to affect, their ability to 

exercise independent judgment so that 

the Board can assess independence on a 

regular basis.

A director with an actual or potential 

conflict of interest in relation to a matter 

before the Board does not receive the 

Board papers relating to that matter and 

when the matter comes before the Board 

for discussion, the director withdraws 

from the meeting for the period the matter 

is considered and takes no part in the 

discussions or decision-making process.

Minutes reporting on matters in which a 

director is considered to have a conflict of 

interest are not provided to that director. 

However, the director is given notice 

of the broad nature of the matter for 

discussion and is updated in general terms 

on the progress of the matter.

2.6 Board succession planning

ASXCGC Recommendation 2.6

The Board manages its succession 

planning with the assistance of the 

Nominations Committee. The committee 

annually reviews the size, composition 

and diversity of the Board and the mix of 

existing and desired competencies across 

members and reports its conclusions 

to the Board. In conducting the review 

a skills matrix is used to enable the 

committee to assess the skills and 

experience of each director and the 

combined capabilities of the Board. The 

results of this review are considered in 

the context of Woodside’s operations and 

strategy. Where the committee identifies 

existing or projected competency gaps, 

it recommends a succession plan to 

the Board that addresses those gaps. 

The Board does not currently consider 

that there are any existing or projected 

competency gaps.

Recognising the importance of Board 

renewal, the committee takes each 

director’s tenure into consideration in its 

succession planning. As a general rule 

directors are not expected to serve on the 

Board beyond ten years.

The Nominations Committee is 

responsible for evaluating Board 

candidates and recommending individuals 

for appointment to the Board. The 

committee evaluates prospective 

candidates against a range of criteria 

including the skills, experience, expertise 

and diversity that will best complement 

Board effectiveness at the time. The 

Board may engage an independent 

recruitment firm to undertake a search for 

suitable candidates.

In its evaluation of candidates for the 

Board, the Nominations Committee 

will have regard to normally accepted 

nomination criteria, including:

honesty and integrity;

the ability to exercise sound business 

judgement;

appropriate experience and professional 

qualifications;

absence of conflicts of interest or other 

legal impediments to serving on the 

Board;

Woodside Petroleum Ltd. | Corporate Governance Statement 41
willingness to devote the required time; 

and

availability to attend Board and 

committee meetings.

In considering overall Board balance, the 

Nominations Committee will give due 

consideration to the value of a diversity 

of backgrounds and experiences among 

the members, and to having some of the 

directors based in the centres of operation 

of Woodside.

With the exception of the Managing 

Director, directors appointed by the Board 

are subject to shareholder election at the 

next AGM.

A copy of the Nominations Committee 

Charter and a description of 

Woodside’s procedure for the selection 

and appointment of new directors 

and the re-election of incumbent 

directors are available in the corporate 

governance section of Woodside’s 

website.

In December 2012, Mr Fraunschiel 

and Dr Jungels had both served ten 

years on the Board. Dr Jungels retired 

with effect on 7 December 2012 and 

Mr Fraunschiel will retire with effect 

on 28 February 2013. During the year, 

the Board directly engaged executive 

recruitment specialists, to conduct an 

extensive search for suitable candidates 

for the Board. The search culminated in 

the appointment by the Board of 

Dr Ryan with effect on 6 December 2012 

and Mr Frank Cooper with effect on 

1 February 2013. Mr Cole was appointed 

to the Board as an executive director, 

effective 23 February 2012. Prior to 

his appointment as a director, Mr Cole 

worked for Woodside in senior executive 

roles since 2006, most recently as 

Executive Vice President Commercial.

2.7 Directors’ retirement and 

re-election

ASXCGC Recommendation 2.6

With the exception of the Managing 

Director, directors must retire at the third 

AGM following their election or most 

recent re-election. At least one director 

must stand for election at each AGM. Any 

director appointed to fill a casual vacancy 

since the date of the previous AGM must 

submit themselves to shareholders for 

election at the next AGM. 

Board support for a director’s re-election is 

not automatic and is subject to satisfactory 

director performance (in accordance 

with the evaluation process described in 

section 2.9).

2.8 Directors’ appointment, 

induction training and continuing 

education

All new directors are required to sign and 

return a letter of appointment which sets 

out the key terms and conditions of their 

appointment, including duties, rights and 

responsibilities, the time commitment 

envisaged and the Board’s expectations 

regarding their involvement with 

committee work.

Induction training is provided to all new 

directors. It includes a comprehensive 

induction manual, discussions with the 

CEO and senior executives and the option 

to visit Woodside’s principal operations 

either upon appointment or with the Board 

during its next site tour. The induction 

materials and discussions include 

information on Woodside’s strategy, 

culture and values; key corporate and 

Board policies; the company’s financial, 

operational and risk management 

position; the rights and responsibilities of 

directors; and the role of the Board and its 

committees and meeting arrangements.

All directors are expected to maintain 

the skills required to discharge their 

obligations to the company. Directors 

are encouraged to undertake continuing 

professional education including industry 

seminars and approved education 

courses. These are paid for by the 

company, where appropriate. In addition, 

the company provides the Board with 

regular educational information papers and 

presentations on industry-related matters 

and new developments with the potential 

to affect Woodside.

2.9 Board performance evaluation

ASXCGC Recommendations 1.3, 2.5, 2.6

The Nominations Committee is 

responsible for determining the process 

for evaluating Board performance. 

Evaluations are conducted annually and 

have produced improvements in Board 

processes and overall efficiency.

The Board performance evaluation 

process is conducted by way of 

questionnaires appropriate in scope and 

content to effectively review:

the performance of the Board and 

each of its committees against the 

requirements of their respective 

charters; and

the individual performance of the 

Chairman and each director.

The questionnaires are completed by each 

director and the responses compiled by 

an external consultant. The reports on 

Board and committee performance are 

provided to all directors and discussed by 

the Board.

The report on the Chairman’s 

performance is provided to the Chairman 

and two committee chairmen for 

discussion.

The report on each individual director 

is provided to the individual and copied 

to the Chairman. The Chairman meets 

individually with each director to discuss 

the findings of their report.

The performance of each director retiring 

at the next AGM is taken into account by 

the Board in determining whether or not 

the Board should support the re-election 

of the director.

The Human Resources & Compensation 

Committee reviews and makes 

recommendations to the Board 

on the criteria for the evaluation of 

the performance of the CEO. The 

Board conducts the evaluation of the 

performance of the CEO.

The Remuneration Report on pages 53 

to 65 discloses the process for evaluating 

the performance of senior executives, 

including the CEO. In 2012, performance 

evaluations for the Board, its committees, 

directors and senior executives took place 

in accordance with the process disclosed 

above and in the Remuneration Report.

2.10 Board access to information 

and independent advice

ASXCGC Recommendation 2.6

Subject to the Directors’ Conflict of 

Interest Guidelines referred to in section 

2.5, directors have direct access to 

members of company management and 

to company information in the possession 

of management. 

The Board has agreed a procedure under 

which directors are entitled to obtain 

independent legal, accounting or other 

professional advice at the company’s 

expense. Directors are entitled to 

reimbursement of all reasonable costs 

where a request for such advice is 

approved by the Chairman. In the case of 

a request made by the Chairman, approval 

is required by a majority of the nonexecutive directors.

2.11 Directors’ remuneration

Details of remuneration paid to directors 

(executive and non-executive) are set out 

in the Remuneration Report on pages 

53 to 65. The Remuneration Report also 

contains information on the company’s 

policy for determining the nature and 

amount of remuneration for directors and 

senior executives and the relationship 

between the policy and company 

performance.

Shareholders will be invited to consider 

and approve the Remuneration Report at 

the 2013 AGM.

42 Woodside Petroleum Ltd. | 2012 Annual Report

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2.12 Board meetings

During the year ended 31 December 

2012, the Board held six Board meetings. 

In addition, site visits and a strategic 

planning session were held in conjunction 

with the June Board meeting. Details of 

directors’ attendance at Board meetings 

are set out in Table 1 on page 45.

The Chairman, in conjunction with the 

CEO and the Company Secretary, sets 

the agenda for each meeting. Any director 

may request matters be included on the 

agenda. 

Typically at Board meetings the agenda 

will include:

minutes of the previous meeting and 

matters arising;

the CEO’s report;

the CFO’s report;

reports on major projects and current 

issues;

specific business proposals;

reports from the chairs of the 

committees on matters considered at 

committee meetings; and

minutes of previous committee 

meetings.

The Board works to an annual agenda 

encompassing periodic reviews of 

Woodside’s operating business units and 

site visits; approval of strategy, business 

plans, budgets and financial statements; 

and review of statutory obligations and 

other responsibilities identified in the 

Board Charter.

The CFO and the Company Secretary 

attend meetings of the Board by invitation. 

Other members of senior management 

attend Board meetings when a matter 

under their area of responsibility is being 

considered or as otherwise requested by 

the Board. 

At each scheduled Board meeting there 

is a session for non-executive directors to 

meet without management present. This 

session is led by the Chairman. 

Copies of Board papers are circulated 

in advance of the meetings in either 

electronic or hard copy form. Directors are 

entitled to request additional information 

where they consider further information is 

necessary to support informed decisionmaking.

2.13 Company secretaries

Details of the Company Secretaries 

are set out on page 52 in the Directors’ 

Report. The appointment and removal 

of a Company Secretary is a matter for 

decision by the Board. The Company 

Secretaries are responsible for ensuring 

that Board procedures are complied 

with and that governance matters are 

addressed. During 2012, Mr Cole and 

Ms Frances Kernot resigned as Company 

Secretaries following their appointment 

to other roles at Woodside. Woodside’s 

General Counsel Mr Michael Abbott and 

Senior Legal Counsel Mr Warren Baillie 

were appointed as Company Secretaries.

3 Committees of the Board

3.1 Board committees, 

membership and charters

ASXCGC Recommendations 2.4, 2.6, 4.1, 

4.2, 4.3, 4.4, 8.1, 8.2, 8.4

The Board has the ability under the 

company’s constitution to delegate its 

powers and responsibilities to committees 

of the Board. This allows the directors to 

spend additional and more focused time 

on specific issues.

The Board has four standing committees 

to assist in the discharge of its 

responsibilities. These are the:

Audit & Risk Committee;

Nominations Committee;

Human Resources & Compensation 

Committee; and

Sustainability Committee.

The committees operate principally in 

a review or advisory capacity, except 

in cases where powers are specifically 

conferred on a committee by the Board.

Each committee has a charter, detailing 

its role, duties and membership 

requirements. The committee charters 

are reviewed regularly and updated as 

required. Prior to the commencement of 

each year, the committees set an annual 

agenda for the coming year with reference 

to the committee charters and other 

issues the committee members or Board 

consider appropriate for consideration by 

the committees.

Each committee’s charter is available 

in the corporate governance section of 

Woodside’s website.

Membership of the committees is based 

on directors’ qualifications, skills and 

experience. Each standing committee is 

comprised of:

only non-executive directors;

at least three members, the majority of 

whom are independent; and

a chairman appointed by the Board 

who is one of the independent nonexecutive directors.

The Audit & Risk Committee and the 

Human Resources & Compensation 

Committee have additional membership 

requirements which are discussed in 

sections 3.2 and 3.4.

The composition of each committee and 

details of the attendance of members at 

meetings held during the year are set out 

in Table 1 on page 45.

All directors are entitled to attend 

meetings of the standing committees. 

Papers considered by the standing 

committees are available on request to 

directors who are not on that committee. 

Minutes of the standing committee 

meetings are provided to all directors 

and the proceedings of each meeting 

are reported by the chairman of the 

committee at the next Board meeting.

Each committee is entitled to seek 

information from any employee of the 

company and to obtain any professional 

advice it requires in order to perform its 

duties.

Each standing committee participates in 

a regular review of its performance and 

effectiveness. As a result of the 2012 

review, the Board is satisfied that the 

committees have performed effectively 

with reference to their charters.

Ad hoc committees are convened to 

consider matters of special importance or 

to exercise the delegated authority of the 

Board.

3.2 Audit & Risk Committee

ASXCGC Recommendations 4.1, 4.2, 

4.3, 4.4

The role of the Audit & Risk Committee 

is to assist the Board to meet its 

oversight responsibilities in relation 

to the company’s financial reporting, 

compliance with legal and regulatory 

requirements, internal control structure, 

risk management procedures and the 

internal and external audit functions.

The Audit & Risk Committee’s charter, 

which sets out further details on the 

role and duties of the committee, is 

available in the corporate governance 

section of Woodside’s website.

The committee’s charter requires that the 

committee be composed of directors who 

are financially literate, with at least one 

director possessing accounting or related 

financial expertise and qualifications, and 

at least one director who has experience 

in, and an understanding of, the oil and 

gas industry. The chairman of the Audit & 

Risk Committee cannot be the Chairman 

of the company.

Members of the Audit & Risk Committee 

are identified in Table 1 on page 45 which 

sets out their attendance at meetings. 

Their qualifications are listed on pages 

36 and 37.

Woodside Petroleum Ltd. | Corporate Governance Statement 43
Key activities undertaken by the Audit & 

Risk Committee during the year included:

monitoring developments in accounting 

and financial reporting relevant to 

Woodside;

approval of the scope, plan and fees for 

the 2012 external audit;

review of the independence and 

performance of the external auditor;

review of significant accounting 

policies and practices, including with 

respect to the financial implications 

of the enactment of the Clean Energy 

Act 2011 (Cth) and the transition of 

the North West Shelf project into the 

Petroleum Resources Rent Tax regime;

review of Internal Audit reports and 

approval of the 2013 Internal Audit plan;

review of the Group’s key risks and risk 

management framework;

review of reports from management 

on the effectiveness of the Group’s 

management of its material business 

risks;

monitoring progress of the Woodside 

Management System and matters 

arising under the Code of Conduct and 

the Whistleblower Policy; 

reviewing and making 

recommendations to the Board on 

amendments to the committee’s 

charter, the Group Treasury Policy and 

the Risk Management Policy; and

review and recommendation to 

the Board for the adoption of the 

Group’s half-year and annual financial 

statements.

The external auditors, the Chairman, 

the CEO, the Executive Director and 

Executive Vice President, Corporate and 

Commercial, the CFO, the Group Financial 

Controller, the head of Internal Audit, the 

head of Corporate Risk and the head of 

Taxation are regular attendees at Audit 

& Risk Committee meetings. At each 

committee meeting, time is scheduled for 

the committee to meet with the external 

auditors without management present.

The Committee meets at least semiannually with Woodside’s internal auditors 

without management present.

3.3 Nominations Committee

ASXCGC Recommendations 2.4, 2.6

The role of the Nominations Committee 

is to assist the Board to review Board 

composition, performance and succession 

planning. This includes identifying, 

evaluating and recommending candidates 

for the Board.

The Nominations Committee’s charter, 

which sets out further details on the role 

and duties of the committee, is available 

in the corporate governance section of 

Woodside’s website.

All non-executive directors are currently 

members of the Nominations Committee.

Table 1 on page 45 sets out their 

attendance at committee meetings.

Key activities undertaken by the 

Nominations Committee during the year 

included:

review of the size and composition of 

the Board;

Board and CEO succession planning, 

including recommending that the Board 

appoint Mr Cole as Executive Director 

and Executive Vice President, Corporate 

and Commercial and Mr Cooper and 

Dr Ryan as non-executive directors;

making recommendations to the Board 

regarding the directors seeking reelection at the 2013 AGM; and

approval of the process for the annual 

Board performance evaluation.

3.4 Human Resources & 

Compensation Committee

ASXCGC Recommendations 8.1, 8.2, 8.4

The role of the Human Resources & 

Compensation Committee is to assist the 

Board in establishing human resources 

and compensation policies and practices 

which:

enable the company to attract, retain 

and motivate employees who achieve 

operational excellence and create value 

for shareholders; and

reward employees fairly and 

responsibly, having regard to the results 

of the Group, individual performance 

and general remuneration conditions.

The Human Resources & 

Compensation Committee’s charter, 

which sets out further details on the 

role and duties of the committee, is 

available in the corporate governance 

section of Woodside’s website.

The committee’s charter requires at least 

one member to have been a director of 

Woodside for not less than three years 

and states that it is desirable that at least 

one member has an understanding of 

remuneration policies and practices. 

Members of the Human Resources & 

Compensation Committee are identified 

in Table 1 on page 45 which sets out their 

attendance at meetings.

Key activities undertaken by the Human 

Resources & Compensation Committee 

during the year included:

monitoring legislative and corporate 

governance developments in relation to 

employment and remuneration matters 

relevant to Woodside;

reviewing the company’s remuneration 

policies and practices, approving the 

use of remuneration consultants to 

provide recommendations in respect 

of the remuneration of Woodside’s 

key management personnel and 

considering advice on the remuneration 

of Woodside’s key management 

personnel;

reviewing and making 

recommendations to the Board on 

amendments to the committee’s 

charter;

reviewing the company’s recruitment 

and retention strategies;

approval of the appointment and 

remuneration packages of executives 

reporting directly to the CEO (other than 

the Executive Director and Executive 

Vice President, Corporate 

and Commercial);

monitoring progress against measurable 

objectives in respect of gender diversity; 

and

reviewing and making 

recommendations to the Board on:

remuneration for non-executive 

directors; 

the remuneration of the CEO and the 

Executive Director and Executive Vice 

President, Corporate and Commercial;

the criteria for the evaluation of the 

performance of the CEO;

incentives payable to the CEO and 

the Executive Director and Executive 

Vice President, Corporate and 

Commercial;

employee equity based plans; and

the annual Remuneration Report.

Review of the 2012 performance of the 

CEO and executive succession planning 

was conducted by the Board. 

The Human Resources & Compensation 

Committee assists the Board to 

ensure that Woodside’s remuneration 

arrangements are equitable and consistent 

with the delivery of superior performance 

that is aligned to the creation of value 

for shareholders. To ensure it is fully 

informed when making remuneration 

decisions, the committee draws on 

services from a range of external sources, 

including remuneration consultants where 

appropriate. 

Woodside’s guidelines on the use 

of remuneration consultants set out 

requirements to ensure the independence 

of remuneration consultants from 

44 Woodside Petroleum Ltd. | 2012 Annual Report

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Woodside’s management, including the 

process for the selection of consultants 

and their terms of engagement. 

Remuneration consultants are engaged 

by, and report directly to, the committee. 

Further information on the activities of 

the Human Resources & Compensation 

Committee in relation to the use of 

remuneration consultants during 2012 is 

provided in the Remuneration Report on 

page 59.

The Chairman, the CEO, the head of the 

Corporate function and the head of the 

Human Resources function are regular 

attendees at the Human Resources & 

Compensation Committee meetings. 

The CEO was not present during any 

committee or Board agenda item where 

his remuneration was considered or 

discussed.

3.5 Sustainability Committee

The role of the Sustainability Committee 

is to assist the Board to meet its 

oversight responsibilities in relation to 

the company’s sustainability policies and 

practices. 

The Sustainability Committee’s charter, 

which sets out further details on the 

role and duties of the committee, is 

available in the corporate governance 

section of Woodside’s website.

Members of the Sustainability Committee 

are identified in Table 1 below which sets 

out their attendance at meetings.

Key activities undertaken by the 

Sustainability Committee during the year 

included:

review of the Group’s environmental, 

health, safety and process safety 

performance, incidents and 

improvement plans;

consideration of heritage and land 

access affecting the company and 

security and emergency management 

performance;

monitoring Australian government 

policy development in respect of 

climate change and the enactment of 

the Clean Energy Act 2011 (Cth) and 

reviewing Woodside’s initiatives to 

reduce greenhouse gas emissions;

review of delivery against Woodside’s 

Reconciliation Action Plan 

commitments;

review of community relations activities 

and social investment themes and 

planned expenditure; 

reviewing and making 

recommendations to the Board on 

amendments to the committee’s 

charter and sustainability-related Board 

policies, including the Environment 

Policy; and

approval of the annual Sustainable 

Development Report.

Further information on the activities 

of the Sustainability Committee 

will be provided in the Sustainable 

Development Report to be released 

in March 2013, which will be 

made available in the sustainable 

development section of Woodside’s 

website.

The Chairman, the CEO, the head of 

the Corporate function, the head of the 

Health and Safety function, the head of 

the Production function and the head 

of the Environment function are regular 

attendees at Sustainability Committee 

meetings.

4 Shareholders

4.1 Shareholder communication

ASXCGC Recommendations 6.1, 6.2

Directors recognise that shareholders, as 

the ultimate owners of the company, are 

entitled to receive timely and relevant high 

quality information about their investment. 

Similarly, prospective new investors are 

entitled to be able to make informed 

investment decisions when considering 

the purchase of shares.

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

Director Board Audit & Risk

Committee

Human Resources 

& Compensation 

Committee

Sustainability 

Committee

Nominations 

Committee

(1) (2) Held Attended Held Attended Held Attended Held Attended Held Attended

Executive Director

PJ Coleman 6 6 6 7 6 6

RJ Cole (3) 5 5 5 2 4

Non-executive directors(4)

MA Chaney 6 6 6 7 6 6 6

MA Cilento 6 6 5 7 7 6 6 6 6

E Fraunschiel(5) 6 6 6 6 6 6 6 6

CM Haynes(6) 6 6 7 7 6 6 6 6

A Jamieson 6 6 2 7 7 6 6 6 6

PJMH Jungels(7) 6 6 6 6 7 7 4 6 6

DI McEvoy 6 6 6 6 1 6 6 6 6

SE Ryan (8) 1 1 1 1 1 1 1 1 1

Legend: Notes:

Current Chairman

Current member

Prior member

(1) ‘Held’ indicates the number of meetings held during the period of each director’s tenure.

(2) ‘Attended’ indicates the number of meetings attended by each director.

(3) Mr Cole was appointed with effect on 23 February 2012.

(4) Mr Frank Cooper was appointed a director with effect on 1 February 2013. He did not attend any meetings during 2012.

(5) Mr Fraunschiel will retire with effect on 28 February 2013.

(6) Dr Haynes ceased to be a member of the Human Resources & Compensation Committee on 7 December 2012. 

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

(7) Dr Jungels retired with effect on 7 December 2012.

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

Woodside Petroleum Ltd. | Corporate Governance Statement 45
Woodside’s Continuous Disclosure 

and Market Communications Policy 

encourages effective communication with 

the company’s shareholders by requiring:

the disclosure of full and timely 

information about Woodside’s activities 

in accordance with the disclosure 

requirements contained in the ASX 

Listing Rules and the Corporations Act;

all information released to the market 

to be placed on Woodside’s website 

promptly following release;

the company’s market announcements 

to be maintained on Woodside’s 

website for at least three years; and

that all disclosures, including notices 

of meetings and other shareholder 

communications, are drafted clearly and 

concisely.

A copy of the Continuous Disclosure 

and Market Communications Policy is 

available in the corporate governance 

section of Woodside’s website. 

Briefings on the financial results, and other 

briefings with institutional investors and 

analysts containing material information 

not previously released to the market, 

are webcast and made available on 

Woodside’s website.

Shareholders are notified in advance of 

the date of investor briefing webcasts. 

Presentation material from briefings or 

speeches containing material information 

not previously released is disclosed to the 

market via ASX and posted to the website.

The company produces a short form 

annual and half-year shareholder review. 

The Annual Report, the Sustainable 

Development Report and the short form 

shareholder reviews are available on the 

company’s website, or shareholders can 

elect to receive hard copies. Shareholders 

can elect to receive email notification 

when these reports are posted to the 

website. Shareholders can also receive 

email notification of Woodside’s ASX 

announcements and media releases. 

Any person wishing to receive 

email alerts of significant market 

announcements can subscribe through 

Woodside’s website.

The company recognises the importance 

of shareholder participation in general 

meetings and supports and encourages 

that participation. The company has direct 

voting arrangements in place, allowing 

shareholders unable to attend the AGM 

to vote on resolutions without having 

to appoint someone else as a proxy. 

Shareholders are also able to register their 

voting instructions electronically.

The company’s AGM is webcast live and 

is archived for viewing on Woodside’s 

website. The company also makes 

available podcasts of the AGM. Copies 

of the addresses by the Chairman and 

the CEO are disclosed to the market 

and posted to the company’s website. 

The outcome of voting on the items of 

business are disclosed to the market and 

posted to the company’s website after the 

AGM.

All of Woodside’s directors attended the 

company’s 2012 AGM and are expected 

to attend the 2013 AGM.

The company’s external auditor 

attends the company’s AGM to answer 

shareholder questions about the conduct 

of the audit, the preparation and content 

of the audit report, the accounting 

policies adopted by the company and the 

independence of the auditor in relation to 

the conduct of the audit.

4.2 Continuous disclosure and 

market communications

ASXCGC Recommendations 5.1, 5.2

Woodside is committed to ensuring that 

shareholders and the market are provided 

with full and timely information and that 

all stakeholders have equal opportunities 

to receive externally available information 

issued by Woodside.

A Disclosure Committee manages 

compliance with market disclosure 

obligations and is responsible for 

implementing and monitoring reporting 

processes and controls and setting 

guidelines for the release of information. 

The Disclosure Committee is comprised 

of senior executives. The Disclosure 

Committee reports at least annually 

to the Board on the performance of 

Woodside’s reporting processes and 

controls. Continuous disclosure matters 

are considered at each Board meeting.

The Board approves any announcement 

relating to the annual and half year 

financial reports and any other information 

for disclosure to the market that contains 

or relates to financial projections, 

statements as to future financial 

performance or changes to the policy 

or strategy of the company (taken as a 

whole).

Woodside’s Continuous Disclosure 

and Market Communications Policy, 

referred to in section 4.1, and associated 

guidelines reinforce Woodside’s 

commitment to continuous disclosure and 

outline management’s accountabilities and 

the processes to be followed for ensuring 

compliance. The policy also describes 

Woodside’s guiding principles for market 

communications. Each Woodside 

employee is required to ensure potentially 

price-sensitive information concerning 

Woodside is assessed with reference to 

the Continuous Disclosure and Market 

Communications Policy and associated 

guidelines as soon as the employee 

becomes aware of the information.

A copy of the Continuous Disclosure 

and Market Communications Policy is 

available in the corporate governance 

section of Woodside’s website. 

5 Promoting responsible and 

ethical behaviour

5.1 Code of Conduct and 

Whistleblower Policy

ASXCGC Recommendation 3.1

Woodside has a Code of Conduct which 

outlines Woodside’s commitment 

to appropriate and ethical corporate 

practices.

The Code of Conduct describes 

Woodside’s mission, vision and values 

and sets out the principles, practices 

and standards of personal and corporate 

behaviour Woodside expects in daily 

business activities. The Code of Conduct 

covers matters such as compliance with 

laws and regulations, responsibilities to 

shareholders and the community, sound 

employment practices, confidentiality, 

privacy, conflicts of interest, giving and 

accepting business courtesies and the 

protection and proper use of Woodside’s 

assets.

The Code of Conduct is available in 

the corporate governance section of 

Woodside’s website.

All directors, officers and employees 

are required to comply with the Code 

of Conduct. Managers are expected to 

take reasonable steps to ensure that 

employees, contractors, consultants, 

agents and partners under their 

supervision are aware of the Code and to 

foster an environment that encourages 

ethical behaviour and compliance with 

the Code. Directors and employees are 

required to complete online Code of 

Conduct training upon appointment and 

thereafter annually.

Failure to comply with the Code of 

Conduct is a serious breach of Woodside’s 

policy and will be investigated. Breaches 

may result in disciplinary action ranging 

from a formal warning through to 

termination of employment. All breaches 

are required to be recorded.

The Sustainable Development Report, 

which will be released in March 2013 

and made available in the sustainable 

development section of Woodside’s 

website, provides further information 

on the Code of Conduct. 

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Directors and senior management are 

required to provide annual certification 

of their compliance with the Code of 

Conduct and the Securities Dealing 

Policy. In addition, all executives and 

key finance managers complete a 

questionnaire from the directors on a 

half-yearly basis which includes questions 

on compliance by the managers and 

all employees and contractors within 

their area of responsibility with the 

Code of Conduct, the Securities Dealing 

Policy, the Whistleblower Policy and 

the Continuous Disclosure and Market 

Communications Policy. The responses to 

the questionnaire, together with a report 

on breaches of the Code of Conduct and 

matters raised through the Whistleblower 

helpline (refer below) are considered by 

the Audit & Risk Committee.

Woodside’s Whistleblower Policy 

documents Woodside’s commitment to 

maintaining an open working environment 

in which employees and contractors are 

able to report instances of unethical, 

unlawful or undesirable conduct without 

fear of intimidation or reprisal.

The purpose of the Whistleblower Policy 

is to:

help detect and address unacceptable 

conduct;

help provide employees and contractors 

with a supportive working environment 

in which they feel able to raise issues 

of legitimate concern to them and to 

Woodside;

provide an external confidential helpline 

which can be used for reporting 

unacceptable conduct; and

help protect people who report 

unacceptable conduct in good faith.

A summary of the Whistleblower Policy 

is available in the corporate governance 

section of Woodside’s website.

5.2 Securities ownership and 

dealing

ASXCGC Recommendation 8.4

Woodside’s Securities Dealing Policy 

applies to all directors, employees, 

contractors, consultants and advisers. This 

policy provides a brief summary of the 

law on insider trading and other relevant 

laws; sets out the restrictions on dealing 

in securities by people who work for, or 

are associated with, Woodside; and is 

intended to assist in maintaining market 

confidence in the integrity of dealings 

in the company’s securities. The policy 

is aligned with the ASX Listing Rules 

on trading policies and associated ASX 

guidelines.

The policy prohibits directors and 

employees from dealing in the company’s 

securities when they are in possession 

of price-sensitive information that is not 

generally available to the market. It also 

prohibits dealings by directors and certain 

restricted employees during “black-out” 

periods, including during the periods 

between the end of the financial half-year 

and the announcement of the half-year 

results and the end of the financial 

full-year and the announcement of the 

full-year results. Directors are required to 

seek the approval of the Chairman (or in 

the case of the Chairman, the CEO) before 

dealing in the company’s securities or 

entering into any financial arrangement 

by which Woodside securities are used 

as collateral. Restricted employees are 

required to notify their manager and 

the General Counsel before dealing in 

the company’s securities. In addition, 

executives reporting directly to the CEO, 

and the Company Secretaries, have 

notification requirements in respect of 

entering into any financial arrangement by 

which Woodside securities are used as 

collateral.

The Board has adopted a requirement 

for non-executive directors to have a 

minimum holding of 2,000 shares in 

Woodside. Non-executive directors who 

have less than the minimum holding are 

required to direct 25% of their net fees 

to the purchase of shares in Woodside 

until the minimum holding requirement is 

satisfied. 

Non-executive directors (other than 

directors who are both nominated 

and employed by Shell) are eligible to 

participate in Woodside’s non-executive 

directors’ share plan. Under the plan 

a proportion of the director’s after tax 

remuneration is applied to the purchase 

of shares in Woodside. These shares are 

acquired on market at market value at 

predetermined intervals.

Any dealing in Woodside securities by 

directors is notified to the ASX within 

five business days of the dealing. It is 

a condition of the Securities Dealing 

Policy that directors, and executives 

participating in an equity-based incentive 

plan, are prohibited from entering into any 

transaction which would have the effect 

of hedging or otherwise transferring to 

any person the risk of any fluctuation in 

the value of any unvested entitlement 

in Woodside securities. This prohibition 

is also contained in the terms of the 

Executive Incentive Plan.

A copy of the Securities Dealing Policy 

is available in the corporate governance 

section of Woodside’s website.

5.3 Political donations

Woodside’s Code of Conduct prohibits 

donations to any political party, politician or 

candidate for public office in any country 

without prior Board approval. In certain 

circumstances Woodside representatives 

may attend a party-political function 

which charges an attendance fee without 

Board approval. Attendance at these 

functions must be approved by the head 

of the Government Affairs function, and 

a register of attendances and the cost of 

attending each function is maintained by 

Woodside at a corporate level.

6 Risk management and internal 

control

6.1 Approach to risk management 

and internal control

ASXCGC Recommendations 7.1, 7.4

The Board recognises that risk 

management and internal compliance 

and control are key elements of good 

corporate governance.

Woodside’s Risk Management Policy 

describes the manner in which Woodside:

provides a consistent process for the 

recognition and management of risks 

across Woodside’s business; and

confers responsibility on Woodside 

staff at all levels to proactively identify, 

manage, review and report on risks 

relating to the objectives those staff are 

accountable for delivering.

A copy of the Risk Management Policy 

is available in the corporate governance 

section of Woodside’s website.

Woodside recognises that risk is 

inherent to its business and that effective 

management of risk is vital to delivering 

on its objectives, success and continued 

growth. Woodside is committed to 

managing all risk in a proactive and 

effective manner. Woodside’s approach 

to risk enhances opportunities, reduces 

threats and sustains Woodside’s 

competitive advantage. 

The Woodside Group operates a 

standardised enterprise-wide risk 

management process that provides an 

over-arching and consistent framework 

for the identification, assessment, 

monitoring and management of material 

business risks. Woodside has a Risk 

function, separate to Internal Audit, and 

aligns the company’s risk management 

process with the International Standard 

for risk management (ISO 31000 Risk 

Management). Risks are identified, 

assessed and prioritised using a 

common methodology. Assessed risk 

is escalated to increasingly senior levels 

of management based on corporate 

materiality thresholds.

Woodside Petroleum Ltd. | Corporate Governance Statement 47
6.2 Risk management roles and 

responsibilities

ASXCGC Recommendations 7.2, 7.4

The Board is responsible for reviewing and 

approving Woodside’s risk management 

strategy, policy and key risk parameters, 

including determining the Group’s appetite 

for country risk and major investment 

decisions.

The Board is also responsible for satisfying 

itself that management has developed 

and implemented a sound system of risk 

management and internal control. The 

Board has delegated oversight of the Risk 

Management Policy, including review of 

the effectiveness of Woodside’s internal 

control system and risk management 

process, to the Audit & Risk Committee.

Management is responsible for promoting 

and applying the Risk Management Policy. 

This responsibility involves identifying 

and assessing business and operational 

risks, developing and implementing 

appropriate risk treatment strategies and 

controls, monitoring the effectiveness 

of risk controls and reporting on risk 

management capability and performance. 

Within each major business and functional 

area there is a designated senior risk role, 

with specific responsibilities to ensure 

appropriate application of Woodside’s risk 

management process and regular risk 

review and reporting.

Every organisational unit has a risk 

management section within its annual 

business plan, and these plans are 

discussed at regular performance reviews.

The Risk function is responsible for 

Woodside’s risk management process, 

development of risk management 

capability, and providing risk management 

reports to the executive team and 

the Audit & Risk Committee on the 

corporate risk profile and the Group’s risk 

management performance.

In 2012, both the Audit & Risk Committee 

and the Board reviewed the risk profile 

for the Group and received reports from 

management on the effectiveness 

of the Group’s management of its 

material business risks. The reported 

risks considered Woodside’s health and 

safety, environmental, financial, legal 

and compliance, social and cultural and 

reputational exposures.

Internal Audit is responsible for providing 

an independent appraisal of the adequacy 

and effectiveness of the Group’s risk 

management and internal control system.

6.3 Internal Audit

Internal Audit is independent of both 

business management and of the 

activities it reviews. Internal Audit provides 

assurance that the design and operation of 

the Group’s risk management and internal 

control system is effective. A risk-based 

audit approach is used to ensure that the 

higher risk activities in each business 

unit or function are targeted by the audit 

program. All audits are conducted in a 

manner that conforms to international 

auditing standards. Internal Audit has 

all necessary access to management 

and information and is staffed by 

industry professionals including qualified 

accountants and engineers.

The Audit & Risk Committee oversees 

and monitors Internal Audit’s activities 

and reviews Internal Audit’s performance. 

It approves the annual audit program 

and receives reports from Internal 

Audit concerning the effectiveness of 

internal control and risk management. 

The Audit & Risk Committee approves 

the appointment of the head of Internal 

Audit. The head of Internal Audit is 

jointly accountable to the Audit & Risk 

Committee and the Executive Director and 

Executive Vice President, Corporate and 

Commercial. The Committee members 

have access to Internal Audit without the 

presence of other management. Internal 

Audit has unfettered access to the Audit & 

Risk Committee and its chairman.

Internal Audit and external audit are 

separate and independent of each other.

6.4 CEO and CFO assurance

ASXCGC Recommendations 7.3, 7.4

The Board receives regular reports on the 

Group’s financial and operational results. 

Before the adoption by the Board of 

the 2012 half-year and full-year financial 

statements, the Board received written 

declarations from the CEO and the 

CFO that the financial records of the 

company have been properly maintained 

in accordance with section 286 of the 

Corporations Act, and the company’s 

financial statements and notes comply 

with accounting standards and give a true 

and fair view of the consolidated entity’s 

financial position and performance for the 

financial period.

The CEO and the CFO have also stated 

in writing to the Board that the statement 

relating to the integrity of Woodside’s 

financial statements is founded on a 

sound system of risk management and 

internal control and that the system 

is operating effectively in all material 

respects in relation to financial reporting 

risks.

In addition, all executives and key finance 

managers complete a questionnaire from 

the directors on a half-yearly basis. The 

questions relate to the financial position 

of the company, market disclosure, 

the application of company policies 

and procedures (including the Risk 

Management Policy), compliance with 

external obligations and other governance 

matters. This process assists the CEO and 

the CFO in making the declarations to the 

Board referred to above.

