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1、Annual Report 2014B|Santos Annual Report 2014Santos Limited ABN 80 007 550 923Contents 1 Message from the Chairman 3 Q&A with David Knox,Santos Managing Director and Chief Executive Officer 6 Board of Directors 8 Santos Leadership Team 10 Production and sales 11 Reserves Statement 16 Corporate Gover
2、nance Statement 36 10-year summary 38 Directors Report 52 Remuneration Report 75 Financial Report 155 Independent Auditors Report 156 Auditors Independence Declaration 157 Information for shareholders 158 Securities Exchange and Shareholder Information 160 Index 161 GlossaryThis 2014 Annual Report i
3、s a summary of Santos operations,activities and financial position as at 31 December 2014.All references to dollars,cents or$in this document are to Australian currency,unless otherwise stated.An electronic version of this report is available on Santos website,organisation chartBoARD CoMMItteesAudit
4、&RiskEnvironment,Health,Safety and SustainabilityFinanceNominationPeople and RemunerationCoRpoRAte CentReAllocate capital and provide governance and policyHuman Resources,Health,Aboriginal AffairsFinance,Strategy,Legal,Investor Relations,Treasury,Risk and Audit,Information Technology and Procurement
5、 Government and Public AffairsCorporate SecretariatBoARD oF DIReCtoRsMAnAgIng DIReCtoR AnD ChIeF exeCutIve oFFICeRsAntos leADeRshIp teAMComprises the Managing Director and his reportsDrive business strategy and operationsBusIness unItsBusiness execution and delivery Asia PacificEastern AustraliaGLNG
6、Western Australia and Northern TerritoryteChnICAl DIsCIplInesProvide excellence,service and assuranceExploration and SubsurfaceDrilling&Completions and Engineering Safety and Environment|1Dear Shareholder,Five years ago Santos approved the first of two transformational liquefied natural gas(LNG)proj
7、ects to open more of our resources to the large and growing markets of Asia.In May 2014 PNG LNG exported its first cargo ahead of schedule and shipped 55 cargoes during the course of the year.Our GLNG project also made substantial progress and ended the year more than 90%complete,on track for first
8、LNG in the second half of 2015.Once GLNG is fully ramped up,Santos will be exporting over 3 million tonnes of LNG per annum to customers throughout Asia,realising our vision to be a leading oil and gas producer in the region.These projects are underpinned by 20 year offtake agreements which will see
9、 shareholders benefit from strong cash flows for decades to come.In 2014,the Board announced a progressive dividend policy that would strike a balance between higher dividends,debt repayment and ongoing investment for growth.With the start-up of PNG LNG in the first-half of 2014 and receipt of first
10、 cash from the project,we were pleased to announce a 33%increase in the interim dividend from 15 cents per share to 20 cents per share,fully franked.In light of the current oil price environment,the Board elected to maintain a cautious approach and set the final dividend at 15 cents per share,fully
11、franked.This brings the full-year 2014 dividend to 35 cents per share,up 17%on the prior year.We will again review the level of the dividend around the start-up of GLNG in the second half of 2015.The Brent crude oil price fell by almost 50%in the fourth quarter of 2014,closing the year at US$56 per
12、barrel,its lowest level in more than five years.The speed and degree of this decline was unexpected,impacting oil and gas stocks around the world,including Santos.We acknowledge the effect this has had on shareholder value and have moved to implement a range of initiatives to manage the company thro
13、ugh this lower oil price environment.In 2014,despite the volatile oil price environment,Santos recorded its highest production in five years of 54.1 million barrels of oil equivalent(mmboe),record sales revenue of$4 billion and a strong operating cash flow of$1.8 billion,up 13%on the prior year.The
14、business also recorded an underlying net profit after tax of$533 million,an increase of 6%year on year,reflecting the strong operating performance of the business.The sharp fall in oil prices in the second half of the year led us to recognise significant asset impairments in our 2014 results of$1.6
15、billion after tax.The impairment charge is a non-cash accounting adjustment that relates only to the book value of the companys assets.Taking into account the after tax impairments of$1.6 billion,the financial result for the year was a net loss after tax of$935 million.The long term characteristics
16、of the worlds energy markets should continue to support the growth in global LNG demand.The worlds population is expected to grow by 1.1 billion people over the next 15 years,and the secure and reliable supply of energy remains fundamental to a strong,cohesive and prosperous society1.As a result,the
17、 demand for food is projected to increase by 35%,water by 40%and energy by 50%2.Australia,with over 920 trillion cubic feet(Tcf)of natural gas resources and local demand of only 1 Tcf per annum,is well placed to meet the energy demands of the domestic Australian market and contribute supply to our A
18、sian neighbours3.And Santos vision to be a leading energy company in Australia and Asia remains unchanged.We are committed to providing the energy needs of schools,hospitals,homes,transport networks as well as business and industry.We will continue to drive value and performance in our base business
19、,leverage our existing LNG infrastructure and capabilities,and build a focused,high-value position in South-East Asia.Message from the ChairmanSantos vision is to be a leading energy company in Australia and Asia.We will continue to drive value and performance in our Australian base business,leverag
20、e our existing LNG infrastructure and capabilities,and build a focused,high-value position in South-East Asia.1.United Nations,July 20142.US National Intelligence Council,Global Trends 2030,December 20123.BREE,Gas Market Report,November 20142|Santos Annual Report 2014Santos technical and highly cred
21、entialed work-force is committed not only to safe and sustainable operations but also recognising that we operate in communities,and as such,must work hard to gain their trust and support.Santos prides itself on the reputation it has earned through transparent and proactive engagement in the communi
22、ties in which we operate.Our project life cycles are often over many decades and as such,we are in a position to benefit local communities and landholders over the long-term.Santos has helped fund road improvements and communications infrastructure,and contributes millions of dollars each year in ra
23、tes to shire councils.Our policy to support local service providers and product suppliers also boosts local businesses and our in-kind support also helps community groups to organise and run events and provide emergency services support.For societies to continue to prosper,we must create a diverse,r
24、eliable and affordable energy mix that will underpin our standard of living as well as our childrens future.The natural gas industry will have an important role in achieving this,and Santos is already playing its part.For further information regarding our commitment to environmental and social repor
25、ting,I would encourage you to read our 2014 Sustainability Report,available on our website at 2014 we took the opportunity to strengthen the Board,appointing two new independent non-executive directors.Scott Sheffield was appointed in February and brings strong leadership,technical and operational s
26、kills to the Board and a deep understanding of the US energy industry and markets.The company he leads in the US,Pioneer Natural Resources,is at the forefront of the US shale oil and gas industry.Yasmin Allen was appointed in October and has more than 20 years experience in finance and investment ba
27、nking and brings extensive governance,leadership and risk management skills to the table.Yasmin is also a Director of Insurance Australia Group Limited,Cochlear Limited and ASX Limited.On behalf of the Board,I would like to thank all our employees and contractors.The professionalism and hard work ex
28、hibited is evident in the delivery of production growth,new projects and exploration success.During this period of intense construction,we maintained a strong safety track record.Our lost time injury frequency rate(LTIFR)of 0.67 reflects our commitment that no business objective will take priority o
29、ver health and safety,and that no task is so important or urgent that it cannot be done safely.The Board and management would also like to thank you,our shareholders,for your ongoing support.We remain focused on driving operational efficiency,reducing costs,prudently managing capital and ensuring ou
30、r balance sheet remains strong.Our strategy is clear;we will continue to focus on the long-term drivers of shareholder value that reinforce Santos position as a leading energy company in Australia and Asia.Finally,in March 2015 it was announced that I will retire as Chairman and member of the Board
31、at the Annual General Meeting on 30 April.Mr Peter Coates,AO,currently a non-executive director,will resume the role of Chairman.It has been a great privilege to serve on the Board of Santos and I would like to thank all of the Santos team for their dedication and hard work.I leave in the knowledge
