ANNUAL REPORT 2016 DELIVERING VALUE GROWTH Woodside Petroleum Ltd | i On the cover Sustainable Development The Pluto LNG Plant underpinned Woodside’s Report 2016 record LNG production in 2016, contributing This report is a summary of Woodside's 40.2 MMboe. For Woodside, Pluto LNG sustainability approach, actions and represents safe, highly reliable operations performance for the 12-month period ended backed by new technology and innovation. 31 December 2016. This report will be available This image was taken by a drone and looks on 16 March 2017. across Pluto towards the North West Shelf Project. Drones are increasingly being used at our onshore and offshore facilities to conduct high-risk inspections more safely and efficiently. About this report Report objectives This Annual Report 2016 is a summary of All dollar figures are expressed in US currency, This report meets our compliance and Woodside’s operations and activities for the Woodside share, unless otherwise stated. governance requirements, and is designed 12-month period ended 31 December 2016 to provide easy-to-read information on Woodside is continuing efforts to reduce its and financial position as at 31 December 2016. how Woodside performed in 2016 for environmental footprint associated with the Woodside Petroleum Ltd (ABN 55 004 898 our stakeholders, including shareholders, production of the Annual Report. Printed 962) is the parent company of the Woodside customers, the community and employees. copies of the Annual Report will only be group of companies. In this report, unless posted to shareholders who have elected to We aim to build awareness of our operations otherwise stated, references to 'Woodside' receive a printed copy. and demonstrate how we delivered on our and the 'Group', the 'company,' 'we', 'us' and mission and vision while maintaining our 'our' refer to Woodside Petroleum Ltd and its The Annual Report is printed on an values and commitment to sustainable controlled entities, as a whole. The text does environmentally responsible paper development. not distinguish between the activities of the manufactured under ISO 14001 environmental parent company and those of its controlled management standards, using elemental entities. chlorine-free pulps from sustainable, well-managed forests. In this report, references to a year are to the calendar and financial year ended 31 December 2016 unless otherwise stated. Additional information Forward looking statements In this report, we have indicated where This report contains forward looking additional information is available online and statements. Please refer to page 59 We are working with Green ReportsTM in an in other sections of this report like this: which contains a notice in respect of these initiative that ensures that communications statements. A glossary of key terms, units of measure minimise environmental impact and create a and conversion factors is on pages 133 more sustainable future for the community. and 134. More information can be found on our website at www.woodside.com.au. ii Woodside Petroleum Ltd | Annual Report 2016 Contents Overview Marketing and shipping 43 About Woodside 1 Marketing and shipping 44 Our areas of activity 2 Corporate 47 Our performance 4 People and capability 48 Chairman’s report 8 Sustainability 50 Chief Executive Officer’s report 10 Community contribution 52 Organisational structure 12 Health, safety and environment 54 Technology and innovation 56 Operating and Financial Review Risk 58 Financial summary 16 Reserves and resources 60 Strategy, capital management and business model 18 Our 2017 priorities 20 Governance Woodside Board 66 Exploration 22 Global exploration 23 Corporate Governance Statement 68 Australia and Asia-Pacific 24 Directors' Report 69 Atlantic Margins 24 Remuneration Report 71 Sub-Saharan Africa 25 Financial Statements 91 Projects and Developments 26 Shareholder information Senegal 27 Shareholder statistics 129 Wheatstone LNG 28 Business directory 131 Myanmar 30 Key announcements 2016 132 Greater Enfield Project 31 Events calendar 2017 132 NWS subsea tiebacks 31 Glossary, units of measure and conversion factors 133 Kitimat LNG 32 Index 135 Scarborough 33 Asset facts 136 Browse LNG 33 Summary charts 137 Operations 35 Ten-year comparative data summary 138 Pluto LNG 36 North West Shelf Project 38 Australia oil 40 International gas production 41 Woodside Petroleum Ltd | Overview iii Our Compass Who we are Where we’re going How we’ll get there Integrity Our mission Partner of choice We are open, honest and fair. We do what we To deliver superior shareholder returns. We are the premium choice for partnerships say we will do. We have the courage to do the based on our distinctive capabilities, culture and right thing. Our vision track record as