7 External auditor relationship

ASXCGC Recommendation 4.4

In accordance with Woodside’s 

External Auditor Policy, the Audit & Risk 

Committee oversees detailed External 

Auditor Guidelines covering the terms 

of engagement of Woodside’s external 

auditor. The guidelines include provisions 

directed to maintaining the independence 

of the external auditor and assessing 

whether the provision of any non-audit 

services by the external auditor that 

may be proposed is appropriate. Such 

provisions are referenced to the Code 

of Ethics published by the International 

Federation of Accountants (IFAC).

The External Auditor Guidelines contain a 

set of controls which address threats to 

the independence of the external auditor 

including, in particular, any threat which 

may arise by reason of self-interest, 

self-review, advocacy, familiarity or 

intimidation.

The External Auditor Guidelines classify a 

range of non-audit services which could 

potentially be provided by the external 

auditor as:

acceptable within limits;

requiring the approval of the CFO;

requiring the approval of the Audit & 

Risk Committee; or

not acceptable.

The services considered not acceptable 

for provision by the external auditor 

include:

internal audit;

acquisition accounting due diligence 

where the external auditor is also the 

auditor of the other party;

transactional support for acquisitions or 

divestments where the external auditor 

is also the auditor of the other party;

book-keeping and financial reporting 

activities to the extent such activities 

require decision-making ability and/or 

posting entries to the ledger;

the design, implementation, operation 

or supervision of information systems 

and provision of systems integration 

services;

independent expert reports;

financial risk management; and

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taxation planning and taxation 

transaction advice.

The External Auditor Guidelines require 

rotation of the audit partner and audit 

review partner at least every five years 

and prohibit the reinvolvement of a 

previous audit partner in the audit service 

for two years following rotation.

In addition to incorporating safeguards 

to ensure compliance with sections 

324CI and 324CK of the Corporations 

Act in respect of employment of a 

former partner of the audit firm or 

member of the audit team as a director 

or senior employee of Woodside, the 

Guidelines also require assessment of the 

significance of a potential threat to the 

external auditor’s independence before 

any employment of a former partner or 

audit team member. Any employment of a 

member of the audit team or a partner of 

the audit firm also requires the approval of 

the Audit & Risk Committee.

Information on the procedures for 

the selection and appointment of the 

external auditor and for the rotation of 

external audit engagement partners is 

available in the corporate governance 

section of Woodside’s website.

8 Diversity

ASXCGC Recommendations 3.2, 3.3, 

3.4, 3.5

Woodside recognises that workforce 

diversity provides a key competitive 

advantage and our success is a reflection 

of the quality and skills of our people. To 

this end Woodside leadership continues to 

focus on the development of a workplace 

climate that promotes diversity as a key 

contributor to our business success.

A copy of Woodside’s Diversity Policy 

is available in the corporate governance 

section of Woodside’s website.

Woodside’s policy is to recruit and 

manage on the basis of competence and 

performance regardless of age, nationality, 

race, gender, religious beliefs, sexuality, 

physical ability or cultural background.

Woodside aims to meet its ongoing 

commitment to diversity by, among other 

things:

respecting the unique attributes that 

each individual brings to the workplace 

and fostering an inclusive and 

supportive culture;

providing diversity education and 

training as well as undertaking 

diversity initiatives and measuring their 

effectiveness;

the Board reviewing Woodside’s 

diversity strategy; and

the Board annually reviewing the 

measurable objectives it has set for 

achieving improvement in the diversity 

mix of Woodside and the progress in 

achieving those objectives.

During 2012, Woodside continued to 

meet its specific commitments under 

its Reconciliation Action Plan (RAP) to 

increase Indigenous participation at 

Woodside. Woodside has increased 

Indigenous employment by over 188% 

since the RAP was adopted in 2010 and 

at the end of 2012 had 92 Indigenous 

employees, 54 people on Indigenous 

pathway programs and four Indigenous 

university students participating in 

Woodside’s cadetship program. Since 

2009, Woodside has successfully 

converted 70% of its Indigenous 

pathway participants to employment 

following completion of their training 

program and had 75 participants at 

its peak during the year. Woodside 

also significantly enhanced its support 

for the establishment or expansion 

of Indigenous businesses during the 

year, internally through its commercial 

contracting activities, as well as through 

its support of external programs operating 

in the Kimberley, the Pilbara and Perth. 

Woodside has already exceeded its target 

of more than 750 employees attending 

cultural awareness training and is now 

looking beyond that target and devising 

new programs to support Woodside’s 

Indigenous employees, such as formal 

mentoring and supervisor training.

Woodside continued to undertake 

initiatives in 2012 aimed at improving 

gender diversity across the organisation. 

A detailed review and analysis of gender 

diversity progress occurred at the 

end of 2011 with the aim of reducing 

female turnover and increasing female 

progression into senior roles. The 

review resulted in the development, 

communication and implementation in 

2012 of a three-year gender diversity 

strategy.

Key activities carried out in 2012 to 

support Woodside’s gender diversity 

strategy included improvements to the 

graduate program recruitment process 

which delivered a 40% increase in 

applications and an improved gender 

diversity balance outcome. A critical 

review of female talent conducted through 

an organisation-wide capability review 

resulted in improved gender balance in 

senior management succession planning. 

A review of remuneration demonstrated 

effective pay parity for males and females 

doing similar roles. 

During the year, Woodside strengthened 

its general recruitment processes to 

ensure gender diversity in candidate 

short-listing and on interview panels. 

These changes will be fully embedded in 

2013 and aim to deliver improved gender 

recruitment and promotion outcomes over 

time. 

During 2012, Woodside’s overall female 

representation remained stable at 26.7%. 

Women are represented at all levels within 

the organisation. In particular, female 

representation in middle and senior 

management roles remained steady at 

approximately 10% at the end of 2012. 

The focus in 2013 will continue to be on 

building a strong pipeline of female talent 

to fill senior roles in the future. To this 

end, a specific development program 

for high talent females and a job design 

toolkit will be developed and implemented 

to increase part-time and flexible 

working opportunities, support ongoing 

competency development and facilitate 

improved career progression. 

Table 2 on page 50 sets out Woodside’s 

2012 measurable objectives, as disclosed 

in the 2011 Annual Report, and progress 

made towards achieving those objectives. 

The 2013 measurable objectives 

agreed by the Board to improve gender 

diversity remain consistent with the 

2012 objectives, so that Woodside 

is able to measure and demonstrate 

cumulative progress. The 2013 diversity 

measurable objectives, set out below, 

will continue to be centred on the five 

themes of Leadership, Process and 

Practice, Education, Government and 

Community Engagement, and Metrics 

and Measurement established in 2012. 

2013 measurable objectives

Achieve gender balance in Woodside’s 

graduate intake;

Increase the percentage of women in 

senior management roles;

Maintain remuneration equity between 

men and women in the same role at the 

same level; 

Achieve female senior management 

turnover that is equal to or less than 

total senior management turnover;

Achieve overall female turnover that 

is equal to or less than organisational 

turnover;

Increase the overall percentage of 

females employed by Woodside; and

Deliver diversity development 

programs, including Equal Employment 

Opportunity training, recruitment and 

promotion training and ‘Leading Diverse 

Teams’ programs.

Woodside will report on progress against 

these objectives in its 2013 Annual Report. 

Woodside Petroleum Ltd. | Corporate Governance Statement 49
Table 2 - Woodside’s 2012 measurable diversity objectives

2012 measurable objectives Progress

Graduates

Achieve gender balance in Woodside’s 

graduate intake

Changes to the 2012 graduate recruitment process resulted in a 40% increase in the total 

number of applicants and 50% overall female graduate intake representation, with 43% 

of the technical graduate intake being female. This represents a significant improvement 

from 2011.

Senior management development

Increase the representation of women in 

senior management roles

Representation of females in middle and senior management roles remains stable at 

approximately 10%. Continued focus is required in this area which will be supported by 

2013 initiatives.

Executive development

Increase the number of senior women 

who are ready to move into executive 

leadership roles

Woodside remains ahead of target for female succession into executive roles, having 

doubled the number of women ready to move into executive leadership roles through a 

critical review of talent in the bi-annual organisation wide capability review process.

Remuneration

Remuneration equity between men 

and women in the same role at the 

same level 

In the annual remuneration review process there was a continued reduction in the average 

difference between men and women in the same role at the same level such that the gap is 

now negligible.

Voluntary turnover

Female turnover levels no greater than 

organisation turnover levels

Although overall company turnover has increased, female turnover remains on par with 

overall organisational turnover at 8.5%.

Attraction and retention

Increase overall percentage of women 

employed by Woodside

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

of 28%.

Education and awareness

‘Leading Diverse Teams’ program rolled 

out to 300 managers

The leading diverse teams program continued to be delivered in 2012 and was reshaped to 

enable broader attendance. Attendance was lower than planned at 98 attendees. 

Equal Employment Opportunity (EEO) 

program rolled out to 150 managers

EEO training was attended by 47 employees, below the target of 150. There will be 

renewed focus on this in early 2013. 

Selection and promotion program rolled 

out to 100 managers

Selection and promotion process training was deferred to 2013. A practical ‘How to 

Interview’ guide, which includes tools to ensure any bias is removed from the selection 

process, is being finalised and will be rolled out in the first quarter of 2013. 

Woodside’s strong focus in 2012 on its Organisational Effectiveness program and 

supporting training for leaders and managers impacted on the roll-out and delivery of 

gender diversity training and development initiatives.

Further information regarding Woodside’s commitment to diversity will be available in Woodside’s 2012 Sustainable Development 

Report which will be released in March 2013 and made available in the sustainable development section of Woodside’s website.

Table 3 - Woodside workforce gender profile

Female Female % Male Male %

Administration 234 65.9 121 34.1

Technical 366 25.4 1,076 74.6

Supervisory / Professional 395 26.6 1,089 73.4

Middle Management 69 10.3 602 89.7

Senior Management 4 8.9 41 91.1

Total 1,068 26.7 2,929 73.3

Board Members 2 22.2 7 77.8

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9 ASX Corporate Governance Council recommendations checklist

This table cross-references the ASXCGC Recommendations to the relevant sections of the Corporate Governance Statement and the 

Remuneration Report.

ASX Corporate Governance Council recommendations Reference Comply

Principle 1: Lay solid foundations for management and oversight

1.1 Companies should establish the functions reserved to the board and those delegated to senior executives 

and disclose those functions.

2.1 

1.2 Companies should disclose the process for evaluating the performance of senior executives. Remuneration Report 

1.3 Companies should provide the information indicated in Guide to Reporting on Principle 1. 2.1, 2.9, Remuneration 

Report



Principle 2: Structure the board to add value 

2.1 A majority of the board should be independent directors. 2.2, 2.4 

2.2 The chair should be an independent director. 2.2, 2.3 

2.3 The roles of chair and chief executive officer should not be exercised by the same individual. 2.2, 2.3 

2.4 The board should establish a nomination committee. 3.1, 3.3 

2.5 Companies should disclose the process for evaluating the performance of the board, its committees and 

individual directors.

2.9 

2.6 Companies should provide the information indicated in Guide to Reporting on Principle 2. 2.2, 2.4, 2.6, 2.7, 2.9, 2.10, 

3.1, 3.3



Principle 3: Promote ethical and responsible decision-making

3.1 Companies should establish a code of conduct and disclose the code or summary of the code as to:

 the practices necessary to maintain confidence in the company’s integrity

 the practices necessary to take into account their legal obligations and the reasonable expectations of their 

stakeholders

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

5.1 

3.2 Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. 

The policy should include requirements for the board to establish measurable objectives for achieving gender 

diversity for the board to assess annually both the objectives and progress in achieving them.

8 

3.3 Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the 

board in accordance with the diversity policy and progress towards achieving them.

8 

3.4 Companies should disclose in each annual report the proportion of women employees in the whole 

organisation, women in senior executive positions and women on the board.

8 

3.5 Companies should provide the information indicated in the Guide to reporting on Principle 3. 8 

Principle 4: Safeguard integrity in financial reporting

4.1 The board should establish an audit committee. 3.1, 3.2 

4.2 The audit committee should be structured so that it:

 consists only of non-executive directors

 consists of a majority of independent directors 

 is chaired by an independent chair, who is not chair of the board 

 has at least three members.

3.1, 3.2 

4.3 The audit committee should have a formal charter. 3.1, 3.2 

4.4 Companies should provide the information indicated in Guide to Reporting on Principle 4. 3.1, 3.2, 7 

Principle 5: Make timely and balanced disclosure

5.1 Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure 

requirements and to ensure accountability at a senior executive level for that compliance and disclose those 

policies or a summary of those policies.

4.2 

5.2 Companies should provide the information indicated in Guide to Reporting on Principle 5. 4.2 

Principle 6: Respect the rights of shareholders

6.1 Companies should design a communications policy for promoting effective communication with shareholders 

and encouraging their participation at general meetings and disclose their policy or a summary of that policy.

4.1 

6.2 Companies should provide the information indicated in Guide to Reporting on Principle 6. 4.1 

Principle 7: Recognise and manage risk

7.1 Companies should establish policies for the oversight and management of material business risks and 

disclose a summary of those policies.

6.1 

7.2 The board should require management to design and implement the risk management and internal control system to 

manage the company’s material business risks and report to it on whether those risks are being managed effectively. 

The board should disclose that management has reported to it as to the effectiveness of the company’s management 

of its material business risks.

6.2 

7.3 The board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the 

chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations 

Act is founded on a sound system of risk management and internal control and that the system is operating effectively in 

all material respects in relation to financial reporting risks.

6.4 

7.4 Companies should provide the information indicated in Guide to Reporting on Principle 7. 6.1, 6.2, 6.4 

Principle 8: Remunerate fairly and responsibly

8.1 The board should establish a remuneration committee. 3.1, 3.4 

8.2 The remuneration committee should be structured so that it:

 consists of a majority of independent directors

 is chaired by an independent chair

 has at least three members.

3.1, 3.4 

8.3 Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of 

executive directors and senior executives.

Remuneration Report 

8.4 Companies should provide the information indicated in Guide to Reporting on Principle 8. 3.1, 3.4, 5.2 

Woodside Petroleum Ltd. | Corporate Governance Statement 51
The directors of Woodside Petroleum 

Ltd present their report (including the 

Remuneration Report) together with the 

Financial Report of the consolidated entity, 

being Woodside Petroleum Ltd and its 

controlled entities, for the year ended 

31 December 2012.

Directors

The directors of Woodside Petroleum Ltd 

in office at any time during or since the 

end of the 2012 financial year are set out 

in the Remuneration Report on page 55. 

Additional information on the directors 

(including qualifications and experience 

and directorships of listed companies 

held by the directors at anytime in the last 

three years) is set out on pages 36 and 37.

The number of directors’ meetings held 

(including meetings of committees of 

the Board) and the number of meetings 

attended by each of the directors of 

Woodside Petroleum Ltd during the 

financial year are shown in Table 1 on 

page 45.

Details of director and senior executive 

remuneration is set out in the 

Remuneration Report on pages 53 to 65.

The particulars of directors’ interests in 

shares of the company as at the date of 

this report are set out on page 66.

Principal activities

The principal activities and operations of 

the Group during the financial year were 

hydrocarbon exploration, evaluation, 

development, production and marketing.

Other than as previously referred to in 

the Annual Report, there were no other 

significant changes in the nature of the 

activities of the consolidated entity during 

the year.

Consolidated results

The consolidated operating profit 

attributable to the company’s shareholders 

after provision for income tax was $2,983 

million ($1,507 million in 2011).

Review of operations

A review of the operations of the 

Woodside Group during the financial year 

and the results of those operations are set 

out on pages 1 to 35.

Significant changes in state of 

affairs

The review of operations (pages 1 to 

35) sets out a number of matters which 

have had a significant effect on the state 

of affairs of the consolidated entity. 

Other than those matters, there were no 

significant changes in the state of affairs 

of the consolidated entity during the 

financial year.

Events subsequent to end of 

financial year

Dividends

Since the reporting date, the directors 

have declared a fully franked dividend of 

US65 cents (2011: US55 cents), payable 

on 3 April 2013. The amount of this 

dividend will be US$536 million (2011: 

US$443 million). No provision has been 

made for this dividend in the Financial 

Report as the dividend was not declared 

or determined by the directors on or 

before the end of the financial year.

Likely developments and expected 

results 

In general terms, the review of operations 

of the Group gives an indication of likely 

developments and the expected results 

of the operations. In the opinion of 

the directors, disclosure of any further 

information would be likely to result in 

unreasonable prejudice to the Group.

Environmental compliance

Woodside is subject to a range of 

environmental legislation in Australia and 

other countries in which it operates.

Details of Woodside’s environmental 

performance is provided on page 13.

Through its Environment Policy, Woodside 

plans and performs activities so that 

adverse effects on the environment are 

avoided or kept as low as reasonably 

practicable.

Woodside did not incur any environmental 

fines or penalties during 2012.

Dividends

The directors have declared a final 

dividend out of profits of the company in 

respect of the year ended 31 December 

2012 of US65 cents per ordinary share 

(fully franked) payable on 3 April 2013.

A fully franked final dividend of US55 

cents per ordinary share was paid to 

shareholders on 4 April 2012 in respect 

of the year ended 31 December 2011. 

Together with the fully franked interim 

dividend of US65 cents per share paid to 

shareholders on 2 October 2012, the total 

dividend paid during the 2012 year was 

US120 cents per share fully franked.

Woodside’s dividend reinvestment plan 

operated during the year.

Company secretaries

The following individuals have acted as 

company secretary during 2012:

Michael Abbott

BJuris LLB, BA, MBA (UWA)

General Counsel and 

Joint Company Secretary

Mr Abbott joined Woodside in 2007 and 

was appointed to the role of General 

Counsel effective 23 February 2012. He 

was appointed Joint Company Secretary 

effective 3 May 2012. Mr Abbott holds 

Bachelor of Laws and Bachelor of Arts 

degrees and a Masters of Business 

Administration.

Warren Baillie

LLB, BCom, Grad. Dip. CSP

Company Secretary

Warren Baillie joined Woodside in 2005 

and was appointed Company Secretary 

effective 1 February 2012. Mr Baillie 

holds Bachelor of Laws and Bachelor of 

Commerce degrees and is a solicitor and 

chartered secretary. He is a member of 

the National Board and WA State Council 

of Chartered Secretaries Australia. 

Robert Cole

BSc, LLB (Hons) (ANU)

Executive Director and Executive Vice 

President, Corporate and Commercial

Mr Cole retired as a Joint Company 

Secretary effective 3 May 2012 following 

his appointment to the role of Executive 

Director and Executive Vice President, 

Corporate and Commercial effective 

23 February 2012.

Frances Kernot

BCom (Hons) (UWA), Grad. Dip. CSP,

CA, ACIS

Company Secretary

Ms Kernot resigned as Company 

Secretary effective 29 February 2012 to 

take another role in the company. 

Directors’ report (including remuneration report)

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REMUNERATION report (audited)

CONTENTS

Overview 54

Executive remuneration 55

CEO remuneration 57

General employee share plans 58

Contracts for KMP executives 58

Non-executive directors 58

Human Resources & 

Compensation Committee 59

Securities Dealing Policy 59

Use of remuneration consultants 59

Reporting notes 59

Summary index of tables

Table Description Page

General 

1 Woodside five year performance 54

2 Allocation of executive remuneration between fixed and variable annual reward 55

3 Summary of contractual provisions for KMP executives 58

CEO and Senior Executive Remuneration

4 Compensation of KMP executives’ for the year ended 31 December 2012 and 2011 60

Variable Annual Rewards – Executive Incentive Plan

5 Vesting schedule for RTSR-tested Variable Pay Rights awarded for the 2012 performance year 61

6 Vesting Schedule for RTSR-tested Variable Pay Rights awarded for the performance years 2008 - 2011 61

7 STA Peer Group and LTA Peer Group for performance years 2008 - 2011 61

8 LTA peer group 2012 performance year – International Oil and Gas Companies 61

9 Summary of terms and conditions of unvested RTSR-tested Variable Pay Rights 61

10 Summary of terms and conditions of unvested deferred short-term award 61

11 Summary of the KMP executives’ interests in Time-tested Variable Pay Rights 62

12 Summary of KMP executives’ interests in Restricted Shares 62

13 Summary of the KMP executives’ interests in RTSR-tested Variable Pay Rights 63

Retention and General Employee Share Plans

14 Summary of KMP executives’ interests in shares under the Woodside Share Purchase Plan 64

15 Summary of KMP executives’ interests in Equity Rights under the Woodside Employee Equity Plan 64

16 Summary of KMP executives’ interests in Equity Rights under the Woodside Equity Plan 65

Non-Executive Directors

17 Annual base Board and committee fees for non-executive directors 65

18 Total remuneration paid to non-executive directors in 2012 and 2011 65

Woodside Petroleum Ltd. | Remuneration Report 53
Overview

Woodside’s remuneration philosophy is based on providing 

competitive rewards that attract, retain and motivate the highest 

calibre people to deliver superior performance that is aligned with 

the creation of value for shareholders. To achieve this Woodside 

ensures that the level and composition of remuneration is 

sufficient and reasonable; there is a clear relationship between 

Woodside and individual performance and remuneration; 

and the remuneration policy is openly communicated. 

The Human Resources & Compensation Committee (Committee) 

assists the Board in creating a strong linkage between executive 

remuneration and Woodside’s performance and the details 

of these linkages are provided in the following sections.

Woodside’s 2012 AGM was held on 2 May. The Remuneration 

Report for 2011 was adopted at the AGM with a clear majority of 

479,930,217 votes in favour of the motion (representing 96.4% of 

the votes received).

Review of executive incentive arrangements 

During 2012 the Committee undertook with the assistance of 

PricewaterhouseCoopers a review of the approach, framework 

and structure of the executive incentive arrangements to ensure 

ongoing alignment with Woodside’s strategic direction and values.

As a result of the review the Board approved a number of 

changes to the short and long-term incentives applicable to 

Woodside executives under the Executive Incentive Plan (EIP). 

In respect of the short-term incentive the Board has determined 

to award restricted shares instead of variable pay rights for 

the deferred portion of the short-term award. These are 

awards which have already been earned, a portion of which 

is taken in shares which are only time restricted and therefore 

the Board considers it reasonable for the executives to earn 

dividends on the shares during the restriction period. 

To enhance the alignment of the long-term award with company 

strategy and executive performance the Board has determined to:

Extend the initial performance testing period from three years 

to four years;

Remove the ability for greater than 100% of an award to vest;

Change the approach to re-testing (while continuing to ensure 

that executives only benefit from re-testing if the company’s 

relative performance improves); 

Use the “fair value”, as determined by the relevant accounting 

standards, to determine the number of performance tested 

variable pay rights to award to participants;

Extend the international oil and gas peer group to 18 companies 

(including Woodside); and

Introduce a second peer group, being the ASX top 50.

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

Executive remuneration outcomes for 2012

Performance outcomes for 2012 for the Chief Executive 

Officer and the broad executive group, including Key 

Management Personnel (KMP) were as follows:

The value of the short-term award (STA) scorecard for 2012 

was 1.27 out of a maximum possible result of 2.

The total potential amount of the STA pool for 2012 ranged 

from a minimum of A$ nil to a maximum of A$30,943,948. The 

actual STA pool for 2012 was A$20,271,351 for 102 participants 

including the executive directors.

One third of the STA for the 2012 performance year for current 

executives (A$6,757,117) will be deferred as an equity award, 

the vesting of which is dependent on three years continuous 

service.

A long-term award (LTA) in respect of the 2012 performance 

year will be allocated in February 2013 to eligible participants.

Vested Awards during 2012:

Time-tested Variable Pay Rights that were allocated in 2009 as 

deferred STA in respect of the 2008 performance year vested 

during 2012.

The LTA awarded in 2009 was subject to performance testing 

during 2012 and as the 50th percentile of the peer group was 

attained 50% of the award vested and 50% of the award 

lapsed. 

The LTA awarded in 2008 was subject to a second test in 2012 

and failed to satisfy the vesting requirements and as such the 

award lapsed.

In 2012, Woodside also made awards of equity rights 

under the Woodside Equity Plan to Key Management 

Personnel (KMP), excluding the Chief Executive Officer, 

Executive Director and Executive Vice President Corporate 

and Commercial and the non-executive directors. 

There were no individual retention arrangements for KMP entered 

into or vested in 2012.

Executive remuneration and company performance

Whilst there are a number of internal and external factors relevant 

to Woodside’s performance, the Board believes Woodside’s 

performance is also attributable to the ability to motivate 

and retain its executives and, thus, the effectiveness of its 

remuneration policies. Table 1 below shows the key financial 

measures of company performance over the past five years.

Table 1 - Woodside five year performance

Year Ended 31 December 2012 2011 2010 2009(4) 2008(4)

Net Profit After Tax (US$ million) 2,983 1,507 1,575 1,474 1,546

Earnings Per Share (US cents)(1) 366 190 204 210 225

Dividends Per Share (US cents) 130 110 105 95 100

Production (MMboe) 84.9 64.6 72.7 80.9 81.3

Share closing price (last 

trading day of the year)(5) (A$) 33.88 30.62 42.56 47.20 36.70

5 Year rolling TSR(2) (%) (0.33) 4.58 12.11 26.44 19.65

Relative TSR(3) (1 year) 2nd Quartile 4th Quartile 4th Quartile 1st Quartile 2nd Quartile

(1) Basic and diluted earnings per share from total operations.

(2) This calculation is annualised and measured in US dollars.

(3) As discussed under the STA component of EIP on page 55.

(4) Amounts were translated to US dollars using monthly average exchange rates.

(5) The share closing price (last trading day) for 2007 was A$50.39.

54 Woodside Petroleum Ltd. | 2012 Annual Report

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(1) On 23 February 2012 Mr Cole was appointed to the position of Executive Director and 

Executive Vice President, Corporate and Commercial. He previously held the position of 

Executive Vice President Commercial and General Counsel and Joint Company Secretary.

(2) On 19 June 2012 Mr Ahmed was appointed to the position of Executive Vice President 

Technology. He previously held the position of Executive Vice President Development.

(3) On 10 May 2012 Mr Della Martina departed from Woodside.

(4) On 7 May 2012 Mr Edwardes joined Woodside and became key management personnel.

(5) On 1 May 2012 Mr Santostefano was appointed to the position of Chief Operations 

Officer. He previously held the position of Executive Vice President Production.

(6) Effective 1 February 2013 Mr Cooper was appointed a non-executive director of Woodside.

(7) On 28 February 2013 Mr Fraunschiel will retire as a non-executive director of Woodside.

(8) On 7 December 2012 Dr Jungels retired as a non-executive director of Woodside.

(9) On 6 December 2012 Dr Ryan was appointed a non-executive director of Woodside.

Executives Non-executive directors

Executive directors M A Chaney (Chairman)

P Coleman - (Managing Director and Chief Executive Officer) (CEO) M A Cilento

R Cole (Executive Director and Executive Vice President, Corporate and Commercial)(1) F Cooper(6)

Senior executives E Fraunschiel(7)

F Ahmed (Executive Vice President Technology)(2) C M Haynes 

L Della Martina (Executive Vice President Pluto)(3) A Jamieson 

R Edwardes (Executive Vice President Development)(4) P J M H Jungels(8)

P Moore (Executive Vice President Exploration) D I McEvoy

G Roder (Executive Vice President Corporate Strategy and Planning) S Ryan(9)

V Santostefano (Chief Operations Officer)(5)

L Tremaine (Executive Vice President and Chief Financial Officer)

Executive remuneration

Remuneration Policy

Woodside’s Remuneration Policy aims to reward executives fairly 

and responsibly in accordance with the regional (and in some 

instances, international) market and ensure that Woodside:

provides competitive rewards that attract, retain and motivate 

executives of the highest calibre;

sets demanding levels of performance which are clearly linked 

to an executive’s remuneration;

structures remuneration at a level that reflects the executive’s 

duties and accountabilities;

benchmarks remuneration against appropriate comparator 

groups; 

aligns executive incentive rewards with the creation of value for 

shareholders; and 

complies with applicable legal requirements and appropriate 

standards of governance.

Executive remuneration is reviewed annually having regard to 

individual and business performance and relevant comparative 

information.

Executive remuneration structure

Woodside’s remuneration structure for executives has several 

components:

Fixed remuneration - the ‘not at risk’ component which 

includes base salary, superannuation contribution and other 

allowances such as motor vehicle and health insurance. Fixed 

remuneration is determined on the basis of the scope of the 

executive’s role and the individual level of knowledge, skill and 

experience;

Variable Annual Reward (VAR) – the ‘at risk’ component 

(related to performance) which is awarded under the EIP and 

comprises:

Short-term award (detailed on page 56);

Long-term award (detailed on page 56);

Participation in general employee share plans; and

Participation in retention plans from time to time.

Proportion of remuneration at risk

The target allocation of remuneration between fixed remuneration 

and VAR for Woodside’s executives is shown in Table 2 on this 

page. Participation in retention plans and participation in general 

employee share plans is not taken into account for the calculation 

of the percentages shown in the table. 

Table 2 - Allocation of executive remuneration between 

fixed and variable annual reward

Not at risk At risk

Position Fixed Annual 

Reward

Variable Annual Reward

STA LTA

CEO 30% 30% 40%

Executives 45%-50% 30%-33% 20%-22%

Executive Incentive Plan

The short-term and long-term awards which are described in 

more detail below are delivered through the EIP. The EIP aims 

to reward executives for meeting or exceeding their individual 

performance targets, while at the same time linking their reward 

to the creation of long-term sustainable wealth for shareholders.

Under the EIP executives may receive a VAR which is based on a 

percentage of an executive’s fixed remuneration. This percentage 

is determined by the Board with reference to market comparator 

data and the scope of the executive’s role. 

VAR has two elements:

1. The STA (which links remuneration to short-term performance) 

which is delivered two thirds in cash and one third as a 

deferred equity award the vesting of which is dependent on 

three years continuous service; and

2. The LTA (which links remuneration to long-term performance) 

which is delivered as a grant of variable pay rights, the vesting 

of which is dependent on service and total shareholder return 

on Woodside shares relative to two identified peer groups 

(RTSR tested VPRs).

Woodside Petroleum Ltd. | Remuneration Report 55
Short-term award 

The STA is determined by reference to both individual 

performance and a company scorecard which is set and approved 

annually by the Board (Scorecard). 

The Scorecard for 2012 was based on four equally weighted 

measures:

safety and environmental factors;

production;

operating expenditure; and

Woodside’s one year total return to shareholders, ranked against 

an international peer group (STA Peer Group, see Table 7 on 

page 61). Total return to shareholders is the growth in the 

value of shares over the performance year, plus the value of 

dividends, other distributions paid out over that year (assuming 

that dividends and other distributions are reinvested in shares 

on the payment date) and pro rata buybacks. 

The measures for the Scorecard were chosen because of the 

impact they have on shareholder value. The specific measurable 

targets related to each performance measure are approved by the 

Board at the commencement of the performance year.

For the 2012 performance year Woodside exceeded its targets 

on three of the four equally weighted scorecard measures which 

resulted in an overall scorecard multiple of 1.27 out of a maximum 

of two. In summary:

Production volume achieved for the 2012 year exceeded the 

production target falling within the upper 10% of the potential 

production range which resulted in a scorecard multiple of 1.8 

out of a maximum of two, weighted at 25%;

Woodside achieved a better than budget performance on 

operating cost which resulted in a scorecard multiple of 1.49 

out of a maximum of two, weighted at 25%; 

Woodside’s good day frequency measure for health safety 

and environment tracked below target. The resulting scorecard 

multiple was 0.4 out of a maximum of two, weighted at 25%; and

Woodside achieved fourth place in the STA peer group of 12, 

which resulted in a scorecard multiple of 1.4 out of a maximum 

possible of two, weighted at 25%.

The total STA available for all participating executives is pooled in 

each pool group by adding the target STA value for each individual 

within the pool(s). The Scorecard result (with a possible value 

of between zero and two) is used as a multiple to adjust the 

value of the pool(s). The adjusted pool(s) are allocated among 

the executives in that pool group based on their individual 

performance relative to other executives in that pool. Therefore 

the potential value of the STA for an individual executive is in part 

dependent on the performance rating of the other executives in 

the pool. 

An executive’s performance during the year is assessed against 

their individual performance agreement, which is set at the start 

of each year and includes key performance indicators (KPIs) 

relevant to the executive’s areas of responsibility. KPIs may 

include the following:

health and safety (e.g. total recordable case frequency, high 

potential incident frequency);

environment (e.g. greenhouse gas emissions, flared gas); 

human resources (e.g. voluntary turnover);

financial (e.g. revenue, operating costs, earnings before interest 

and tax, return on average capital employed, production costs, 

drilling costs); and

operational (e.g. production volumes, project progress).

These KPIs are chosen because they align individual performance 

with the achievement of Woodside’s business plan and 

objectives.

Each executive receives a performance rating based upon the 

assessment of their performance and demonstrated values 

and behaviour. This assessment is conducted by the CEO and 

approved by the Committee. This rating is then used to determine 

the short-term award (if any). 

The short-term award for a performance year is delivered two 

thirds in cash and one third as deferred equity. For the 2012 

performance year the deferred equity component will be 

delivered in the form of restricted shares. Participants will receive 

any dividends paid on their restricted shares after they have 

been allocated. The deferred portion of STA made in respect of 

performance years 2008 to 2011 were delivered in the form of 

Time-tested VPRs. 

Generally, vesting of the deferred STA is subject to the executive’s 

employment not being terminated with cause, or by resignation 

for three years after allocation. The deferred STA may vest prior 

to the expiry of the three years upon a change of control event, or 

on the death or total and permanent disablement of the executive. 

Deferred STA granted will also generally vest upon redundancy, 

retirement or the cessation of a fixed term employment contract. 

There are no further performance conditions for vesting of 

deferred STA.

A summary of the terms of deferred STA awarded to key 

management personnel is provided in Table 10 on page 61. 

Details of restricted shares awarded to KMP are provided in Table 

12 on page 62. Details of Time-tested VPRs awarded for previous 

performance periods are provided in Table 11 on page 62. No 

amount is payable by the executives on the grant or vesting of 

either restricted shares or Time-tested VPRs.

Long-term award (LTA) 2012

The LTA for the 2012 performance year is granted in the form of 

variable pay rights, the vesting of which is linked to service and 

total shareholder return. A variable pay right is a right to receive 

a fully paid ordinary share in Woodside, subject to satisfaction of 

vesting conditions. The number of variable pay rights awarded 

under the EIP for long-term award purposes for the 2012 

performance year is calculated by dividing the value of the award 

by the fair value of a variable pay right (as calculated in accordance 

with the relevant accounting standards).

The RTSR-tested VPRs are divided into two tranches which will 

each be subject to a separate relative total shareholder return 

(RTSR) performance hurdle tested over a four or five year period.

One tranche weighted at 33% will be tested against a comparator 

group that comprises the entities within the S&P/ASX 50 index 

at 7 December 2012. The other tranche, weighted at 67%, will 

be tested against an international group of oil and gas companies. 

The oil and gas companies used for the 2012 performance year 

are set out in Table 8 on page 61.

RTSR was chosen in order to ensure that Woodside’s Executives’ 

remuneration is aligned with the company’s performance in 

relation to the performance of peer companies. 

The RTSR in respect of Woodside and both peer groups is 

calculated by an external advisor in accordance with the EIP 

rules on the fourth anniversary of the allocation of these RTSRtested VPRs. The outcome of the test is measured against the 

schedule shown in Table 5 on page 61. Any RTSR-tested VPRs 

which do not vest at this time are subject to a second RTSR test 

on the fifth anniversary of the allocation date, but further vesting 

in accordance with the schedule will only occur if Woodside 

56 Woodside Petroleum Ltd. | 2012 Annual Report

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achieves a superior RTSR ranking at the second test date. Any 

RTSR-tested VPRs that do not vest on the fifth anniversary lapse. 

RTSR-tested VPRs will lapse if the executive’s employment is 

terminated with cause, or by resignation, prior to vesting. 

RTSR-tested VPRs may vest prior to the satisfaction of the 

vesting conditions upon a change of control event, or on the 

death or total and permanent disablement of the executive. In the 

event of retirement, redundancy or the cessation of a fixed term 

employment contract of a participant RTSR-tested VPRs continue 

in the plan and remain subject to the normal performance 

measures. 

Long-term awards 2008 – 2011

The LTA for the performance years 2008 to 2011 inclusive was 

granted in the form of variable pay rights, the vesting of which is 

linked to service and total shareholder return. 

The vesting of the 2008 to 2011 RTSR-tested VPRs is conditional 

on a satisfactory ranking of Woodside’s RTSR, as calculated under 

the EIP rules, over a three or four year period in comparison with 

an international peer group. The international oil and gas LTA Peer 

Group for the grant of RTSR-tested VPRs for the performance 

years 2008 to 2011 is set out in Table 7 on page 61. 

The RTSR in respect of Woodside and the peer group is 

calculated by an external advisor in accordance with the EIP rules 

on the third anniversary of the allocation of these RTSR-tested 

VPRs. The outcome of the test is measured against the schedule 

shown in Table 6 on page 61. If no RTSR-tested VPRs vested at 

the first test then the award is subject to a second RTSR test on 

the fourth anniversary of the allocation date. Any RTSR-tested 

VPRs that do not vest on the fourth anniversary lapse. 

RTSR-tested VPRs will lapse if the executive’s employment is 

terminated with cause, or by resignation, prior to vesting. 