32、that the company has an experienced Chairman,a strong Board and an executive team well led by Managing Director and Chief Executive Officer David Knox.Ken Borda ChairmanChairmans Review continuedFor societies to continue to prosper,we must create a diverse,reliable and affordable energy mix that wil
33、l underpin our standard of living as well as our childrens future.The natural gas industry will have an important role in achieving this,and Santos is already playing its part.|3how did santos deliver against its vision to be a leading energy company in Australia and Asia in 2014?As I reflect on 201
34、4,I am proud to say the underlying business performed well.PNG LNG commenced production ahead of schedule in April and was producing at full capacity by late July.Construction on this project commenced in 2010,and with over 55,000 workers involved and 200 million work hours expended on the projects
35、construction,it was indeed a remarkable feat of logistics,engineering and design.We also made considerable headway during the year on our Gladstone LNG project.The US$18.5 billion project is now more than 90%complete and we remain on track for first LNG in the second half of 2015,on time and on budg
36、et.Importantly,despite the volatile external environment,the long-term fundamentals that underpin our vision to be a leading energy company in Australia and Asia have not changed.The worlds population is forecast to grow by 1.1 billion over the next 15 years1.The majority of this growth will be in A
37、sia where the local population is expected to increase at double the rate of the rest of the world combined.This,coinciding with the rapid migration of people from rural areas to cities,will see Asias energy demand increase by nearly 50%2.Natural gas,with its lower carbon footprint,will be a key ben
38、eficiary of this growth.Exposing Santos gas reserves to these large and growing export markets has created the scale and pricing necessary to justify the continued development of our resources to meet demand growth,both here in Australia and in Asia,and ultimately,deliver greater returns to sharehol
39、ders.In Australia,where we seek to drive value and performance in our base business and unlock resources to meet demand,we delivered strongly in 2014.The Eastern Australia Business Unit recorded a 7%rise in sales revenue to more than$2 billion primarily on the back of increased drilling activity,inf
40、rastructure upgrades and higher third-party processing in the Cooper Basin.This increase in production and upgrades to infrastructure have set the company up to meet its commitments to supply Santos gas to the GLNG project,and also to take advantage of new opportunities as existing east coast contra
41、cts roll off in the coming years.An impairment to the value of our NSW gas assets was recorded on the back of a 30%reduction in reserves combined with a later start-up date for the Narrabri Gas Project.This action does not change our view about the project and the importance for NSW to develop its o
42、wn natural gas supplies.This is a strategic asset and we remain focused on supplying natural gas to the 1 million families in NSW that use our product and the thousands of people who rely on the energy provided by gas for their employment.The Western Australia and Northern Territory Business Unit re
43、corded a significant gas-condensate discovery with the Lasseter-1 well in the Browse Basin,offshore Western Australia,reinforcing our material resource position following our Crown discovery in 2012.The Barossa-3 appraisal well in the Bonaparte Basin,offshore Northern Territory,also recorded a stron
44、g result,thereby strengthening the position of the field to potentially supply gas for either back-fill or expansion at Darwin LNG.The Asia Pacific Business Unit underwent a significant transformation with the early start-up of PNG LNG in April of 2014.By year-end over 55 cargoes of LNG had been shi
45、pped to customers throughout Asia.The early start-up of PNG LNG resulted in a 134%lift in EBITDAX3 to$743 million.The Business Unit also recorded new project delivery in Indonesia and Vietnam,and made a new country entry,farming in to high impact exploration acreage in the Sabah Basin,offshore Malay
46、sia.Santos has been providing natural gas safely and securely in Australia for more than 50 years and because of the global need for energy especially in the Asia-Pacific Santos has now grown into a regional energy company.At 2014 year-end we were delivering 160,000 barrels of oil equivalent a day,w
47、hich is an outstanding Q&AIn 2014,Santos achieved record sales revenue,strong operating cash flow,the highest production level in five years and added to future production potential through successful exploration and appraisal activities.In December we responded to the fall in oil price by cutting c
48、apital spend in 2015 by 44%compared with 2014.With David Knox,Managing Director and Chief Executive Officer1.United Nations,July 20142.IEA,World Energy Outlook 2014 3.EBITDAX(Earnings before interest,tax,depreciation,depletion,exploration and evaluation and impairment)4|Santos Annual Report 2014resu
49、lt and certainly the highest daily production since I joined the company.Through diversification we have built a more robust and sustainable business,enabling us to be resilient throughout the energy price cycle.What initiatives have you taken to address the fall in oil price?We are meeting the chal
50、lenge of a volatile oil price head on.In December 2014 we announced a reduction in forecast 2015 capital expenditure to$2 billion,44%lower than 2014.In doing so,we led the industry by responding in a clear and significant way.We also announced at that time that asset divestments were under considera
51、tion as part of the companys ongoing portfolio management,provided fair long-term value is realised.Cost pressures will continue to abate as we review contracts and optimise procurement,logistics and construction strategies across the business.In fact,production costs per barrel are expected to redu
52、ce by 10%in 2015.We are implementing innovative technologies to drive down costs and increase efficiencies in line with the current operating environment.We also sought to maintain a robust liquidity profile,and to that end we announced a$1 billion bi-lateral debt facility in the second half of Dece
53、mber.This is effectively a buffer should it ever be needed.The money is not drawn down,but is kept for unexpected events and supports our liquidity profile.At the end of 2014,Santos had approximately$2.9 billion in cash and undrawn debt facilities available.In a lower oil price environment we will c
54、ontinue to drive efficiencies and cost out measures.Across the business we are eliminating all distractions,simplifying and challenging ourselves.We strive to be as efficient as we can while ensuring we maintain the integrity of our operations and keep everyone safe.Nobody can predict the future dir
55、ection of the oil price,but what we can do is ensure that,as a firm,we remain robust through the lower oil price environment.how do you think about santos as an environmentally and socially responsible energy company?There was much debate during the year about what defines a companys credibility wit
56、h respect to operating in an environmental,sustainable and socially responsible manner.The debate around the environment and climate change is an important one and,as such,it needs to be based on science and facts rather than fiction.As a region blessed with a large endowment of natural resources,we
57、 have a responsibility to help our neighbouring countries and economies grow to improve their standard of living.I am glad to say that Santos is a company that has the capacity and responsibility to promote progress to a more sustainable future.Santos is committed to taking a seat at the table to be
58、tter understand the challenges,concerns and genuine needs of our local communities and key stakeholders.Working with local landholders and communities is central to what we do and we simply could not operate without building these strong and enduring relationships.Ultimately,it is true engagement on
59、 both sides that will bring communities,employees,and the wider public onboard.And it is the Santos way of genuinely committing to engagement,and taking the time to do it properly,that has ensured we have a positive reputation in the communities in which we operate.Energy after all can be the source
60、 of progress and prosperity not only does it power our homes and underpin our manufacturing industry,but access to energy lifts living standards for families and provides opportunities for businesses in Australia,Asia and around the globe.During the year we were recognised by the National Trust as a
61、 corporate icon in recognition of our outstanding contribution to South Australia.The National Trust recognised the high degree of integrity,social responsibility and leadership shown by Santos since 1954,and this would not be possible without our people-from the tenacity of our early pioneers to th
62、e committed staff of today.Our consistent and enduring approach to lightening our footprint and working closely Q&A continued|5with our communities has paved the way for our success.We have received awards both internationally and in Australia for our track record,and have been recognised by the Dow