a great partner. Our aim is to be a global leader in upstream oil Respect and gas. Engaged people We give everyone a fair go. We listen. We work for a highly regarded and successful Our strategic direction company. We are part of a team working together for great results and have opportunities to Working sustainably Maintain our leading Australian position contribute and grow. We are here for the long term. We look after each by optimising our producing assets and other, our communities and the environment. We commercialising our growth projects and other keep each other safe. premium opportunities. Functional excellence We leverage our core capabilities and the latest Working together Grow our portfolio by leveraging our core technology to create new opportunities and capabilities for global upstream growth. sharpen our competitive edge. We are on the same team. We build long-term partnerships. Decision effectiveness Discipline We make and execute decisions in line with our business priorities and our values. We play by the rules. We set goals and we hold ourselves to account. Excellence We achieve great results. We learn. We get better. Since its launch in 2012, the Compass has enabled Woodside to evolve and respond to the external environment, creating an engaged and disciplined workforce focused on delivering superior shareholder returns. iv Woodside Petroleum Ltd | Annual Report 2016 About Woodside Woodside is Australia’s largest Our mission is to deliver superior shareholder Our global exploration portfolio includes returns through realising our vision of emerging and frontier provinces in Australia independent oil and gas company becoming a global leader in upstream oil and the Asia-Pacific region, the Atlantic with a global portfolio, recognised for and gas. Margins and Sub-Saharan Africa. our world-class capabilities – as an Our assets are renowned for their safety, We have significant equity interests in reliability and efficiency, and we are high-quality development opportunities explorer, a developer, a producer and Australia’s most experienced liquefied natural in Australia, Senegal, Myanmar and North supplier of energy. gas (LNG) operator. We operate 8% of global America and are pursuing new concepts, LNG supply.1 technology and contracting strategies to enable the earliest commercialisation of these Our producing assets in Australia include the resources in line with global demand. landmark North West Shelf (NWS) Project, which has been operating since 1984. In 2012, We believe that technology and innovation we commenced production from the Pluto are essential to bringing down costs LNG Plant and will add additional volumes and unlocking future growth. Today, we from our non-operated Wheatstone LNG are pioneering remote support and the interests in mid-2017. application of artificial intelligence and advanced analytics across our operations. Today, we continue to be at the forefront of our industry by seeking to grow new markets We recognise that long-term meaningful for LNG. To achieve this we are planning relationships with communities are for Australia’s first LNG fuel hub to capture fundamental to maintaining our licence to growing land and marine LNG fuel markets. operate, and we work to build mutually beneficial relationships. We also operate a fleet of floating production storage and offloading (FPSO) facilities. Woodside is characterised by strong From mid-2019, we will add additional oil safety and environmental performance in production from the Greater Enfield Project all locations where we are active and we via our existing Ngujima-Yin FPSO facility. are committed to upholding our values of integrity, respect, working sustainably, We continue to expand our capabilities in discipline, excellence and working together. marketing, trading and shipping and have enduring relationships that span more Our success is driven by our people and we than 25 years with foundation customers aim to attract, develop and retain a diverse throughout the Asia-Pacific region. high-performing workforce. Our proven track record, distinctive capabilities and ability to As a low-cost energy supplier with a manage risk and volatility are underpinned sustainable business model, we are pursuing by more than 60 years of experience, making opportunities to deliver affordable energy to us a partner of choice. the world’s growing markets. 1. Source: Wood Mackenzie LNG Tool, Q4 2016 WoodsideWoodside Petroleum Petroleum Ltd Ltd | Overview| Overview 1 Our areas of activity SENEGAL CANADA KITIMAT LNG CANADA IRELAND GRASSY POINT LNG USA PORT ARTHUR LNG MOROCCO GABON1 PERU PRODUCING ASSET PROJECTS AND DEVELOPMENTS APPRAISAL AND EXPLORATION Gas Oil Gas or oil 1. Woodside farm-in to Luna Muetse block is awaiting final Government