RTSR-tested VPRs may vest prior to the satisfaction of the 

vesting conditions upon a change of control event, or on the 

death or total and permanent disablement of the executive. In the 

event of retirement, redundancy or the cessation of a fixed term 

employment contract of a participant RTSR-tested VPRs continue 

in the plan and are subject to the normal vesting. 

Variable pay rights

The Board has a discretion to satisfy variable pay rights that vest 

in cash rather than shares (although participants in the EIP cannot 

elect to receive one or the other). 

The shares used to satisfy vested variable pay rights may be 

acquired through on market purchase or by subscription. If the 

Board exercises its discretion to satisfy vested variable pay rights 

in cash, the cash amount will be based on the market value of a 

Woodside share at the vesting date calculated by reference to the 

Volume Weighted Average Price (VWAP) of Woodside shares 

in the five trading days prior to the vesting date. No amount is 

payable by the recipient executive on the grant or vesting of a 

variable pay right.

A summary of the terms and conditions of VPRs under each 

award made to executives under the EIP is provided in Table 9

on page 61. A summary of executives’ interests in Time-tested 

VPRs and RTSR-tested VPRs are in Tables 11 and 13 on pages 

62 and 63.

CEO remuneration

Mr Coleman’s remuneration is governed by his contract of 

employment which, in summary, for 2012 is comprised of:

30% fixed remuneration;

30% short-term award component; and 

40% long-term award component. 

Short-term award

The grant of an STA to the CEO is determined by the Scorecard 

and individual performance as determined by the Board. The 

Scorecard and performance against the scorecard measures is 

described on page 56 of this report under the section related to 

executive Short-term Award.

Each year the Board determines and documents the factors which 

will be used to assess the annual performance of the CEO.

The individual performance of the CEO is reviewed by the Board 

against the following factors which were chosen because of their 

impact on shareholder value:

setting and pursuing the growth agenda;

achieving effective execution;

building enterprise and organisational capacity;

enhancing culture and reputation; and

ensuring shareholder focus.

At the completion of the performance year each Board member 

contributes to the documented review of the CEO’s performance 

for that year. 

The STA for the CEO is calculated by multiplying the CEO’s fixed 

remuneration by the scorecard multiple and the CEO’s individual 

performance factor.

For the 2012 performance year, STA is allocated as two-thirds 

cash and one-third Restricted Shares. Restricted Shares have the 

same terms and conditions as those awarded to other executives 

under the EIP as described on pages 55 to 57. 

Long-term award

The LTA entitlement for the 2012 performance year will be 

allocated in February 2013 and will be subject to Relative Total 

Shareholder Return (RTSR) testing in February 2017. The vesting 

conditions for the LTA allocation reflect those contained in the EIP 

as outlined on page 55 and summarised in Table 9 on page 61 in 

respect of the 2012 EIP allocation.

A summary of the CEO’s equity awards is provided in Tables 11

to 13 on pages 62 and 63.

Sign-on bonus

Mr Coleman was awarded a one-off sign on incentive with a 

grant date of 30 May 2011 to recognise certain rights he was 

giving up with his former employer. Woodside acquired 66,004 

Woodside Petroleum Ltd shares which are held in trust for Mr 

Coleman. The sign-on award was structured such that one third 

of these shares vest on each anniversary after the date of his 

appointment. In accordance with the award rules one third of 

the shares vested on 30 May 2012 being the first anniversary of 

Mr Coleman’s employment. The fair value of each of the shares 

awarded is USD$49.19. Any unvested entitlements will be 

forfeited if Mr Coleman’s employment is terminated for cause or 

by his resignation. There are no performance conditions attached 

to this award.

Woodside Petroleum Ltd. | Remuneration Report 57
General employee share plans

Woodside has a history of providing employees with the 

opportunity to participate in ownership of shares in the Company. 

This has supported staff retention and alignment of employees 

with shareholder interests. As part of the strategy to attract, retain 

and motivate employees, the Board approved the introduction 

from November 2011 of a broad-based, long-term equity plan 

called the Woodside Equity Plan to recognise and reward the 

commitment of eligible employees.

Woodside Equity Plan

The Woodside Equity Plan (WEP) is available to all Australian 

based permanent employees including executives, other than the 

CEO and any executive director. Woodside’s intention is to enable 

eligible employees to build up a holding of equity in the Company 

as they progress through their career at Woodside. 

The number of equity rights (ERs) offered to each eligible 

employee is calculated with reference to salary and performance 

as assessed under the performance review process as described 

on page 56 under the heading Short-term Award. There are no 

further ongoing performance conditions upon allocation of each 

individual’s ERs. The linking of performance to an allocation allows 

Woodside to recognise and reward eligible employees for high 

performance. Participants do not make any payment in respect of 

the ERs at grant nor at vesting.

Eligible participants receive an allocation of ERs. Each ER entitles 

the participant to receive a Woodside share on the vesting date 

three years after the effective date. ERs may vest prior to the 

vesting date on a change of control or on a pro rata basis, at the 

discretion of the CEO, limited to the following circumstances; 

redundancy, retirement (after six months participation), death, 

termination due to medical illness or incapacity or total and 

permanent disablement of a participating employee. An employee 

whose employment is terminated by resignation or for cause prior 

to the vesting date will forfeit all of their ERs.

Participants in the WEP cannot dispose of or otherwise deal 

with an ER and do not receive any dividends or have voting rights 

in respect of an ER. Allocations of ERs to participants will be 

adjusted in the event of Woodside making a bonus issue of shares 

or upon reconstruction of the Company’s share capital. 

Table 16 on page 65 provides a summary of KMP executives’ 

interests in ERs under the WEP. 

Historical plans

During 2012 the Woodside Employee Equity Plan 2009 – 2012 

and the Woodside Share Purchase Plan were formally ended. 

Details of the KMP executives’ participation in these plans are 

provided in Tables 14 and 15 on page 64.

Contracts for KMP executives 

Each KMP executive has a contract of employment. Table 3

below contains a summary of the key contractual provisions of the 

contracts of employment for the KMP executives. 

Termination provisions

Under each executive contract of employment Woodside may 

choose to terminate the contract immediately by making a 

payment equal to the ‘Company Notice Period’ of Fixed Annual 

Reward in lieu of notice as shown in Table 3 below. Since 2009 

new executive contracts ensure that any payments made in 

the event of a company-initiated termination of an executive 

contract would be consistent with the Corporations Amendment 

(Improving Accountability on Termination Payments) Act 2009.

Non-executive directors

Remuneration Policy

Woodside’s Remuneration Policy for non-executive directors aims 

to attract, retain, motivate and to remunerate fairly and responsibly 

having regard to:

the level of fees paid to non-executive directors relative to other 

major Australian companies;

the size and complexity of Woodside’s operations; and

the responsibilities and work requirements of Board members. 

Fees paid to non-executive directors are recommended by the 

Human Resources & Compensation Committee based on advice 

from external remuneration consultants, Mercer Australia Pty Ltd 

(Mercer) and determined by the Board, subject to an aggregate 

limit of A$3 million per financial year, approved by shareholders at 

the 2007 Annual General Meeting (AGM). 

The annual base Board fees and committee fees were increased 

with effect from 1 July 2012 in line with general movements in 

the comparator market as reported by Mercer. 

Name Employing company Contract duration Termination notice 

period company(1)(2)

Termination notice 

period executive(2)

P Coleman Woodside Petroleum Ltd Unlimited 12 months 6 months

F Ahmed Woodside Energy Ltd Fixed Term Contract until 

13 February 2015

12 months 6 months

R Cole Woodside Energy Ltd Unlimited 12 months 6 months

L Della Martina(3) Woodside Energy Ltd Unlimited 12 months 6 months

R Edwardes Woodside Energy Ltd Fixed Term Contract until 

6 May 2015

6 months 6 months

P Moore Woodside Energy Ltd Unlimited 12 months 6 months

G Roder Woodside Energy Ltd Fixed Term until

31 August 2017

6 months 6 months

V Santostefano Woodside Energy Ltd Unlimited 12 months 6 months

L Tremaine Woodside Energy Ltd Unlimited 12 months 6 months

(1) Termination provisions – Woodside may choose to terminate the contract immediately by making a payment equal to the ‘Company Notice Period’ fixed remuneration in lieu of notice. 

In the event of termination for serious misconduct or other nominated circumstances, executives are not entitled to this termination payment.

(2) On termination of employment, executives will be entitled to the payment of any fixed remuneration calculated up to the termination date, any leave entitlement accrued at the termination 

date and any payment or award permitted under the EIP Rules. Executives are restrained from certain activities for specified periods after termination of their employment in order to 

protect Woodside’s interests. 

(3) Mr Della Martina departed Woodside on 10 May 2012.

Table 3 - Summary of contractual provisions for KMP executives

58 Woodside Petroleum Ltd. | 2012 Annual Report

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The Woodside Petroleum Ltd shareholding guideline for nonexecutive directors requires non-executive directors to hold a 

minimum holding of 2,000 Woodside Petroleum Ltd shares and 

non-executive directors who have less than the minimum holding 

are required to direct 25% of net (after tax) fees to the purchase 

of Woodside shares until the minimum holding requirement 

is satisfied. The non-executive directors may utilise the NonExecutive Directors’ Share Plan (NEDSP) to acquire the shares 

on market at market value. As the shares are acquired with net 

fees the shares in the NEDSP are not subject to any forfeiture 

conditions. 

Remuneration structure

Non-executive director remuneration consists of base fees, 

committee fees, other payments for additional services outside 

the scope of Board and committee duties, and statutory 

superannuation contributions or payments in lieu (currently 

9%). Non-executive directors do not earn retirement benefits 

other than superannuation and are not entitled to any form of 

performance-linked remuneration. 

Table 17 on page 65 shows the annual base Board and 

committee fees for non-executive directors.

In addition to these fees, non-executive directors are entitled to 

reimbursement of reasonable travel, accommodation and other 

expenses incurred attending meetings of the Board, committees 

or shareholders, or while engaged on Woodside business. 

Non-executive directors are not entitled to compensation on 

termination of their directorships. 

Board fees are not paid to the CEO or other executive directors, 

as the time spent on Board work and the responsibilities of Board 

membership are considered in determining the remuneration 

package provided as part of the normal employment conditions. 

The total remuneration paid to, or in respect of, each nonexecutive director in 2012 is set out in Table 18 on page 65.

Human Resources & Compensation Committee

The Human Resources & Compensation Committee (Committee) 

assists the Board to determine appropriate remuneration policies 

and structures for non-executive directors and executives. Further 

information on the role of the Committee is described in the 

Corporate Governance Statement set out in this Annual Report at 

pages 44 to 45. 

Securities Dealing Policy

Woodside’s Securities Dealing Policy prohibits executives 

who participate in an equity-based plan from entering into any 

transaction which would have the effect of hedging or otherwise 

transferring to any other person the risk of any fluctuation in 

the value of any unvested entitlement in Woodside securities. 

Directors proposing to enter into arrangements to limit the 

economic risk of a vested holding in Woodside securities must 

obtain the approval of the Chairman (or, where the notifying 

director is the Chairman, the CEO) prior to entering into the 

arrangement and immediately provide details of the arrangements 

entered into. Executives who report directly to the CEO and the 

Company Secretary/ies must submit a completed compliance 

certificate in respect of arrangements to limit the economic 

risk of a vested holding in Woodside securities to their direct 

manager and then to the General Counsel for acknowledgement. 

Adherence to this policy by executives is monitored by six 

monthly directors’ questionnaires to management. Further 

information on Woodside’s Securities Dealing Policy is provided in 

section 5.2 of the Corporate Governance Statement on page 47.

In addition to the restrictions imposed under the Securities 

Dealing Policy, key management personnel are prohibited by law 

from hedging any of their unvested entitlements or any of their 

vested entitlements that remain subject to a holding lock.

Use of remuneration consultants

The Committee directly engages external advisors to provide 

input to the process of reviewing non-executive director, 

executive director and executive remuneration.

Following a formal tender process the Committee engaged 

PricewaterhouseCoopers to undertake a review of the EIP in 

2012 and to provide recommendations to the Committee in 

regard to the alignment of the plan with the Woodside values 

and strategies. The reports and recommendations prepared by 

PricewaterhouseCoopers were provided directly to the Human 

Resources & Compensation Committee chairman. The fee for the 

provision of the recommendations was $320,000. A statement 

was provided by PricewaterhouseCoopers to the Committee 

that the recommendations had been prepared free of undue 

influence from KMP. The Committee had full oversight of the 

review process and therefore it, and the Board, were satisfied the 

recommendations made by PricewaterhouseCoopers were free 

from undue influence by KMP. PricewaterhouseCoopers provided 

other services to Woodside including provision of taxation advice, 

support for international assignee movements and general 

financial and business consulting which resulted in a total of 

$3,852,790 fees being paid by Woodside.

Mercer Consulting provided market data and a recommendation 

in regard to non-executive director fees in May 2012. Mercer 

Consulting also provided market data and a recommendation in 

November 2012 in relation to the remuneration of the CEO. In 

both cases, the market data reports and the recommendations 

were provided directly to the Committee chairman. The fee for 

the provision of the reports was A$55,728. Mercer Consulting 

provided a statement to the Committee that the reports had been 

prepared free of undue influence from KMP. The Committee 

had full oversight of the review process and therefore it, and the 

Board, were satisfied that the recommendations made by Mercer 

Consulting were free from undue influence by KMP. Woodside’s 

superannuation arrangements for all participating employees are 

provided through Woodside’s participation in the Mercer Master 

Trust. The total of fees paid by Woodside to Mercer in respect of 

services provided directly to Woodside during 2012 was $35,605.

Reporting notes

Reporting in United States dollars

In this report the remuneration and benefits reported have been 

presented in US dollars. This is consistent with the change in 

functional currency of the company from Australian dollars to US 

dollars from 1 January 2010. Compensation for Australian-based 

employees is paid in Australian dollars and, for reporting purposes, 

converted to US dollars based on the applicable exchange rate at 

the date of payment. Valuation of equity awards is converted at 

the spot rate applying when the equity award is granted. 

RTSR fair values

During the year, a review of the RTSR valuation model was 

conducted to ensure it accurately reflected the EIP rules. 

This review concluded that the fair values for the RTSR tested 

VPR’s that were granted from 2007 to 2011 had been overstated. 

The revised fair values are reflected in Table 13 on page 63. 

The impact on total compensation of executives as reported for 

the year ended 31 December 2011 is an aggregate decrease of 

$236,333.

Woodside Petroleum Ltd. | Remuneration Report 59
Executives Year

Fixed Annual Reward Variable Annual Reward

Short Term Post employment Short Term Share based 

payments

Salaries, 

fees and 

allowances

Benefits and 

allowances (inc 

non-monetary)(3)

Company 

contributions to 

superannuation

Short-term 

award (cash)(5) Share Plans(6)(13) Termination 

benefits

Total 

remuneration

Performance 

related

$ $ $ $ $ $ $ %

P Coleman, Chief 

Executive Officer(7),(8)

2012 2,255,383 84,745 16,693 2,380,590 2,559,787 - 7,297,198 68

2011 1,375,146 38,730 9,569 978,550 1,430,807 - 3,832,802 63

F Ahmed, Executive 

Vice President 

Technology(4),(9)

2012 658,746 275,676 - 280,857 (139,313) - 1,075,966 13

2011 473,808 363,684 - 285,544 622,667 - 1,745,703 52

R Cole, Executive 

Director and 

Executive Vice 

President Corporate 

and Commercial

2012 825,899 27,609 38,722 556,487 439,589 - 1,888,306 53

2011 726,382 12,516 23,065 415,541 398,011 - 1,575,515 52

R Edwardes, 

Executive 

Vice President 

Development(10)

2012 509,534 366,898 36,714 330,317 75,884 - 1,319,347 31

2011 - - - - - - - -

P Moore, Executive 

Vice President 

Exploration

2012 405,206 62,241 88,927 181,211 245,583 - 983,168 43

2011 380,764 41,352 83,643 183,111 216,825 - 905,695 44

G Roder, Executive 

Vice President 

Corporate Strategy 

and Planning(11)

2012 738,321 48,779 59,761 270,387 48,785 - 1,166,033 27

2011 114,680 25,281 10,301 - - - 150,262 -

V Santostefano, 

Chief Operations 

Officer

2012 631,571 19,827 129,549 616,037 389,325 - 1,786,309 56

2011 544,433 13,003 110,784 362,194 319,626 - 1,350,040 51

L Tremaine, 

Executive Vice 

President and Chief 

Financial Officer

2012 593,264 21,657 49,938 489,505 291,218 - 1,445,582 54

2011 503,712 12,516 27,584 294,809 221,457 - 1,060,078 49

L Della Martina, 

Executive Vice 

President Pluto(12)

2012 173,641 23,933 38,201 - (492,083) 355,266 98,958 -

2011 455,952 51,148 100,309 248,483 290,747 - 1,146,639 47

Table 4 - Compensation of KMP executives for the year ended 31 December 2012 and 2011(1)(2)

(1) The Australian dollar compensation paid during the year ended 31 December 2012 

was converted to US dollars at the average exchange rate of US$1:A$0.96586, and 

valuation of equity awards at 1 January 2012 was converted to US dollars at the spot 

rate of US$1:A$0.97885. The Australian dollar compensation paid during the year 

ended 31 December 2011 was converted to US dollars at the average exchange rate of 

US$1:A$0.96834, and valuation of equity awards at 1 January 2011 was converted to 

US dollars at the spot rate of US$1:A$0.97585.

(2) KMP Executives in 2011 who are no longer KMP Executives in 2012 have not been 

disclosed.

(3) Reflects the value of allowances and benefits including but not limited to travel, motor 

vehicle and health insurance.

(4) As a non-resident for Australian tax purposes Mr Ahmed has elected to receive a 

cash payment in lieu of all superannuation contributions, in accordance with the 

Superannuation Guarantee (Administration) Act 1992. The cash payment is subject to 

(PAYG) income tax and paid as part of his normal monthly salary. The amount is included 

in salaries, fees and allowances.

(5) The amount represents the short-term incentive earned in the respective year, which is 

actually paid in the following year.

(6) ‘Share plan’ incorporates all equity based plans. In accordance with the requirements 

of AASB 2 Share-based Payment, the fair value of rights as at their date of grant has 

been determined by applying the Black-Scholes option pricing technique or binomial 

valuation method combined with a Monte Carlo simulation with the exception of Mr 

Ahmed’s 2008 VPR’s which are to be settled in cash as a result of his international 

secondment.  The fair value of rights is amortised over the vesting period, such that 

‘Total remuneration’ includes a portion of the fair value of unvested equity compensation 

during the year.  The amount included as remuneration is not related to or indicative of 

the benefit (if any) that individual executives may ultimately realise should these equity 

instruments vest. 

(7) Mr Coleman commenced with Woodside on 30 May 2011. 

(8) On Mr Coleman’s commencement 66,004 Woodside Petroleum Limited shares were 

acquired and held in trust for Mr Coleman. Details were provided under the heading signon bonus in the 2011 Remuneration Report. The proportionate fair value for the shares is 

included in the Share-based Payments.

(9) Mr Ahmed’s 2011 share-based payment amortisation expense was accelerated as his 

contract was due to expire on the 13 February 2012 and details of an extension had not 

been finalised at the time of reporting. Mr Ahmed’s contract has since been extended 

to the 13 February 2015. The 2012 share-based payment amortisation expense has been 

adjusted accordingly.

(10) Mr Edwardes commenced with Woodside on 7 May 2012.

(11) On 27 October 2011 Mr Roder was appointed to KMP. Mr Roder was engaged as a third 

party contractor through Energy Resourcing Australia, he transferred to a Fixed Term 

contract on 1 September 2012.

(12) On 10 May 2012 Mr Della Martina departed Woodside. The Australian dollar 

compensation paid for the period from 1 January 2012 to 10 May 2012 was converted to 

US dollars at the average exchange rate of US$1:A$0.95450.

(13) 2011 comparatives have been appropriately restated to reflect the revised fair values. 

The impact on total compensation of executives as reported for the year ended 

31 December 2011 is an aggregate decrease of $236,333.

60 Woodside Petroleum Ltd. | 2012 Annual Report

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Table 5 - Vesting schedule for RTSR-tested VPRs awarded for the 2012 performance year

Woodside RTSR percentile position within Peer Group Vesting of RTSR-tested VPRs

Less than 50th percentile no vesting

Equal to 50th percentile 50% vest

Equal to 75th percentile 100% vest

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

Table 6 - Vesting schedule for RTSR-tested VPRs awarded for the performance years 2008 to 2011

Woodside RTSR percentile position within Peer Group Vesting of RTSR-tested VPRs

Less than 50th percentile no vesting

Equal to 50th percentile 50% vest

Equal to 75th percentile 100% vest

Equal to 100th percentile 150% vest (i.e. 50% uplift for topping LTA Peer Group)

Vesting between these percentile points is on a pro rata basis. While a VPR generally only confers an entitlement to a single share on vesting (or its cash value), when greater than 100% 

vesting is achieved additional shares are allocated in respect of each RTSR-tested VPR to achieve the necessary uplift.

Table 7 - STA Peer Group and LTA Peer Group for 

performance years 2008 to 2011(1)

Apache Corporation

Anadarko Petroleum Corporation

BG Group PLC

CNOOC Limited

Inpex Corporation

Marathon Oil Company

Murphy Oil Corporation

Pioneer Natural Resources Company

Repsol YPF, S.A.

Santos Ltd

Talisman Energy Inc

(1) As a consequence of the merger between Petro-Canada and Suncor Energy Inc. in 

August 2009, Petro-Canada was deleted from the Peer Group for the purposes of 

LTA awards made in February 2009, leaving 10 comparator companies. For the 2009, 

2010 and 2011 Performance Years Inpex Corporation has been added to the LTA Peer 

Group. 

Table 8 - LTA Peer Group 2012 performance year – 

International Oil and Gas Companies

Apache Corporation

Anadarko Petroleum Corporation

BG Group PLC

ConocoPhillips

ENI S.p.A

Hess Corporation

Inpex Corporation

Marathon Oil Company

Murphy Oil Corporation

Oil Search Limited

Origin Energy Limited

Pioneer Natural Resources Company

Repsol YPF, S.A

Santos Ltd

Statoil ASA

Talisman Energy Inc

Tullow Oil PLC

Table 9 - Summary of terms and conditions of unvested RTSR tested VPRs

The following table summarises the terms and conditions of the RTSR tested VPRs awarded for performance years 2012, 2011, 2010 

and 2009.

Terms and conditions 2012 VPR allocation 2011 VPR allocation 2010 VPR allocation 2009 VPR allocation

Allocation Date 22 February 2013 1 March 2012 25 February 2011 5 March 2010

Pricing Date 7 December 2012 31 December 2011 31 December 2010 31 December 2009

Grant Date 1 January 2012 1 January 2011 1 January 2010 1 January 2009

Allocation Price(4) A$19.65 A$31.93 A$42.78 A$47.86

Vesting Date(1) 22 February 2017 1 March 2015 25 February 2014 5 March 2013

Retesting Date 22 February 2018(2) 1 March 2016(3) 25 February 2015(3) 5 March 2014(3)

(1) Provision is made for accelerated vesting in certain events such as total and permanent disability, death or a change in control of Woodside.

(2) Any VPRs that do not vest as a result of the first test will be re-tested based on a five year performance period. Retesting is not applicable in respect of Time-tested VPRs.

(3) Retesting is applied to the RTSR tested VPRs if the RTSR threshold is not achieved at the vesting date.

(4) For allocations made for the years prior to 2012, the allocation price was determined by calculating the Volume Weighted Average Price of Woodside shares for the trading days in the 

month of December of the respective performance year. For the 2012 performance year, the allocation price is the fair value of a variable pay right, as at 7 December 2012, as determined 

by the relevant accounting standard.

Table 10 - Summary of terms and conditions of unvested deferred STA

The following table summarises the terms and conditions of the deferred short-term award for performance years 2012, 2011, 2010 

and 2009.

Terms and conditions 2012 allocation 2011 allocation 2010 allocation 2009 allocation

Deferral Instrument Restricted Shares Time-tested VPRs Time-tested VPRs Time-tested VPRs

Allocation Date 22 February 2013 1 March 2012 25 February 2011 5 March 2010

Pricing Date 31 December 2012 31 December 2011 31 December 2010 31 December 2009

Grant Date 1 January 2012 1 January 2011 1 January 2010 1 January 2009

Volume Weighted 

Average Price A$34.09 A$31.93 A$42.78 A$47.86

Vesting Date(1) 22 February 2016 1 March 2015 25 February 2014 5 March 2013

(1) Provision is made for accelerated vesting in certain events such as total and permanent disability, death or a change in control of Woodside.

Executive Incentive Plan

Woodside Petroleum Ltd. | Remuneration Report 61
(1) For valuation purposes all VPRs are treated as if they will be equity settled, with the 

exception of Mr Ahmed’s 2008 VPRs which are to be settled in cash as a result of his 

international secondment. This fair value for the cash settled awards is recalculated at 

the end of every reporting period. In 2011 the fair value of the 2008 cash settled VPRs 

was $31.26.

(2) Vesting date and exercise date are the same. Vesting is subject to satisfaction of vesting 

conditions.

(3) In accordance with the requirements of AASB 2 Share-based Payment, the fair value 

of rights as at their date of grant has been determined by applying the Binomial or Black 

Scholes option pricing technique with the exception of Mr Ahmed as noted in (1). The 

fair value of rights is amortised over the vesting period, such that ‘Total remuneration’ 

includes a portion of the fair value of unvested equity compensation during the year. The 

amount included as remuneration is not related to or indicative of the benefit (if any) that 

individual executives may ultimately realise should these equity instruments vest.

(4) Additional allocation of VPRs to each tranche of granted VPRs, following renounceable 

equity rights issue by the company.

(5) Mr Moore did not meet the definition of KMP under AASB 124 for years prior to 2010. 

Previous years comparative figures are not shown.

(6) Mr Tremaine did not meet the definition of KMP under AASB 124 for years prior to 2011. 

Previous years comparative figures are not shown.

(7) A total of 9,471 Time-tested VPRs with a value of A$316,331 were forfeited on Mr Della 

Martina’s departure on 10 May 2012.

Name Allocation date Vesting date(2) Awarded but 

not vested

Vested in 

2012

% of total 

vested

Lapsed in 

2012

Fair value(3) of VPRs by 

performance year

P Coleman March 2012 March 2015 14,791 - - - 38.87

F Ahmed February 2009 February 2012 - 3,245 100 - 31.26

December 2009(4) February 2012 - 27 100 - 31.26

March 2010 March 2013 3,692 - - - 29.57

February 2011 February 2014 2,415 - - - 38.32

March 2012 March 2015 4,330 - - - 38.87

R Cole February 2009 February 2012 - 4,543 100 - 39.81

December 2009(4) February 2012 - 38 100 - 39.92

March 2010 March 2013 4,599 - - - 29.57

February 2011 February 2014 4,302 - - - 38.32

March 2012 March 2015 6,301 - - - 38.87

P Moore(5) February 2009 February 2012 - 1,344 100 - 39.81

December 2009(4) February 2012 - 11 100 - 39.92

February 2011 February 2014 2,018 - - - 38.32

March 2012 March 2015 2,776 - - - 38.87

V Santostefano February 2009 February 2012 - 2,910 100 - 39.81

December 2009(4) February 2012 - 24 100 - 39.92

March 2010 March 2013 3,786 - - - 29.57

February 2011 February 2014 2,286 - - - 38.32

March 2012 March 2015 5,492 - - - 38.87

L Tremaine(6) February 2009 February 2012 - 1,252 100 - 39.81

December 2009(4) February 2012 - 10 100 - 39.92

March 2012 March 2015 4,470 - - - 38.87

L Della Martina(7) February 2009 February 2012 - 2,916 100 - 39.81

December 2009(4) February 2012 - 24 100 - 39.92

March 2010 March 2013 2,950 - - 2,950 29.57

February 2011 February 2014 2,753 - - 2,753 38.32

March 2012 March 2015 3,768 - - 3,768 38.87

Table 11 - Summary of KMP executives’ interests in time-tested VPRs(1) 

Table 12 - Summary of KMP executives’ interests in restricted shares(1)

Name Allocation date Vesting date(1) Awarded but 

not vested

Vested in 

2012

% of total 

vested

Lapsed in 

2012

Value(2) of restricted shares 

by performance year

P Coleman February 2013 February 2016 33,720 - - - 30.98

F Ahmed February 2013 February 2016 3,978 - - - 30.98

R Cole February 2013 February 2016 7,882 - - - 30.98

R Edwardes February 2013 February 2016 4,710 - - - 30.98

P Moore February 2013 February 2016 2,566 - - - 30.98

G Roder February 2013 February 2016 3,829 - - - 30.98

V Santostefano February 2013 February 2016 8,726 - - - 30.98

L Tremaine February 2013 February 2016 6,933 - - - 30.98

(1) Vesting date and exercise date are the same. Vesting is subject to satisfaction of vesting conditions.

(2) The modifications made to the EIP only affect awards made from the 2012 performance year onwards. The fair value of the awards allocated in February 2013 at the grant date based 

on the original plan rules was $28.22, the fair value at modification date under the original rules was $33.19 and the fair value at the modification date after the changes was $35.95. 

Accordingly, the value of the restricted shares is represented by the sum of the grant date fair value and the incremental benefit on modification date amounting to $2.76.

62 Woodside Petroleum Ltd. | 2012 Annual Report

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REPORT

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INFORMATION
Name Allocation date Vesting date (2),(3)

Awarded but not 

vested

Vested in 

2012

% of total 

vested

Lapsed in 

2012(4)

Fair value(5),(9), (10)

of VPRs

P Coleman March 2012 March 2016 51,769 - - - 21.36

February 2013 February 2018 150,665 - - - 15.90

F Ahmed March 2008 March 2012 - - - 2,050 0.21

December 2009 March 2012 - - - 17 0.21

February 2009 February 2012 - 4,119 50 4,119 7.44

December 2009 February 2012 - 34 50 34 7.46

March 2010 March 2014 6,017 - - - 14.82

February 2011 February 2015 7,042 - - - 20.02

March 2012 March 2016 9,768 - - - 21.36

February 2013 February 2018 16,503 - - - 15.90

R Cole March 2008 March 2012 - - - 4,862 14.36

December 2009 March 2012 - - - 40 22.94

February 2009 February 2012 - 4,325 50 4,325 19.08

December 2009 February 2012 - 36 50 36 25.53

March 2010 March 2014 6,305 - - - 14.82

February 2011 February 2015 7,526 - - - 20.02

March 2012 March 2016 10,661 - - - 21.36

February 2013 February 2018 19,430 - - - 15.90

R Edwardes February 2013 February 2018 11,923 - - - 15.90

P Moore(6) March 2008 March 2012 - - - 1,541 14.36

December 2009 March 2012 - - - 13 22.94

February 2009 February 2012 - 1,208 50 1,208 19.08

December 2009 February 2012 - 10 50 10 25.53

February 2011 February 2015 4,412 - - - 20.02

March 2012 March 2016 6,264 - - - 21.36

February 2013 February 2018 10,788 - - - 15.90

G Roder February 2013 February 2018 5,774 - - - 15.90

V Santostefano March 2008 March 2012 - - - 3,465 14.36

December 2009 March 2012 - - - 29 22.94

February 2009 February 2012 - 2,770 50 2,770 19.08

December 2009 February 2012 - 23 50 23 25.53

March 2010 March 2014 5,190 - - - 14.82

February 2011 February 2015 6,665 - - - 20.02

March 2012 March 2016 9,293 - - - 21.36

February 2013 February 2018 18,259 - - - 15.90

L Tremaine(7) March 2008 March 2012 - - - 1,422 14.36

December 2009 March 2012 - - - 12 22.94

February 2009 February 2012 - 1,126 50 1,126 19.08

December 2009 February 2012 - 10 50 9 25.53

March 2012 March 2016 7,564 - - - 21.36

February 2013 February 2018 14,631 - - - 15.90

L Della Martina(8) March 2008 March 2012 - - - 3,481 14.36

December 2009 March 2012 - - - 29 22.94

February 2009 February 2012 - 2,776 50 2,776 19.08

December 2009 February 2012 - 23 50 23 25.53

March 2010 March 2014 4,045 - - 4,045 14.82

February 2011 February 2015 6,020 - - 6,020 20.02

March 2012 March 2016 8,500 - - 8,500 21.36

Table 13 - Summary of KMP executives’ interests in RTSR tested VPRs(1) 

(1) For valuation purposes all VPRs are treated as if they will be equity settled, with the 

exception of Mr Ahmed’s 2007 and 2008 VPRs which are to be settled in cash as a 

result of his international secondment. The fair value for the cash settled awards is 

recalculated at the end of every reporting period. In 2011 the fair value of the 2007 

and 2008 cash settled VPR’s was $0.21, $7.44 and $7.46 respectively.

(2) Vesting date and exercise date are the same. Vesting is subject to satisfaction of 

vesting conditions.

(3) Vesting date is 14 March 2012 in respect of March 2008 allocations, on 27 February 

2012 in respect of February 2009 allocations, on 5 March 2013 or 5 March 2014 in 

respect of March 2010 allocations, 25 February 2014 or 25 February 2015 in respect 

of February 2011 allocations and 1 March 2015 or 1 March 2016 in respect of March 

2012 allocations. Vesting date is 22 February 2017 or 22 February 2018 in respect of 

March 2013 allocations.

(4) The 2007 performance year RTSR-tested VPRs lapsed as they did not meet the vesting 

conditions. The VPRs lapsed on 14 March 2012 and the Share Price at that date was 

$35.59. For the 2008 performance year Woodside’s TSR was at the 50th Peer Group 

Percentile, therefore 50% RTSR-tested VPRs vested and 50% lapsed. The VPRs lapsed 

on 27 February 2012 and the Share Price at that date was $37.16.

(5) In accordance with the requirements of AASB 2 Share-based Payment, the fair value 

of rights as at their date of grant has been determined by applying the Binomial or 

Black Scholes option pricing technique with the exception of Mr Ahmed as noted 

in (1). The fair value of rights is amortised over the vesting period, such that ‘Total 

remuneration’ includes a portion of the fair value of unvested equity compensation 

during the year. The amount included as remuneration is not related to or indicative 

of the benefit (if any) that individual executives may ultimately realise should these 

equity instruments vest.

(6) Mr Moore did not meet the definition of KMP under the AASB 124 for the years prior 

to 2010. Comparative figures are not shown.

(7) Mr Tremaine did not meet the definition of KMP under the AASB 124 for the years 

prior to 2011. Comparative figures are not shown.

(8) A total of 18,565 RTSR-tested VPRs with a value of A$620,071 were forfeited on 

Mr Della Martina’s departure on 10 May 2012.

(9) The modifications made to the EIP were made on the 7 December 2012 where 

the share price was A$34.22. The modification only affects awards made from 

the 2012 performance year onwards. The fair value of the awards allocated in 

February 2013 at the grant date based on the original plan rules was $15.90, the 

fair value at modification date under the original rules was $21.64 and the fair value 

at the modification date after the changes was $20.64. Accordingly, there was no 

incremental benefit from the modification.

(10) A review of the RTSR valuation model was conducted to ensure it accurately reflects 

the EIP rules. Prior year fair values have been appropriately restated to reflect the 

modification.

Woodside Petroleum Ltd. | Remuneration Report 63
Retention and General Employee Share Plans

Table 14 - Summary of KMP executives’ interests in shares under the WSPP(1)(2)

Name WSPP

year

Opening 

balance

Shares purchased 

under WSPP

Matching 

shares(3)

Vested 

shares

Lapsed / 

forfeited

Closing 

balance

R Cole 2012 395 - - 395 - -

2011 769 - - 374 - 395

2010 893 - - 124 - 769

2009 WSPP(4) 498 158 237 - - 893

2008 WSPP(5) 124 173 201 - - 498

2007 WSPP(6) - 62 62 - - 124

P Moore(7) 2011 234 - - 234 - -

2010 358 - - 124 - 234

V Santostefano 2012 395 - - 395 - -

2011 769 - - 374 - 395

2010 893 - - 124 - 769

2009 WSPP(4) 498 158 237 - - 893

2008 WSPP(5) 124 173 201 - - 498

2007 WSPP(6) - 62 62 - - 124

L Della Martina(8) 2012 395 - - 395 - -

2011 769 - - 374 - 395

2010 893 - - 124 - 769

2009 WSPP(4) 498 158 237 - - 893

2008 WSPP(5) 124 173 201 - - 498

(1) For a full summary of executives interests in shares see note 28b to the financial report on page 125.

(2) Participants in the WSPP elected to sacrifice an amount of salary and this amount was applied by the WSPP Trustee to purchase Woodside Shares on market. Woodside provided funds 

to the WSPP Trustee to buy additional Woodside Shares (matching shares) on Market.

(3) To become entitled to the matching shares funded by Woodside, the participant had to remain a Woodside employee for the three year qualification period.

(4) 2009 WSPP refers to the purchases made in 2009 for the 2008/09 Plan. The matching shares for the 2009 WSPP with a grant date of 2 Janaury 2009 had a fair value of $31.46 and a 

grant date of 1 April 2009 had a fair value of $34.49 per share.

(5) 2008 WSPP refers to the plan for the 2008/09 Plan Year as well as the purchases made in 2008 for the 2007/08 Plan. The matching shares for the 2008 WSPP with a grant date of 

3 March 2008 had a fair value of $49.97, with a grant date of 13 June 2008 had a fair value of $56.16 and with a grant date of 1 October 2008 has a fair value of $47.19 per share.