63、 Jones Sustainability Indices World Leaders Index,and as a sustainability leader in Australia and in the Asia-Pacific region.The safety of our employees,contractors and the communities in which we work,will underpin our operations each and every day.Our objective,is to ensure that everyone goes home
64、 from work without injury.We remain focused on this objective,and in 2014 we recorded another good year in terms of lost time injury performance.This was particularly pleasing during a period in which two major contractors completed work and demobilised from the GLNG project.Santos is passionate abo
65、ut paving the way for brighter futures.We are built on strong foundations of environmental,sustainable and social responsibilities,and have the right mechanisms in place to prepare for the next phase of gas supply to Australia and our Asian neighbours.For me,it remains a privilege to be your CEO.I a
66、m proud of the hard work and commitment that Santos employees and contractors demonstrated during 2014.We remain focused on maximising returns for shareholders.Exposing Santos gas reserves to global markets has created the scale and pricing necessary to justify the continued development of our resou
67、rces and ultimately,deliver greater returns to shareholders.6|Santos Annual Report 2014Kenneth BoRDA*ChairmanLLB,BAAppointed Santos Chairman on 9 May 2013.Previously independent non-executive Director since 14 February 2007.Chairman of Santos Finance Limited.Chairman of the Nomination Committee and
68、member of the Finance and People&Remuneration Committees of the Board.Board member of Fullerton Funds Management Company Limited,owned by Temasek,Singapore,since February 2007.Chairman of Aviva Ltd(Singapore)and Navigator Investment Service Ltd(Singapore)since January 2011.Director since 2009.Sevent
69、een year career with Deutsche Bank based in Sydney,Hong Kong,Singapore and Dubai.Formerly Regional CEO Asia Pacific,Regional CEO Middle East and North Africa and CEO Australia and New Zealand,Deutsche Bank until retirement in May 2007 after 17 years of service.DAvID KnoxManaging Director and Chief e
70、xecutive officerBSc(Hons)Mech Eng,MBA,FIE Aust,FTSEAppointed Managing Director and Chief Executive Officer of Santos in July 2008,having been appointed Acting Chief Executive Officer in March 2008.Joined Santos in September 2007 as Executive Vice President Growth Businesses.Member of the Environment
71、,Health,Safety and Sustainability Committee of the Board.Director of Santos Finance Ltd.Over 30 years of experience in the global oil and gas industry,including as Managing Director for BP Developments in Australasia from 2003 to 2007.Previously held senior positions with BP in Australia,the United
72、Kingdom and Pakistan,and management and engineering roles at ARCO and Shell in the United States,Netherlands,the United Kingdom and Norway.Director of the Migration Council Australia.Chairman of the Adelaide Botanic Gardens Foundation and Director of the Board of the Botanic Gardens and State Herbar
73、ium in South Australia.Council Member of the Commonwealth Science Council,Business Council of Australia,University Queensland Industry Engagement Committee,Great Barrier Reef Foundation and the Royal Institute of Australia.Chair of the CSIRO Energy Strategic Advisory Committee.Member of Trade and In
74、vestment Policy Advisory Council and the UK University College London Advisory Committee.Fellow of the Australian Institute of Mechanical Engineering and elected in November 2012 as a Fellow of the Australian Academy of Technological Sciences and EngineeringYAsMIn AllenBCom FAICDIndependent non-exec
75、utive Director since 22 October 2014.A member of the Environment,Health,Safety and Sustainability Committee of the Board.Ms Allen has more than 20 years experience in finance and investment banking,including senior roles at Deutsche Bank AG,ANZ and HSBC Group Plc.Ms Allen is a director of Insurance
76、Australia Group Limited,where she chairs the Nomination and Remuneration Committee and is a member of the Audit and Risk Committee.She is a director of Cochlear Limited,chairs its Audit Committee and is a member of the Nomination and Remuneration Committee.She is also a director of ASX Limited.Ms Al
77、len was formerly chair of Macquarie Specialised Asset Management Limited.She is a national director of the Australian Institute of Company Directors,a member of the George Institute for Global Health Board and a director of the National Portrait Gallery.peteR CoAtes Ao*BSc(Mining Engineering),FAICD,
78、FAusIMMIndependent non-executive Director.Previously Santos Chairman from 9 December 2009 to 9 May 2013,and prior to that an independent non-executive Director since 18 March 2008.Member of the Nomination Committee of the Board and Member of the Environment,Health,Safety and Sustainability Committee
79、 of the Board.Non-executive director of Glencore plc since its float in April 2011 until its merger with Xstrata plc in May 2013.Joined the Board of the merged company in June 2013 and worked as an executive director assisting with the integration of Glencore and Xstrata before resuming the position
80、 as a non-executive director from 1st January 2014.Non-executive Chairman of Glencore majority owned Sphere Minerals Ltd since May 2013.Non-executive director of Amalgamated Holdings Limited since July 2009 and Chair of the Sydney North West Rail Link Advisory Board since December 2012.Former non-ex
81、ecutive Chairman of Xstrata Australia Pty Limited from January 2008 to August 2009 and former Chairman and non-executive director of Minara Resources Limited from April 2008 to April 2011.Previously Chief Executive of Xstrata Coal,Xstrata plcs global coal business.Past Chairman of the Minerals Counc
82、il of Australia,the NSW Minerals Council and the Australian Coal Association.Made an Officer of the Order of Australia in June 2009 and was awarded the 2010 Australasian Institute of Mining and Metallurgy Medal.Kenneth DeAnBCom(Hons),FCPA,FAICDIndependent non-executive Director since 23 February 200
83、5.Member of the Audit and Risk,Finance and Nomination Committees of the Board.Director of Santos Finance Limited since 30 September 2005.Non-executive director of Bluescope Steel Limited since April 2009 and Chairman of Bluescopes Audit and Risk Committee.Independent non-executive director of Energy
84、Australia Holdings Limited since June 2012.Previously Chief Financial Officer of Alumina Limited,alternate director of Alumina Limited,and non-executive director of Alcoa of Australia Ltd,Alcoa World Alumina LLC and related companies,October 2005 to February 2009.Director of Shell Australia Ltd from
85、 1997 to 2001 and Woodside Petroleum Ltd from 1998 to 2004.40 years experience in the oil and gas industry.Fellow of the Australian Society of Certified Practising Accountants and Fellow of the Australian Institute of Company Directors.Former Chief Executive Officer of Shell Financial Services and m
86、ember of the La Trobe University Council.Board of Directors*Ken Borda will be stepping down as Chairman and resigning as a Santos Board member following our Annual General Meeting on the 30 April 2015.Peter Coates has been elected by the Board to replace Ken Borda.|7RoY FRAnKlIn oBeBSc(Hons)Independ
87、ent non-executive Director since 28 September 2006.Chairman of the Environment,Health,Safety and Sustainability Committee and member of the People and Remuneration Committee of the Board.Non-executive director of Keller Group plc since July 2007 and Chairman since August 2009.Non-executive director
88、of Cuadrilla Resources Holdings Limited since January 2012 and a member of the Supervisory Board of OMV AG since May 2014.Chief Executive Officer of Paladin Resources plc from 1997 to 2005 and former Group Managing Director of Clyde Petroleum plc.Chairman of BRINDEX,the trade association for UK inde
89、pendent oil and gas companies from 2002 to 2005 and a former member of PILOT,the joint industry/UK Government task force set up to maximise hydrocarbon recovery from the UK North Sea 2002-05.Former non-executive director of Statoil ASA from October 2007 to June 2013.In 2004,awarded the OBE for servi
90、ces to the UK oil and gas industry.hoCK gohB Eng(Hons)Mech EngIndependent non-executive Director since 22 October 2012.Member of the Environment,Health,Safety and Sustainability Committee and the Audit and Risk Committee of the Board.More than 30 years experience in the global oil and gas industry,h
91、aving spent 25 years with Schlumberger Limited,including as President of Network and Infrastructure Solutions division in London,President of Asia,and Vice President and General Manager of China.Previously held managerial and staff positions in Asia,the Middle East and Europe.Chairman of MEC Resourc
92、es Ltd since October 2006.Appointed as non-executive director of Stora Enso Oyj(Finland)in April 2012 and AB SKF(Sweden)in March 2014.Previously an Operating Partner of Baird Capital Partners Asia,based in China,from 2007 to June 2012,and non-executive director of Xaloy Holding Inc in the US from 20
93、06 to 2008 and BPH Energy from 2007 to 2015.JAne heMstRItChBSc(Hons),FCA,FAICDIndependent non-executive Director since 16 February 2010.Member of the People&Remuneration committee and Chairman of the Audit and Risk Committee.Broad experience in the oil and gas,telecommunications,government,financial