(6) 2007 WSPP refers to the plan for the 2007/08 Plan Year granted in 2007. The matching shares for the 2007 WSPP with a grant date of 27 November 2007 had a fair value of 

$43.11 per share. 

(7) Mr Moore did not meet the definition of KMP under AASB 124 for any years prior to 2010. Previous years comparative figures are not shown. 

(8) Mr Della Martina did not meet the definition of KMP under AASB 124 for the 2007 year. Previous years comparative figures are not shown.

Table 15 - Summary of KMP executives’ interests in Equity Rights under the EEP(1)

Name Grant date Number of Equity 

Rights granted

Number of Equity 

Rights which have 

lapsed/forfeited

Number of Equity 

Rights which have 

vested during 2012

Fair Value of 

Equity Rights(2)

F Ahmed

31 October 2009 4,350 - 4,350 39.81

30 April 2010 36 - 36 39.83

R Cole

31 October 2009 4,350 - 4,350 39.81

30 April 2010 36 - 36 39.83

P Moore

31 October 2009 4,350 - 4,350 39.81

30 April 2010 36 - 36 39.83

V Santostefano

31 October 2009 4,350 - 4,350 39.81

30 April 2010 36 - 36 39.83

L Tremaine 31 October 2009 4,350 - 4,350 39.81

L Della Martina(3) 31 October 2009 4,350 4,350 - 39.81

(1) Under the EEP eligibility participants received a one-off allocation of Equity Rights entitling the participant to receive a Woodside share on the vesting date. There were no 

performance conditions attached. Participants did not make any payment in respect of the Equity Rights at grant nor at vesting.

(2) The fair value of Equity Rights as at their date of grant has been determined by reference to the share price at acquisition. The fair value of Equity Rights is amortised over the vesting 

period, such that ‘Total remuneration’ includes a portion of the fair value of unvested equity compensation during the year. The amount included as remuneration is not related to or 

indicative of the benefit (if any) that individual executives received upon vesting in August 2012.

(3) A total of 4,350 Equity Rights with a value of A$145,390 were forfeited on Mr Della Martina’s departure on 10 May 2012.

64 Woodside Petroleum Ltd. | 2012 Annual Report

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Table 16 - Summary of KMP executives’ interests in Equity Rights under the WEP

Name Grant date Number of Equity 

Rights granted

Number of Equity 

Rights which have 

lapsed/forfeited

Number of Equity Rights 

which have vested during 

2012

Fair Value of Equity 

Rights(1)

R Cole 30 November 2011 1,830 - - 30.49

P Moore 30 November 2011 1,830 - - 30.49

1 October 2012 2,000 - - 31.99

V Santostefano 30 November 2011 1,830 - - 30.49

1 October 2012 2,000 - - 31.99

L Tremaine 30 November 2011 1,830 - - 30.49

1 October 2012 2,000 - - 31.99

L Della Martina(2) 30 November 2011 1,830 1,830 - 30.49

(1) The fair value of Equity Rights as at their date of grant has been determined by reference to the share price at acquisition. The fair value of Equity Rights is amortised over the vesting 

period, such that ‘Total remuneration’ includes a portion of the fair value of unvested equity compensation during the year. The amount included as remuneration is not related to or 

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

(2) A total of 1,830 Equity Rights with a value of A$61,122 were forfeited on Mr Della Martina’s departure on 10 May 2012.

Table 17 - Annual base Board and committee fees for non-executive directors

Position Board Audit & Risk 

Committee

Human Resources 

& Compensation 

Committee

Sustainability 

Committee

Nominations 

Committee

A$ A$ A$ A$ A$

Chairman of the Board(1) 679,200(3) - - - -

Non-executive directors(2) 206,500(3) - - - -

Committee Chairman - 54,400(3) 46,000(3) 46,000(3) Nil

Committee Member - 27,100(3) 23,000(3) 23,000(3) Nil

(1) Inclusive of committee work.

(2) Board fees paid to non-executive directors, other than the Chairman.

(3) Annual fee from 1 July 2012.

Table 18 - Total remuneration paid to non-executive directors in 2012 and 2011(1)

Cash salary and fees Pension super

Salaries, fees and Total

allowances

Company contributions 

to superannuation

$ $ $

M A Chaney 2012 689,698 62,073 751,771

2011 659,941 59,395 719,336 

M A Cilento 2012 255,162 22,965 278,127

2011 242,889 21,860 264,749 

F C Cooper(2) 2012 - - -

E Fraunschiel(3) 2012 287,672 25,891 313,563

2011 274,592 24,713 299,305 

C Haynes 2012 278,127 - 278,127

2011 155,712 - 155,712 

A Jamieson 2012 302,898 - 302,898

2011 278,700 - 278,700 

P J M H Jungels(4) 2012 326,670 - 326,670

2011 332,451 - 332,451 

D I McEvoy 2012 282,702 25,444 308,146

2011 264,111 23,770 287,881 

S Ryan(5) 2012 19,132 1,722 20,854

2011 - - -

(1) The total remuneration for 2011 was converted at the average exchange rate of US$1:A$0.96834 and the 2012 total remuneration was converted at the average exchange rate of 

US$1:A$0.96586.

(2) Effective 1 February 2013 Mr Cooper was appointed a non-executive director of Woodside.

(3) On 28 February 2013 Mr Fraunschiel will retire as a non-executive director of Woodside.

(4) Dr Jungels retired on 7 December 2012. The Australian dollar compensation paid for the period from 1 January 2012 to 7 December 2012 was converted to US dollars at the average 

exchange rate of US$1:A$0.96659.

(5) Dr Ryan was appointed to the Board on 6 December 2012. The Australian dollar compensation paid for the period from 6 December 2012 to 31 December 2012 was converted to 

US dollars at the average exchange rate of US$1:A$0.95543.

Woodside Petroleum Ltd. | Remuneration Report 65
Indemnification and insurance of 

directors and officers

The company’s constitution requires the 

company to indemnify each director, 

secretary, executive officer or employee 

of the company or its wholly-owned 

subsidiaries against liabilities (to the 

extent the company is not precluded by 

law from doing so) incurred in or arising 

out of the conduct of the business of the 

company or the discharge of the duties 

of any such person. The company has 

entered into deeds of indemnity with each 

of its directors, secretaries, certain senior 

executives, and employees serving as 

officers on wholly-owned or partly-owned 

companies of Woodside in terms of the 

indemnity provided under the company’s 

constitution.

From time to time, Woodside engages 

its external auditor, Ernst & Young, to 

conduct non-statutory audit work and 

provide other services in accordance with 

Woodside’s External Auditor Guidelines. 

The terms of engagement include an 

indemnity in favour of Ernst & Young:

against all losses, claims, costs, 

expenses, actions, demands, damages, 

liabilities or any proceedings (liabilities) 

incurred by Ernst & Young in respect of 

third party claims arising from a breach 

by the Group under the engagement 

terms; and

for all liabilities Ernst & Young has to 

the Group or any third party as a result 

of reliance on information provided by 

the Group that is false, misleading or 

incomplete.

The company has paid a premium under 

a contract insuring each director, officer, 

secretary and employee who is concerned 

with the management of the company or 

its subsidiaries against liability incurred in 

that capacity. Disclosure of the nature of 

the liability covered by and the amount of 

the premium payable for such insurance 

is subject to a confidentiality clause under 

the contract of insurance. The company 

has not provided any insurance for the 

external auditor of the company or a body 

corporate related to the external auditor.

Non-audit services and auditor 

independence declaration

Details of the amounts paid or payable to 

the external auditor of the company, Ernst 

& Young, for audit and non-audit services 

provided during the year are disclosed in 

note 32 to the Financial Report.

Based on advice provided by the Audit 

& Risk Committee, the directors are 

satisfied that the provision of non-audit 

services by the external auditor during 

the financial year is compatible with the 

general standard of independence for 

auditors imposed by the Corporations Act 

for the following reasons:

all non-audit services were provided in 

accordance with Woodside’s External 

Auditor Policy and External Auditor 

Guidelines; and 

all non-audit services were subject to 

the corporate governance processes 

adopted by the company and have 

been reviewed by the Audit & Risk 

Committee to ensure that they do not 

affect the integrity or objectivity of the 

auditor. 

Further information on Woodside’s policy 

in relation to the provision of non-audit 

services by the auditor is set out in 

section 7 of the Corporate Governance 

Statement on pages 48 to 49.

The auditor independence declaration, 

as required under section 307C of the 

Corporations Act, is set out on this page 

and forms part of this report. 

Proceedings on behalf of the 

company

No proceedings have been brought 

on behalf of the company, nor has any 

application been made in respect of 

the company, under section 237 of the 

Corporations Act. 

Rounding of amounts 

The amounts contained in this report 

have been rounded to the nearest million 

dollars under the option available to the 

company under Australian Securities and 

Investments Commission Class Order 

98/0100 dated 10 July 1998.

Directors’ relevant interests in 

Woodside shares as at date of report

Director Relevant interest in shares

MA Chaney 20,000

RJ Cole1,2,3 28,502

PJ Coleman2,3 55,004

MA Cilento 2,086

F Cooper -

E Fraunschiel 81,930

CM Haynes 1,333

A Jamieson 4,235

DI McEvoy 8,040

SE Ryan -

Signed in accordance with a resolution of 

the directors.

M A Chaney, AO

Chairman

Perth, Western Australia

20 February 2013

P J Coleman

Chief Executive Officer and 

Managing Director

Perth, Western Australia

20 February 2013

Auditor’s Independence 

Declaration to the Directors of 

Woodside Petroleum Ltd

In relation to our audit of the financial 

report of Woodside Petroleum Ltd for 

the year ended 31 December 2012, to 

the best of my knowledge and belief, 

there have been no contraventions of the 

auditor independence requirements of the 

Corporations Act 2001 or any applicable 

code of professional conduct.

Ernst & Young

R J Curtin

Partner

Perth, Western Australia

20 February 2013

Liability limited by a scheme approved under 

Professional Standards Legislation.

Directors’ report (continued)

(1) Mr Cole holds 1,830 equity rights under the Woodside 

Equity Plan, on the terms and conditions summarised 

in the Remuneration Report on page 58.

(2) Messrs Cole and Coleman hold variable pay rights 

under Woodside’s Executive Incentive Plan, details 

of which are set out in the Remuneration Report on 

pages 62 to 63. 

(3) Messrs Cole and Coleman will be allocated restricted 

shares under Woodside’s Executive Incentive Plan on 

22 February 2013, as set out in the Remuneration 

Report on page 62.

66 Woodside Petroleum Ltd. | 2012 Annual Report

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2012 FinancIAL REPORT

Consolidated income statement 68

Consolidated statement of comprehensive income 69

Consolidated statement of financial position 70

Consolidated statement of cash flows 71

Consolidated statement of changes in equity 72

Notes to and forming part of the Financial Report

1. Summary of significant accounting policies 73

2. Operating segments 86

3. Revenue and expenses 89

4. Taxes 91

5. Earnings per share 94

6. Dividends paid and proposed 94

7. Cash and cash equivalents 95

8. Receivables 95

9. Inventories 95

10. Other financial assets 96

11. Other assets 96

12. Exploration and evaluation assets 97

13. Oil and gas properties 98

14. Other plant and equipment 99

15. Payables 99

16. Interest-bearing liabilities 100

17. Tax payable 100

18. Other financial liabilities 100

19. Other liabilities 101

20. Provisions 101

21. Contributed equity 102

22. Other reserves 103

23. Retained earnings 104

24. Parent entity information 104

25. Financial and capital risk management 104

26. Expenditure commitments 113

27. Employee benefits 114

28. Key management personnel compensation 124

29. Events after the end of the reporting period 128

30. Related party disclosures 128

31. Contingent liabilities and contingent assets 129

32. Auditor remuneration 129

33. Joint ventures 130

34. Associated entities 131

35. Subsidiaries 132

36. Corporate information 134

Directors’ declaration 135

Independent audit report 136

Woodside Petroleum Ltd. | Financial Report 67
Consolidated income statement

For the year ended 31 December 2012

Notes

2012

US$m

2011

US$m

Operating revenue 3(a) 6,348 4,802

Cost of sales 3(b) (2,618) (1,657)

Gross profit 3,730 3,145

Other income 3(c) 830 97

Other expenses 3(d) (765) (1,030)

Profit before tax and net finance costs 3,795 2,212

Finance income 3(e) 8 10

Finance costs 3(f) (145) (36)

Profit before tax 3,658 2,186

Petroleum Resource Rent Tax expense 4(a) 523 (17)

Income tax expense 4(a) (1,137) (660)

Profit after tax 3,044 1,509

Profit attributable to

Equity holders of the parent 2,983 1,507

Non-controlling interest 61 2

Profit for the year 3,044 1,509

Basic and diluted earnings per share attributable to the equity holders of the parent (US cents) 5 366 190

The accompanying notes form part of the Financial Report.

68 Woodside Petroleum Ltd. | 2012 Annual Report

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Consolidated statement of comprehensive income

For the year ended 31 December 2012

2012

US$m

2011

US$m

Profit for the year 3,044 1,509

Other comprehensive income

Net change in fair value of available-for-sale financial assets (2) (3)

Companies voluntarily liquidated - (16)

Other comprehensive income for the year, net of tax (2) (19)

Total comprehensive income for the year 3,042 1,490

Total comprehensive income attributable to

Equity holders of the parent 2,981 1,488

Non-controlling interest 61 2

Total comprehensive income for the year 3,042 1,490

The accompanying notes form part of the Financial Report.

Woodside Petroleum Ltd. | Financial Report 69
Notes

2012

US$m

2011

US$m

Current assets

Cash and cash equivalents 7(a) 2,422 41

Receivables 8 574 669

Inventories 9(a) 241 195

Other financial assets 10(a) 32 16

Other assets 11(a) 20 93

Total current assets 3,289 1,014

Non-current assets

Inventories 9(b) 7 18

Other financial assets 10(b) 64 86

Other assets 11(b) 3 3

Exploration and evaluation assets 12 1,120 2,235

Oil and gas properties 13 19,375 19,289

Other plant and equipment 14 60 62

Deferred tax assets 4(c) 892 524

Total non-current assets 21,521 22,217

Total assets 24,810 23,231

Current liabilities

Payables 15(a) 829 1,214

Interest-bearing liabilities 16(a) 575 770

Tax payable 17 647 74

Other liabilities 19(a) 24 27

Provisions 20 290 327

Total current liabilities 2,365 2,412

Non-current liabilities

Payables 15(b) 196 215

Interest-bearing liabilities 16(b) 3,765 4,332

Deferred tax liabilities 4(c) 1,368 1,825

Other financial liabilities 18 7 6

Other liabilities 19(b) 165 181

Provisions 20 1,117 991

Total non-current liabilities 6,618 7,550

Total liabilities 8,983 9,962

Net assets 15,827 13,269

Equity

Issued and fully paid shares 21(a) 6,547 5,880

Shares reserved for employee share plans 21(b) (44) (67)

Other reserves 22 859 1,063

Retained earnings 23 7,786 5,782

Equity attributable to equity holders of the parent 15,148 12,658

Non-controlling interest 679 611

Total equity 15,827 13,269

The accompanying notes form part of the Financial Report.

Consolidated statement of financial position

As at 31 December 2012

70 Woodside Petroleum Ltd. | 2012 Annual Report

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Consolidated statement of cash flows

For the year ended 31 December 2012

Notes

2012

US$m

2011

US$m

Cash flows from/(used in) operating activities

Profit after tax for the year 3,044 1,509

Adjustments for:

Non-cash items

Depreciation and amortisation 1,217 664

Impairment of exploration and evaluation assets 26 14

Impairment/(reversal) of oil and gas properties and other assets 131 (17)

Unrealised foreign exchange loss/(gain) 3 (3)

Gain on disposal of exploration and evaluation assets (762) (7)

Loss/(gain) on disposal of oil and gas properties 7 (5)

Gain on disposal of investments (2) -

Change in fair value of derivative financial instruments 10 5

Change in fair value of other financial instruments - (12)

Net finance costs 137 26

Tax expense 614 677

Exploration and evaluation written off 129 176

Other 63 59

Changes in assets and liabilities

Decrease/(increase) in trade and other receivables 23 (175)

Increase in inventories (38) (63)

(Decrease)/increase in provisions (66) 250

Increase/(decrease) in other assets and liabilities 12 (45)

(Decrease)/increase in trade and other payables (6) 13

Cash generated from operations 4,542 3,066

Purchases of shares and payments relating to employee share plans (11) (10)

Interest received 5 10

Dividends received 5 4

Interest paid (198) (200)

Income tax paid (604) (496)

Petroleum Resource Rent Tax paid (260) (132)

Payments for restoration (4) -

Net cash from operating activities 3,475 2,242

Cash flows from/(used in) investing activities

Payments for capital and exploration expenditure (1,914) (3,584)

Proceeds from disposal of investments 7 -

Proceeds from disposal of exploration and evaluation assets 2,068 16

Proceeds from disposal of oil and gas properties - 35

Net cash from/(used in) investing activities 161 (3,533)

Cash flows from/(used in) financing activities

(Repayments of)/proceeds from borrowings (772) 172

Contributions from non-controlling interests 67 194

Proceeds from underwriters of Dividend Reinvestment Plan (DRP) 320 648

Dividends paid (net of DRP) (325) (652)

Dividends paid outside of DRP (542) -

Net cash (used in)/from financing activities (1,252) 362

Net increase/(decrease) in cash held 2,384 (929)

Cash and cash equivalents at the beginning of the year 41 963

Effects of exchange rate changes on the balances of cash held in foreign currencies (3) 7

Cash and cash equivalents at the end of the year 7(b) 2,422 41

The accompanying notes form part of the Financial Report.

Woodside Petroleum Ltd. | Financial Report 71
Consolidated statement of changes in equity

For the year ended 31 December 2012

Issued and fully 

paid shares

Shares reserved 

for employee share 

plans

Employee benefits 

reserve

Foreign currency 

translation reserve

Hedge of net 

investment reserve

Investment fair 

value reserve

Retained earnings

Equity holders of 

the parent

Non-controlling 

interest

Total 

equity

Note 21

(a)

Note 21

(b) Note 22 Note 22 Note 22 Note 22 Note 23

US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m

At 1 January 2012 5,880 (67) 303 663 110 (13) 5,782 12,658 611 13,269

Profit for the year - - - - - - 2,983 2,983 61 3,044

Other comprehensive income - - - - - (2) - (2) - (2)

Total comprehensive income for the year - - - - - (2) 2,983 2,981 61 3,042

Non-controlling interest - - - - - - - - 7 7

Dividend Reinvestment Plan 431 - - - - - - 431 - 431

Shares issued 236 (236) - - - - - - - -

Employee share plan purchases - (11) - - - - - (11) - (11)

Employee share plan redemptions - 270 (270) - - - - - - -

Share-based payments - - 68 - - - - 68 - 68

Dividends paid - - - - - - (979) (979) - (979)

At 31 December 2012 6,547 (44) 101 663 110 (15) 7,786 15,148 679 15,827

At 1 January 2011 5,036 (57) 192 679 110 (10) 5,141 11,091 595 11,686

Profit for the year - - - - - - 1,507 1,507 2 1,509

Other comprehensive income - - - (16) - (3) - (19) - (19)

Total comprehensive income for the year - - - (16) - (3) 1,507 1,488 2 1,490

Non-controlling interest - - - - - - - - 14 14

Dividend Reinvestment Plan 844 - - - - - - 844 - 844

Shares issued - - - - - - - - - -

Employee share plan purchases - (10) - - - - - (10) - (10)

Employee share plan redemptions - - - - - - - - - -

Share-based payments - - 111 - - - - 111 - 111

Dividends paid - - - - - - (866) (866) - (866)

At 31 December 2011 5,880 (67) 303 663 110 (13) 5,782 12,658 611 13,269

The accompanying notes form part of the Financial Report.

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72 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

1. Summary of significant accounting policies

(a) Basis of preparation

The Financial Report is a general purpose financial report, which has been prepared in accordance with the 

requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of 

the Australian Accounting Standards Board.

The Financial Report has been prepared on a historical cost basis, except for derivative financial instruments and certain 

other financial assets, which have been measured at fair value. 

The Financial Report is presented in US dollars. The amounts contained in this report have been rounded to the nearest 

million dollars under the option available to the Group under Australian Securities and Investments Commission Class 

Order 98/0100 dated 10 July 1998, unless otherwise stated.

The Financial Report was authorised for issue in accordance with a resolution of the directors on 20 February 2013. 

Woodside Petroleum Ltd is a for-profit entity. The nature of the operations and principal activities of the Group are 

described in the Directors’ Report.

Except as disclosed below, the accounting policies adopted are consistent with those disclosed in the Annual Financial 

Report for the year ended 31 December 2011. Certain comparative information has been reclassified to be presented on 

a consistent basis with the current year’s presentation.

Changes in accounting policy and disclosures

The Group has adopted all new and amended Australian Accounting Standards and Interpretations effective from 

1 January 2012 including:

•	 AASB 1054 Australian Additional Disclosures

•	 AASB 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project 

[AASB 1, AASB 5, AASB 101, AASB 107, AASB 108, AASB 121, AASB 128, AASB 132 & AASB 134 and Interpretations 

2, 112 & 113]

New and amended Standards and Interpretations did not result in any significant changes to the Group’s 

accounting policies.

The Group has not elected to early adopt any other new or amended Standards or Interpretations that are issued but 

not yet effective (refer Note 1(af)).

(b) Statement of compliance

The Financial Report complies with Australian Accounting Standards and International Financial Reporting Standards, 

as issued by the International Accounting Standards Board.

(c) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group as at 31 December each year. 

Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be 

consolidated from the date at which control is transferred out of the Group.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. At acquisition, the assets, 

liabilities and contingent liabilities of a subsidiary are measured at their fair values. Any excess of the cost of acquisition 

over the fair values of the identifiable net assets acquired is recognised as goodwill. 

The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using 

consistent accounting policies. All intercompany balances and transactions, including unrealised profits and losses 

arising from intra-group transactions, have been eliminated in full.

Woodside Petroleum Ltd. | Financial Report 73
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

1. Summary of significant accounting policies (continued)

(c) Basis of consolidation (continued)

A change in ownership of a subsidiary that does not result in a loss of control is accounted for as an equity transaction.

On loss of control of a subsidiary, all carrying amounts of assets, liabilities and non-controlling interests are derecognised. 

Any retained interest in the subsidiary is remeasured to its fair value and a gain or loss is recognised in the income 

statement.

Investments in subsidiaries are carried at cost less impairment charges in the separate financial statements of the parent 

company. Dividends received from subsidiaries are recorded as other income in the separate income statement of 

the parent company and do not impact the recorded cost of investment. The parent company will assess whether any 

indicators of impairment of the carrying amount of the investment in the subsidiary exist. Where such indicators exist, to 

the extent that the carrying amount of the investment exceeds its recoverable amount, an impairment loss 

is recognised.

Non-controlling interests are allocated their share of the net profit after tax in the consolidated income statement, their 

share of other comprehensive income, net of tax in the consolidated statement of comprehensive income and are 

presented within equity in the consolidated statement of financial position, separately from parent shareholders’ equity.

(d) Revenue

Revenue is recognised and measured at the fair value of consideration received or receivable to the extent that it is 

probable that the economic benefits will flow to the Group and the revenue can be reliably measured.

Product revenue

Revenue earned from the sale of oil, gas and condensate produced is recognised when the risks and rewards of 

ownership of the products are transferred to the customer. This policy is applied to the Group’s different operating 

arrangements as follows:

•	 revenue earned under a lease or licence conferring ownership rights to production, in which the Group has a working 

interest with other producers, is recognised in earnings on the basis of the Group’s interest in the relevant lease or 

licence (entitlements method). Revenue is not reduced for royalties and other taxes payable from production, except 

where royalties are payable in kind;

•	 revenue from take or pay contracts is recognised in earnings when the product has been drawn by the customer or 

recorded as unearned revenue when not drawn by the customer;

•	 revenue earned under a risk service contract is recognised when the Group has a legally enforceable entitlement to 

the proceeds;

•	 revenue earned under a production service contract is recognised on the basis of the Group’s share of oil, gas or 

condensate allocated to the contractor party or parties under the contract; and

•	 revenue earned from LNG processing services is recognised when the services are rendered.

Interest revenue 

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the 

amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest 

rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset 

to the net carrying amount of the financial asset.

Dividend revenue 

Dividend revenue is recognised when the Group’s right to receive payment is established.

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74 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(e) Exploration and evaluation

Expenditure on exploration and evaluation is accounted for in accordance with the area of interest method.

The Group’s application of the accounting policy for the cost of exploring and of evaluating discoveries is closely aligned 

to the US GAAP-based successful efforts method.

Exploration licence acquisition costs are capitalised and subject to half-yearly impairment testing.

All exploration and evaluation expenditure, including general permit activity, geological and geophysical costs and new 

venture activity costs, is expensed as incurred except where:

•	 the expenditure relates to an exploration discovery that, at the reporting date, has not been recognised as an area of 

interest, as an assessment of the existence or otherwise of economically recoverable reserves is not yet complete; 

or

•	 an area of interest is recognised and it is expected that the expenditure will be recouped through successful 

exploitation of the area of interest, or alternatively, by its sale.

The costs of drilling exploration wells are initially capitalised pending the results of the well. Costs are expensed where 

the well does not result in the successful discovery of economically recoverable hydrocarbons and the recognition of an 

area of interest. Areas of interest are recognised at the field level. Subsequent to the recognition of an area of interest, 

all further evaluation costs relating to that area of interest are capitalised.

Each potential or recognised area of interest is reviewed half-yearly to determine whether economic quantities of 

reserves have been found, or whether further exploration and evaluation work is underway or planned to support the 

continued carry forward of capitalised costs.

Upon approval for the commercial development of an area of interest, accumulated expenditure for the area of interest 

is transferred to oil and gas properties.

The recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful 

development and commercial exploitation, or alternatively, sale of the respective areas of interest.

Where a potential impairment is indicated, assessment is performed for each area of interest to which the exploration 

and evaluation expenditure is attributed. To the extent that capitalised expenditure is not expected to be recovered it is 

charged to the income statement.

In the statement of cash flows, those cash flows associated with capitalised exploration and evaluation expenditure 

are classified as cash flows used in investing activities. Exploration and evaluation expenditure expensed is classified as 

cash flows used in operating activities.

(f) Oil and gas properties

Oil and gas properties are stated at cost less accumulated depreciation and impairment charges. Oil and gas properties 

include construction, installation or completion of production and infrastructure facilities such as pipelines and 

platforms, capitalised borrowing costs, transferred exploration and evaluation assets, development wells and the cost of 

dismantling and restoration.

Subsequent capital costs, including major maintenance, are included in the asset’s carrying amount only when it is 

probable that future economic benefits associated with the item will flow to the Group and the cost of the item can 

be measured reliably. Otherwise costs are charged to the income statement during the financial year in which they are 

incurred.

1. Summary of significant accounting policies (continued)

Woodside Petroleum Ltd. | Financial Report 75
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(g) Other plant and equipment

Other plant and equipment is stated at cost less accumulated depreciation and any impairment charges.

(h) Depreciation and amortisation

Oil and gas properties and other plant and equipment are depreciated to their estimated residual values at rates based 

on their expected useful lives. The major categories of assets are depreciated as follows:

Category Method Estimated useful 

lives (years)

Oil and gas properties

Land Not depreciated -

Buildings Straight-line over useful life 24-40

Transferred exploration and evaluation assets 

and offshore plant and equipment

Units of production basis over Proved plus 

Probable reserves

5-50

Onshore plant and equipment Straight-line over the lesser of useful life and the 

life of Proved plus Probable reserves

5-50

Marine vessels and carriers Straight-line over useful life 10-40

Other plant and equipment Straight-line over useful life 5-15

(i) Impairment of assets

The carrying amounts of all assets, other than inventory, financial assets and deferred tax assets, are reviewed 

half-yearly to determine whether there is an indication of an impairment loss. If any such indication exists, the asset’s 

recoverable amount is estimated. 

The recoverable amount of an asset is determined as the higher of its value in use and fair value less costs to sell. Value in 

use is determined by estimating future cash flows after taking into account the risks specific to the asset and discounting 

them to its present value using a pre-tax discount rate that reflects current market assessment of the time value of money.

For any asset that does not generate largely independent cash flows, the recoverable amount is determined for the 

cash generating unit to which the asset belongs. If the carrying amount of an asset (or cash generating unit) exceeds its 

recoverable amount, the asset (or cash generating unit) is written down. Generally, the Group evaluates its oil and gas 

properties on a field-by-field basis.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased 

to the revised estimate of its recoverable amount, but only to the extent that the asset’s carrying amount does not exceed 

the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been 

recognised.

(j) Non-current assets and disposal groups held for sale and discontinued operations

Non-current assets and disposal groups that are expected to be recovered primarily through a sale transaction rather 

than through continuing use are classified as held for sale and measured at the lower of their carrying amounts and fair 

values less cost to sell. They are not depreciated or amortised. To be classified as held for sale, an asset or a disposal 

group must be available for immediate sale in its present condition and its sale must be highly probable.

An impairment loss is recognised for any initial or subsequent write-down of the asset to its fair value less cost to sell. 

Impairment losses on initial classification as held for sale and subsequent impairment gains or losses on remeasurement 

are recognised in the income statement. Gains are not recognised in excess of any cumulative impairment loss.

(k) Derivative financial instruments and hedge accounting 

From time to time, the Group uses derivative financial instruments such as swaps, options, futures and forward 

contracts to hedge its risks associated with commodity price, interest rate and foreign currency fluctuations.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently 

remeasured to their fair values in line with market fluctuations. The unrealised gain or loss on remeasurement is 

immediately recognised in the income statement, except where hedge accounting applies. 

1. Summary of significant accounting policies (continued)

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76 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

1. Summary of significant accounting policies (continued)

(k) Derivative financial instruments and hedge accounting (continued)

The fair values of derivative financial instruments that are traded on an active market are based on quoted market prices 

at the reporting date. The fair values of financial instruments not traded on an active market are determined using a 

valuation technique based on cash flows discounted to present value using current market interest rates. 

Hedge accounting

When a derivative is designated as a hedge for accounting purposes, the relationship between the derivative and the 

hedged item is documented, as is its risk management objective and strategy for undertaking the hedge transaction. 

Also documented is the assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that 

are used in hedging transactions have been, and will continue to be, highly effective in offsetting changes in fair values 

or cash flows of hedged items.

For the purposes of hedge accounting, hedges are classified and accounted for as follows:

Hedge type and risk Accounting treatment

Fair value hedge

Exposure to changes in the fair value of 

a recognised asset, liability or committed 

transaction

Changes in fair value of derivatives that are designated and qualified as fair 

value hedges are recorded in the income statement, together with any 

changes in the fair value of the hedged risk that are attributable to the asset, 

liability or committed transaction.

Cash flow hedge 

Exposure to variability in cash flows 

associated with a highly probable 

forecasted transaction or a committed 

foreign currency transaction

The effective portion of changes in the fair value of derivatives is recognised 

in other comprehensive income and in the hedging reserve in equity. The 

gain or loss relating to any ineffective portion is recognised in the income 

statement immediately.

Amounts accumulated in equity are taken to the income statement in the 

periods when the hedged item affects income, for instance, when the 

forecast sale that is hedged takes place.

Hedge of net investment

Exposure to changes in the net assets of 

foreign operations from foreign exchange 

movements

The accounting treatment is substantially similar to a cash flow hedge. 

Gains or losses accumulated in the hedge of net investment reserve 

in equity are taken to the income statement on disposal of the foreign 

operation.

Hedge accounting is discontinued when the hedging instrument expires, is sold or terminated, or when a hedge 

no longer meets the criteria for hedge accounting. At that point in time, any cumulative gain or loss on the hedging 

instrument recognised in equity remains in equity until the forecasted transaction occurs. 

If the forecast transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is 

transferred to the income statement.

Embedded derivatives

Derivatives embedded in the Group’s contracts, that change the nature of a host contract’s risk and are not clearly 

and closely related to the host contract, are initially recognised at fair value on the date the contract is entered into. 

Subsequent fair value movements of the derivative are recognised in the income statement.

(l) Provision for restoration

The Group records the present value of the estimated cost of legal and constructive obligations to restore operating 

locations in the period in which the obligation arises. The nature of restoration activities includes the removal of facilities, 

abandonment of wells and restoration of affected areas.

A restoration provision is recognised and updated at different stages of the development and construction of a facility 

and then reviewed on an annual basis. When the liability is initially recorded, the estimated cost is capitalised by 

increasing the carrying amount of the related exploration and evaluation assets or oil and gas properties. 

Woodside Petroleum Ltd. | Financial Report 77
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

1. Summary of significant accounting policies (continued)

(l) Provision for restoration (continued)

Over time, the liability is increased for the change in the present value based on a pre-tax discount rate appropriate to 

the risks inherent in the liability. The unwinding of the discount is recorded as an accretion charge within finance costs. 

The carrying amount capitalised in oil and gas properties is depreciated over the useful life of the related asset (refer to 

Note 1(h)).

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

are expensed.

(m) Joint ventures 

The Group’s interests in jointly controlled assets are accounted for by recognising its proportionate share in assets and 

liabilities from joint ventures, except where as operator, Woodside takes on the role as independent contractor. In these 

instances, receivables and payables relating to jointly controlled operations are brought to account on a gross basis.

Joint venture expenses and the Group’s entitlement to production are recognised on a pro-rata basis according to the 

Group’s joint venture interest.

Investments in jointly controlled entities, where the Group has significant influence, but not control, are accounted for 

using the equity method of accounting. Under the equity method, the cost of the investment is adjusted by the postacquisition changes in the Group’s share of the net assets of the venture.

On loss of joint control in a jointly controlled entity, any retained interest in the former entity is recognised at its fair 

value at the date that joint control is lost. A gain or loss, on loss of joint control, is recognised in the income statement.

(n) Borrowing costs

Borrowing costs incurred for the acquisition or construction of qualifying assets are capitalised during the period of time 

that is required to complete and prepare the asset for its intended use or sale. Assets are considered to be qualifying 

assets when this period of time is substantial (greater than 12 months).

The interest rate used to determine the amount of borrowing costs to be capitalised is the weighted average effective 

interest rate applicable to the Group’s outstanding borrowings during the year.

(o) Foreign currency

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

Translation of foreign currency transactions

Transactions in foreign currencies are initially recorded in the functional currency of the transacting entity at the 

exchange rates ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies at 

the reporting date are translated at the rates of exchange ruling at that date. Exchange differences in the consolidated 

financial statements are taken to the income statement, with the exception of differences on foreign currency 

borrowings that provide an effective hedge against a net investment in subsidiaries which are taken directly to the 

hedge of net investment reserve until the disposal of the net investment, at which time they are recognised in the 

income statement.

Translation of the financial results of foreign operations prior to 2010

Prior to 1 January 2010, certain entities within the Group had a functional currency of Australian dollars as a result of the 

economic environment in which they were operating. For the period prior to the date of change in functional currency 

assets and liabilities of these entities were translated into the presentation currency of the Group (US dollars) at the rate 

of exchange ruling at the respective reporting dates. The income statements were translated at the average exchange 

rates for the reporting period, or at the exchange rates ruling at the date of transactions. Exchange differences arising on 

translation were taken to the foreign currency translation reserve in equity.

Hedge transactions

Derivatives and other financial instruments are used to hedge foreign exchange risk relating to certain transactions 

(refer to Note 1(k)).

Disposal of foreign operations

On disposal of a foreign operation, the proportionate share of exchange differences recognised in the foreign currency 

translation reserve relating to the particular foreign operation is recognised in the income statement.

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78 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

1. Summary of significant accounting policies (continued)

(p) Leases

The determination of whether an arrangement is or contains a lease, is based on the substance of the arrangement and 

requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or 

assets and the arrangement conveys a right to use the asset.

Assets held under leases that transfer to the Group substantially all the risks and rewards of ownership of the leased 

asset are classified as finance leases. Finance leases are capitalised at the inception of the lease, at the lower of the fair 

value of the leased asset and the present value of the minimum lease payments.

Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve 

a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in the income 

statement over the lease term.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease assets are not capitalised and payments are recognised in the income statement as an expense 

over the lease term. Lease incentives received are recognised in the income statement as an integral part of the 

total lease expense.

(q) Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at bank and short-term deposits with 

an original maturity of three months or less. Cash and cash equivalents are stated at face value in the statement of 

financial position. 

For the purposes of the statement of cash flows, cash and cash equivalents are reported net of outstanding 

bank overdrafts.

(r) Trade and other receivables

Trade and other receivables, including receivables from related parties, are initially recognised at fair value and 

subsequently measured at amortised cost less an allowance for uncollectible amounts. Collectability and impairment 

are assessed on a regular basis. Subsequent recoveries of amounts previously written off are credited against other 

expenses in the income statement.

(s) Inventories

Inventories include hydrocarbon stocks, consumable supplies and maintenance spares. Inventories are valued at the 

lower of cost and net realisable value. Cost is determined on a weighted average basis and includes direct costs and an 

appropriate portion of fixed and variable production overheads where applicable. Inventories determined to be obsolete 

or damaged are written down to net realisable value.

(t) Investments

Investments are classified as either available-for-sale or held for trading and are initially recognised at fair value plus, in 

the case of investments not held for trading, any directly attributable transaction costs.

After initial recognition investments are carried at fair value. Changes in the fair value of available-for-sale investments 

are recognised as a separate component of equity until the investment is sold, collected or otherwise disposed of, or 

until the investment is determined to be impaired, at which time the cumulative change in fair value previously reported 

in equity is included in the income statement. Changes in the fair value of held for trading investments are recognised in 

the income statement.

For investments that are actively traded in organised financial markets, fair value is determined by reference to stock 

exchange quoted market bid prices at the close of business on the reporting date. Where investments are not actively 

traded, fair value is established by using other market accepted valuation techniques.

Woodside Petroleum Ltd. | Financial Report 79
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(u) Investments in associates 

The Group’s investments in its associates are accounted for using the equity method of accounting in the consolidated 

financial statements. An associate is an entity in which the Group has significant influence and is neither a subsidiary 

nor a joint venture.

The financial statements of associates, prepared for the same reporting period as the Group and applying consistent 

accounting policies, are used by the Group to apply the equity method. The investment in the associate is carried in the 

consolidated statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of 

the associate less any impairment. The income statement reflects the Group’s share of the associate’s after tax profit or 

loss from operations.

Where there has been a change recognised directly in the associate’s equity, the Group recognises its share of any 

changes and discloses this, where applicable, in the consolidated statement of changes in equity.

On loss of significant influence of an associate, any retained investment in the former associate is recognised at its fair 

value. A gain or loss, on loss of significant influence, is recognised in the income statement.

(v) Employee provisions

Provision is made for employee benefits accumulated as a result of employees rendering services up to the end of the 

reporting period. These benefits include wages, salaries, annual leave and long service leave.

Liabilities in respect of employees’ services rendered that are not due to be settled within one year after the end of the 

period in which the employees render the related services are recognised in the statement of financial position. These 

liabilities are measured at the present value of the estimated future cash outflow to be made to the employees using 

the projected unit credit method. In determining the present value of the estimated future cash outflow, consideration is 

given to expected future wage and salary levels, experience of employee departures and periods of service. Estimated 

future payments are discounted using appropriate discount rates. Liabilities due to be settled within one year after the 

end of the period in which the employees render the related services are measured at the amount due to be paid.

(w) Share-based payments 

Equity-settled transactions

The Group provides benefits to its employees (including key management personnel) in the form of share-based 

payments whereby employees render services for shares (equity-settled transactions). The cost of equity-settled 

transactions with employees is measured by reference to the fair values of the equity instruments at the date at which 

they are granted. The fair value is determined by using a Binomial or Black-Scholes option pricing technique combined 

with a Monte Carlo simulation methodology, where relevant. The cost of equity-settled transactions is recognised, 

together with a corresponding increase in equity, over the period in which the vesting conditions are fulfilled (the vesting 

period), ending on the date on which the relevant employees become fully entitled to the awards (the vesting date).

At each subsequent reporting date until vesting, the cumulative charge to the income statement is the result of:

•	 the grant date fair value of the award;

•	 the current best estimate of the number of awards that will vest, taking into account the likelihood of 

employee turnover; and

•	 the expired portion of the vesting period.

The charge to the income statement for the year is the cumulative amount, as calculated above, less the amounts 

charged in the previous years. There is a corresponding entry to equity.

Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than 

were originally anticipated.

An additional expense is recognised for any modification that increases the total fair value of the share-based payment 

arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation and any expense not 

yet recognised for the award is recognised immediately.

Shares in the Group reacquired on-market are classified and disclosed as reserved shares and deducted from equity 

(refer to Note 1(ac)). No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation 

of the Group’s own equity instruments.

1. Summary of significant accounting policies (continued)

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80 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

1. Summary of significant accounting policies (continued)

(w) Share-based payments (continued)

Cash-settled transactions

The Group provides benefits to employees who have been on international assignment or secondment at any time 

during the vesting period in the form of cash-settled share-based payments. Employees render services in exchange 

for cash, the amounts of which are determined by reference to the price of the shares of Woodside Petroleum Ltd.

The ultimate cost of these cash-settled share-based payments will be equal to the actual cash paid to the employees 

which will be the fair value at settlement date. The cumulative cost recognised until settlement is held as a liability. All 

changes in the liability are recognised in the income statement for the year.

The fair value of the liability is determined, initially and at each reporting date until it is settled, by using a Binomial or 

Black-Scholes option pricing technique combined with a Monte Carlo simulation methodology, where relevant.

(x) Retirement benefits

All employees of the Group’s Australian entities are entitled to benefits under the Group’s superannuation plan due to 

retirement, disability or death. The Group has a defined benefit component and a defined contribution component within 

the plan. The defined benefit section of the plan is closed to new members.

The defined benefit component provides defined lump sum benefits based on years of service and final average salary. 

The cost of providing benefits under the defined benefit plan is determined using the projected unit credit actuarial 

valuation method. A liability or asset in respect of the defined benefit component of the superannuation plan is 

recognised in the statement of financial position and is measured at the present value of the defined benefit obligation 

at the reporting date less the fair value of the superannuation fund’s assets at that date. The defined benefit obligation 

includes actuarial estimates of future variables such as employee turnover and the plan’s rate of return. 

The cost of the defined benefit component is charged to the income statement systematically over the employee’s 

service life. 

Gains and losses arising from changes in actuarial estimates are recognised immediately as income or expense in the 

income statement.

The defined contribution component receives fixed contributions from Group companies and the Group’s legal or 

constructive obligation is limited to these contributions. Contributions to the defined contribution fund are recognised 

as an expense as incurred.

 (y) Financial liabilities

Borrowings are initially recognised at fair value less transaction costs. Borrowings are subsequently carried at amortised 

cost, except for those designated in a fair value hedge relationship as described previously. Any difference between 

the proceeds received and the redemption amount is recognised in the income statement over the period of the 

borrowings using the effective interest method.

Trade and other payables are carried at amortised cost when goods and services are received, whether or not billed to 

the Group, prior to the end of the financial year.

Dividends payable are recognised when declared by the Group.

(z) Tax

Income tax

Income tax expense on the profit or loss for the year comprises current and deferred tax expense.

Current tax expense is the expected tax payable on the taxable income for the year and any adjustment to tax payable 

in respect of previous years. 

Temporary differences arise between the tax bases of assets and liabilities and their carrying amounts in the financial 

statements. Deferred tax expense is determined based on changes in temporary differences.

Woodside Petroleum Ltd. | Financial Report 81
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

Deferred tax liabilities are recognised for taxable temporary differences. Deferred tax assets are recognised for 

deductible temporary differences, unused tax losses and unused tax credits only if it is probable that sufficient future 

taxable income will be available to utilise those temporary differences and losses. Such deferred tax liabilities and 

assets are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in 

a business combination) of assets and liabilities in a transaction that affects neither the taxable profit or loss nor the 

accounting profit or from investments in subsidiaries, associates and interests in joint ventures. This is to the extent that 

the Group is able to control the reversal of the temporary difference and the temporary difference is not expected to 

reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the 

extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be 

recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the 

liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantially 

enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against 

current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends 

to settle its current tax assets and liabilities on a net basis.

Current and deferred tax expenses are recognised in the income statement, except to the extent that they relate to 

items recognised directly in equity, in which case they are recognised in equity.

Petroleum Resource Rent Tax (PRRT)

PRRT is considered, for accounting purposes, to be a tax based on income. Accordingly, current and deferred PRRT 

expense is measured and disclosed on the same basis as income tax.

Tax consolidation

The parent and its wholly owned Australian controlled entities have elected to enter into tax consolidation, with 

Woodside Petroleum Ltd as the head entity of the tax consolidated group.

The tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the 

members of the tax consolidated group are recognised in the separate financial statements of the members of the tax 

consolidated group, using the stand alone approach.

(aa) Goods and Services Tax (GST)

Revenue, expenses and assets are recognised net of GST except where the GST incurred on a purchase of goods 

and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of 

acquisition of the asset or as part of the expense item.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or 

payables in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising 

from investing and financing activities that is recoverable from, or payable to, the taxation authority is classified as an 

operating cash flow.

(ab) Royalties and excise duty

Royalties and excise duty under existing regimes are considered to be production based taxes and are therefore 

accrued on the basis of the Group’s entitlement to physical production.

(ac) Issued capital

Ordinary shares are classified as equity and recorded at the value of consideration received. The cost of issuing shares 

is shown in share capital as a deduction, net of tax, from the proceeds.

Reserved shares

The Group’s own equity instruments, which are reacquired for later use in employee share-based payment 

arrangements (reserved shares), are deducted from equity. No gain or loss is recognised in the income statement on 

the purchase, sale, issue or cancellation of the Group’s own equity instruments.

1. Summary of significant accounting policies (continued)

(z) Tax (continued)

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82 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(ad) Carbon emissions

Carbon emission units purchased for compliance purposes under the Australian Carbon Pricing Mechanism are 

recognised at cost as an intangible asset. Carbon emission units granted by the Australian Government are recognised 

at nominal value (nil value).

An emissions liability is recognised as a provision when actual emissions exceed the emission units granted by 

the Australian Government. Any provision recognised is measured at the value of purchased units held, with any 

excess measured at the current market value of carbon units at the reporting date. The movement in the provision is 

recognised in the income statement.

(ae) Critical accounting estimates, assumptions and judgements

In applying the Group’s accounting policies, management continually evaluates judgements, estimates and assumptions 

based on experience and other factors including expectations of future events that may have an impact on the Group. 

All judgements, estimates and assumptions made are believed to be reasonable based on the most current set of 

circumstances available to management. Actual results may differ from those judgements, estimates and assumptions. 

Significant judgements, estimates and assumptions made by management in the preparation of these financial 

statements are outlined below.

Impairment of assets

In determining the recoverable amount of assets, in the absence of quoted market prices, estimates are made 

regarding the present value of future cash flows. For oil and gas properties, expected future cash flow estimation is 

based on reserves, future production profiles, commodity prices and costs.

Restoration obligations

The Group estimates the future removal costs of offshore oil and gas platforms, production facilities, wells and pipelines 

at different stages of the development and construction of assets or facilities. In most instances, removal of assets 

occurs many years into the future. This requires judgemental assumptions regarding removal date, future environmental 

legislation, the extent of reclamation activities required, the engineering methodology for estimating cost, future 

removal technologies in determining the removal cost, and liability specific discount rates to determine the present 

value of these cash flows. For more detail regarding the policy in respect of provision for restoration refer to Note 1(l).

Reserve estimates

Estimation of reported recoverable quantities of Proven and Probable reserves include judgemental assumptions 

regarding commodity prices, exchange rates, discount rates, and production and transportation costs for future cash 

flows. It also requires interpretation of complex geological and geophysical models in order to make an assessment of 

the size, shape, depth and quality of reservoirs, and their anticipated recoveries. The economic, geological and technical 

factors used to estimate reserves may change from period to period. 

Changes in reported reserves can impact assets’ carrying amounts, provision for restoration and recognition of 

deferred tax assets due to changes in expected future cash flows. Reserves are integral to the amount of depreciation, 

amortisation and impairment charged to the income statement. Reserve estimates are prepared in accordance 

with Woodside’s Hydrocarbon Resource Inventory Management Process and guidelines prepared by the Society of 

Petroleum Engineers.

Exploration and evaluation 

The Group’s accounting policy for exploration and evaluation assets is set out in Note 1(e). The application of this policy 

requires management to make certain estimates and assumptions as to future events and circumstances, in particular, 

the assessment of whether economic quantities of reserves have been found. Any such estimates and assumptions 

may change as new information becomes available. If, after having capitalised expenditure under the policy, the Group 

concludes that it is unlikely to recover the expenditure by future exploitation or sale, then the relevant capitalised 

amount will be written off to the income statement. 

1. Summary of significant accounting policies (continued)

Woodside Petroleum Ltd. | Financial Report 83
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(ae) Critical accounting estimates, assumptions and judgements (continued)

PRRT - North West Shelf Project

The Group’s accounting policy for PRRT is set out in Note 1(z). The application of this policy to the North West Shelf 

Project as a result of its transition into the PRRT regime initially results in a deductible temporary difference which is 

available to offset against future taxable profits. An estimated deferred tax asset (refer Note 4(d)) in respect of this 

deductible temporary difference has not been recognised on the basis deductions from future augmentation of the 

deductible temporary difference will be sufficient to offset future taxable profit. Had an alternative approach been used 

to assess recovery of the deferred tax asset, whereby future augmentation was not included in the assessment, the 

estimated deferred tax asset would have been recognised, with a corresponding benefit to income tax expense.

It was determined that the approach adopted provides the most meaningful information on the implications of transition 

of the North West Shelf Project to the PRRT regime, whilst ensuring compliance with AASB 112 Income Taxes.

(af) New and amended Accounting Standards and Interpretations issued but not yet effective

The following Standards and interpretations have recently been issued or amended but are not yet effective and have 

not been adopted by the Group as at the financial reporting date.

Title

Application date 

of the Standard Summary

AASB 9 Financial Instruments Periods 

beginning on or 

after 1 January 

2015

AASB 9 includes requirements for the classification and 

measurement of financial assets and financial liabilities 

and the recognition and derecognition requirements 

for financial instruments. This standard will be applied 

retrospectively.

AASB 2010-7 Amendments to Australian 

Accounting Standards arising from AASB 9 

(December 2010)

[AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 

120, 121, 127, 128, 131, 132, 136, 137, 139, 

1023 & 1038 and Interpretations 2, 5, 10, 

12, 19 & 127]

Periods 

beginning on or 

after 1 January 

2013

This Standard adds the requirements for classifying and 

measuring financial liabilities to AASB 9. The Standard 

also makes amendments to several Australian Accounting 

Standards and Interpretations. These amendments arise 

from the issuance of AASB 9 Financial Instruments as 

issued in December 2010.

AASB 10 Consolidated Financial 

Statements

Periods 

beginning on or 

after 1 January 

2013

AASB 10 introduces a revised definition of control and 

establishes a single control model that applies to all 

entities. This Standard replaces AASB 127 Consolidated 

and Separate Financial Statements and Interpretation 112 

Consolidation - Special Purpose Entities and will be applied 

on a modified retrospective basis.

AASB 11 Joint Arrangements Periods 

beginning on or 

after 1 January 

2013

This Standard supersedes AASB 131 Interests in Joint 

Ventures and Interpretation 113 Jointly Controlled Entities - 

Non-Monetary Contributions by Venturers and establishes 

principles for the financial reporting by parties to a joint 

arrangement. Changes will be applied on a modified 

retrospective basis.

AASB 2011-7 Amendments to Australian 

Accounting Standards arising from the 

Consolidation and Joint Arrangements 

Standards

[AASB 1, 2, 3, 5, 7, 9, 2009-11, 101, 107, 

112, 118, 121, 124, 132, 133, 136, 138, 139, 

1023 & 1038 and Interpretations 5, 9, 16 

& 17]

Periods 

beginning on or 

after 1 January 

2013

This Standard makes amendments to several Australian 

Accounting Standards and Interpretations arising from 

the issuance of the consolidation and joint arrangements 

Standards.

1. Summary of significant accounting policies (continued)

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84 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

AASB 12 Disclosures of Interests in Other 

Entities

Periods 

beginning on or 

after 1 January 

2013

This standard provides a single source of guidance for all 

disclosures relating to an entity’s interests in subsidiaries, 

joint arrangements, associates and unconsolidated 

structured entities.

AASB 13 Fair Value Measurement Periods 

beginning on or 

after 1 January 

2013

This standard defines fair value and provides a single 

framework for measuring fair value when required by 

individual Standards. The requirements of AASB 13 will be 

applied prospectively.

AASB 2011-8 Amendments to Australian 

Accounting Standards arising from 

AASB 13 

[AASB 1, 2, 3, 4, 5, 7, 9, 2009-11, 2010-7, 

101, 102, 108, 110, 116, 117, 118, 119, 120, 

121, 128, 131, 132, 133, 134, 136, 138, 139, 

140, 141, 1004 and Interpretations 2, 4, 12, 

13, 14, 17, 19, 131 & 132]

Periods 

beginning on or 

after 1 January 

2013

This Standard makes amendments to several Australian 

Accounting Standards and Interpretations. These 

amendments principally arise from the issuance of 

AASB 13.

AASB 119 Employee Benefits (revised) Periods 

beginning on or 

after 1 January 

2013

The revised Standard requires the immediate recognition 

of defined benefit costs, improves the presentation and 

disclosure requirements for defined benefit plans and 

requires the recognition of short-term and other long-term 

employee benefits to be based on the expected timing 

of settlement rather than employee entitlement. These 

revisions will be applied retrospectively.

AASB 2011-10 Amendments to Australian 

Accounting Standards arising from AASB 

119 (September 2011)

[AASB 1, 8, 101, 124, 134, 1049 & 2011-8 

and Interpretation 14]

Periods 

beginning on or 

after 1 January 

2013

This Standard makes amendments to several Australian 

Accounting Standards and Interpretations. These 

amendments principally arise from amendments to the 

revised employee benefits Standard.

AASB 2011-4 Amendments to Australian 

Accounting Standards to Remove Individual 

Key Management Personnel Disclosure 

Requirements [AASB 124]

Periods 

beginning on or 

after 1 July 2013

This Standard removes the requirements to include 

individual key management personnel disclosures in the 

notes to and forming part of the Financial Report.

AASB 2011-9 Amendments to Australian 

Accounting Standards - Presentation of 

Items of Other Comprehensive Income

[AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 

134, 1039 & 1049]

Periods 

beginning on or 

after 1 July 2012

This Standard amends the presentation of components 

of other comprehensive income including presenting 

separately those items that will be reclassified to profit or 

loss in the future and those that would not. Amendments 

will be applied retrospectively.

AASB 2012-5 Amendments to Australian 

Accounting Standards arising from Annual 

Improvements 2009-2011 Cycle 

[AASB 1,101, 116, 132, & 134 and 

Interpretation 2]

Periods 

beginning on or 

after 1 January 

2013

This Standard makes amendments to several Australian 

Accounting Standards. These amendments primarily relate 

to clarification of narrative requirements for comparative 

information and segment disclosures for interim financial 

reports.

The potential effect of these Standards is yet to be fully determined. However, it is not expected that the new or 

amended Standards will significantly affect the Group’s accounting policies, financial position or performance.

1. Summary of significant accounting policies (continued)

(af) New and amended Accounting Standards and Interpretations issued but not yet effective (continued)

Woodside Petroleum Ltd. | Financial Report 85
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

2. Operating segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the executive 

management team (the chief operating decision makers) in assessing performance and in determining the allocation of 

resources. The following operating segments are identified by management based on the nature and geographical location of 

the business or venture. 

North West Shelf Business Unit

Exploration, evaluation, development, production and sale of liquefied natural gas, pipeline natural gas, condensate, liquefied 

petroleum gas and crude oil from the North West Shelf ventures.

Australia Oil Business Unit

Exploration, evaluation, development, production and sale of crude oil in assigned permit areas including Laminaria, Mutineer–

Exeter, Enfield, Vincent and Stybarrow ventures. 

Pluto Business Unit

Exploration, evaluation, development, production and sale of liquefied natural gas and condensate in assigned permit areas.

Browse Business Unit

Exploration, evaluation and development of liquefied natural gas and condensate in assigned permit areas.

United States Business Unit

Exploration, evaluation, development, production and sale of pipeline natural gas, condensate and crude oil in assigned 

permit areas.

Other

This segment comprises the activities undertaken by Exploration, International and Sunrise Business Units.

Unallocated items

Unallocated items comprise non-segmental items of revenue and expenses and associated assets and liabilities not allocated 

to operating segments as they are not considered part of the core operations of any segment.

Performance monitoring and evaluation

Management monitors the operating results of the Business Units separately for the purpose of making decisions about 

resource allocation and performance assessment. The performance of operating segments is evaluated based on profit before 

tax and net finance costs (profit before tax and interest) and is measured in accordance with the Group’s accounting policies.

Financing requirements, finance income, finance costs and taxes are managed at a Group level. 

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86 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(a) Revenue and profit after tax for the year ended 31 December 2012

North West 

Shelf

Business Unit

Australia Oil

Business Unit

Pluto 

Business Unit

Browse 

Business Unit

United States 

Business Unit

Other

Unallocated 

items

Consolidated

2012

US$m

2012

US$m

2012

US$m

2012

US$m

2012

US$m

2012

US$m

2012

US$m

2012

US$m

Revenue

Operating revenue 3,300 1,545 1,427 - 76 - - 6,348

Cost of sales

Cost of production (739) (365) (178) - (12) - (1) (1,295)

Shipping and direct sales costs (57) (1) (81) - (5) - (6) (150)

Oil and gas properties depreciation and amortisation (267) (356) (526) - (33) - 9 (1,173)

Total cost of sales (1,063) (722) (785) - (50) - 2 (2,618)

Gross profit 2,237 823 642 - 26 - 2 3,730

Exploration and evaluation (19) (11) (17) (95) (75) (176) 1 (392)

Share of associates net profit 4 - - - - - - 4

Change in fair value of derivative financial instruments - - - - - - (10) (10)

Change in fair value of other financial instruments - - - - - - - -

Loss on disposal of oil and gas properties (7) - - - - - - (7)

Depreciation of other plant and equipment - - - - - - (11) (11)

Gain on disposal of exploration and evaluation assets - - - 3 5 - 754 762

Gain on disposal of investments 2 - - - - - - 2

Net defined benefit plan loss - - - - - - (3) (3)

Exchange loss on cash balances - 1 (17) - - 1 12 (3)

Other exchange gain - (1) 3 - - 1 4 7

Impairment loss - (82) (49) - - (26) - (157)

Other income 21 8 3 1 1 - 21 55

Other expenses (3) - (112) - (17) (1) (49) (182)

Profit before tax and net finance income/(costs) 2,235 738 453 (91) (60) (201) 721 3,795(1)

Finance income 8

Finance costs (145)

Profit before tax 3,658

Taxes (614)

Profit after tax 3,044

2011

US$m

2011

US$m

2011

US$m

2011

US$m

2011

US$m

2011

US$m

2011

US$m

2011

US$m

Revenue

Operating revenue 2,989 1,677 - - 93 43 - 4,802

Cost of sales

Cost of production (692) (252) (1) - (13) (10) (13) (981)

Shipping and direct sales costs (43) (1) (6) - (6) - (5) (61)

Oil and gas properties depreciation and amortisation (182) (374) - - (32) (26) (1) (615)

Total cost of sales (917) (627) (7) - (51) (36) (19) (1,657)

Gross profit 2,072 1,050 (7) - 42 7 (19) 3,145

Exploration and evaluation (4) (3) (278) (31) (69) (194) (8) (587)

Share of associates net profit 3 - - - - - - 3

Change in fair value of derivative financial instruments - - - - - - (5) (5)

Change in fair value of other financial instruments - - 12 - - - - 12

Gain on disposal of oil and gas properties 1 - - - 4 - - 5

Depreciation of other plant and equipment - - - - (1) - (11) (12)

Gain on disposal of exploration and evaluation assets - - - - 1 6 - 7

Gain on disposal of investments - - - - - - - -

Net defined benefit plan loss - - - - - - (7) (7)

Exchange gain on cash balances - 6 14 (3) - - (10) 7

Other exchange gain - (3) (3) - - - 52 46

Impairment reversal/(loss) - (14) - - 17 - - 3

Other income 14 3 2 - - - 10 29

Other expenses (39) (4) (330) (3) (22) (1) (35) (434)

Profit before tax and net finance income/(costs) 2,047 1,035 (590) (37) (28) (182) (33) 2,212(1)

Finance income 10

Finance costs (36)

Profit before tax 2,186

Taxes (677)

Profit after tax 1,509

2. Operating segments (continued)

(1) The performance of operating segments is evaluated based on profit before finance income, finance costs and tax. Financing requirements, finance income, finance 

costs and taxes are managed on a Group basis.

There were no significant inter-segment transactions during the financial year.

Woodside Petroleum Ltd. | Financial Report 87
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(b) Segment assets and liabilities and other segment information at 31 December 2012

North West 

Shelf 

Business Unit

Australia Oil

Business Unit

Pluto

Business Unit

Browse 

Business Unit

United States

Business Unit

Other

Unallocated 

items

Consolidated

2012

US$m

2012

US$m

2012

US$m

2012

US$m

2012

US$m

2012

US$m

2012

US$m

2012

US$m

Segment assets 4,083 1,704 14,981 48 318 227 3,449 24,810

Segment liabilities 1,714 448 771 57 49 71 5,873 8,983

Other segment information

Investment in associates 2 - - - - - - 2

Additions to oil and gas properties 328 132 899 - 25 (2) - 1,382

Additions to exploration and evaluation assets 7 58 8 283 2 43 (12) 389

Additions to other plant and equipment - - - - - - 9 9

2011

US$m

2011

US$m

2011

US$m

2011

US$m

2011

US$m

2011

US$m

2011

US$m

2011

US$m

Segment assets 3,975 1,941 14,672 1,184 365 216 878 23,231

Segment liabilities 1,632 573 1,028 86 41 112 6,490 9,962

Other segment information

Investment in associates 2 - - - - - - 2

Additions to oil and gas properties 460 366 2,446 - 15 - - 3,287

Additions to exploration and evaluation assets 28 48 283 460 (10) 7 - 816

Additions to other plant and equipment - - - - - - 2 2

(c) Geographical information 

Revenue from external customers and non-current assets by geographical locations is detailed below. Revenue is attributable to 

geographic location based on the location of the customers.

Australia Asia United States of 

America

Other Consolidated

2012

US$m

2011

US$m

2012

US$m

2011

US$m

2012

US$m

2011

US$m

2012

US$m

2011

US$m

2012

US$m

2011

US$m

Revenue from external customers 549 507 5,483 3,400 187 224 129 671 6,348 4,802

Non-current assets 20,303 21,272 - 6 291 342 2 25 20,596(2) 21,645(3)

(2) Non-current assets excludes derivatives (US$33 million) and deferred tax (US$892 million).

(3) Non-current assets excludes derivatives (US$48 million) and deferred tax (US$524 million).

(d) Major customer information 

The Group has one major customer which accounts for 11% of external revenue within the Pluto Business Unit (2011: nil).

2. Operating segments (continued)

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88 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

2012

US$m

2011

US$m

(a) Operating Revenue

Revenue from sale of goods

Liquefied natural gas

North West Shelf 1,670 1,509

Pluto 1,164 -

2,834 1,509

Pipeline natural gas

North West Shelf 367 375

United States of America 3 8

370 383

Condensate

North West Shelf 765 860

Pluto 138 -

Ohanet(1) - 26

United States of America - 1

903 887

Oil

North West Shelf 373 118

Laminaria 222 152

Mutineer–Exeter 20 11

Enfield 325 475

Vincent 713 589

Stybarrow 265 450

United States of America 73 84

1,991 1,879

Liquefied petroleum gas

North West Shelf 125 127

Ohanet(1) - 17

125 144

Total revenue from sale of goods 6,223 4,802

LNG processing revenue 125 -

Total operating revenue 6,348 4,802

(b) Cost of sales

Cost of production 

Production costs (692) (505)

Royalties and excise (501) (466)

Carbon costs (17) -

Insurance (40) (31)

Inventory movement (45) 21

(1,295) (981)

Shipping and direct sales costs (150) (61)

Oil and gas properties depreciation and amortisation

Land and buildings (41) (7)

Transferred exploration and evaluation (42) (21)

Plant and equipment (1,084) (581)

Marine vessels and carriers (6) (6)

(1,173) (615)

Total cost of sales (2,618) (1,657)

Gross profit 3,730 3,145

(1) Woodside’s interest in the Ohanet risk sharing contract expired in October 2011.

3. Revenue and expenses

Woodside Petroleum Ltd. | Financial Report 89
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

2012

US$m

2011

US$m

(c) Other income

Other fees and recoveries 55 29

Share of associates’ net profit 4 3

Other exchange gain 7 46

Gain on disposal of exploration and evaluation assets(1) 762 7

Gain on disposal of investments 2 -

Change in fair value of other financial instruments - 12

Total other income 830 97

(d) Other expenses

Exploration and evaluation

Exploration expensed in current year (230) (381)

Exploration expensed previously capitalised (38) (147)

Amortisation of license acquisition costs (26) (28)

Evaluation (98) (31)

Total exploration and evaluation (392) (587)

Other costs

Net defined benefit plan loss (3) (7)

(Loss)/gain on disposal of oil and gas properties (7) 5

Change in fair value of derivative financial instruments (10) (5)

Exchange (loss)/gain on cash balances (3) 7

Depreciation of other plant and equipment (11) (12)

General, administrative and other costs (96) (130)

Pluto mitigation and initial start up costs (86) (304)

Impairment of exploration and evaluation assets (26) (14)

(Impairment)/reversal of oil and gas properties(2) (131) 17

Total other costs (373) (443)

Total other expenses (765) (1,030)

Profit before tax and net finance income/(costs) 3,795 2,212

(e) Finance income 

Interest 8 10

Total finance income 8 10

(f) Finance costs

Unwinding of present value discount (accretion) (26) (27)

Other finance costs (119) (9)

Total finance costs (145) (36)

Profit before tax 3,658 2,186

(1) On 18 September 2012, the Group sold a 14.7% interest in the Browse LNG permits on an assumed unitised basis to Japan Australia LNG (MIMI Browse) Pty 

Ltd (MIMI) for US$2 billion. The proceeds were treated as a reimbursement of previously incurred costs and credited against the exploration and evaluation 

assets. The excess was recognised as a gain on sale. 

(2) As part of the Group’s regular review of assets whose value may be impaired, the impairment loss includes, a charge of US$82 million recognised in relation to 

the Laminaria-Corallina field (which is part of the Australia Oil Business Unit segment). This followed an assessment of the expected ultimate reserve recovery. 

The recoverable amount for the cash-generating unit was determined based on the value in use calculation. The nominal pre-tax discount rate applied to the 

cash generating unit was 12%.

3. Revenue and expenses (continued)

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INFORMATION

90 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

2012

US$m

2011

US$m

(a) Tax expense comprises

PRRT

Current tax expense 387 92

Under/(over) provided in prior years - -

Deferred tax expense related to the movements in deferred tax balances (910) (75)

(523) 17

Income tax

Current tax expense 1,030 579

Under provided in prior years 14 (5)

Deferred tax expense related to the movements in deferred tax balances 93 86

1,137 660

Total tax expense reported in the income statement 614 677

(b) Reconciliation of tax expense to prima facie tax payable

Profit before tax 3,658 2,186

PRRT expense 523 (17)

Profit after PRRT expense 4,181 2,169

Tax expense calculated at 30% 1,254 651

Tax effect of items which are non-deductible/(assessable)

Sale of assets (186) -

Research and development (6) (9)

Other (1) (4)

Foreign expenditure not brought to account 58 21

Tax rate differential on non-Australian income - 2

Under/(over) provided in prior years 14 (5)

Foreign exchange impact on tax expense 4 4

PRRT expense (523) 17

Tax expense 614 677

The tax rate used in the above reconciliation is that applied to resident companies pursuant to the income tax statutes in 

force in Australia as at the reporting date. There has been no change in the corporate tax rate when compared with the 

previous reporting year.

4. Taxes

Woodside Petroleum Ltd. | Financial Report 91
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

4. Taxes (continued)

At 

1 January

Charged/ 

(credited) 

to income 

statement

Acquisition/ 

(disposal)

At 

31 December

US$m US$m US$m US$m

(c) Deferred tax

2012

Deferred tax assets

Arising from temporary differences and tax losses

Foreign jurisdiction 11 - - 11

Domestic jurisdiction 22 (22) - -

Arising from PRRT 491 390 - 881

524 368 - 892

Deferred tax liabilities

Arising from temporary differences

Exploration and evaluation assets 563 (71) (308) 184

Oil and gas properties 686 229 - 915

Financial instruments 39 (6) - 33

Other liabilities (203) 118 121 36

Provisions (374) (53) - (427)

Other (53) 33 - (20)

Arising from PRRT 1,167 (117) (403) 647

1,825 133 (590) 1,368

2011

Deferred tax assets

Arising from temporary 

differences and tax losses

Foreign jurisdiction 11 - - 11

Domestic jurisdiction 30 (8) - 22

Arising from PRRT 211 280 - 491

252 272 - 524

Deferred tax liabilities

Arising from temporary differences

Exploration and evaluation assets 410 153 - 563

Oil and gas properties 548 138 - 686

Financial instruments 114 (75) - 39

Other liabilities (238) 35 - (203)

Provisions (203) (171) - (374)

Other (49) (4) - (53)

Arising from PRRT 962 205 - 1,167

1,544 281 - 1,825

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92 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

2012

US$m

2011

US$m

(d) Unrecognised deferred tax assets

Tax losses not recognised

Revenue 250 205

Capital - 100

Deductible temporary differences not recognised(1) 3,203 144

Temporary differences associated with investments 5 4

3,458 453

(1) Includes a deductible temporary difference of $3 billion related to the transition of the North West Shelf Project to the PRRT regime. Refer Note 1(ae).

(e) Tax losses

At the reporting date the Group has unused (recognised and not recognised) tax losses of US$751 million 

(2011: US$981 million) that are available for offset against future taxable profits.

There are no deferred tax assets recognised in respect of tax losses as they have been fully utilised in 2012 

(2011: US$16 million).

No deferred tax asset has been recognised in respect of the remaining tax losses and credits due to the uncertainty of 

future profit streams.

There are no carried forward tax credits available in 2012 (2011: nil). 

(f) Tax consolidation

The parent and its wholly-owned Australian controlled entities have elected to enter tax consolidation, with 

Woodside Petroleum Ltd as the head entity of the tax consolidated group. The members of the tax consolidated 

group are identified at Note 35(a).

Entities within the tax consolidated group have entered into a tax funding arrangement and a tax sharing agreement 

with the head entity. Under the terms of the tax funding arrangement, Woodside Petroleum Ltd and each of the entities 

in the tax consolidated group have agreed to make a tax equivalent payment to or from the head entity calculated on 

a stand alone basis based on the current tax liability or current tax asset of the entity. Such amounts are reflected in 

amounts receivable from, or payable to, other entities in the tax consolidated group.

The tax sharing agreement entered into between members of the tax consolidated group provides for the 

determination of the allocation of income tax liabilities between the entities, should the head entity default on its tax 

payment obligations. No amounts have been recognised in the financial statements in respect of this agreement as 

payment of any amounts under the tax sharing agreement is considered remote.

4. Taxes (continued)

Woodside Petroleum Ltd. | Financial Report 93
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

5. Earnings per share

2012 2011

Profit attributable to equity holders of the parent (US$m) 2,983 1,507

Weighted average number of shares on issue 814,751,356 791,668,973

Basic and diluted earnings per share (US cents)(1) 366 190

(1) Earnings per share is calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares 

outstanding during the year. The weighted average number of shares makes allowance for shares reserved for employee share plans. Diluted earnings per share is not 

significantly different from basic earnings per share.

There have been no transactions involving ordinary shares between the reporting date and the date of completion of this 

Financial Report.

6. Dividends paid and proposed

2012

US$m

2011

US$m

(a) Dividends paid during the financial year

Prior year fully franked final dividend US$0.55, paid on 4 April 2012

(2011: US$0.55, paid on 6 April 2011) 443 430

Current year fully franked interim dividend US$0.65, paid 2 October 2012

(2011: US$0.55 paid on 30 September 2011) 536 436

979 866

(b) Dividend declared (not recorded as a liability)

Final dividend US$0.65,to be paid on 3 April 2013 

(2011: US$0.55, paid on 4 April 2012) 536 443

Dividend per share in respect of financial year (US cents) 130 110

(c) Franking credit balance

Franking credits available for the subsequent periods 3,391 2,785

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94 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

7. Cash and cash equivalents

2012

US$m

2011

US$m

(a) Components of cash and cash equivalents

Cash at bank 94 20

Money market deposits 2,328 21

Total cash and cash equivalents 2,422 41

(b) Reconciliation to statement of cash flows

For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:

2012

US$m

2011

US$m

Cash at bank 94 20

Money market deposits 2,328 21

2,422 41

8. Receivables

2012

US$m

2011

US$m

Trade receivables(1) 449 339

Other receivables(2) 122 328

Dividends receivable(3) 2 2

Interest receivable 1 -

574 669

(1) Denominated in a mixture of Australian dollars and US dollars, interest free and settlement terms between 7 and 30 days.

(2) Other receivables are interest-free with various maturities.

(3) Dividends and interest receivable are receivable within 30 days of period end. 

9. Inventories

2012

US$m

2011

US$m

(a) Inventories (current)

Petroleum products (at cost)

Work in progress 1 1

Goods in transit 106 3

Finished stocks 63 119

Warehouse stores and materials (at cost) 71 72

241 195

(b) Inventories (non-current)

Warehouse stores and materials (at cost) 7 18

Woodside Petroleum Ltd. | Financial Report 95
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

10. Other financial assets 

2012

US$m

2011

US$m

(a) Other financial assets (current)

Derivative instruments (at fair value)(1) 10 9

Embedded derivatives (at fair value)(2) 4 7

Cash held in reserve 18 -

32 16

(b) Other financial assets (non-current)

Other investments (available-for-sale) 

Listed (at fair value) 1 3

Unlisted (at cost) - 5

Cash held in reserve(3) 30 30

Derivative instruments (at fair value)(1) - 10

Embedded derivatives (at fair value)(2) 33 38

64 86

(1) Details regarding derivative instruments are contained in Note 25(f).