94、 services and manufacturing sectors.Spent 25 years of her career with Accenture and Andersen Consulting.Formerly Accentures Managing Director Resources Operating Group Asia Pacific,and before that,Country Managing Director Australia.Non-executive director of the Commonwealth Bank of Australia since
95、October 2006,Lend Lease Group since September 2011 and Tabcorp Holdings Ltd since November 2008.Chairman of Victorian Opera since February 2013 having formerly been non-executive director since 2010.Director of the Walter and Eliza Hall Institute of Medical Research since November 2013.A member of t
96、he Council of the National Library of Australia.A Fellow of the Institutes of Chartered Accountants in Australia and in England and Wales,a Fellow of the Australian Institute of Company Directors and a member of Chief Executive Women Inc.gRegoRY MARtInB.Ec,LLB,FAIM,MAICDIndependent non-executive Dir
97、ector since 29 October 2009.Chairman of the People&Remuneration and Finance Committees of the Board and Member of the Audit and Risk Committee of the Board.Non-executive Director of a number of listed and unlisted companies including Energy Developments Limited since May 2006.Chairman of Iluka Resou
98、rces Limited from18 December 2013.Chairman and Joint Managing Partner of Prostar Capital since July 2012 and independent non-executive Chairman of Sydney Desalination Plant Pty Ltd from December 2012.Appointed Australian Senior Adviser to the Royal Bank of Canada(RBC)in May 2014.Previous Deputy Chai
99、rman of the Australian Gas Association,inaugural Chairman of the Energy Supply Association of Australia between 2004 and 2006 and Non Executive Director of Australian Energy Market Operator Limited.Past member of the Business Council of Australia,Committee for the Economic Development of Australia,a
100、nd the Council on Australia Latin America Relations.Formerly Managing Director and Chief Executive Officer of AGL,Chief Executive Infrastructure at Challenger Financial Services Group and Managing Director of Murchison Metals Limited.sCott sheFFIelDBS Petroleum EngineeringMr Sheffield is an independ
101、ent non-executive Director,effective 24 February 2014.Member of the Finance Committee of the Board.He is Chairman and Chief Executive Officer of Pioneer Natural Resources Company,which is listed on the New York Stock Exchange and included in the S&P 500 Index.He has been Chief Executive Officer sinc
102、e 1997 and Chairman since 1999.Serves on various industry and education-related boards,including the National Petroleum Council and the Maguire Energy Institute of the SMU Cox School of Business.Recipient of the Permian Basin Associations Top Hand award,which recognises individuals who have demonstr
103、ated exceptional leadership within the oil and gas industry and the Permian Basin community.He is also a 2013 inductee into the Permian Basin Petroleum Museum Hall of Fame.8|Santos Annual Report 201401 DAvID KnoxManaging Director and Chief executive officerFor bio see page 6.02 AnDReW seAtonChief Fi
104、nancial officerBEng Hons(Chem),GradDip BusAdminAndrew Seaton was appointed Chief Financial Officer in 2010,and is responsible for Santos corporate finance,accounting,taxation,treasury,risk,audit,insurance,corporate development,strategy&planning,information systems and procurement functions.Andrew ha
105、s over 25 years of oil and gas industry experience,encompassing finance,banking,commercial and engineering roles.Prior to joining Santos in 2005,Andrew held senior positions in investment banking with Merrill Lynch and corporate banking with NAB where he worked on a broad range of M&A,equity and deb
106、t transactions.His early career included 10 years of operations,engineering design and project management experience.03 John AnDeRsonAsia,Western Australia and northern territoryLLB,BEc,GDCLJohn Anderson is responsible for Santos activities in the Asia Pacific,Western Australia and the Northern Terr
107、itory,including commercial and finance,business development,exploration,development and operated assets.John joined Santos in 1996 as Corporate Counsel for the former Queensland Northern Territory Business Unit.John has over more than 20 years experience in the upstream oil and gas industry.04 JAMes
108、 BAulDeRstoneeastern AustraliaLLB(Hons),BSc(Hons)James Baulderstone is responsible for Santos activities in Eastern Australia and unconventional business across Australia.This includes the exploration,production,development and commercial-isation of the companys oil and gas resources in central Aust
109、ralia,the Gunnedah Basin and offshore Victoria.James also oversees Santos Public Affairs team,leading the companys engagement with communities and governments.James joined Santos in 2007 as General Counsel and Company Secretary after previously holding similar roles at Mayne Group and BlueScope Stee
110、l.James has 23 years of extensive legal,commercial and business development experience.05 tRevoR BRoWnQueenslandBSc(Hons)(Geology)Trevor Brown has end-to-end responsibility for the delivery of optimal gas supply,execution of the upstream facilities construction project and ongoing upstream developme
111、nt and operations for the GLNG Project.Trevor is a petroleum geologist with more than 29 years experience in the oil and gas industry working onshore and offshore exploration and development projects in Australia,South East Asia,the US and South America including 11 years in Indonesia.Trevor joined
112、Santos in 2001 from Unocal.06 peteR CleARYlng Markets and CommercialB.Com,LLBPeter Cleary leads LNG commercial for Santos,and commercial for the Eastern Australia Business Unit.Peter joined Santos in September 2010 from BP,where he was the President of North West Shelf Australia LNG,the LNG marketin
113、g company for the North West Shelf Venture.During his 24-year career with BP,Peter held senior management positions in Australia,Indonesia,Korea,Hong Kong,Abu Dhabi and the United Kingdom.Peter is currently a member of the Executive Committee of the Australia Japan Business Co-operation Committee,th
114、e Australia Korea Business Council,and is a Board member of the Australian Petroleum Production&Exploration Association.07 petRInA CoventRYhuman Resources and CommunitiesB.Ed.M.Phil.(Ethics)MBA.EMBA.FAICD.FAHRIPetrina joined Santos in 2009 and is responsible for the companys organisational and commu
115、nity strategies.Prior to Santos,she worked for leading companies such as GE and The Coca Cola Company out of the United States,Europe and Asia.She has over 25 years of experience in global executive and non-executive director roles across the energy,financial services,and manufacturing and fast-movi
116、ng consumer goods sectors.santos leadership team0103040506070802091011121314|908 RoD DuKeDownstream gladstone lngBEng(Hons)Chemical,GradDip ManagementRod is responsible for leading the downstream activities of the Santos GLNG project,including the delivery of the GLNG gas transmission pipeline and L
117、NG plant&port projects,as well as ongoing plant operations,commercial,LNG marketing and production planning for GLNG.Rod has extensive global experience in the LNG industry and joined Santos in February 2013 from Singapore LNG Corporation,where he held the position of Senior Vice President.He has ov
118、er 29 years international experience in project management,engineering,construction,commissioning,operations,commercial,marketing and business development areas of the upstream natural gas and LNG industry.09 DIAnA hoFFtechnical,engineering and Innovation(Magna cum Laude)Diana Hoff is responsible fo
119、r drilling and completions,major projects,surface engineering,safety and environment.She has more than 25 years of experience with major and independent operators in the upstream oil and gas industry,including Chevron,Amoco and Questar.Diana joined Santos in 2010 as General Manager Drilling and Comp
120、letions.Her career has included drilling and completions operations,engineering and management,and production management with significant focus on regulatory processes,including environmental approvals,stakeholder engagement and mitigations to lessen impacts to air quality,water quality and surface
121、disturbance.More recently Diana has been at the forefront of innovation within Santos,including sourcing technologies to deal with the complex engineering and technical challenges of conventional and unconventional drilling.10 DAvID lIMCompany secretaryBEc,LLB,Ch.SecDavid Lim is accountable to the B
122、oard for the effectiveness of corporate governance processes,ensuring adherence to the Boards principles and procedures and coordinating all Board business,and provides the Santos Board with independent advice and support in relation to these matters.Prior to joining Santos in 2007,David had over 15
123、 years of experience in commercial legal practice.He is an accredited Chartered Secretary.11 AnDReW nAIRn group executive Investor RelationsB.CommAndrew is responsible for Santos investor and media relations.He has over 20 years resources industry experience,encompassing finance,commercial and inves
124、tor relations roles.Andrew joined Santos in 2008 from BHP Billiton.Andrew is a member of the Board of the Australasian Investor Relations Association.12 BIll ovenDenexploration and subsurfaceBSc(Hons)(Geology and Geophysics)Bill Ovenden is responsible for exploration budget and strategy,and ensuring
125、 excellence in subsurface activities across Santos upstream programs.He is a geologist with 30 years of experience in the oil and gas industry.He has worked on exploration projects in Australia,Central and South-East Asia,North Africa and the Middle East,with companies including Sun Oil,Kufpec,Exxon
126、Mobil and Ampolex.He joined Santos in 2002 after working for ExxonMobil in Indonesia.Bill is a member of the AAPG,SEAPEX and serves on the Advisory Board of the Adelaide School of Petroleum.13 ChRIstIAn pAeChgeneral CounselLLB(Hons)BComChristian Paech advises the Santos Board and management on legal
127、 matters affecting the company and its operations.He is responsible for Santos legal function,which supports the corporate team and the business units in joint venture agreements,project development,dispute resolution,statutory compliance,mergers and acquisitions,gas sales and production sharing con
128、tracts.Christian has 20 years of legal experience and joined Santos in 2004 after working in national and international firms in Australia and overseas where he focused on large-scale corporate transactions and corporate governance.14 BRett WooDsWestern Australia and northern territoryBSc(Hons)Geolo
129、gy&GeophysicsBrett Woods is responsible for Santos activities in Western Australia and its offshore interests in Northern Territory and South Australia,including commercial and finance,business development,exploration,development and operated assets.Brett joined Santos in February 2013 as the Manage
130、r Exploration for the companys Perth-based WA&NT business unit.Brett is a geologist and geophysicist,and has over 20 years of oil and gas industry experience including senior management,technical and business development roles with Woodside,Japan Australia LNG(MIMI)and UK-listed Sterling Resources.H
131、e was also managing director of dual-listed E&P company,Rialto Energy,which had interests throughout Africa and Australia.Brett has worked around the world in many challenging environments and led multi-disciplinary teams.10|Santos Annual Report 2014 total 2014 Total 2013 Field units mmboeField unit
132、s mmboesales gas and ethane(pJ)Cooper 63.3 10.9 61.0 10.5 Carnarvon 54.2 9.3 64.9 11.1 Indonesia 25.1 4.3 26.9 4.6 Otway 16.0 2.8 18.4 3.2 Denison/Scotia/Spring Gully 12.4 2.1 12.0 2.0 GLNG 7.9 1.4 9.6 1.7 Vietnam 3.2 0.5 1.5 0.3 Other 0.4 0.1 1.9 0.3 total production 182.5 31.4 196.2 33.7 total sal
133、es volume 207.0 35.6 210.7 36.2 total sales revenue($million)1,028 1,025 sales gas to lng(pJ)PNG LNG 34.0 5.9 0.1 -Darwin LNG 16.5 2.8 16.7 2.9 total production 50.5 8.7 16.8 2.9 total sales volume (000 t)766.5 7.3 300.5 2.9 total sales revenue($million)659 257 Condensate(000 bbls)Cooper 1,036.9 1.0
134、 1,043.0 1.0 PNG LNG 915.6 0.9 -Bayu-Undan 695.4 0.6 967.5 0.9 Carnarvon 533.4 0.5 627.5 0.6 Amadeus 41.0 -28.4 -Other 19.7 -25.4 -total production 3,242.0 3.0 2,691.8 2.5 total sales volume 3,127.4 2.9 2,820.2 2.6 total sales revenue($million)317 310 total 2014 Total 2013 Field units mmboeField uni
135、ts mmboelpg(000 t)Cooper 128.4 1.1 125.7 1.0 Bayu-Undan 39.0 0.3 55.9 0.6 total production 167.4 1.4 181.6 1.6 total sales volume 172.6 1.5 186.8 1.6 total sales revenue($million)155 176 Crude oil(000 bbls)Cooper 3,230.6 3.2 3,104.4 3.1 Vietnam 2,822.0 2.8 2,658.5 2.7 Fletcher Finucane/Mutineer-Exet
136、er 1,443.6 1.5 2,167.9 2.2 Stag 1,085.5 1.1 1,124.3 1.1 Barrow/Thevenard 526.7 0.5 740.7 0.7 Amadeus 225.6 0.2 173.1 0.2 Indonesia 168.2 0.2 203.1 0.2 PNG 46.5 0.1 49.8 0.1 Queensland 46.0 -49.9 -total production 9,594.7 9.6 10,271.7 10.3 total sales volume16,446.1 16.4 15,163.4 15.2 total sales rev
137、enue($million)1,878 1,834 totAlproduction(mmboe)54.1 51.0 sales volume(mmboe)63.7 58.5 sales revenue($million)4,037 3,602production and sales|11ReseRves hIghlIghts Year-end 2014 proved(1P)reserves were 622 million barrels of oil equivalent,slightly higher than 2013 Proved plus probable(2P)reserves w
138、ere 1,245 mmboe,9%lower than 2013 2P Reserves life of 23 years,based on 2014 production of 54 mmboe GLNG proved reserves up 22%and proved plus probable reserves up 4%Gunnedah Basin proved plus probable reserves down 32%116%organic five-year 1P reserves replacement 97%organic five-year 2P reserves re
139、placementReserves and 2C contingent resources20142013%changeProvedmmboe6226200.3Proved plus probablemmboe1,2451,368(9.0)Contingent resourcesmmboe1,7211,869(7.9)Proved plus probable reserves declined by 123 mmboe in 2014(inclusive of 54 mmboe production).This was primarily due to a 62 mmboe reduction
140、 in Gunnedah Basin 2P reserves following a re-assessment during the year,as advised at the companys investor seminar in November 2014.Excluding the Gunnedah Basin re-assessment,2P reserves were 6 mmboe or 0.5%lower before 2014 production.The key movements in proved plus probable reserves before prod
141、uction were:18 mmboe addition from growth in GLNG reserves;18 mmboe net reduction in the Cooper Basin,mainly due to a review of production performance and reservoir studies;and 10 mmboe reduction in John Brookes due to a re-assessment of fuel usage and heating value.After deducting 2014 production o
142、f 54 mmboe,year-end proved and probable reserves were 1,245 mmboe,9%lower than 2013.proved reserves (mmboe)20102011201220146466496636222013620proved plus probable reserves (mmboe)20102011201220141,4451,3641,4061,24520131,368Proved plus probable reserves by product20142013%changeSales gasPJ6,4507,035
143、(8.3)Crude oilmmbbl6170(12.3)Condensatemmbbl5363(15.6)LPG000t3,0023,510(14.5)Totalmmboe1,2451,368(9.0)Proved plus probable reserves by area20142013%changeEastern Australiammboe795877(9.3)WA&NTmmboe195221(11.7)Asia Pacificmmboe255270(5.5)Totalmmboe1,2451,368(9.0)Reserves statement12|Santos Annual Rep
144、ort 2014Cooper BasinProved plus probable reserves by productsantos share20142013%changeSales gasPJ9721,108(12.3)Crude oilmmbbl2629(12.5)Condensatemmbbl1518(18.3)LPG000t1,7912,246(20.2)Totalmmboe222256(13.3)Sales gas proved plus probable reserves decreased by 7%before production,primarily due to a re
145、view of production performance and reservoir studies and a re-assessment of PEL 106A,partially offset by higher gas uplift associated with additional wellhead compression.glngReserves and 2C contingent resourcesglng share20142013%changeProvedPJ2,2451,84421.7Proved plus probablePJ5,6035,4063.6Conting
146、ent resourcesPJ1,2021,374(12.5)GLNG share proved and proved plus probable reserves increased by 427 PJ and 223 PJ respectively before production,primarily due to positive re-assessments in the Fairview,Roma and Scotia fields.In addition to the reserves in the table above,Santos share of 2P reserves
147、in the APLNG-operated Combabula,Ramyard and Spring Gully fields was 389 PJ at the end of 2014.GLNG has also executed the following third party gas supply agreements:750 PJ from Santos over 15 years commencing in 2015;365 PJ from Origin Energy over 10 years commencing in 2015;Up to 194 PJ from Origin
148、 Energy over five years commencing in 2016;A combined 85 PJ from two suppliers:one tranche for 1015 TJ/day over seven years commencing in 2015 and a second tranche for 60100 TJ/day for 21 months commencing in 2016;and Up to 445 PJ from the Meridian joint venture over 20 years commencing in 2015.Gas
149、swap arrangements have also been executed with APLNG covering a number of fields in Queensland,enabling the more efficient development and transport of gas resources.gunnedah BasinSantos conducted an exploration and appraisal program within the Narrabri Gas Project in the Gunnedah Basin during 2013
150、and 2014.The program provided additional geological and reservoir data.The incorporation of this new data led to a detailed geological and engineering re-evaluation over 2014,including the remapping of methane and CO2 content,net gas pay and the revision of expected recoverable volumes and ultimatel
151、y led to a 62 mmboe reduction in 2P reserves.Further,the contingent resource estimates have also been adjusted to incorporate the above re-evaluation and the guidance in the 2011 Guidelines for the Application of the Petroleum Resource Management System relating to the discovery test criteria and th
152、e extent of any such discovery.2C Contingent resourcesContingent resources decreased by 8%to approximately 1.7 billion barrels oil equivalent.Key movements in contingent resources included:161 mmboe addition from exploration discoveries,including Lasseter in the Browse Basin and Cooper Basin unconve
153、ntional;266 mmboe reduction in the Gunnedah Basin from re-assessments and application of SPE-PRMS guidelines;60 mmboe net reduction due to revisions in Cooper Basin unconventional and conventional gas;and 25 mmboe addition from a re-assessment of the Browse and Bonaparte Basin fields.Reserves statem
154、ent continued|13proved reservesYear-end 2014(Santos share)All products mmboeBasin/Areasales gas pJCrude oil mmbblCondensate mmbbllpg 000 tonnesDeveloped undevelopedtotaleastern AustraliaSurat/Bowen79200-4195136Cooper/Eromanga458967785149100Gunnedah186-82432Gippsland/Otway240-4310252347total eA1,6769
155、101,088125191316Western Australia&northern territoryCarnarvon52166-6733101Bonaparte92-213418119Amadeus35412987613total WA&nt6481094329340133Asia pacificPapua New Guinea810014-10052152Vietnam179-12-12Indonesia5300-9-9total Asia pacific880914-12252173total 1p3,20428321,520340282622Proportion of total