(2) Embedded derivatives relate to sales contracts.

(3) Represents restricted cash associated with JBIC facility, refer to Note 25(e).

11. Other assets

2012

US$m

2011

US$m

(a) Other assets (current)

Prepayments 17 41

Other 3 52

20 93

(b) Other assets (non-current)

Other 1 1

Investment in associates 2 2

3 3

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96 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

12. Exploration and evaluation assets

2012

US$m

2011

US$m

(a) Reconciliations of the carrying amounts of exploration 

and evaluation assets

Carrying amount at 1 January 2,235 1,801

Additions 389 816

Disposals at written down value(1) (1,311) (10)

Amortisation of licence acquisition costs (26) (28)

Expensed (previously capitalised):

Exploration (38) (147)

Evaluation (91) (29)

Impairment loss (26) (14)

Transferred exploration and evaluation (12) (154)

Carrying amount at 31 December 1,120 2,235

(b) Carrying amounts of exploration and evaluation assets 2012

US$m

2011

US$m

Regions

Australia

Browse Basin 87 1,200

Carnarvon Basin 773 712

Bonaparte Basin 147 136

The Americas

Gulf of Mexico 111 155

Brazil 2 26

Asia

Korea - 6

1,120 2,235

(1) On 18 September 2012, the Group sold a 14.7% interest in the Browse LNG permits on an assumed unitised basis to Japan Australia LNG (MIMI Browse) 

Pty Ltd (MIMI) for US$2 billion. The proceeds were treated as a reimbursement of previously incurred costs and credited against the exploration and evaluation 

assets. The excess was recognised as a gain on sale.

Woodside Petroleum Ltd. | Financial Report 97
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

13. Oil and gas properties

Land 

and 

buildings

Transferred 

exploration 

and 

evaluation

Plant 

and 

equipment

Marine 

vessels and 

carriers

Projects 

in 

development

Total

US$m US$m US$m US$m US$m US$m

Year ended 31 December 2012

Carrying amount at 1 January 2012 304 120 4,314 126 14,425 19,289

Additions - - 93 - 1,289 1,382

Disposals at written down value - - (1) - (3) (4)

Depreciation and amortisation (41) (42) (1,084) (6) - (1,173)

Impairment loss - - (82) - (49) (131)

Completions and transfers 522 444 13,585 - (14,539) 12

Carrying amount at 31 December 2012 785 522 16,825 120 1,123 19,375

At 31 December 2012

Historical cost 1,106 845 23,014 373 1,172 26,510

Accumulated depreciation and impairment (321) (323) (6,189) (253) (49) (7,135)

Net carrying amount 785 522 16,825 120 1,123 19,375

Year ended 31 December 2011

Carrying amount at 1 January 2011 338 141 3,827 132 12,079 16,517

Additions - - 332 - 2,955 3,287

Disposals at written down value - - (61) - (10) (71)

Depreciation and amortisation (7) (21) (581) (6) - (615)

Impairment reversal - - 17 - - 17

Completions and transfers (27) - 780 - (599) 154

Carrying amount at 31 December 2011 304 120 4,314 126 14,425 19,289

At 31 December 2011

Historical cost 574 402 9,384 373 14,425 25,158

Accumulated depreciation and impairment (270) (282) (5,070) (247) - (5,869)

Net carrying amount 304 120 4,314 126 14,425 19,289

Borrowing costs capitalised in oil and gas properties during the year were US$101 million (2011: US$200 million) at a weighted 

average interest rate of 3.4% (2011: 3.3%).

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98 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

14. Other plant and equipment

2012

US$m

2011

US$m

(a) Other plant and equipment

Plant and equipment 170 161

Less: Accumulated depreciation (110) (99)

60 62

(b) Reconciliation of the carrying amounts of other plant and equipment at the beginning and 

end of the financial year

Carrying amount at 1 January 62 72

Additions 9 2

Depreciation (11) (12)

Carrying amount at 31 December 60 62

15. Payables

2012

US$m

2011

US$m

(a) Payables (current)

Trade payables(1) 268 343

Other payables(1) 517 827

Interest payable(2) 44 44

829 1,214

(b) Payables (non-current)

Trade payables 2 -

Loan payables(3) 194 215

196 215

(1) Trade and other payables are interest-free and normally settled on 30 day terms.

(2) Details regarding interest-bearing liabilities are contained in Note 25(e).

(3) Loan payables are unsecured, interest-free and have a repayment period of 10 years.

Woodside Petroleum Ltd. | Financial Report 99
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

16. Interest-bearing liabilities

2012

US$m

2011

US$m

(a) Interest-bearing liabilities (current)(1)

Bonds 250 -

Debt facilities 325 770

575 770

(b) Interest-bearing liabilities (non-current)(1)

Bonds 2,386 2,626

Debt facilities 1,379 1,706

3,765 4,332

(1) Details regarding interest-bearing liabilities are contained in Note 25(e).

17. Tax payable

2012

US$m

2011

US$m

PRRT payable 116 (10)

Income tax payable 531 84

647 74

18. Other financial liabilities

2012

US$m

2011

US$m

Other financial liabilities (non-current)

Other financial liability 7 6

7 6

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100 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

19. Other liabilities

2012

US$m

2011

US$m

(a) Other liabilities (current)

Unearned revenue 21 24

Gas purchase commitments 3 3

24 27

(b) Other liabilities (non-current)

Unearned revenue 118 134

Gas purchase commitments 17 17

Defined benefit superannuation plan 30 30

165 181

20. Provisions

Restoration 

of operating 

locations(1)

Employee

benefits(2)

Other Total

US$m US$m US$m US$m

Year ended 31 December 2012

At 1 January 2012 899 175 244 1,318

Change in provision 115 25 (75) 65

Unwinding of present value discount 24 - - 24

At 31 December 2012 1,038 200 169 1,407

At 31 December 2012

Current 9 153 128 290

Non-current 1,029 47 41 1,117

1,038 200 169 1,407

Year ended 31 December 2011

At 1 January 2011 581 156 11 748

Change in provision 295 19 233 547

Unwinding of present value discount 23 - - 23

At 31 December 2011 899 175 244 1,318

At 31 December 2011

Current 26 134 167 327

Non-current 873 41 77 991

899 175 244 1,318

(1) Details regarding restoration of operating locations are contained in Note 1(l) and 1(ae).

(2) Details regarding employee benefits are contained in Note 1(v) and 27.

Woodside Petroleum Ltd. | Financial Report 101
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

21. Contributed equity

2012

US$m

2011

US$m

(a) Issued and fully paid shares 

823,910,657 (2011: 805,671,604) ordinary shares(1) 6,547 5,880

(b) Shares reserved for employee share plans

961,799 (2011: 1,298,284) ordinary shares(2) (44) (67)

(1) All shares are a single class with equal rights to dividends, capital distributions and voting. The company does not have authorised capital nor par value in 

respect of its issued shares.

(2) Information relating to the number of Woodside Petroleum Ltd shares reserved for employee share plans can be found in Note 27(a) and (b).

2012

Shares

2011

Shares

2012

US$m

2011

US$m

(c) Movements in issued and fully paid shares

At 1 January 805,671,604 783,401,631 5,880 5,036

Dividend reinvestment plan: 

2010 final dividend(1) - 9,828,189 - 440

2011 interim dividend(2) - 12,441,784 - 404

2011 final dividend(3) 11,639,053 - 431 -

Employee share plans:

2012 employee equity plan(4) 6,600,000 - 236 -

Balance at the end of the period 823,910,657 805,671,604 6,547 5,880

(1) 7,397,386 ordinary shares issued at A$43.80 and 2,430,803 ordinary shares issued at A$42.32.

(2) 9,507,762 ordinary shares issued at A$33.43 and 2,934,022 ordinary shares issued at A$33.49. 

(3) 2,924,534 ordinary shares issued at A$34.88 and 8,714,519 ordinary shares issued at A$35.40. 

(4) 6,600,000 ordinary shares issued at A$34.71.

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102 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

22. Other reserves 

Employee 

benefits 

reserve

Foreign 

currency 

translation 

reserve

Hedge of net 

investment 

reserve

Investment 

fair value 

reserve

Total

US$m US$m US$m US$m US$m

Year ended 31 December 2012

At 1 January 2012 303 663 110 (13) 1,063

Share-based payments 68 - - - 68

Share plan redemptions (270) - - - (270)

Available-for-sale financial assets - - - (2) (2)

Companies voluntarily liquidated - - - - -

At 31 December 2012 101 663 110 (15) 859

Year ended 31 December 2011

At 1 January 2011 192 679 110 (10) 971

Share-based payments 111 - - - 111

Share plan redemptions - - - - -

Available-for-sale financial assets - - - (3) (3)

Companies voluntarily liquidated - (16) - - (16)

At 31 December 2011 303 663 110 (13) 1,063

Nature and purpose of reserves

Employee benefits reserve

Used to record share-based payments associated with the employee share plans.

Foreign currency translation reserve

Used to record foreign exchange differences arising from the translation of the financial statements of foreign entities from 

their functional currency to the Group’s presentation currency.

Hedge of net investment reserve

Used to record gains and losses on hedges of net investments in foreign operations.

Investment fair value reserve

Used to record changes in the fair value of the Group’s available-for-sale financial assets.

Woodside Petroleum Ltd. | Financial Report 103
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

23. Retained earnings

2012

US$m

2011

US$m

At 1 January 5,782 5,141

Net profit for the year 2,983 1,507

Dividends (979) (866)

At 31 December 7,786 5,782

24. Parent entity information

2012

US$m

2011

US$m

Information relating to Woodside Petroleum Ltd

Current assets 31 -

Total assets 7,800 6,800

Current liabilities (427) (131)

Total liabilities (934) (426)

Net assets 6,866 6,374

Issued and fully paid shares 6,547 5,880

Share reserved for employee share plans (44) (67)

Employee benefits reserve 79 264

Foreign currency translation reserve 303 303

Retained earnings (19) (6)

Total shareholders’ equity 6,866 6,374

Profit of the parent entity 965 885

Total comprehensive income of the parent entity 965 885

Guarantees

Woodside Petroleum Ltd and Woodside Energy Ltd (a subsidiary company) are parties to a Deed of Cross Guarantee as 

disclosed in Note 35(b). The effect of the Deed is that Woodside Petroleum Ltd has guaranteed to pay any deficiency in the 

event of winding up of the subsidiary company under certain provisions of the Corporations Act 2001. The subsidiary company 

has also given a similar guarantee in the event that Woodside Petroleum Ltd is wound up.

Woodside Petroleum Ltd has guaranteed the discharge by a subsidiary company of its financial obligations under debt facilities 

disclosed in Note 25(e).

25. Financial and capital risk management

(a) Financial risk management objectives and policies

The Group’s principal financial instruments, other than derivatives, comprise interest-bearing debt, cash and short-term 

deposits. Other financial instruments include trade receivables and trade payables, which arise directly from operations. 

Market (including foreign exchange, commodity price and interest rate risk), liquidity and credit risks arise in the normal 

course of the Group’s business. Primary responsibility for identification and control of financial risk rests with a central 

treasury department (Treasury) under directives approved by the Board.

The Group’s management of financial risk is aimed at ensuring net cash flows are sufficient to: 

•	 meet all its financial commitments as and when they fall due; 

•	 maintain the capacity to fund its committed project developments; 

•	 pay a reasonable dividend; and 

•	 maintain a long-term credit rating of not less than ‘investment grade’. 

The Group monitors and tests its forecast financial position against these criteria and, in general, will undertake hedging 

activity only when necessary to ensure that these objectives are achieved. Other circumstances that may lead to 

hedging activities include the purchase of reserves and the underpinning of the economics of a new project. 

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104 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

It is, and has been throughout the period, the Group Treasury policy that no speculative trading in financial instruments 

shall be undertaken. The Group’s forecast financial risk position with respect to key financial objectives and compliance 

with Treasury policy is regularly reported to the Board. The Audit & Risk Committee oversees the internal auditor review 

of the treasury function. 

(b) Market risk

(i) Foreign exchange risk

Foreign exchange risk arises from future commitments, assets and liabilities that are denominated in a currency 

that is not the functional currency in which they are measured. The functional currency of all entities within the 

Group is US dollars.

Currency exposure relates to transactions and balances in currencies other than US dollars. The majority of the 

operations’ revenue is denominated in US dollars whereas the majority of operating expenditure and capital 

expenditure is incurred in currencies other than US dollars (including Australian dollars). As a result, most 

operations within the Group are exposed to foreign currency risk arising from Australian dollars. Monetary items 

denominated in currencies other than the functional currency are translated into US dollar equivalents and any 

associated gain or loss is taken to the income statement.

Measuring the exposure to foreign exchange risk is achieved by regularly monitoring and performing sensitivity 

analysis on the Group’s financial position. Currently there are no foreign exchange hedge programs in place. 

Group Treasury manages the purchase of foreign currency to meet operational requirements. 

The following table shows financial instruments by currency. The Group is principally exposed to foreign exchange 

risk on those financial instruments denominated in Australian dollars.

2012 2011

USD AUD Other Total USD AUD Other Total

US$m US$m US$m US$m US$m US$m US$m US$m

Financial assets

Cash 2,366 37 19 2,422 16 22 3 41

Receivables 474 98 2 574 555 114 - 669

Other financial assets 38 58 - 96 48 54 - 102

2,878 193 21 3,092 619 190 3 812

Financial liabilities

Payables 224 770 31 1,025 475 915 39 1,429

Interest-bearing liabilities(1) 4,366 - - 4,366 5,136 - - 5,136

Other financial liabilities 7 - - 7 6 - - 6

4,597 770 31 5,398 5,617 915 39 6,571

(1) Excludes transaction costs.

25. Financial and capital risk management (continued)

(a) Financial risk management objectives and policies (continued)

Woodside Petroleum Ltd. | Financial Report 105
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

The following table summarises the sensitivity of the balance of financial instruments held at the reporting date to 

movement in the exchange rate of the US dollar to the Australian dollar, with all other variables held constant. The 

12% sensitivity is based on reasonably possible changes, over a financial year, using the observed range of actual 

historical rates for the preceding five-year period.

Post tax profits 

 (decrease)/increase

Other comprehensive income 

(decrease)/increase

Judgements of reasonably possible movements

2012

US$m

2011

US$m

2012

US$m

2011

US$m

US$:A$ +12% (2011:+15%) 43 66 - -

US$:A$ -12% (2011:-15%) (55) (89) - -

(ii) Commodity price risk

The Group’s revenue is exposed to commodity price fluctuations, in particular oil and gas prices. As at reporting 

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

Group Treasury measures exposure to commodity price risk by monitoring and stress testing the Group’s forecast 

financial position to sustained periods of low oil and gas prices. This analysis is regularly performed on the Group’s 

portfolio and, as required, for discrete projects and acquisitions.

(iii) Interest rate risk

Interest rate risk is the risk that the Group’s financial position will fluctuate due to changes in market interest 

rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to financial 

instruments with floating interest rates including long-term debt obligations and cash and short-term deposits.

The Group aims to manage its interest rate risk by maintaining an appropriate mix of fixed and floating rate 

debt. To manage the ratio of fixed rate debt to floating rate debt, the Group may enter into interest rate swaps. 

Derivatives are entered into against specific rate exposures only, as disclosed in Note 25(f). No hedging programs 

were placed during 2012 (2011: nil).

Cash and short-term deposits are short term in nature and are therefore monitored by Group Treasury to achieve 

the optimal outcome.

At reporting date, the Group had the following mix of financial assets and liabilities exposed to various benchmark 

interest rates that were not designated in cash flow hedges:

2012

US$m

2011

US$m

Financial assets

Cash and cash equivalents 2,422 41

Other financial assets 10 19

2,432 60

Financial liabilities

Interest-bearing liabilities(1) (1,717) (2,487)

Derivative instruments (250) (250)

(1,967) (2,737)

(1) Excludes transaction costs.

25. Financial and capital risk management (continued)

(b) Market risk (continued)

(i) Foreign exchange risk (continued)

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106 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

The following table summarises the sensitivity of the balance of financial instruments held at the reporting 

date, following a movement to London Interbank Offered Rate (LIBOR), with all other variables held constant. 

The LIBOR +1.8%/- 0.5% sensitivity is based on reasonably possible changes, over a financial year, using the 

observed range of actual historical rates for the preceding five-year period, bound by a lower limit of 0%.

Post tax profits

(decrease)/increase

Other comprehensive income 

(decrease)/increase

Judgements of reasonably possible movements

2012

US$m

2011(2)

US$m

2012

US$m

2011

US$m

LIBOR +1.8% (2011: +1.5%) 16 (5) - -

LIBOR -0.5% (2011: -1.5%) (5) 5 - -

(2) Excludes impact of sensitivities on interest-bearing liabilities where borrowing costs are capitalised to qualifying assets. For 2011 no interest bearing liabilities 

were considered as all borrowing costs were capitalised.

Significantly higher cash and cash equivalents at 31 December 2012 has favourably impacted net profit sensitivity 

(for an increase in LIBOR).

(c) Liquidity risk

Liquidity risk arises from financial liabilities of the Group and the Group’s subsequent ability to meet their obligations to 

repay financial liabilities as and when they fall due.

The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet its financial 

commitments in a timely and cost-effective manner. 

Group Treasury continually reviews the Group’s liquidity position including cash flow forecasts to determine 

the forecast liquidity position and maintain appropriate liquidity levels. At 31 December 2012, the Group has a total 

of US$4,122 million available undrawn facilities and cash at its disposal. Financing facilities available to the Group are 

disclosed in Note 25(e). Refer to Note 25(g) for details of the repayment obligations in respect of the amount of 

facilities drawndown.

2012 2011

Payables maturity analysis Payables maturity analysis

< 30 days 30-60 days > 60 days Total < 30 days 30-60 days > 60 days Total

US$m US$m US$m US$m US$m US$m US$m US$m

Trade payables 182 6 82 270 255 6 82 343

Other payables 490 3 24 517 827 - - 827

Loan payables - - 194 194 - - 215 215

Interest payable 6 - 38 44 6 - 38 44

Total payables 678 9 338 1,025 1,088 6 335 1,429

25. Financial and capital risk management (continued) 

(b) Market risk (continued) 

(iii) Interest rate risk (continued) 

Woodside Petroleum Ltd. | Financial Report 107
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(d) Credit risk

Credit risk is the risk that a contracting entity will not complete its obligation under a financial instrument, resulting in 

a financial loss to the Group. Credit risk arises from the financial assets of the Group, which comprise trade and other 

receivables and deposits with banks and financial institutions.

The Group manages its credit risk on trade receivables and financial instruments by predominantly dealing with 

counterparties with an investment grade credit rating. Customers who wish to trade on unsecured credit terms are 

subject to credit verification procedures. Receivable balances are monitored on an ongoing basis. As a result, the 

Group’s exposure to bad debts is not significant. The Group’s maximum credit risk is limited to the carrying amount of 

its financial assets. At the reporting date, the Group held $2,422 million in cash on deposit with 10 financial institutions. 

The amounts held with these institutions are within the counterparty limits as approved by the Chief Financial Officer 

and the Board approved Group Treasury Policy. 

2012 2011

Receivables maturity analysis Receivables maturity analysis

< 30 days 30-60 days > 60 days Total < 30 days 30-60 days > 60 days Total

US$m US$m US$m US$m US$m US$m US$m US$m

Trade receivables 449 - - 449 339 - - 339

Other receivables 119 1 2 122 323 1 4 328

Dividends receivable 2 - - 2 2 - - 2

Interest receivable 1 - - 1 - - - -

Total receivables 571 1 2 574 664 1 4 669

(e) Financing facilities

364-day revolving credit facilities

The Group has three dual currency (US and Australian dollars) 364-day revolving credit facilities totalling US$200 million. 

Interest rates are based on LIBOR and are fixed at the commencement of the drawdown period. Interest is paid at 

the end of the drawdown period. The 364-day revolving credit facilities are subject to various covenants and a negative 

pledge restricting future secured borrowings, subject to a number of permitted lien exceptions. Neither the covenants 

nor the negative pledges have been breached at any time during the reporting year. 

Bi-lateral loan facilities 

The Group has 12 bi-lateral loan facilities totalling US$950 million. Details of bi-lateral loan facilities at the reporting date 

are as follows:

Number of facilities Term (years) Currency Extension option

6 5 AUD, USD Evergreen

2 5 Multiple Evergreen

1 5 USD Not evergreen

1 4 AUD, USD Evergreen

1 3 AUD, USD Evergreen

1 4 USD Evergreen

Interest rates are based on LIBOR and are fixed at the commencement of the drawdown period. Interest is paid at 

the end of the drawdown period. Evergreen facilities may be extended continually by a year subject to the bank’s 

agreement. The bi-lateral loan facilities are subject to various covenants and a negative pledge restricting future secured 

borrowings, subject to a number of permitted lien exceptions. Neither the covenants nor the negative pledges have 

been breached at any time during the reporting year. 

25. Financial and capital risk management (continued)

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108 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

Bonds

The Group has five unsecured bonds issued to ‘qualified institutional buyers’ in the United States of America as 

defined in Rule 144A of the US Securities Act 1933. These bonds include:

•	 The 2013 US$250 million bond has a fixed rate coupon of 5.00% p.a. and matures on 15 November 2013;

•	 The 2014 US$400 million bond has a fixed rate coupon of 8.125% p.a. and matures on 1 March 2014;

•	 The 2014 US$700 million bond has a fixed rate coupon of 4.50% p.a. and matures on 10 November 2014;

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

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

Interest on the bonds is payable semi-annually in arrears. The bonds are subject to various covenants and a negative 

pledge restricting future secured borrowings, subject to a number of permitted lien exceptions. Neither the 

covenants nor the negative pledges have been breached at any time during the reporting year.

Japan Bank for International Cooperation (JBIC) Facility

On 24 June 2008, the Group entered into a committed loan facility totalling US$1,500 million (JBIC Facility). The 

JBIC Facility comprises a 15-year, US$1,000 million tranche with JBIC (JBIC Tranche), and a five-year, US$500 million 

commercial tranche with a syndicate of eight Australian and international banks arranged by The Bank of TokyoMitsubishi UFJ, Ltd (Commercial Tranche). There is a prepayment option for both the Commercial Tranche and the JBIC 

Tranche. Interest rates are based on LIBOR. Interest is payable semi-annually in arrears on the JBIC Tranche and with a 

choice of one, two, three, six, nine or twelve months in arrears on the Commercial Tranche. Both tranches amortise on a 

straight-line basis, with equal instalments of principal due on each interest payment date (every six months) starting on 

7 January 2012. Under the JBIC Facility, 90% of the receivables from designated Pluto LNG Project Sale and Purchase 

Agreements, are secured in favour of the lenders through a trust structure, with a required reserve amount of US$30 

million. To the extent that this reserve amount remains fully funded and no default notice or acceleration notice has 

been given, the revenue from the Pluto LNG Project continues to flow directly to the Group from the trust account. The 

JBIC Facility is subject to various covenants and a negative pledge restricting future secured borrowings, subject to a 

number of permitted lien exceptions. Neither the covenants nor the negative pledge has been breached at any time 

during the reporting year.

Asian syndicated facility

On 8 December 2010, the Group executed a five-year US$1,100 million syndicated loan facility with 34 banks. Funds 

from the loan were used to repay the US$1,100 million syndicated loan facility executed in May 2009. Australia and 

New Zealand Banking Group Limited and The Bank of Tokyo-Mitsubishi UFJ, Ltd were joint-mandated lead arrangers 

of the syndicated loan. The loan is composed of a US$550 million term facility (Facility A) and a US$550 million 

revolving facility (Facility B). Interest rates are based on LIBOR for both facilities and are fixed at the commencement 

of the drawdown period. Interest is paid at the end of the drawdown period. The syndicated loan is subject to various 

covenants, including a negative pledge restricting future secured borrowings, subject to a number of permitted lien 

exceptions. Neither the covenants nor the negative pledge has been breached at any time during the reporting year.

25. Financial and capital risk management (continued) 

(e) Financing facilities (continued)

Woodside Petroleum Ltd. | Financial Report 109
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(f) Hedging and derivatives

Interest rates 

The Group manages its exposure to interest rate risk by maintaining a mix of fixed rate and floating rate debt. In 

general, the fixed rate debt and floating rate debt ratio is managed through an appropriate choice of debt instrument. 

The Group may enter into interest rate swaps to manage the ratio of fixed rate debt to floating rate debt.

Fair value

Instrument Notional 

amount

Rate Expiry Hedge type 2012

US$m

2011

US$m

Interest 

rate swaps

US$250 

million

Receive 5% fixed

Pay LIBOR 

less 0.10%

2013 Fair value hedge in 2006 - 

designated to swap the 2013 

US$250 million bond from a fixed 

rate to floating rate exposure. 

De-designated as a fair value 

hedge on 1 January 2007.

10 19

(g) Maturity profile of interest-bearing liabilities

The maturity profile of the Group’s interest-bearing liabilities are as follows:

Due for payment in

1 year 

or less

1-2 years 2-3 years 3-4 years 4-5 years More than 

5 years

Total

US$m US$m US$m US$m US$m US$m US$m

2012

Interest-bearing liabilities(1) (757) (1,335) (736) (172) (172) (1,987) (5,159)

2011

Interest-bearing liabilities(1) (952) (761) (1,339) (740) (174) (2,167) (6,133)

(1) Excludes deferred transaction costs.

The amounts disclosed in the tables above are the contractual undiscounted cash flows, representing principal 

and interest, and hence will not necessarily reconcile with the amounts disclosed in the consolidated statement 

of financial position.

25. Financial and capital risk management (continued) 

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110 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(h) Fair values

The Group uses various methods in estimating the fair value of a financial instrument. These methods and financial 

instruments to which the method applies are as follows:

•	 Level 1 - the fair value of listed equity instruments is based on quoted market prices in active markets at reporting 

date.

•	 Level 2 - the fair value is estimated using valuation techniques comparable to similar instruments such as present 

value techniques for which market observable prices exist. Financial instruments that use valuation techniques 

with only observable market inputs, that are not significant to the overall valuation, include interest rate swaps and 

forward commodity contracts.

•	 Level 3 - the fair value is estimated using inputs for the asset or liability that are not based on observable market 

data. This methodology applies to the fair value measurement of embedded derivatives.

The fair values of receivables, payables, interest-bearing liabilities and other financial assets and liabilities which are not 

measured at fair value approximate their carrying amounts.

The fair values of financial instruments are as follows:

2012 2011

Quoted 

market

price

(Level 1)

Valuation 

technique - 

market 

observable 

inputs

(Level 2)

Valuation 

technique - 

non-market 

observable 

inputs

(Level 3) 

Total Quoted 

market 

price

(Level 1)

Valuation 

technique -

 market 

observable 

inputs

(Level 2)

Valuation 

technique - 

non-market 

observable 

inputs

(Level 3) 

Total

US$m US$m US$m US$m US$m US$m US$m US$m

Financial assets

Derivative instruments

Current - 10 - 10 - 9 - 9

Non-current - - - - - 10 - 10

Other investments (available-for-sale):

Listed entity investments 1 - - 1 3 - - 3

Embedded derivatives:

Current - - 4 4 - - 7 7

Non-current - - 33 33 - - 38 38

25. Financial and capital risk management (continued)

Woodside Petroleum Ltd. | Financial Report 111
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

Transfer between categories

There were no transfers between Level 1 and Level 2 during the year.

Reconciliation of Level 3 fair value movements

2012

US$m

2011

US$m

At 1 January 45 54

Amortisation recognised in the income statement (7) (9)

At 31 December 38 45

Total amortisation stated in the above table for assets held at the end of the financial year (7) (9)

(i) Capital management

Group Treasury is responsible for the Group’s capital management including cash, debt and equity. Capital management 

is undertaken to ensure that a secure, cost-effective and flexible supply of funds is available to meet the Group’s 

operating and capital expenditure requirements. This involves the use of corporate forecasting models, which facilitates 

analysis of the Group’s financial position including cash flow forecasts to determine the future capital management 

requirements. 

Group Treasury maintains a stable capital base from which the Group can pursue its growth aspirations, whilst 

maintaining a flexible capital structure that allows access to a range of debt and equity markets to both draw upon and 

repay capital. An example of the Group’s capital management is the activation of the Dividend Reinvestment Plan (DRP) 

during a period of high capital expenditure.

The DRP was approved by shareholders at the Annual General Meeting in 2003 for activation as required to fund future 

growth. The Group announced the activation of the DRP in December 2006 to manage capital requirements. The DRP 

was activated with the 2006 final dividend and deactivated for the 2007 final dividend. The DRP was reactivated in 

2008, and remained in force up to and including the 2012 interim dividend. The DRP will be deactivated for the 2012 

final dividend. 

Group Treasury monitors a range of financial metrics, including gearing, and treasury policy breaches and exceptions. 

The gearing ratio which is net debt divided by total equity (excluding non controlling interest) plus net debt is 11% 

(2011: 29%) at reporting date.

25. Financial and capital risk management (continued)

(h) Fair values (continued)

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112 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

26. Expenditure commitments 

2012

US$m

2011

US$m

(a) Operating lease commitments 

Rentals payable on non-cancellable operating leases, due

Within one year 241 411

After one year but not more than five years 572 482

Later than five years 619 337

1,432 1,230

The Group leases assets for operations including floating production, storage and off-take vessels, helicopters, supply 

vessels, cranes, land, mobile offshore drilling units, office premises and computers. 

There are no restrictions placed upon the lessee by entering into these leases. Renewals are at the option of the 

specific entity that holds the lease. Certain leases contain a clause enabling upward revision of the rental charge on an 

annual basis based on the consumer price index. The Group made payments under operating leases of US$487 million 

during the year (2011: US$540 million). A portion of this amount relates to arrangements containing non-lease elements, 

which are not practicable to separate.

(b) Capital expenditure commitments

The Group has capital expenditure commitments contracted for but not provided for in the Financial Report of 

US$174 million (2011:US$568 million).

(c) Exploration commitments

The Group has exploration obligations for the following regions which are contracted for but not provided for in the 

Financial Report:

2012

US$m

2011

US$m

Australia

Browse Basin 4 18

Canning Offshore Basin 238 187

Carnarvon Basin 185 153

The Americas

Gulf of Mexico 86 11

Peru 16 2

Asia 

Korea - 72

Middle East & Africa

Canary Islands 140 -

669 443

These obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations 

of the Group.

Woodside Petroleum Ltd. | Financial Report 113
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

27. Employee benefits

(a) Woodside employee share plans

(i) Woodside share purchase plan

The Woodside Share Purchase Plan (WSPP) was introduced in April 2007 and was available to all employees, 

including executives up to March 2009. The plan was suspended in May 2009 due to uncertainty regarding the 

future operation of the plan created by proposed taxation legislation changes announced in the 2009 Federal 

budget. The WSPP provided eligible employees with an opportunity to acquire Woodside shares and to share in 

the growth of the company. The WSPP year was based on a 1 July to 30 June period (WSPP Year). 

Participants in the WSPP elected to salary sacrifice an amount of base salary and this amount was applied by the 

WSPP Trustee to purchase shares in Woodside Petroleum Ltd. Additional shares were granted (matching shares) 

at a fixed annual ratio of the shares awarded for the salary sacrifice amount. In the 2008/09 WSPP Year, the ratio 

was one for one and a half; the ratio for the 2007/08 WSPP Year was one for one. Conditions applied in order for 

employees to become entitled to the matching shares.

Share acquisitions under the WSPP for the employee sacrificed amounts were made quarterly in arrears. The 

shares were purchased by the Trustee on market by dividing the sacrificed amount by the volume weighted 

average price paid for all the shares purchased for participating employees. The sacrificed amount is rounded 

down to the nearest whole share. Any amount not used was carried forward and applied to the sacrificed amount 

for the next quarter. Any balance at the end of the specified sacrifice period (normally 12 months) was paid to 

the participant or carried over to the next sacrifice period if the employee elected to participate. If employment 

ceased (for whatever reason) during a quarter or after the end of a quarter, but before any shares had been 

purchased in respect of the quarter, no shares were transferred to the participant in relation to that quarter.

In order for the matching shares to beneficially vest to the participating employees in the WSPP, the employee 

was required to hold shares purchased through the sacrificed amount for three years and remain employed at the 

end of that qualification period.

Matching shares were purchased on a quarterly basis at the same time as the shares were purchased using the 

employee’s sacrificed amount.

If employment ceased because of resignation or termination before the end of the three-year qualification period, 

the participants forfeited their interests in any matching shares. Shares acquired using any sacrificed amount 

were released to the participant.

The WSPP vested in April 2012 and had 39 employees participating as at 31 December 2012.

Matching shares acquired under the WSPP were accounted for as share-based payments to employees for 

services provided and were measured at fair value, being the share price on acquisition date.

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114 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(ii) Woodside employee equity plan

In July 2009 Woodside introduced the Woodside Petroleum Ltd 2009 - 2012 Employee Equity Plan (EEP) which 

was available to all employees including executives, other than the CEO. The EEP was intended to provide a 

retention mechanism for participating employees as well as provide an opportunity to share in the growth of the 

company. The Equity Rights (ERs) are a form of remuneration that is not dependent on employee's individual 

performance or Woodside's performance. 

Eligible participants were entitled to receive an allocation of ERs. Each ER entitled the participants to receive a 

Woodside share on vesting. The ERs vested on 1 August 2012 and unrestricted possession (full entitlement) of 

these shares was transferred to employees.

Shares were issued by the company to satisfy vesting ER entitlements. The number of ERs that vested was 

adjusted for any interruptions to an employee's service. Participants in the EEP could not dispose of or otherwise 

deal with an ER and did not receive any dividends or have voting rights in respect of an ER. Allocations of ERs to 

participants were adjusted when the company made a bonus issue of shares.

As a consequence of the renounceable rights issue by Woodside in December 2009, the Board resolved to issue 

additional ERs under the EEP to maintain the value of the ERs held by participating employees. An additional 

allocation of ERs was granted to each participant in early 2010. The same terms and conditions which apply to 

existing ERs apply to these additional ERs.

The EEP was accounted for as a share-based payment to employees for services provided. The fair value of the 

benefit provided was estimated using the Black-Scholes option pricing technique.

The number of ERs and movements in each EEP offer was as follows:

2012

Grant date On issue at 

beginning of year

Granted during 

the year

Vested during 

the year(1)

Forfeited/lapsed 

during the year

On issue at 

end of year

29 February 2012 - 69,644 (67,404) (2,240) -

16 December 2011 82,602 - (81,581) (1,021) -

16 September 2011 83,605 - (80,228) (3,377) -

10 June 2011 98,387 - (92,845) (5,542) -

18 March 2011 115,098 - (111,412) (3,686) -

17 December 2010 186,549 - (178,871) (7,678) -

24 September 2010 207,563 - (193,317) (14,246) -

25 June 2010 296,414 - (286,726) (9,688) -

30 April 2010 39,352 - (37,222) (2,130) -

19 March 2010 232,567 - (223,569) (8,998) -

30 December 2009 194,013 - (186,899) (7,114) -

31 October 2009 5,235,377 - (4,994,681) (240,696) -

6,771,527 69,644 (6,534,755) (306,416) -

(1) Amount includes 93,867 rights that were settled in cash.

2011

Grant date On issue at 

beginning of year

Granted during 

the year

Vested during 

the year

Forfeited/lapsed 

during the year

On issue at 

end of year

16 December 2011 - 82,602 - - 82,602 

16 September 2011 - 83,605 - - 83,605 

10 June 2011 - 104,048 - (5,661) 98,387 

18 March 2011 - 125,477 - (10,379) 115,098 

17 December 2010 192,851 - - (6,302) 186,549 

24 September 2010 227,999 - - (20,436) 207,563 

25 June 2010 323,173 - - (26,759) 296,414 

30 April 2010 41,677 - - (2,325) 39,352 

19 March 2010 257,654 - - (25,087) 232,567 

30 December 2009 202,176 - (241) (7,922) 194,013 

31 October 2009 5,568,584 - (2,975) (330,232) 5,235,377 

6,814,114 395,732 (3,216) (435,103) 6,771,527 

27. Employee benefits (continued)

(a) Woodside employee share plans (continued)

Woodside Petroleum Ltd. | Financial Report 115
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(ii) Woodside employee equity plan (continued)

The following table lists the inputs to the Black-Scholes option pricing technique used for the years ended 

31 December 2012, 31 December 2011, 31 December 2010 and 31 December 2009:

Valuation assumptions

Grant date Vesting date Share price at 

grant date 

(A$/share)

Employee benefit 

fair value 

(US$/ER)

Expected 

dividend return 

(%)

Expected life 

(years)

29 February 2012 1 August 2012 37.24 32.46 2.5 0.42

16 December 2011 1 August 2012 31.30 30.59 2.5 0.63 

16 September 2011 1 August 2012 34.25 32.50 2.5 0.88 

10 June 2011 1 August 2012 43.55 39.79 2.5 1.15 

18 March 2011 1 August 2012 44.41 42.17 2.5 1.38 

17 December 2010 1 August 2012 43.17 40.81 2.5 1.62

24 September 2010 1 August 2012 44.48 40.51 2.5 1.85

25 June 2010 1 August 2012 43.28 35.71 2.5 2.10

30 April 2010 1 August 2012 45.40 39.83 2.5 2.26

19 March 2010 1 August 2012 46.73 40.53 2.5 2.37

30 December 2009 1 August 2012 47.35 39.68 2.5 2.59

31 October 2009 1 August 2012 47.70 39.81 2.5 2.75

(iii) Woodside equity plan

In November 2011 Woodside introduced the Woodside Petroleum Ltd - Woodside Equity Plan (WEP) which is available to 

all Australian based permanent employees including executives, other than the CEO and executive directors. Woodside’s 

intention is to enable eligible employees to build up a holding of equity in the company as they progress through their 

career at Woodside. The number of Equity Rights (ERs) offered to each eligible employee is calculated with reference to 

salary and performance. The linking of performance to an allocation allows Woodside to recognise and reward eligible 

employees for high performance. The WEP is intended to provide an opportunity to share in the growth of the company 

as well as provide a retention mechanism for participating employees. Participants do not make any payment in respect of 

the ERs at grant or at vesting.