156、proved reserves that are unconventional27%Proved reserves reconciliationproductReserves Year-end 2013productionRevisions and extensionsDiscoveriesCommercial-isationnet acquisitions and divestmentsReserves Year-end 2014Sales gas(PJ)3,140(233)294-213,204Crude oil(mmbbl)33(10)4-(0)-28Condensate(mmbbl)3
157、6(3)(1)-(0)-32LPG(000 tonnes)1,580(167)108-0-1,520total 1p(mmboe)620(54)55-0062214|Santos Annual Report 2014proved plus probable reservesYear-end 2014(Santos share)All products mmboeBasin/Areasales gas pJCrude oil mmbblCondensate mmbbllpg 000 tonnesDeveloped undevelopedtotaleastern AustraliaSurat/Bo
158、wen2,18700-43334376Cooper/Eromanga97226151,791120101222Gunnedah777-8126134Gippsland/Otway324-5398343064total eA4,26026192,189205591795Western Australia&northern territoryCarnarvon654157-9441135Bonaparte112-321621324Amadeus12382597241236total WA&nt889231381313956195Asia pacificPapua New Guinea1,21202
159、0-15969228Vietnam1212-14-14Indonesia7600-13-13total Asia pacific1,3011221-18669255total 2p6,45061533,0025307161,245Proportion of total proved plus probable reserves that are unconventional41%Proved plus probable reserves reconciliationproductReserves Year-end 2013productionRevisions and extensionsDi
160、scoveriesCommercial-isationnet acquisitions and divestmentsReserves Year-end 2014Sales gas(PJ)7,035(233)(396)265136,450Crude oil(mmbbl)70(10)10(0)-61Condensate(mmbbl)63(3)(6)-0-53LPG(000 tonnes)3,510(167)(341)-0-3,002total 2p(mmboe)1,368(54)(76)5121,245 Reserves statement continued|152C Contingent r
161、esourcesYear-end 2014(Santos share)Basin/Areasales gas pJCrude oil mmbblCondensate mmbbllpg 000 tonnesAll products mmboeEastern Australia5,20235263,446984Western Australia&Northern Territory3,298353956639Asia Pacific297452-98total 2C8,797115673,5021,7212C Contingent resources reconciliationproductCo
162、ntingent resources Year-end 2013productionRevisions and extensionsDiscoveriesCommercial-isationnet acquisitions and divestmentsContingent resources Year-end 2014total 2C(mmboe)1,869-(308)161(1)01,721notes1.This reserves statement:a.is based on,and fairly represents,information and supporting documen
163、tation prepared by,or under the supervision of the qualified petroleum reserves and resources evaluators listed in note 14 of this reserves statement.Details of each qualified petroleum reserves and resources evaluators employment and professional organisation membership are set out in note 14 of th
164、is reserves statement;and b.as a whole has been approved by Barbara Pribyl,who is a qualified petroleum reserves and resources evaluator,and whose employment and professional organisation membership details are set out in note 14 of this reserves statement;and c.is issued with the prior written cons
165、ent of Barbara Pribyl as to the form and context in which the estimated petroleum reserves and contingent resources and the supporting information are presented.2.The estimates of petroleum reserves and contingent resources contained in this reserves statement are as at 31 December 2014.3.Santos pre
166、pares its petroleum reserves and contingent resources estimates in accordance with the Petroleum Resources Management System(PRMS)sponsored by the Society of Petroleum Engineers(SPE).4.All estimates of petroleum reserves and contingent resources reported by Santos are prepared by,or under the superv
167、ision of,a qualified petroleum reserves and resources evaluator or evaluators.Processes are documented in the Santos Reserves Guidelines,which are overseen by a Reserves Committee.The frequency of reviews is dependent on the magnitude of the petroleum reserves and contingent resources and changes in
168、dicated by new data.If the changes are material,they are reviewed by the Santos internal technical leaders,prior to overall approval by management and the Reserves Committee.5.Santos engages independent experts Gaffney,Cline&Associates,Netherland,Sewell&Associates,Inc.and DeGolyer and MacNaughton to
169、 audit and/or evaluate reserves and contingent resources.Each auditor found,based on the outcomes of their respective audit and evaluation,and their understanding of the estimation processes employed by Santos,that Santos 31 December 2014 petroleum reserves and contingent resources quantities in agg
170、regate compare reasonably to those estimates prepared by each auditor.Thus,in the aggregate,the total volumes summarised in the tables included in this reserves statement represent a reasonable estimate of Santos petroleum reserves and contingent resources position as at 31 December 2014.6.Unless ot
171、herwise stated,all references to petroleum reserves and contingent resources quantities in this reserves statement are Santos net share.7.Reference points for Santos petroleum reserves and contingent resources and production are defined points within Santos operations where normal exploration and pr
172、oduction business ceases,and quantities of produced product are measured under defined conditions prior to custody transfer.Fuel,flare and vent consumed to the reference points are excluded.8.Petroleum reserves and contingent resources are aggregated by arithmetic summation by category and as a resu
173、lt,proved reserves may be a very conservative estimate due to the portfolio effects of arithmetic summation.9.Petroleum reserves and contingent resources are typically prepared by deterministic methods with support from probabilistic methods.10.Any material concentrations of undeveloped petroleum re
174、serves that have remained undeveloped for more than five years:(a)are intended to be developed when required to meet contractual obligations;and(b)have not been developed to date because they have not yet been required to meet contractual obligations.11.Petroleum reserves replacement ratio is the ra
175、tio of the change in petroleum reserves(excluding production)divided by production.12.Information on petroleum reserves and contingent resources quoted in this reserves statement is rounded to the nearest whole number.Some totals in the tables may not add due to rounding.Items that round to zero are
176、 represented by the number 0,while items that are actually zero are represented with a dash“-“.13.Conversion factorsSales gas and ethane,1PJ171,937 boeLPG,1 tonne8.458 boeCondensate,1 barrel0.935 boeCrude oil,1 barrel1 boe 14.Qualified Petroleum Reserves and Resources Evaluators nameemployerprofessi
177、onal organisationB PribylSantos LtdSPEP LyfordSantos LtdSPEB CamacSantos LtdSPE,PESA A WesternSantos LtdSPEW BardSantos LtdSPEE KlettkeSantos LtdSPE,APEGAJ Ariyaratnam Santos LtdSPEA Wisnugroho Santos LtdSPEJ TelfordSantos LtdSPEM LeesSantos LtdSPED SmithNSAISPE SPE:Society of Petroleum Engineers AP
178、EGA:The Association of Professional Engineers and Geoscientists of Alberta PESA:Petroleum Exploration Society of Australia16|Santos Annual Report 20142014 GOVERNANCE HIGHLIGHTS The Directors participated in various site visits and a strategy session Yasmin Allen and Scott Sheffield were appointed as
179、 independent non-executive Directors Santos ranked at the 95th percentile in Corporate Governance in Dow Jones Sustainability Index,Oil and Gas industry sector The Board Charter was amended to include a Minimum Shareholding Requirement for non-executive Directors in order to more closely align their
180、 interests with the interests of shareholders The role of the Audit Committee was expanded to include additional responsibilities in relation to risk.The Committee has been renamed the Audit&Risk Committee and its Charter has been updatedINTROduCTION The Board and Management of Santos believe that f
181、or the Company to achieve its vision as a leading energy company for Australia and Asia,it must meet the highest standards of personnel safety and environmental performance,governance and business conduct across its operations in Australia and internationally.The Board has established policies and c
182、harters(“Policies”)designed to achieve the highest standards of corporate governance within Santos.The Policies,or a summary of the Policies,are publicly available in the Corporate Governance section of the Companys website,https:/ otherwise stated below.The Companys Constitution is also available i
183、n the Corporate Governance section of the website,along with additional information regarding the Companys corporate governance practices.The Companys Policies and corporate governance practices meet the requirements of both the Corporations Act 2001(Cth)(“Corporations Act”)and the Listing Rules of
184、the Australian Securities Exchange(“ASX”).The Policies and corporate governance practices comply with best practice,including the 2nd edition of the ASX Corporate Governance Councils Principles and Recommendations(“ASX Principles”),except where explained below.While Santos is not yet required to rep
185、ort against the 3rd edition of the ASX Principles,the Company has commenced the transition towards their adoption and will report against the 3rd edition for the 2015 financial year.Corporate Governance Statement|17The table below indicates the sections of this Corporate Governance Statement that ad
186、dress each of the recommendations under the 3rd edition of the ASX Principles.ASX RECOMMENdATIONSREFERENCE1.1A listed entity should disclose:(a)the respective roles and responsibilities of its board and management;and(b)those matters expressly reserved to the board and those delegated to management.
187、Section 2.11.2A listed entity should:(a)undertake appropriate checks before appointing a person,or putting forward to security holders a candidate for election,as a director;and(b)provide security holders with all material information in its possession relevant to a decision on whether or not to ele
188、ct or re-elect a director.Section 1.31.3A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.Section 1.41.4The company secretary of a listed entity should be accountable directly to the board,through the chair,on all matte
189、rs to do with the proper functioning of the board.Section 2.11.5A listed entity should:(a)have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and
190、the entitys progress in achieving them;(b)disclose that policy or a summary of it;and(c)disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entitys diversity policy and i
191、ts progress towards achieving them,and either:1.the respective proportions of men and women on the board,in senior executive positions and across the whole organisation(including how the entity has defined“senior executive”for these purposes);or 2.if the entity is a“relevant employer”under the Workp
192、lace Gender Equality Act,the entitys most recent“Gender Equality Indicators”,as defined in and published under that Act.Section 5.1 n/a1.6A listed entity should:(a)have and disclose a process for periodically evaluating the performance of the board,its committees and individual directors;and(b)discl
193、ose,in relation to each reporting period,whether a performance evaluation was undertaken in the reporting period in accordance with that process.Sections 1.5 and 3.11.7A listed entity should:(a)have and disclose a process for periodically evaluating the performance of its senior executives;and(b)dis
194、close,in relation to each reporting period,whether a performance evaluation was undertaken in the reporting period in accordance with that process.Section 2.118|Santos Annual Report 2014Corporate Governance Statement continued2.1The board of a listed entity should:(a)have a nomination committee whic
195、h:1.has at least three members,a majority of whom are independent directors;and 2.is chaired by an independent director,and disclose:3.the charter of the committee;4.the members of the committee;and 5.as at the end of each reporting period,the number of times the committee met throughout the period
196、and the individual attendances of the members at those meetings;or(b)if it does not have a nomination committee,disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills,knowledge,experience,independence and
197、diversity to enable it to discharge its duties and responsibilities effectively.Sections 1.3 and 3.1-3.3 n/a.2.2A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.Section 1
198、.22.3A listed entity should disclose:(a)the names of the directors considered by the board to be independent directors;(b)if a director has an interest,position,association or relationship of the type described in Box 2.3 of the ASX Principles(“Factors relevant to assessing the independence of a dir
199、ector”),but the board is of the opinion that it does not compromise the independence of the director,the nature of the interest,position,association or relationship in question and an explanation of why the board is of that opinion;and(c)the length of service of each director.Sections 1.1-1.2 and pa
200、ges 6 and 7 of the Annual Report2.4A majority of the board of a listed entity should be independent directors.Section 1.12.5The chair of the board of a listed entity should be an independent director and,in particular,should not be the same person as the chief executive officer of the entity.Section
201、 1.12.6A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.Section 1.43.1A listed entity should:(a)have a
202、code of conduct for its directors,senior executives and employees;and(b)disclose that code or a summary of it.Section 5.24.1The board of a listed entity should:(a)have an audit committee which:1.has at least three members,all of whom are non-executive Directors and a majority of whom are independent
203、 directors;and 2.is chaired by an independent director,who is not the chair of the board,and disclose:3.the charter of the committee;4.the relevant qualifications and experience of the members of the committee;and 5.in relation to each reporting period,the number of times the committee met throughou
204、t the period and the individual attendances of the members at those meetings;or(b)if it does not have an audit committee,disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting,including the processes for the appointment and re
205、moval of the external auditor and the rotation of the audit engagement partner.Sections 3.1-3.3 See http:/ n/a|194.2The board of a listed entity should,before it approves the entitys financial statements for a financial period,receive from its chief executive officer and chief financial officer a de
206、claration that,in their opinion,the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been for
207、med on the basis of a sound system of risk management and internal control which is operating effectively.Section 4.24.3A listed entity that has an annual general meeting should ensure that its external auditor attends its annual general meeting and is available to answer questions from security hol
208、ders relevant to the audit.Section 5.45.1A listed entity should:(a)have a written policy for complying with its continuous disclosure obligations under the Listing Rules;and(b)disclose that code or a summary of it.Section 5.4 See http:/ listed entity should provide information about itself and its g
209、overnance to investors via its website.See http:/ listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.Section 5.46.3A listed entity should disclose the policies and processes it has in place to facilitate and encourage
210、participation at meetings of security holders.Section 5.46.4A listed entity should give security holders the option to receive communications from,and send communications to,the entity and its security registry electronically.Section 5.47.1The board of a listed entity should:(a)have a committee or c
211、ommittees to oversee risk,each of which:1.has at least three members,a majority of whom are independent directors;and 2.is chaired by an independent director,and disclose:3.the charter of the committee;4.the members of the committee;and 5.as at the end of each reporting period,the number of times th
212、e committee met throughout the period and the individual attendances of the members at those meetings;or(b)if it does not have a risk committee or committees that satisfy a)above,disclose that fact and the processes it employs for overseeing the entitys risk management framework.Sections 3.1-3.3 See
213、 http:/ n/a7.2The board or a committee of the board should:(a)review the entitys risk management framework at least annually to satisfy itself that it continues to be sound;and(b)disclose,in relation to each reporting period,whether such a review has taken place.Sections 4.1-4.37.3A listed entity sh
214、ould disclose:(a)if it has an internal audit function,how the function is structured and what role it performs;or(b)if it does not have an internal audit function,that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal con
215、trol processes.Section 4.1 n/a20|Santos Annual Report 2014Corporate Governance Statement continued7.4A listed entity should disclose whether it has any material exposure to economic,environmental and social sustainability risks and,if it does,how it manages or intends to manage those risks.Section 4
216、.3 and pages 4148 of the Annual Report8.1The board of a listed entity should:(a)have a remuneration committee which:1.has at least three members,a majority of whom are independent directors;and 2.is chaired by an independent director,and disclose:3.the charter of the committee;4.the members of the c
217、ommittee;and 5.as at the end of each reporting period,the number of times the committee met throughout the period and the individual attendances of the members at those meetings;or(b)if it does not have a remuneration committee,disclose that fact and the processes it employs for setting the level an
218、d composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.Sections 3.1-3.3 See http:/ n/a8.2A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive Directors and the
219、 remuneration of executive directors and other senior executives.Section 2.18.3A listed entity should disclose:(a)have a policy on whether participants are permitted to enter into transactions(whether through the use of derivatives or otherwise)which limit the economic risk of participating in the s
220、cheme;and(b)disclose that policy or a summary of it.Section 5.3 See:http:/ 1:COMPOSITION OF THE BOARd Relevant policies and charters See Board Charter Company Constitution 1.1 director independence The Board assesses the independence of each Director,having regard to the definition of independence s
221、et out in the ASX Principles.Consistent with this definition,the Board generally considers a Director to be independent if he or she is not a member of Management and is free of any interest and any business or other relationship which could,or could reasonably be perceived to,materially interfere w
222、ith the Directors ability to act in the best interests of the Company.The Board will assess the materiality of any given relationship that may affect independence on a case-by-case basis and has adopted materiality guidelines to assist in that assessment.Under these guidelines,the following interest
223、s are regarded as material in the absence of any mitigating factors:a holding of 5%or more of the Companys voting shares or a direct association with an entity that holds more than 5%of the Companys voting shares;or an affiliation with an entity that accounts for 5%or more of the revenue or expense