Eligible participants receive an allocation of ERs. Each ER entitles the participant to receive a Woodside share on the 

vesting date three years after the effective date. ERs may vest prior to the vesting date on a change of control or on a pro 

rata basis, at the discretion of the CEO, limited to the following circumstances; redundancy, retirement (after six months 

participation), death, termination due to medical illness or incapacity or total and permanent disablement of a participating 

employee. An employee whose employment is terminated by resignation or for cause prior to the vesting date will forfeit 

all of their ERs.

Shares will either be issued by Woodside or acquired on market to satisfy vesting ER entitlements. The number of ERs 

that vest may be adjusted for any interruptions to an employee’s service. Eligible participants who are on an international 

assignment may receive a cash amount subject to Board discretion.

Participants in the WEP cannot dispose of or otherwise deal with an ER and do not receive any dividends or have voting 

rights in respect of an ER. Allocations of ERs to participants will be adjusted in the event of Woodside making a bonus 

issue of shares or upon reconstruction of the company’s share capital. 

The WEP is accounted for as a share-based payment to employees for services provided. The fair value of the benefit 

provided will be estimated using the Black-Scholes option pricing technique. 

27. Employee benefits (continued)

(a) Woodside employee share plans (continued)

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116 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(iii) Woodside equity plan (continued)

The WEP had 3,144 employees participating at 31 December 2012.

The number of equity rights and movements in each WEP offer are as follows:

2012

Grant date On issue at 

beginning of year

Granted during 

the year

Vested during 

the year

Forfeited/lapsed 

during the year

On issue at end 

of year

1 October 2012 - 1,912,965 - - 1,912,965

30 November 2011 1,664,607 9,960 (2,940) (150,265) 1,521,362

1,664,607 1,922,925 (2,940) (150,265) 3,434,327

2011

Grant date On issue at 

beginning of year

Granted during 

the year

Vested during 

the year

Forfeited/lapsed 

during the year

On issue at end 

of year

30 November 2011 - 1,669,427 - (4,820) 1,664,607

The following table lists the inputs to the Black-Scholes option pricing technique used for the years ended 

31 December 2012 and 31 December 2011.

Valuation assumptions

Grant date Vesting date Share price at grant 

date (A$/share)

Employee benefit 

fair value (US$/ER)

Expected dividend 

return (%)

Expected life 

(years)

1 October 2012 1 October 2015 33.20 31.99 2.5 3

30 November 2011 30 November 2014 32.80 30.49 2.5 3

(b) Executive share plans

The Executive Incentive Plan (EIP) and Pay Rights (PR) Plans became effective 1 January 2005 and 15 March 2007 

respectively. For further details regarding the EIP, PR Plans and the Group’s remuneration structure for the CEO and 

senior executives refer to the Remuneration Report included in the 2012 Directors’ Report.

The following table illustrates the number and weighted average prices of shares reserved and acquired during the year 

by the plan.

2012 2011

Number of 

shares

Weighted 

average price Cost

Number of 

shares

Weighted 

average price Cost

(A$/share) US$m (A$/share) US$m

Opening balance 562,830 42.61 18 503,244 46.88 18

Purchases during the year 300,000 35.54 11 200,000 35.50 7 

Vested during the year (172,823) 34.77 (6) (140,414) 47.80 (7)

Shares reserved for executives 

under EIP/PR 690,007 33.35 23 562,830 42.61 18 

27. Employee benefits (continued)

(a) Woodside employee share plans (continued)

Woodside Petroleum Ltd. | Financial Report 117
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

27. Employee benefits (continued)

(b) Executive share plans (continued)

Equity rights are granted on 1 January of each performance year. The EIP is accounted for as a share based payment to 

employees for services provided. The fair value of the benefit provided was estimated using the Binomial or Black-Scholes 

option pricing technique combined with a Monte Carlo simulation methodology, where relevant. Historical volatility has been 

used to estimate the volatility of the share price.

On 7 December, the Board approved a modification to the EIP rules for equity rights granted for the 2012 performance year. 

The modifications effected both the Short Term Award (STA) and Long Term Award (LTA).

For the 2012 performance year, the STA deferred equity component will be delivered in the form of restricted shares. 

Participants will receive any dividends paid on their restricted shares after they have been allocated.

The LTA award for the 2012 performance year is granted in the form of Variable Pay Rights (VPRs), the vesting of which 

is linked to service and Relative Total Shareholder Return (RTSR). The vesting of RTSR-tested VPRs is conditional on 

satisfactory ranking of Woodside’s RTSR, as calculated under the EIP rules, over a four or five year period in comparison 

with an international peer group and separately the ASX top 50. The international oil and gas LTA Peer Group for grant of 

the RTSR-tested VPRs for the 2012 performance year is set out in Table 8 of the Remuneration Report. This peer group has 

a weighting of 67%. The ASX 50 Index as at 7 December 2012, the plan modification date, was taken as the second peer 

group. The selection of the ASX 50 as a second peer group with a weighting of 33% was made in order to reflect Woodside’s 

performance against similar organisations traded on the Australian Securities Exchange. The RTSR in respect of Woodside 

and both peer groups is calculated by an external advisor in accordance with the EIP rules on the fourth anniversary of the 

allocation of these RTSR-tested VPRs. The outcome of the test is measured against the schedule shown in Table 5 of the 

Remuneration Report. Any RTSR-tested VPRs which do not vest at this time are subject to a second RTSR test on the fifth 

anniversary of the allocation date. Any RTSR-tested VPRs that do not vest on the fifth anniversary lapse.

For further details regarding the 2008 to 2011 plans, refer to the Remuneration Report included in the 2012 Directors’ Report. 

As a consequence of the rule modifications, the fair value of the benefit provided was revalued at modification date.

EIP Time-tested variable pay rights (VPRs)/restricted shares

Valuation 

assumptions

Employee benefit fair valueShare Price at grant dateExpected dividend yield 

(US$/VPR) (A$/share) (%)

Fair value of the original equity right at 1 January, 2012 28.22 30.62 2.5

Fair value of modified equity right at 7 December, 2012 35.95 34.22 -

Less: Fair value of original equity right at 7 December, 2012 (33.19) 34.22 2.5

Incremental value of modified equity right at 7 December, 2012 2.76

EIP relative total shareholder return (RTSR) tested VPRs Valuation assumptions Employee benefit fair value Share Price at grant date Expected volatility Risk free interest rate 

Expected dividend yield 

(US$/VPR) (A$/share) (%) (%) (%)

Fair value of the original equity right at 1 January, 2012 15.90 30.62 36 3.9 2.5

Weighted average of fair value equity right at 7 December, 2012 20.64 34.22 22 2.7 3.4

Less: Fair value of original equity right at 7 December, 2012 (21.68) 34.22 24 3.2 2.5

Decrement in value of modified equity right at 7 December, 2012 (1.04)

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118 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

27. Employee benefits (continued)

(b) Executive share plans (continued)

EIP Time-tested variable pay rights (VPRs)/restricted shares

Valuation 

assumption

Performance 

year

Grant date Vesting date On issue at 

beginning of 

year

Granted 

during the 

year

Vested 

during the 

year

Forfeited/ 

lapsed during 

the year

On issue 

at end of 

year

Share price 

at grant 

date

Employee 

benefit 

fair value

Expected 

dividend 

yield

(A$/share) (US$/VPR) (%)

Restricted shares

2012 1 January 2012 22 February 2016 - 191,848 - - 191,848 30.62 30.98(1) -

Variable pay rights

2011 1 January 2011 25 February 2015 133,469 - (11,058) (7,986) 114,425 42.56 38.87 2.5

2010 1 January 2010 25 February 2014 67,985 - (7,078) (5,898) 55,009 47.20 38.32 2.5

2009 1 January 2009 5 March 2013 79,765 - (9,476) (6,824) 63,465 36.70 29.57 2.5

2008 1 January 2008 27 February 2012 59,974 - (59,974)(2) - - 50.39 39.81 3.0

(1) Fair value of restricted shares is represented by the sum of the grant date fair value of $28.22 and the incremental benefit on modification date amounting to $2.76.

(2) Amount includes 13,951 shares that were settled with a fair value of $31.26.

EIP Time-tested VPRs - additional allocation following renounceable rights issue

As a consequence of the renounceable rights issue by the Group in December 2009, the Board exercised its discretion under the 

EIP plan rules to adjust the number of VPRs held by participants to maintain the value equivalence of the unvested VPR awards 

made for the 2008 performance year.

Valuation 

assumption

Performance 

year

Grant date Vesting date On issue at 

beginning of 

year

Granted 

during the 

year

Vested 

during the 

year

Forfeited/ 

lapsed during 

the year

On issue 

at end of 

year

Share price 

at grant 

date

Employee 

benefit 

fair value

Expected 

dividend 

yield

(A$/share) (US$/VPR) (%)

2008 13 December 

2009

27 February 

2012 513 - (498)(3) (15) - 47.18 39.92 2.5

(3) Amount includes 116 shares that were settled in cash with a fair value of $31.26.

Woodside Petroleum Ltd. | Financial Report 119
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(b) Executive share plans (continued)

EIP relative total shareholder return (RTSR) tested VPRs

Valuation assumptions

Performance yearGrant dateVesting datesOn issue at beginning of yearGranted during the yearVested during the yearForfeited/ lapsed during the yearOn issue at end of yearShare price atgrant dateEmployee benefit fair value(2)Expected volatility(2)Risk free interest rateExpected dividend yield

(A$/

share)

(US$/

VPR) (%) (%) (%)

2012 1 January 2012 22 February 2017 - 597,680 - - 597,680 30.62 15.90 36 3.9 2.5

22 February 2018

2011 1 January 2011 25 February 2015 337,524 - - (17,956) 319,568 42.56 21.36 36 5.7 2.5

25 February 2016

2010 1 January 2010 25 February 2014 211,740 - - (12,338) 199,402 47.20 20.02 38 5.3 2.5

25 February 2015

2009 1 January 2009 5 March 2013 165,640 - - (7,911) 157,729 36.70 14.82 36 3.6 2.5

5 March 2014

2008 19 February 2008 27 February 2012 81,606 - - (81,606) - 51.26 19.90 29 4.5 3.0

2008 1 January 2008 27 February 2012 226,580 - (113,299)(1) (113,281) - 50.39 19.08 26 6.6 3.0

2007 1 January 2007 4 March 2012 150,345 - - (150,345) - 38.11 14.36 25 6.0 3.0

(1) Amount includes 15,183 shares that were settled with cash with a fair value of $7.44.

(2) A review of the RTSR valuation model was conducted to ensure it accurately reflects the EIP rules. Prior year fair values have been appropriately restated to reflect 

the changes. 

EIP RTSR tested - additional allocation following renounceable rights issue

As a consequence of the renounceable rights issue by the Group in December 2009, the Board exercised its discretion under the 

EIP plan rules to adjust the number of VPRs held by participants to maintain the value equivalence of the unvested VPR awards 

made for the 2007 and 2008 performance years.

Valuation assumptions

Performance yearGrant dateVesting datesOn issue at beginning of yearGranted during the yearVested during the yearForfeited/ lapsed during the yearOn issue at end of yearShare price atgrant dateEmployee benefit fair value(3)Expected volatility(3)Risk free interest rateExpected dividend yield

(A$/

share)

(US$/

VPR) (%) (%) (%)

2008 13 December 2009 27 February 2012 1,882 - (941)(4) (941) - 47.18 25.53 44 5.0 2.5

2008 13 December 2009 31 March 2012 678 - - (678) - 47.18 23.07 47 5.3 2.5

2007 13 December 2009 14 March 2012 1,245 - - (1,245) - 47.18 22.94 48 4.7 2.5

(3) A review of the RTSR valuation model was conducted to ensure it accurately reflects the EIP rules. Prior year fair values have been appropriately restated to reflect 

the changes. 

(4) Amount includes 253 shares that were settled with cash with a fair value of $7.46.

27. Employee benefits (continued)

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120 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

27. Employee benefits (continued)

Pay rights - additional allocation following renounceable rights issue

As a consequence of the renounceable rights issue by the Group in December 2009, the Board exercised its discretion 

under the Pay Rights Plan rules to adjust the number of VPRs held by participants to maintain the value equivalence of the 

unvested VPR awards for the 2008 performance year.

Valuation assumptions

Performance year Grant date Vesting datesOn issue at beginning of yearGranted during the yearVested during the yearForfeited/ lapsed during the yearOn issue at end of yearShare price atgrant dateEmployee benefit fair value (3)Expected volatility (3)Risk free interest rate (3)Expected dividend yield (3)

(A$/share) (US$/VPR) (%) (%) (%)

2008 13 December 

2009 5 March 2012 98 - - (98) - 47.18 28.35 40 4.3 2.5

(3) Valuation assumptions and employee benefit fair values are based on weighted averages.

(b) Executive share plans (continued)

Pay rights

Pay rights are accounted for as a share-based payment, with fair value estimated using the Binomial or Black Scholes option 

pricing technique combined with a Monte Carlo simulation methodology, where relevant. Historical volatility has been used to 

estimate the volatility of the share price.

Valuation 

assumptions

Performance year (1)Grant date Vesting datesOn issue at beginning of yearGranted during the yearVested during the yearForfeited/ lapsed during the yearOn issue at end of yearShare price atgrant dateEmployee benefit fair value (2)Expected volatility (2)Risk free interest rate (2)Expected dividend yield (2)

(A$/share) (US$/VPR) (%) (%) (%)

2010 1 June 2010 15 March 2012 17,022 - - (5,674) 11,348 43.59 21.25 41 4.5 2.5

15 March 2013

15 March 2014

2008 5 May 2008 5 March 2012 11,972 - - (11,972) - 59.22 26.48 31 6.5 3.0

(1) Pay rights granted on 5 May 2008 and 1 June 2010 are RTSR-tested.

(2) Valuation assumptions and employee benefit fair values are based on weighted averages.

Woodside Petroleum Ltd. | Financial Report 121
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

(c) CEO sign-on incentive shares

Mr Coleman gave up certain rights with his former employer to join Woodside as CEO. To recognise these interests, he 

was paid a one off sign-on incentive. Woodside acquired Woodside Shares to the value of $3 million to be held in trust for 

Mr Coleman. One third of these shares will vest each anniversary after the date of his appointment (in the absence of any 

accelerating event, including a change of control, in which case all shares will vest on the date of the control event). 

Any unvested entitlements will be forfeited if Mr Coleman’s employment is terminated for cause or by his resignation. 

Mr Coleman cannot dispose of or deal with any restricted shares until such restricted shares vest. In the event bonus 

shares are allotted in respect of the sign-on shares, the bonus shares will be allotted to the Trustee and held for 

Mr Coleman on the same terms and conditions as the underlying restricted shares. 

The number of equity rights and movements in the CEO Sign-On Incentive share offer was as follows:

Year Grant date On issue at 

beginning 

of year

Granted during 

the year

Vested during 

the year

Forfeited/lapsed 

during the year

On issue at 

end of year

2012 30 May 2011 66,004 - (22,002) - 44,002

2011 30 May 2011 - 66,004 - - 66,004

The following table lists the inputs to the Black-Scholes option pricing technique used for the year ended 

31 December 2012.

Valuation assumptions

Grant date Vesting date Share price 

at grant date 

(A$/share)

Employee 

benefit fair value 

(US$/ER)

Expected 

dividend return 

(%)

Expected life 

(years)

30 May 2011 30 May 2012 45.97 49.19 - 1

30 May 2011 30 May 2013 45.97 49.19 - 2

30 May 2011 30 May 2014 45.97 49.19 - 3

(d) Superannuation plan

Employees of the Group may be entitled to superannuation benefits on retirement, disability, death or withdrawal 

under the Group’s Superannuation Plan. The Group has one funded plan with a defined benefit section and a defined 

contribution section.

The defined benefit section of the plan is closed to new members. All new members receive accumulation only 

benefits. The defined contribution section receives fixed contributions from Group companies and the Group’s legal or 

constructive obligation is limited to these contributions.

Defined benefit superannuation plan

The Group has a legal obligation to settle defined benefit plan deficits, however, these do not need to be settled with an 

immediate contribution or additional one-off contribution. Any defined benefit plan surplus may only be used to reduce 

future contributions from the Group.

The present value of the defined benefit obligation has been determined using the projected unit credit method.

Employer contributions

Employer contributions to the defined benefit section of the plan are based on recommendations by the plan’s actuary. 

Actuarial assessments are made at no more than yearly intervals and the last such assessment was made as at 

31 December 2012.

Funding method

The objective of funding is to ensure that the benefit entitlements of members and other beneficiaries are fully funded 

by the time they become payable. To achieve this objective, the actuary has adopted a method of funding benefits 

known as the attained age normal method. This funding method seeks to have benefits funded by means of a total 

contribution which is expected to be a constant percentage of members’ salaries over their working lifetimes.

Using the funding method described above, in October 2008 the actuary recommended that the payment of employer 

contributions to the fund recommence. The Group recommenced contributions to the defined benefit section of the 

plan based on actuary recommended contribution rates for the respective groups of employees from 1 November 

2008. Total employer contributions paid by Group companies for the year ending 31 December 2012 were US$17 million 

(2011: US$20 million). 

27. Employee benefits (continued)

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122 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

27. Employee benefits (continued)

(d) Superannuation plan (continued)

2012

US$m

2011

US$m

Defined benefit plan asset/(liability) included in the statement of financial position

Present value of the defined benefit obligation (211) (184)

Fair value of defined benefit plan assets 181 154

Net defined benefit liability - non-current (30) (30)

2012

%

2011

%

Defined benefit plan categories of plan assets

Cash 7 8

Australian equity 26 28

International equity 29 29

Fixed income 18 14

Property 15 16

Other 5 5

100 100

2012

US$m

2011

US$m

Defined benefit plan reconciliations

Reconciliation of the present value of the defined benefit obligation, 

which is fully funded

At 1 January (184) (160)

Current service cost (12) (10)

Interest on obligation (7) (9)

Actuarial (loss)/gain (17) (13)

Plan participants’ contributions (3) (3)

Benefits, administrative expenses, premiums and tax paid 14 14 

Currency translation differences (2) (3)

At 31 December (211) (184)

Reconciliation of the fair value of plan assets

At 1 January 154 146 

Expected return on plan assets 11 10 

Actuarial gain/(loss) 8 (13)

Employer contributions 17 20 

Plan participants’ contributions 3 3 

Benefits, administrative expenses, premiums and tax paid (14) (14)

Currency translation differences 2 2 

At 31 December 181 154

Defined benefit plan amounts recognised in the income statement

Current service cost 14 7 

Interest on obligation 9 7 

Expected return on plan assets (13) (8)

Net actuarial loss 10 21 

Defined benefit plan expense 20 27 

Woodside Petroleum Ltd. | Financial Report 123
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

27. Employee benefits (continued)

(d) Superannuation plan (continued)

Defined benefit plan principal actuarial assumptions

The principal actuarial assumptions used as at the reporting date for the purpose of calculating the present value of the 

defined benefit obligation are as follows:

Financial year

2012 2011

Discount rate – active members 3.10% p.a. 3.70% p.a.

Discount rate – pensioners 3.10% p.a. 3.70% p.a.

Expected salary increase rate 5.00% p.a. 5.00% p.a.

The expected rate of return on plan assets is determined by weighting the expected long-term return for each asset 

class by the benchmark allocation of assets to each class. The returns for each asset class are net of investment tax 

and investment fees. 

Defined benefit plan historical information

Financial year

2012

US$m

2011

US$m

2010

US$m

Restated

2009

US$m

Restated

2008

US$m

Present value of defined benefit obligation(1) (211) (184) (160) (133) (115)

Fair value of plan assets 181 154 146 119 83

(Deficit)/surplus in plan (30) (30) (14) (14) (32)

Experience adjustments gain/(loss) - plan assets 8 (13) (3) 7 (43)

Experience adjustments (loss)/gain - plan liabilities (7) 3 3 4 (1)

(1) Includes any provision for contribution tax on plan surplus or deficit.

(e) Employee benefits expense

2012

US$m

2011

US$m

Employee benefits 265 191

Defined contribution plan costs 26 18

Defined benefit plan expense 20 27

311 236

28. Key management personnel compensation

(a) Compensation of key management personnel

Key management personnel (KMP) compensation for the financial year is as follows:

2012

US$

2011

US$

Short-term employee benefits 12,828,321 12,346,879

Post employment benefits 458,505 632,747

Share-based payments 3,418,775 6,060,666

Long-term employee benefits - (533,441)

Termination benefits 355,266 986,775

17,060,867 19,493,626

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124 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

28. Key management personnel compensation (continued)

(b) Key management personnel shareholdings

Details of shares held by KMP including their personally related entities(1) for the financial year are as follows: 

2012 2011

Opening 

holding(2)

NEDSP(3)

Acquisition/ 

(disposal)

Net change - 

other

Closing 

holding

Opening 

holding(2)

NEDSP(3)

Acquisition/ 

(disposal)(4)

Net changeother

Closing 

holding

Non-executive 

directors

M A Chaney 20,000 - - - 20,000 20,000 - - - 20,000

E Fraunschiel 81,930 - - - 81,930 81,930 - - - 81,930

A Jamieson 3,000 1,235 - - 4,235 3,000 - - - 3,000

P J M H Jungels(4) 9,205 - - (9,205) - 9,205 - - - 9,205

D I McEvoy 7,924 116 - - 8,040 7,702 222 - - 7,924

M Cilento 1,382 704 - - 2,086 613 769 - - 1,382

C Haynes(5) 186 1,147 - - 1,333 - 186 - - 186

S Ryan(6) - - - - - - - - - - 

Executives

P Coleman(7) 66,004 - (11,000) - 55,004 - - 66,004 - 66,004

L Tremaine 2,224 - 3,748 - 5,972 1,354 - 870 - 2,224 

R Cole 15,174 - 13,328 - 28,502 13,403 - 1,771 - 15,174 

V Santostefano 28,051 - 10,113 - 38,164 19,846 - 8,205 - 28,051 

L Della Martina(8) 54,884 - 5,739 (60,623) - 53,193 - 1,691 - 54,884 

P Moore 6,190 - 6,959 - 13,149 5,436 - 754 - 6,190 

F Ahmed 2,500 - 4,386 - 6,886 2,500 - - - 2,500 

G Roder(9) - - - - - - - - - -

R Edwardes(10) - - - 543 543 - - - - -

(1) Personally related entities include a KMP’s spouse, dependants or 

entities over which they have direct control or significant influence.

(2) Opening holding represents amounts carried forward in respect of KMP 

or amounts held by KMP who commenced during the year.

(3) Relates to participation in the Non-Executive Directors’ Share Plan 

(NEDSP).

(4) Dr Jungels departed Woodside on 7 December 2012.

(5) Dr Haynes was appointed a non-executive director of Woodside on 

1 June 2011.

(6) Dr Ryan was appointed a non-exectutive director of Woodside on 

6 December 2012.

(7) Mr Coleman was appointed as CEO on 30 May 2011. Prior to this 

Mr Coleman was not employed by the Group.

(8) Mr Della Martina departed Woodside on 10 May 2012.

(9) Mr Roder became a KMP on 27 October 2011. 

(10) Mr Edwardes became a KMP on 7 May 2012.

Woodside Petroleum Ltd. | Financial Report 125
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

28. Key management personnel compensation (continued)

(c) Executives’ interests in variable pay rights (VPR), pay rights (PR) and equity rights (ER)

VPR, PR and ER holdings of key management personnel

2012

Name At 1 January

 2012

Allocated in 

2012

Vested in 

2012

Net change - 

other

At 31 December 

2012

P Coleman(1) - 66,560 - - 66,560

L Tremaine 20,400 14,034 (6,748) (2,569) 25,117

R Cole 47,153 16,962 (13,328) (9,263) 41,524

V Santostefano 36,157 16,785 (10,113) (6,287) 36,542

L Della Martina(2) 34,032 12,268 (5,739) (40,561) - 

P Moore 24,379 11,040 (6,959) (2,772) 25,688

F Ahmed(3) 37,197 14,098 (11,811) (6,220) 33,264

G Roder (4) - - - - - 

R Edwardes(5) - - - - - 

2011

Name At 1 January 

2011

Allocated in 

2011

Vested in 

2011

Net change - 

other

At 31 December 

2011

P Coleman - - - - - 

L Tremaine 14,673 7,961 (870) (1,364) 20,400

R Cole 35,266 13,658 (1,771) - 47,153

V Santostefano 27,059 10,781 (1,683) - 36,157

L Della Martina 25,120 10,603 (1,691) - 34,032

P Moore 16,873 8,260 (754) - 24,379

F Ahmed 30,790 9,457 (1,003) (2,047) 37,197

G Roder - - - - - 

(1) Mr Coleman was appointed as CEO on 30 May 2011. Prior to this Mr Coleman was not employed by the Group.

(2) Mr Della Martina departed Woodside on 10 May 2012.

(3) Amount includes 3,272, 4,119 and 34 shares that were settled in cash with a fair value of $31.36, $7.44 and $7.46 respectively. 

(4) Mr Roder became a KMP on 27 October 2011.

(5) Mr Edwardes became a KMP on 7 May 2012.

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126 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

28. Key management personnel compensation (continued)

(d) Summary of Executives’ interests in shares under the Woodside Share Purchase Plan (WSPP)

Name Year Opening 

balance

Shares purchased 

under WSPP

Matching 

shares

Shares vested Net change 

- other

Closing 

balance

P Coleman(1) 2012 - - - - - -

2011 - - - - - -

L Tremaine 2012 - - - - - -

2011 - - - - - -

R Cole

2012 395 - - (395) - -

2011 769 - - (374) - 395

2010 893 - - (124) - 769

2009 498 158 237 - - 893

2008 124 173 201 - - 498

2007 - 62 62 - - 124

V Santostefano

2012 395 - - (395) - -

2011 769 - - (374) - 395

2010 893 - - (124) - 769

2009 498 158 237 - - 893

2008 124 173 201 - - 498

2007 - 62 62 - - 124

L Della Martina(2)

2012 395 - - (395) - -

2011 769 - - (374) - 395

2010 893 - - (124) - 769

2009 498 158 237 - - 893

2008 124 173 201 - - 498

P Moore

2012 - - - - - -

2011 234 - - (234) - -

2010 358 - - (124) - 234

F Ahmed

2012 - - - - - -

2011 - - - - - -

2010 - - - - - -

2009 - - - - - -

G Roder(3) 2012 - - - - - -

2011 - - - - - -

R Edwardes(4) 2012 - - - - - -

(1) Mr Coleman was appointed as CEO on 30 May 2011. Prior to this Mr Coleman was not employed by the Group.

(2) Mr Della Martina departed Woodside on 10 May 2012.

(3) Mr Roder became a KMP on 27 October 2011.

(4) Mr Edwardes became a KMP on 7 May 2012. 

Woodside Petroleum Ltd. | Financial Report 127
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

29. Events after the end of the reporting period

Dividends

Since the reporting date, the directors have declared a fully franked dividend of US$0.65 (2011: US$0.55), payable on 

3 April 2013. The amount of this dividend will be US$536 million (2011: US$443 million). No provision has been made for this 

dividend in the Financial Report as the dividend was not declared or determined by the directors on or before the end of the 

financial year.

30. Related party disclosures

(a) Transactions with related parties

The following table provides the total amount of transactions that were entered into with related parties for the relevant 

financial year:

Sales to 

related parties

US$m

Purchases from 

related parties

US$m

Outstanding 

balances 

receivable from/

(payable to) 

related parties

US$m

Commitments

US$m

Entities with significant influence 

over the Group

Royal Dutch Shell Group (Shell Group)

Shell Company of Australia Ltd

- purchases of goods 2012 - 70 (1) -

2011 - 108 - -

Other members of Shell Group

- purchases of services 2012 - 27 - 12

2011 - 18 1 14

Other members of Shell Group

- sales of goods 2012 313 - 6 -

2011 467 - - -

Shell Energy Holdings Australia Ltd is deemed a related party through its 23.1% (2011: 23.6%) interest of 

190,119,364 ordinary shares (2011: 190,119,364 ordinary shares) in the shareholding of the Group. 

The Group and Shell have common interests in joint ventures (refer to Note 33(a)).

(b) Terms and conditions of transaction with related parties

Sales to and purchases from related parties are made at arm’s length on normal market prices and on normal commercial 

terms. Applicable insurance premiums are negotiated at arm’s length with lead insurers via Woodside’s insurance brokers 

with Solen Versicherungen AG following the terms set by the lead insurers. 

Outstanding balances at year end are unsecured, interest-free and settlement occurs in cash.

No guarantees are provided or received for any related party receivables or payables.

No provision for doubtful debts has been recognised on any outstanding balances and no expense has been recognised 

in respect of bad or doubtful debts due from related parties.

(c) Transactions with directors

No transactions with directors occurred outside of their normal Board and committee duties in 2012 (2011: nil).

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128 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

31. Contingent liabilities and contingent assets

2012

US$m

2011

US$m

Contingent liabilities at the reporting date

Not otherwise provided for in the Financial Report

Contingent liabilities(1) 17 15

Guarantees(2) 7 5

24 20

(1) Contingent liabilities relate predominately to actual or potential litigation of the Group for which amounts are reasonably estimated but the liability is not probable 

and therefore the Group has not provided for such amounts in this Financial Report. Additionally, there are a number of other claims and possible claims that 

have arisen in the course of business against entities in the Group, the outcome of which cannot be foreseen at present, and for which no amounts have been 

included in the table above.

(2) The Group has issued guarantees relating to workers compensation liabilities.

32. Auditor remuneration 

2012

US$’000

2011

US$’000

Fees of the auditors of the company for:

Audit and review of financial reports

Ernst & Young

Audit 1,731 1,463

1,731 1,463

Non-audit services

Ernst & Young

Other assurance/advisory services 1,960 839

Other services 30 27

1,990 866

Woodside Petroleum Ltd. | Financial Report 129
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

33. Joint ventures

(a) Joint venture interests

The Group's interests in joint venture assets as at 31 December 2012 is detailed below. Exploration, development 

and production of hydrocarbons are the principal activities performed across these assets. Related party interests are 

indicated where applicable (refer to Note 30).

Joint venture assets Group interest % Related party interest %

Australasia

Producing and Developing Assets

North West Shelf Joint Venture 12.5 - 50.0 8.3 - 16.7

Enfield and Vincent 60.0 -

Laminaria–Corallina 59.9 - 66.7 -

Mutineer–Exeter 8.2 -

Stybarrow 50.0 -

Pluto 90.0 -

Exploration and Evaluation Assets

Browse Basin 17.0 - 75.0 25.0 - 35.0

Carnarvon Basin 15.8 - 90.0 15.8

Bonaparte Basin 26.7 - 35.0 25.0 - 33.3

Canning Offshore Basin 55.0 45.0

Middle East and Africa

Exploration and Evaluation Assets

Canary Islands 30.0 -

The Americas

Producing and Developing Assets

Gulf of Mexico 20.0 -

Exploration and Evaluation Assets

Gulf of Mexico 10.0 - 65.0 -

Brazil 12.5 -

Peru 20.0 -

Asia

Exploration and Evaluation Assets

Republic of Korea 50.0 -

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130 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

33. Joint ventures (continued)

(b) Jointly controlled assets

The aggregate of the Group’s interest in all jointly controlled assets is as follows:

2012

US$m

2011

US$m

Current assets

Receivables 14 30

Inventories 48 50

Other assets 5 15

67 95

Non-current assets

Inventories 9 10

Exploration and evaluation assets 652 1,582

Oil and gas properties 9,640 9,409

10,301 11,001

10,368 11,096

(c) Commitments through jointly controlled assets

The aggregate of the Group’s commitments through jointly controlled assets is as follows:

2012

US$m

2011

US$m

Capital 153 316

Exploration commitments 534 384

687 700

(d) Jointly controlled entities

Interests in jointly controlled entities are as follows:

Entity Principal activity Country of 

incorporation

Group interest %

2012 2011

North West Shelf Gas Pty Ltd Marketing services for venturers in the 

sale of gas to the domestic market. Australia 16.67 16.67

North West Shelf Liaison 

Company Pty Ltd

Liaison for venturers in the sale of LNG 

to the Japanese market. Australia 16.67 16.67

North West Shelf Australia LNG Pty Ltd Marketing services for venturers in the 

sale of LNG to international markets. Australia 16.67 16.67

North West Shelf Shipping Service 

Company Pty Ltd LNG vessel fleet advisor. Australia 16.67 16.67

These entities exist as integrated components of the overall North West Shelf Joint Venture structure and are held 

proportionately with the other venturers. There have been no changes to the investment in these entities during 

the year.

34. Associated entities

Entity Principal activity

Group interest %

2012 2011

International Gas Transportation Company Ltd(1) LNG vessel fleet management. 16.67 16.67

(1) The associate is incorporated in Bermuda.

Woodside Petroleum Ltd. | Financial Report 131
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

35. Subsidiaries 

(a) Subsidiaries

Name of entity Notes Country of 

incorporation

Parent entity

Woodside Petroleum Ltd (1,2,3) Australia

Subsidiaries

Woodside Energy Ltd (2,3,4) Australia

Woodside Energy Holdings Pty Ltd (2,4) Australia

 Woodside Energy Holdings (USA), Inc (4) USA

 Woodside Energy (USA), Inc (4) USA

 Gryphon Exploration Company (4) USA

 Gander, Inc (formerly ATS, Inc) (4,7) USA

 Woodside Offshore LLC (4,8) USA

 Woodside Natural Gas, Inc (4) USA

 Avilla 8 LLC (4,9) USA

 Woodside Energy (Peru) Pty Ltd (2,4) Australia

 Woodside Energy (Myanmar) Pte Ltd (10) Singapore

Woodside Energy (Algeria) Pty Ltd (2,4) Australia

Woodside Technical Services Pty Ltd (2,4,6) Australia

Metasource Pty Ltd (2,4) Australia

Woodside Guangdong Shipping (One) Pty Ltd (2,4) Australia

Woodside Guangdong Shipping (Two) Pty Ltd (2,4) Australia

Woodside Mauritania Investments Pty Ltd (2,4,6) Australia

Woodside Energy Holdings (UK) Pty Ltd (2,4) Australia

 Woodside Energy (UK) Ltd (4) UK

 Woodside Energy Iberia S.A. (4) Spain

 Woodside Energy (N.A.) Ltd (4) UK

Woodside Energy (Kenya) Pty Ltd (2,4) Australia

Woodside Energy (Carbon Capture) Pty Ltd (2,4) Australia

Woodside Energy (SL) Pty Ltd (2,4) Australia

Woodside West Africa Pty Ltd (2,4) Australia

Woodside Energy Technologies Pty Ltd (2,4) Australia

Woodside Energy (Norway) Pty Ltd (2,4) Australia

Woodside Energy (M.E.) Pty Ltd (2,4) Australia

Woodside Energy Middle East and Africa Pty Ltd (2,4) Australia

Woodside Browse Pty Ltd (2,4) Australia

Woodside Burrup Pty Ltd (2,4) Australia

 Pluto LNG Pty Ltd (5) Australia

 Burrup Facilities Company Pty Ltd (5) Australia

 Burrup Train 1 Pty Ltd (5) Australia

Woodside Energy Australia Asia Holdings Pte Ltd (4) Singapore

 WelCap Insurance Pte Ltd (4) Singapore

 Woodside Energy (Korea) Pte Ltd (4) Singapore

Woodside Energy Holdings (South America) Pty Ltd (2,4) Australia

 Woodside Energia (Brasil) Investimento em Exploração de Petróleo Ltda. (4) Brazil

Woodside Finance Ltd (2,4) Australia

Woodside Petroleum Holdings Pty Ltd (2,4) Australia

Woodside Petroleum (Timor Sea 19) Pty Ltd (2,4) Australia

Woodside Petroleum (Timor Sea 20) Pty Ltd (2,4) Australia

Mermaid Sound Port and Marine Services Pty Ltd (2,4) Australia

Woodside Group Staff Superannuation Pty Ltd (2,4,6) Australia

Woodside Petroleum (Northern Operations) Pty Ltd (2,4) Australia

Woodside Petroleum (W.A. Oil) Pty Ltd (2,4) Australia

(1) Woodside Petroleum Ltd is the ultimate holding company and the head entity within the tax consolidated group.

(2) These companies were members of the tax consolidated group at 31 December 2012.

(3) Pursuant to ASIC Class Order 98/1418, relief has been granted to the controlled entity, Woodside Energy Ltd from the Corporations Act 2001 requirements for 

preparation, audit and publication of accounts. As a condition of the Class Order, Woodside Petroleum Ltd and Woodside Energy Ltd are parties to a Deed of 

Cross Guarantee.

(4) All subsidiaries are wholly owned except for those listed in Note 5 below.

(5) Kansai Electric Power Australia Pty Ltd and Tokyo Gas Pluto Pty Ltd each have 5% of the shares in these companies.

(6) These companies were deregistered on 7 August 2012.

(7) The dissolution of Gander Inc was effective on 5 December 2012.

(8) The dissolution of Woodside Offshore LLC was effective on 1 November 2012. 

(9) The dissolution of Avila 8 LLC was effective on 7 January 2011 and formally notified to the authorities on 10 October 2012.

(10) Woodside Energy (Myanmar) Pte Ltd was incorporated on 5 December 2012.

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132 Woodside Petroleum Ltd. | 2012 Annual Report
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

35. Subsidiaries (continued)

(b) Deed of Cross Guarantee and closed group

Woodside Petroleum Ltd and Woodside Energy Ltd are parties to a Deed of Cross Guarantee under which each 

company guarantees the debts of the other. By entering into the Deed, the entities have been granted relief from 

the Corporations Act 2001 requirements for the preparation, audit and publication of accounts, pursuant to Australian 

Securities and Investment Commission (ASIC) Class Order 98/1418. The two entities represent a Closed Group for the 

purposes of the Class Order.

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

out below.

Closed Group consolidated income statement

2012

US$m

2011

US$m

Profit before tax 2,325 2,723

Taxes (1,129) (1,042)

Profit after tax 1,196 1,681

Retained earnings at the beginning of the financial year 6,932 6,117

Dividends (979) (866)

Retained earnings at the end of the financial year 7,149 6,932

Woodside Petroleum Ltd. | Financial Report 133
Notes to and forming part of the Financial Report

For the year ended 31 December 2012

Closed Group consolidated statement of financial position

2012

US$m

2011

US$m

Current assets

Cash and cash equivalents 34 (61)(1)

Receivables 500 700

Inventories 187 177

Other financial assets 4 7

Other assets 13 65

Total current assets 738 888

Non-current assets

Inventories 6 7

Other financial assets 17,809 16,549

Other assets 1 1

Exploration and evaluation assets 777 697

Oil and gas properties 4,870 5,119

Other plant and equipment 59 61

Deferred tax assets 14 -

Total non-current assets 23,536 22,434

Total assets 24,274 23,322

Current liabilities

Payables 520 744

Tax payable 542 72

Other financial liabilities 26 23

Other liabilities 24 27

Provisions 166 158

Total current liabilities 1,278 1,024

Non-current liabilities

Payables 6,844 6,974

Deferred tax liabilities 767 758

Other financial liabilities 7 6

Other liabilities 165 181

Provisions 812 682

Total non-current liabilities 8,595 8,601

Total liabilities 9,873 9,625

Net assets 14,401 13,697

Equity

Issued and fully paid shares 6,547 5,880

Shares reserved for employee share plans (44) (67)

Other reserves 749 952

Retained earnings 7,149 6,932

Total equity 14,401 13,697

(1) Excess joint venture funds were put on deposit in interest- bearing accounts in Woodside Finance Ltd.

36. Corporate information 

Woodside Petroleum Ltd is a company limited by shares incorporated and domiciled in Australia. Its shares are publicly traded 

on the Australian Securities Exchange.

35. Subsidiaries (continued)

(b) Deed of Cross Guarantee and closed group (continued)

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134 Woodside Petroleum Ltd. | 2012 Annual Report
Directors’ declaration

In accordance with a resolution of directors of Woodside Petroleum Ltd, we state that:

1. In the opinion of the directors:

(a) the financial statements and notes thereto, and the disclosures included in the audited 2012 Remuneration Report, comply 

with Australian Accounting Standards and the Corporations Act 2001;

(b) the financial statements and notes thereto give a true and fair view of the financial position of the Group as at 

31 December 2012 and of the performance of the Group for the financial year ended 31 December 2012;

(c) the financial statements and notes thereto also comply with International Financial Reporting Standards as disclosed in Note 

1(b);

(d) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and 

payable; and

(e) there are reasonable grounds to believe that the members of the Closed Group identified in Note 35 will be able to meet any 

obligations or liabilities which they are or may become subject to, by virtue of the Deed of Cross Guarantee.

2. This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 

295A of the Corporations Act 2001 for the year ended 31 December 2012.

For and on behalf of the Board

M A Chaney, AO

Chairman 

Perth, Western Australia

P J Coleman

Chief Executive Officer and 

Managing Director

Perth, Western Australia

20 February 2013 20 February 2013

Woodside Petroleum Ltd. | Financial Report 135
Independent auditor’s report to the members of Woodside Petroleum Ltd

Report on the financial report

We have audited the accompanying financial report of Woodside Petroleum Ltd, which comprises the consolidated statement of 

financial position as at 31 December 2012, and the consolidated income statement, consolidated statement of comprehensive 

income, statement of changes in equity and consolidated statement of cash flows for the year ended on that date, a summary of 

significant accounting policies, other explanatory notes and the Directors’ Declaration of the consolidated entity comprising the 

Company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance 

with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are 

necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In 

Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the 

financial statements comply with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance 

with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit 

engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from 

material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The 

procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the 

financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to 

the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the 

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also 

includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the 

directors, as well as evaluating the overall presentation of the financial report.

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

Independence

In conducting our audit we have met the independence requirements of the Corporations Act 2001. We have given to the directors 

of the company a written Auditor’s Independence Declaration, a copy of which is included in the Directors’ Report. In addition to 

our audit of the financial report, we were engaged to undertake the services disclosed in the notes to the financial statements. The 

provision of these services has not impaired our independence.

Opinion

In our opinion:

a. the financial report of Woodside Petroleum Ltd is in accordance with the Corporations Act 2001, including:

i giving a true and fair view of the consolidated entity’s financial position as at 31 December 2012 and of its performance for 

the year ended on that date; and

ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and

b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the remuneration report

We have audited the Remuneration Report included in pages 53 to 65 of the Directors’ Report for the year ended 31 December 

2012. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance 

with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on 

our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion, the Remuneration Report of Woodside Petroleum Ltd for the year ended 31 December 2012, complies with section 

300A of the Corporations Act 2001.

Independent audit report

Ernst & Young R J Curtin, Partner

Perth, Western Australia

20 February 2013

Liability limited by a scheme approved under Professional Standards Legislation.

136 Woodside Petroleum Ltd. | 2012 Annual Report

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Shareholder information

Number of shareholdings

There were 208,277 shareholders. All issued shares carry voting rights on a one for one basis.

Distribution of shareholdings

Size of shareholding Number of holders Number of 

shares

% of issued 

capital

1 - 1,000 152,552 58,711,412 7.13

1,001 - 5,000 49,436 98,611,429 11.97

5,001 - 10,000 4,247 29,221,449 3.55

10,001 - 100,000 1,934 40,041,409 4.86

100,001 and over 108 597,324,958 72.50

Total 208,277 823,910,657 100.00

Unmarketable parcels

There were 3,204 members holding less than a marketable parcel of shares in the company.

Twenty largest shareholders

Shareholder Shares held % of issued 

capital

Shell Energy Holdings Australia Limited 190,119,364 23.08

HSBC Custody Nominees (Australia) Limited 123,613,279 15.00

J P Morgan Nominees Australia Limited 83,140,887 10.09

National Nominees Limited 80,836,852 9.81

Citicorp Nominees Pty Limited 25,403,171 3.08

JP Morgan Nominees Australia Limited <Cash Income A/C> 12,772,531 1.55

BNP Paribas Noms Pty Ltd <Master Cust DRP> 9,728,129 1.18

Citicorp Nominees Pty Limited <Colonial First State Inv A/C> 7,733,468 0.94

AMP Life Limited 5,682,812 0.69

UBS Wealth Management Australia Nominees Pty Ltd 5,364,039 0.65

HSBC Custody Nominees (Australia) Limited <NT-Comnwlth Super Corp A/C> 3,687,376 0.45

Australian Foundation Investment Company Limited 3,182,886 0.39

Pacific Custodians Pty Limited <WPL Plans Ctrl A/C> 2,960,376 0.36

BNP Paribas Noms Pty Ltd <SMP Accounts DRP> 2,928,814 0.36

BNP Paribas Noms Pty Ltd <DRP> 2,769,981 0.34

Perpetual Trustee Company Limited 2,082,481 0.25

Argo Investments Limited 1,700,873 0.21

Navigator Australia Ltd <MLC Investment Sett A/C> 1,510,929 0.18

QIC Limited 1,289,143 0.16

Nulis Nominees (Australia) Limited <Navigator Mast Plan Sett A/C> 1,047,257 0.13

Total 567,554,648 68.89

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

Shell Energy Holdings Australia Limited 190,119,364 23.26*

As at 12 February 2013

*Since Shell Energy Holdings Australia Ltd’s most recent notice of change of interests of substantial shareholder was given on 4 April 2012, its interest in Woodside’s issued capital has 

reduced to 23.08%, as a result of additional shares being issued by Woodside. 

Woodside Petroleum Ltd. | Shareholder Information 137
Dividend payments

Woodside declares its dividends in 

US dollars as it is our functional and 

presentation currency. Woodside pays 

its dividends in Australian dollars unless a 

shareholder’s registered address is in the 

United Kingdom where they are paid in 

UK pounds sterling, or in the United States 

where they are paid in US dollars.

Shareholders who reside outside of the 

United States can elect to receive their 

dividend in US dollars. Shareholders must 

make an election to alter their dividend 

currency by the record date for the 

dividend by contacting the share registry 

on 1300 558 507 (within Australia) or 

+61 3 9415 4632 (outside Australia).

Shareholders may have their Australian 

dollar dividends paid directly into any 

bank or building society account within 

Australia. Payments are electronically 

credited on the dividend payment date 

and confirmed by payment advice. To 

request direct crediting of dividend 

payments please contact the share 

registry or visit the share registry website 

(www.investorcentre.com/wpl).

The history of dividends paid by 

the company can be found on the 

company’s website.

Dividend reinvestment plan

Woodside’s Dividend Reinvestment 

Plan (DRP) was suspended by the Board 

in February 2013 until further notice. 

However, shareholders with registered 

addresses in Australia and New Zealand 

can still elect to participate in the DRP, 

pending a decision by the Board to 

recommence the DRP at some future 

date. If the DRP is recommenced in the 

future, the ASX will be notified via an 

announcement lodged with the ASX 

Market Announcements Platform. If the 

DRP is recommenced, shareholders who 

have elected to participate in the DRP 

will have the dividends on some or all of 

their shares automatically reinvested in 

additional shares. Information on the DRP 

is available on the company’s website. 

Election forms are available from the 

company’s website or from the share 

registry.

Annual General Meeting

The 2013 AGM of Woodside Petroleum Ltd 

will be held at 10 am (AWST) on 

24 April 2013, at the Perth Convention 

Exhibition Centre, 21 Mounts Bay Road, 

Perth, Western Australia. Details of the 

business of the meeting will be provided 

in the AGM notice. 

The AGM will be webcast live on the 

internet. An archive version of the 

webcast will be placed on the Woodside 

website to enable the proceedings to be 

viewed at a later time. 

Copies of the Chairman’s and CEO’s 

speeches will be available on the 

company’s website. 

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. 

Share registry: enquiries

Investors seeking information about 

their shareholdings should contact the 

company’s share registry:

Computershare Investor 

Services Pty Limited

Level 2, 45 St Georges Terrace

Perth, Western Australia 6000

Postal address: GPO Box D182

Perth, Western Australia 6840

Telephone: 1300 558 507 

(within Australia)

+61 3 9415 4632 (outside Australia)

Facsimile: +61 8 9323 2033

Email: web.queries@computershare.com.au

Website: www.investorcentre.com/wpl

Change of address or banking 

details

Shareholders should immediately notify 

the share registry of any change to their 

address or banking arrangements for 

dividends electronically credited to a 

bank account. 

Changes can be made online at the 

share registry website 

www.investorcentre.com/wpl.

Australian Securities Exchange 

listing

Woodside Petroleum Ltd securities 

are listed on the Australian Securities 

Exchange (ASX) under the code WPL. 

Share price information can be 

accessed on the company’s website. 

American Depositary Receipts

The Bank of New York Mellon Corporation 

sponsors a level one American Depositary 

Receipts (ADR) program in the United 

States of America. One Woodside share 

equals one ADR and trades over the 

counter under the symbol ‘WOPEY’.

ADR holders should deal directly with the 

Bank of New York Mellon Corporation on 

all matters related to their ADRs. 

Enquiries should be directed to:

The BNY Mellon Shareowner Services

P.O Box 358516

Pittsburgh, PA 15252-8516

USA Toll Free Number:

1-888-269-2377

Number for international callers:

+1 201-680-6825

Email: shrrelations@bnymellon.com

Website: www.adrbnymellon.com

Investor Relations: enquiries

Requests for specific information on 

the company can be directed to Investor 

Relations at:

Investor Relations

Woodside Petroleum Ltd

Woodside Plaza

240 St Georges Terrace,

Perth, WA 6000

Postal address: GPO Box D188

Perth, WA 6840

Telephone: +61 8 9348 4000

Facsimile: +61 8 9214 2777

Email: investor@woodside.com.au

Website: www.woodside.com.au

138 Woodside Petroleum Ltd. | 2012 Annual Report

OVERVIEW BUSINESS 

REVIEWS

GOVERNANCE FiNANCIAL 

REPORT

SHAREHOLDER 

INFORMATION
Events calendar 2013

Key calendar dates for Woodside shareholders in 2013. 

Please note dates are subject to review.

January 17 Fourth quarter 2012 report

February 20 2012 full-year result and final dividend announcement

25 Ex-dividend date for final dividend

March 1 Record date for final dividend

April 3 Payment date for final dividend

18 First quarter 2013 report

22 AGM proxy returns close at 10.00 am (AWST)

24 Annual General Meeting

June 30 Woodside half-year end

July 18 Second quarter 2013 report

August 21 2013 half-year result and interim dividend announcement

TBA Ex-dividend date for interim dividend

TBA Record date for interim dividend

October TBA Payment date for interim dividend

17 Third quarter 2013 report

December 31 Woodside year end

Registered office Perth

Woodside Petroleum Ltd

240 St Georges Terrace, Perth, WA 6000 

Telephone: +61 8 9348 4000

Postal address: GPO Box D188

Perth, WA 6840

Broome

29 Coghlan Street, Broome, WA 6725

Telephone: 1800 036 654

Karratha 

Burrup Peninsula, Karratha, WA 6714

Telephone: 1800 634 988

Houston (USA)

Woodside Energy (USA) Inc.

Sage Plaza

5151 San Felipe, Suite 1200

Houston, TX 77056, USA

Telephone: +1 713 401 0000

Business directory Key announcements 2012

February Appointment of Executive Director

March Pluto LNG Project achieves ready for start-up

April Variation to Browse Basin retention leases approved

Pluto begins LNG production

Offer for sale of Browse equity and LNG volumes 

August Equity changes in Browse Joint Ventures

Woodside reports 2012 half-year profit of $812 million

September Sale of Browse equity completed

October Farm-in offer accepted for offshore Myanmar PSC

Speculation regarding Israeli petroleum licences

Changes to Board of Directors

December Woodside enters major gas discovery offshore Israel

Changes to Board of Directors 

Woodside Petroleum Ltd. | Shareholder Information 139
Units, conversion factors and glossary

Units

bbl barrel

Bcf billion cubic feet

boe barrel of oil equivalent 

kPa thousands of Pascals

Mcf thousand cubic feet

MMbbl million barrels

MMboe million barrels of oil equivalent

MMBtu million British thermal units

mtpa million tonnes per annum

psi pounds per square inch 

t tonnes

Tcf trillion cubic feet

TJ terajoules

Conversion factors

Product Factor Conversion 

Factors*

Domestic Gas 1TJ 163.6 boe

Liquefied Natural 

Gas (LNG)

1 tonne 8.9055 boe

Condensate 1 bbl 1.000 boe

Oil 1 bbl 1.000 boe

Liquefied 

Petroleum Gas 

(LPG)

1 tonne 8.1876 boe

Gulf of Mexico 

Gas

1 MMBtu 0.1724 boe

* Minor changes to some conversion factors can occur 

over time due to gradual changes in the process stream.

Glossary

$, $m US dollars unless otherwise stated, millions of dollars

1H, 2H Halves of the calendar year (i.e. 1H is 1 January to 30 June, 2H is 

1 July to 31 December)

APPEA Australian Petroleum Production and Exploration Association

Appraisal well A well drilled to follow up a discovery and evaluate its commercial potential

ASEAN Association of Southeast Asian Nations

Basis of design Specification of owner's requirements

Brent Intercontinental Exchange (ICE) Brent Crude deliverable futures contract (oil price)

Brownfield An exploration or development project located within an existing province which 

can share infrastructure and management with an existing operation

Condensate Hydrocarbons, which are gaseous in a reservoir, but which condense to form 

liquids as they rise to the surface

Crude oil Oil that is produced from a reservoir after any associated gas has been removed

CWLH Cossack Wanaea Lambert Hermes

Development well A well drilled for the purpose of recovering hydrocarbons

DRP Dividend reinvestment plan

EEP Employee equity plan

EIP Executive incentive plan

EIS Environmental Impact Statement

EPA Enviromental Protection Authority

EPS Earnings per share

ER Equity rights

Front-end engineering 

and design (FEED)

Preliminary design and cost and schedule confirmation before a final investment 

decision

FID Final investment decision

Flaring Flaring is the term used to describe the controlled burning of gas found in oil and 

gas reservoirs.

FPSO Floating production storage and offloading vessel

Gearing Net debt divided by (net debt + equity)

GoM Gulf of Mexico

Greenfield Development or exploration located outside the area of influence of existing 

operations/infrastructure

GWF Greater Western Flank

Infill well Drilled for the purpose of increasing production

ISO International Organisation for Standardisation

JV Joint Venture

KGP Karratha Gas Plant

KPI Key performance indicator

LIBOR London Inter-Bank Offer Rate

LNG Liquefied natural gas

LPG Liquefied petroleum gas

LTA Long-term award

Net debt Total debt less cash and cash equivalents

NPAT Net profit after tax

NRB North Rankin B platform

NR2 North Rankin Redevelopment Project

NWS North West Shelf Project

PRRT Petroleum Resources Rent Tax

PSC Production Sharing Contract

Q1, Q2, Q3, Q4 Quarters of the calendar year (i.e. Q1 is 1 January to 31 March, Q2 is 1 April to 

30 June,Q3 is 1 July to 30 September, Q4 is 1 October to 31 December)

RAP Woodside’s Reconciliation Action Plan

Return on equity A measure of company performance calculated as equity attributable to 

shareholders (excluding non-controlling interests) divided by reported NPAT 

(excluding non-controlling interests) expressed as a percentage 

ROACE Return on average capital employed is calculated as net profit after tax and net 

finance costs (after tax) divided by average debt and equity

RTSR, TSR Relative total shareholder return, total shareholder return

STA Short-term award

TRCF Total recordable case frequency (per million hours worked)

TSR Total shareholder return

Unit production costs Production costs ($ million) divided by production volume (MMboe)

USD US dollars

VAR Variable annual reward

VPR Variable pay rights

VWAP Volume weighted average price

WEP Woodside’s equity plan

WSPP Woodside share purchase plan

140 Woodside Petroleum Ltd. | Glossary

OVERVIEW BUSINESS 

REVIEWS

GOVERNANCE FiNANCIAL 

REPORT

SHAREHOLDER 

INFORMATION
A

American depository receipts 138

Angel platform 3, 24

Annual General Meeting, 2013 Notice 138

Anti-bribery and corruption 11

Australia Oil 28, 29

B

Balance sheet 7, 8, 31, 143

Board of Directors 5, 36, 37, 39, 143

Brazil iii, 34,35

Brent 3, 9, 29, 140, 142

Browse LNG iii, 2, 3, 5- 9, 13, 15-17, 21, 30, 31

C

Canary Islands iii, 35

Carbon tax, Clean Energy Legislation 13, 44, 45, 83

CEO remuneration 57

CEO report 6, 7

CFO report 8, 9

Chairman’s report 4, 5

Cimatti 7, 29

Committees of the Board 43

Compass (workplace culture) iii, 7

Compliance ii, 11, 20, 43, 46-49, 52

Contingent resources 3, 16, 17, 30, 32

Conversion factors 140

Corporate governance 38-52

D

Darwin LNG 33

Directors’ declaration 135

Diversity 7, 10, 49, 50

Dividend 1, 2-4, 8, 52, 138

Dividend Policy 4, 8, 9

Dividend Reinvestment Plan 138

E

Emissions 13, 45, 56

Employees 10

Enfield 6, 9, 28, 29

Environmental report 13

Environmental incidents 13

Events calendar 2013 139

Exchange rate 9, 59

Executives 21

Exploration review 18, 19

External auditor relationship 48, 49

F

Financial report 67-134

Flare gas and intensity 13

Floating LNG 33

Franking credit balance 94

Funding 9

G

Gearing 2, 143

Global LNG demand 14

Goodwyn A 13, 24, 25

Graduates 7, 10, 49, 50

Greater Exmouth 16, 17, 19

Greater Western Flank 4, 6, 15, 25

Gulf of Mexico (GoM) iii, 18, 19, 34, 35

H

Health and safety 6, 7, 11, 20, 45, 48, 56

Henry Hub 15

I

Income tax 8, 9, 52

Independent audit report 136

Indigenous 10, 26, 27, 31, 49

Israel iii, 3, 5, 7, 9, 18, 19, 34, 35, 139

J

James Price Point 5, 13, 31

K

Karratha Gas Plant iii, 24, 25

L

Laminaria–Corallina 9, 28, 29

Laverda 7, 19, 28, 29

Leviathan iii, 1, 3, 5-7, 9, 15, 19, 34, 35

LNG market 14, 15

LNG Train 2 24, 25

LNG Train 4 25

London Benchmarking Group 12

Long-term award 54-57

Index

 For our areas of activity refer to page iv.

M

Mission ii, iii, 7, 46

MODEC Venture II FPSO 29

Mutineer–Exeter 9, 28, 29

Myanmmar iii, 1, 3, 5-7, 9, 15, 18, 19, 34, 35

N

Native Title Agreement 31

Neptune 8, 34, 35

Net profit after tax 2-4, 8, 9, 54

Nganhurra FPSO 13, 28, 29

Ngujima-Yin FPSO 28,29

North American LNG, US LNG 5, 14, 15

North Rankin A 4, 22, 24, 25

North Rankin B iii, 4, 22-25

North Rankin Redevelopment Project iii, 7, 22, 25

North West Shelf Project iii, 7, 12, 24, 25, 44

NWS Oil Redevelopment Project 25

Northern Endeavour FPSO 13, 29

O

Ohanet Risk Sharing Contract 8, 34, 89 

Oil spill response plan 11

Okha FPSO 13, 24, 25

Outer Canning Basin iii, 18, 19

P

Payout ratio, dividend 4, 9, 143

Petroleum Resource Rent Tax (PRRT) 8, 9

Performance summary 2, 3

Peru iii, 18, 19, 35

Pluto LNG ii, iii, 2,4, 6-11, 13-16, 22, 26, 27

Pluto LNG expansion 27

Power Play 35

Price out of range 15

Production 2-4, 6-9, 14-17, 24-29, 34, 35, 142, 143

Proved plus Probable reserves 3, 16, 17, 24, 26, 28, 34, 142

Proved reserves 3, 16, 17

Production Sharing Contract 5, 6, 9, 35

R

Realised prices (average) 8

Reconciliation Action Plan 7, 10, 45, 49

Remuneration report 53-65

Republic of Korea 18, 19, 35

Reserves statement 16, 17

Reserves replacement ratio 16

Retention lease 31

Retention (of employees) 10, 44, 50, 55, 58, 64

Return on equity 2

Risk management, policy, system 11, 20, 47, 48, 104-112

S

Sales revenue 2, 3, 6-8, 24, 25, 28, 29, 34

Security 11

Securities Dealing Policy 59

Sensitivities 9

Share plans 55, 57, 64

Share price performance 3

Share registry: enquiries 138

Shareholders: twenty largest 137

Shareholdings: distribution 137

Short-term award 54-58, 61

Strategy, Woodside iii, 4-7

Stybarrow Venture FPSO 28, 29

Social investment contributions 12, 27, 33

Sunrise LNG 5-7, 12, 32, 33

T

Technology iii, 7, 19

Tension leg platform 35

Timor-Leste 5, 7, 32, 33

Total shareholder return 3, 6, 55-57

TRCF (total recordable case frequency) 3, 7, 11

Turnover (employees) 10

U

United States 16, 17, 59, 138, 142

Unit production cost 9

V

Values ii, iii, 7, 11, 39, 46

Vincent 8, 9, 28, 29

Vision ii, iii, 7, 46

Volunteering 12

W

Whale research 31

WPL 3, 6, 137, 138

X

Xena 6, 26, 27

Woodside Petroleum Ltd. | Shareholder Information 141
2012 Summary charts

Product view Regional view

With the start-up of Pluto LNG, the proportion of natural 

gas in Woodside’s portfolio mix has increased, while oil and 

condensate has decreased. 

Investment

The majority of our investment expenditure was directed 

towards our LNG projects including North West Shelf, Pluto 

LNG and the proposed Browse LNG Development.

Investment

2012 2011

Gas and condensate* 85% 75%

Oil* 14% 12%

Exploration and other <2% 13%

* Indicative only as some assets produce oil and gas

While the bulk of our revenue is currently derived from Australia, 

Woodside’s growth strategy seeks to capture new opportunities 

to broaden our portfolio. Refer to the CEO report on pages 6 

and 7 for further information on our strategy. 

Production

2012 2011

Australia 99% 95%

United States 1% 2%

Rest of World 0% 3%

The revenue profile is largely derived from the increased gas 

streams following the Pluto start-up. While oil production in 2012 

represented only 20% of Woodside’s total production volume, 

ongoing strong oil prices resulted in the oil portfolio contributing 

32% to Woodside’s total revenue. Refer to page 3 to view the 

Brent oil price graph indexed over ten years.

Production

2012 2011

Natural gas* 69% 60%

Oil 20% 26%

Condensate 11% 14%

* Includes LNG, LPG and pipeline gas

The Australian projects provide the majority of Woodside’s 

production volumes. Refer to our areas of activity map on 

page iv, which shows the locations of our producing assets.

Revenue

2012 2011

Australia 99% 97%

United States 1% 2%

Rest of World 0% 1%

Capital expenditure in the north-west of Australia continues to 

dominate regional investment.

Revenue

2012 2011

Natural gas* 53% 42%

Oil 32% 39%

Condensate 15% 19%

* Includes LNG, LPG and pipeline gas

The majority of Woodside’s Proved plus Probable reserves are 

located in Australia, however we anticipate a greater diversity 

will result from the implimentation of our growth strategy.

Reserves (Proved plus Probable)

2012 2011

Australia 99% 99%

United States <1% <1%

Rest of World <0.1% <0.1%

With gas representing the larger portion of Woodside’s reserves, 

our focus is on commercialising the undeveloped volumes of the 

gas assets we hold, in order to maximise shareholder return.

Reserves (Proved plus Probable)

2012 2011

Natural gas* 85% 85%

Oil 6% 7%

Condensate 9% 8%

* Includes LNG, LPG and pipeline gas

2012 2011

Australia 98% 99%

United States 2% <1%

Rest of World 0% <1%

142 Woodside Petroleum Ltd. | 2012 Summary Charts

OVERVIEW BUSINESS 

REVIEWS

GOVERNANCE FiNANCIAL 

REPORT

SHAREHOLDER 

INFORMATION
Profit and Loss (USDm)(1)

Operating Revenues

Australia

Pipeline Gas 367 375 309 378 320 227 182 185 177 167 

LNG 2,834 1,509 1,310 769 1,007 619 614 548 360 296 

LPG 125 127 115 94 112 92 75 70 44 36 

Condensate 903 860 708 571 669 577 512 480 342 268 

Oil 1,918 1,795 1,579 1,496 2,685 1,521 1,062 736 586 546 

LNG Processing Revenue 125 - - - - - - - - - 

Gulf of Mexico 76 93 117 124 197 133 119 21 - - 

Algeria - 43 55 55 55 55 56 55 56 5 

Mauritania - - - - - 137 252 - - - 

Total 6,348 4,802 4,193 3,487 5,045 3,361 2,872 2,095 1,565 1,318 

EBITDAX 5,371 3,426 3,334 3,308 3,885 2,541 2,339 1,685 1,603 905 

EBITDA 4,979 2,839 3,005 3,055 3,584 2,101 2,021 1,452 1,417 712 

EBIT2 3,795 2,212 2,256 2,303 2,852 1,560 1,684 1,238 1,213 558 

Exploration and Evaluation 392 587 329 253 301 440 318 234 186 193 

Depreciation and Amortisation 1,184 627 749 752 732 541 337 213 204 154 

Finance Costs 137 26 (18) 12 19 8 20 7 0 17 

Tax Expense 614 677 697 823 1,287 687 590 387 367 197 

Non-controlling interest 61 2 2 (6) - - - - - - 

Reported NPAT 2,983 1,507 1,575 1,474 1,546 864 1,075 844 845 344 

Underlying NPAT 2,061 1,655 1,418 1,052 1,823 948 1,030 791 495 344 

Reported EPS (cents)3 366 190 204 210 225 128 163 128 129 51 

Underlying EPS (cents)3 253 209 183 150 266 141 157 120 75 51 

DPS (cents) 130 110 105 95 100 91 98 70 44 33 

Underlying payout ratio (%) 51 53 57 64 38 64 63 58 58 64 

EBITDA/Op Cash Flow (%) 143 127 143 206 111 101 139 138 160 91 

Balance Sheet (USDm)1

Total Assets 24,810 23,231 20,196 17,753 10,317 8,515 7,072 5,107 4,250 3,596 

Debt 4,340 5,102 4,915 4,939 2,044 903 1,435 826 791 803 

Net Debt 1,918 5,061 3,952 3,732 1,946 782 1,188 656 169 670 

Shareholder Equity 15,148 12,658 11,091 8,812 4,633 4,458 3,313 2,565 2,162 1,830 

Cash Flow (USDm) and Capital Expenditure (USDm)

Cash Flow From

Operations 3,475 2,242 2,104 1,483 3,224 2,082 1,457 1,053 883 785 

Investing 161 (3,533) (2,941) (4,708) (3,892) (1,700) (1,432) (1,152) (69) (484)

Financing (1,252) 362 608 4,207 684 (522) 41 (352) (259) (273)

Capital Expenditure

Exploration and Evaluation 383 778 703 273 418 447 376 210 77 74

Oil and Gas Properties4 1,145 2,651 2,933 3,992 4,031 1,965 1,091 993 480 250

Ratios (%)

Reported ROACE 16.5% 9.0% 10.5% 14.5% 25.9% 17.2% 26.8% 26.8% 30.3% 15.0%

Underlying ROACE 11.8% 9.9% 9.5% 10.5% 29.6% 18.8% 26.0% 26.8% 18.9% 13.8%

Reported Return on Shareholders Funds 19.7% 11.9% 14.2% 16.7% 33.4% 19.4% 32.5% 32.9% 39.1% 18.8%

Underlying Return on Shareholders Funds 14.5% 12.9% 13.0% 12.5% 37.1% 20.9% 31.5% 31.5% 27.3% 18.8%

Gearing 11.2% 28.6% 26.3% 29.8% 29.6% 14.9% 26.4% 20.4% 7.2% 26.8%

Volumes

Sales (million boe)

Australia

Pipeline Gas 13.9 14.0 14.8 18.4 18.9 16.4 15.5 16.6 16.5 18.0 

LNG 42.6 22.4 22.7 21.3 17.0 17.0 17.3 17.0 13.3 11.9 

LPG 1.1 1.1 1.3 1.5 1.2 1.2 1.2 1.2 1.0 1.1 

Condensate 8.6 7.8 9.1 9.7 7.9 7.8 8.0 8.7 8.8 9.7 

Oil 16.8 15.7 19.8 24.3 29.8 20.4 16.5 13.3 14.7 19.8 

Gulf of Mexico 0.8 1.1 2.2 3.2 3.1 2.6 2.6 0.4 - - 

Mauritania - - - - - 2.0 4.3 - - - 

Algeria - 1.8 2.3 2.3 2.3 2.3 2.3 2.3 2.3 0.1 

Total (million boe) 83.8 63.9 72.2 80.7 80.2 69.7 67.7 59.5 56.6 60.6 

Production (million boe)

Australia

Pipeline Gas 13.8 14.0 14.8 18.4 18.9 16.4 15.6 16.6 16.6 18.0 

LNG 43.9 22.6 23.2 21.5 17.4 17.4 17.4 17.2 13.8 12.1 

LPG 1.1 1.2 1.4 1.5 1.2 1.2 1.2 1.2 1.1 1.0 

Condensate 9.3 7.9 9.1 9.5 7.9 8.0 8.0 8.6 8.7 9.8 

Oil 16.0 16.0 19.7 24.5 30.5 20.5 16.4 13.4 14.9 19.7 

Gulf of Mexico 0.8 1.1 2.2 3.2 3.1 2.6 2.6 0.4 - - 

Mauritania - - - - - 2.2 4.4 - - - 

Algeria - 1.8 2.3 2.3 2.3 2.3 2.3 2.3 2.3 0.1 

Total (million boe) 84.9 64.6 72.7 80.9 81.3 70.6 67.9 59.7 57.4 60.7 

Other ASX Data

Reserves (Proved plus Probable)

Gas (Tcf) 7.51 7.80 8.02 7.79 7.90 7.80 6.90 4.67 5.11 4.65 

Condensate (MMbbl) 130.90 138.70 154.74 147.80 151.40 152.10 144.60 129.70 138.00 145.70 

Oil (MMbbl) 95.90 108.50 117.50 136.10 168.80 170.20 221.10 294.50 258.80 341.50 

Other

Employees5 3,997 3,856 3,650 3,219 3,124 2,981 2,888 2,508 2,528 2,219 

Shares High (A$) 38.16 50.85 49.28 53.87 70.51 56.66 49.80 39.39 21.48 15.10 

Low (A$) 30.09 29.76 40.56 31.19 26.81 34.81 34.81 19.87 14.11 10.00 

Close (A$) 33.88 30.62 42.56 47.20 36.70 50.39 38.11 39.19 20.10 14.80 

Number (000’s) 823,911 805,672 783,402 748,599 698,553 688,331 666,667 666,667 666,667 666,667 

No. Shareholders 208,277 205,868 201,134 175,257 141,035 131,460 119,003 83,829 72,267 69,491 

Market Capitalisation (USD equivalent at reporting date) 28,983 25,287 33,745 31,567 17,717 30,353 20,033 19,146 10,456 7,420 

Market Capitalisation (AUD equivalent at reporting date) 27,914 24,670 33,342 35,334 25,637 34,685 25,407 26,127 13,400 9,867 

Finding Costs ($/boe) (3 year average)6,7 14.09 12.67 6.12 5.71 3.35 3.60 2.47 3.95 1.43 1.18 

Reported effective Income Tax Rate (%) 27.2% 30.5% 25.2% 33.7% 32.6% 35.8% 35.4% 31.4% 30.3% 36.4%

Net Debt/Total Market Cap (%) 6.6% 20.0% 11.6% 11.8% 11.0% 2.6% 5.9% 3.4% 1.6% 9.0%

2012 2011 2010 2009 2008 2007 2006 2005 2004(8)

(Restated) 2003

Woodside Petroleum Ltd. | 10 Year Summary 143

10 year comparative data summary

1 Comparative financial 

information prior to 2010 

has been converted on a 

consistent basis in accordance 

with Note 1(o) to the Financial 

Report. Cash flow and capital 

expenditure have been 

converted using a consistent 

approach adopted on a 

conversion of expenses.

2 EBIT is calculated as a profit 

before income tax, PRRT and 

net finance costs.

3 Earnings per share has been 

calculated using the following 

weighted average number of 

shares (2012: 814,751,356 ; 

2011: 791,668,973 ; 2010: 

773,388,154 ; 2009: 

703,310,697 ; 2008: 

685,179,496 ; 2007: 

671,447,950 ; 2006: 

657,178,947 ; 2005: 

655,150,640 ; 2004: 

653,790,795 ; Pre 2004: 

666,666,667).

4 2005 Oil and Gas Properties 

capital expenditure includes 

acquitions through business 

combinations of A$415m, 

relating to the acquisition 

of Gryphon Exploration 

Company. 

5 From 2005 employee 

numbers do not include third 

party contractors. Previous 

years have included third party 

contractors.

6 Finding cost for 2003 includes 

acquisitions of additional 

Scope for Recovery volumes.

7 Finding cost methodology has 

changed from 2004 to be in 

accordance with the FAS69/

SEC industry standard.

8 From 1 January 2005, 

Woodside prepares its 

financial statements in 

accordance with Australian 

equivalents to IFRS (AIFRS). 

To highlight the impact on 

previously reported data 

information provided for 

2004 has been restated. 

Information pre 1 January 

2004 has not been adjusted 

for the effect of AIFRS.
Head 

Office:

Woodside Petroleum Ltd 

240 St Georges Terrace

Perth WA 6000 Australia Postal Address:

GPO Box D188

Perth WA 6840 Australia

t: +61 8 9348 4000

f: +61 8 9214 2777

e: companyinfo@woodside.com.au

Visit us at

www.woodside.com.au

2012 Annual Report

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