224、of the Company.Each Directors independence is assessed by the Board on an individual basis,with reference to the above materiality guidelines and focusing on an assessment of each Directors capacity to bring independence of judgement to Board decisions.In this context,Directors are required to make
225、prompt disclosure to the Board of any changes in interests in contracts,family ties and cross-directorships that may be relevant in considering their independence.Directors must declare any conflict of interest that they may have at the start of all Board meetings.Where a material personal interest
226、arises with respect to a matter that is to be considered by the Board,the Director is required to declare that interest and must not take part in any Board discussion or vote in relation to that matter,unless permitted in accordance with the Corporations Act.In 2013,the Board reviewed the tenure pro
227、visions in the Board Charter and inserted a guideline that the expected tenure of a non-executive Director would be between six and nine years.This guideline applies flexibly and it is expected that some non-executive Directors may remain in office for longer periods where appropriate,for instance t
228、o maintain the desired mix of skills and experience on the Board.While Ken Dean and Roy Franklin have been in office since 2005 and 2006,respectively,the Board believes that their skills and experience enable them to continue to provide valuable contributions to the Board.The Board is satisfied that
229、 both Directors exercise rigorous and objective judgement and that they remain independent.Total Directors:10 Nine independent Non-executive Directors One Executive Director (Managing Director)Currently,the Board comprises nine non-executive Directors(including the Chairman),all of who are considere
230、d independent under the principles set out above,and one executive Director(the Managing Director).With the exception of the Managing Director,no Director may hold office without re-election beyond the third Annual General Meeting following the meeting at which the Director was last elected or re-el
231、ected.22|Santos Annual Report 2014Corporate Governance Statement continued1.2 Board capabilities In determining the composition of the Board,consideration is given to the optimal mix of background,skills and experience that will position the Board to guide the Company.As the needs of the Board are d
232、ynamic,these skills and experiences may change over time.The following diagram shows how the Companys programs and systems(described in further detail in Sections 1.31.5)support Santos in building an effective Board,with the breadth and depth of background,skills and experience necessary to guide th
233、e Companys strategic growth plans.dEFINING REQuIREd SKILLS ANd EXPERIENCEIdENTIFYING AREAS FOR FuRTHER dEVELOPMENTIMPROVING BOARd EFFECTIVENESSIn order to ensure that the skills and experience available on the Board align with Santos goals and strategy the Board considers:Current business plan and o
234、perations;and Future growth plans.Areas for further development,and skills&experience that would complement existing skills&experience,are identified by:Board performance review to assess current capabilities;and Nomination Committee consideration of succession planning.Steps taken to improve Board
235、effectiveness include:Development and site visits to enhance board effectiveness;and Recruitment of new Directors to complement existing Board capabilities.KEY ACTIONS IN 2014 Ongoing review;and Strategic planning meeting.Internal review commenced in late 2013,completed in February 2014;and Internal
236、 review identified a need for Board succession as a number of directors had held office for an extended period of time.Site visits to Roma,Fairview,Gladstone and Port Bonython;Board meetings in various locations including Perth,Sydney and Gladstone;Appointment of Mr Scott Douglas Sheffield on 14 May
237、 2014;and Appointment of Ms Yasmin Anita Allen on 22 October 2014.The framework for the Nomination Committees ongoing consideration of Board composition,as specified in the Board Charter,is that Directors should be appointed primarily based on their capacity to contribute to the Companys development
238、,and the Board should include at least some members with experience in the upstream oil and gas and/or resources industries.In 2014,the Board comprised Directors from diverse backgrounds with a range of business experience,skills and attributes.The tables and charts on the following pages demonstrat
239、e the skills,experience and diversity of the Directors in office at the end of 2014 across several dimensions that are relevant to Santos as a leading energy Company.|23SKILLS ANd EXPERIENCE OF dIRECTORSComposition of skills and experience of the Board(out of 10)Management and leadership Financial/b
240、usiness qualificationsSenior management positions held outside Santos (past and present)10Tertiary business qualification including post-graduate business studies and CA or CPA4Directorships held outside Santos(past and present)10Position held on financial bodies and councils(past or present)2Intern
241、ational experienceHealth,safety and environmentGlobal 10Experience managing health,safety and environment issues in a large organisation7ASIA Pacific9Resources experience and educationGovernance and regulatoryMining or minerals experience6Membership of governance or regulatory bodies(past or present
242、)4Oil and gas experience8Experience in governance of a complex organisation10Infrastructure experience5StrategyTertiary engineering or science background7Mergers and acquisitions experience8Positions held on industry-related bodies(past or present)or membership of professional industry-related bodie
243、s8Experience in growing a business9Risk managementExperience in implementing capital projects8Background in risk-focused positions e.g.CFO or auditor(past or present)3The names and details of the experience,qualifications,special responsibilities(including Committee memberships),and term of office o
244、f each Director of the Company and the Company Secretary can be found on pages 69 of the Annual Report.TERTIARY QuALIFICATIONS EngineeringFinanceLawScienceAustraliaChinaNorth AmericaUnited KingdomMenWomenMergers and acquisitionsExperience in growing a businessExperience in implementing capital proje
245、ctsMining or minerals experienceOil and gas experienceInfrastructure experienceTertiary engineering or science backgroundPositions held on industry-related bodies(past or present)or membership of professional industry-related projectsINduSTRY EXPERIENCE RESIdENCY GENdER 24|Santos Annual Report 2014C
246、orporate Governance Statement continued1.3 director selection and succession planning The Board renewal process is overseen by the Nomination Committee and involves regularly reviewing the composition of the Board to ensure that the Directors bring to the table an appropriate mix of experience,skill
247、s and backgrounds relevant to the management of a leading energy company.In making recommendations relating to Board composition,the Nomination Committee takes into account both the current and future needs of the Company.The Nomination Committee specifically considers each of the Directors coming u
248、p for re-election and makes an assessment as to whether to recommend their re-appointment to shareholders.This assessment considers matters including their contribution to the Board,the results of Board and Committee reviews,and the ongoing needs of the Company.The Committee also takes into account
249、the succession plans of the Directors more broadly.Where a potential gap is identified in the backgrounds,experiences or skill sets that are considered desirable,or necessary,for the Boards continued effectiveness,this information is used as the basis for selection of new Director candidates.The Nom
250、ination Committee is responsible for defining the desired attributes and skill-sets for a new Director.The services of an independent consultant are then used where appropriate to assist in the identification and assessment of a range of potential candidates based on a brief from the Nomination Comm
251、ittee.The Nomination Committee reviews prospective candidates and arranges for appropriate background checks to be undertaken,then makes recommendations to the Board regarding possible appointments of Directors,including recommendations for appointments to Committees.When candidates are submitted to
252、 shareholders for election or re-election,the Company includes in the Notice of Meeting all information in its possession that is material to the decision whether to elect or re-elect the candidate.1.4 director induction and continuing education Prior to appointment,each non-executive Director is pr
253、ovided with a letter of appointment that sets out the terms of their appointment and includes copies of the Companys Constitution,Board Charter,Committee Charters,relevant policies and functional overviews of the Companys strategic objectives and operations.The expectations of the Board in respect o
254、f a proposed appointee to the Board and the workings of the Board and its Committees are also conveyed in interviews with the Chairman.Induction procedures include site visits and access to appropriate executives in relation to details of the business of the Company.The existing practices of providi
255、ng new non-executive Directors with a formal letter of appointment setting out their rights,duties and responsibilities and ensuring that they receive a comprehensive induction program,including business briefings by Management and site visits,is explicitly recognised in the Board Charter.The Managi
256、ng Director and other Senior Executives are employed under separate employment agreements,which set out their rights,duties and responsibilities.Directors are encouraged by the Board to continue their education by attending both internal and external training and education relevant to their role.dir
257、ector site visits in 2014 to Roma,Fairview,Gladstone and Port Bonython.During 2014,Directors attended site visits to Roma,Fairview,Gladstone and Port Bonython.In addition,Board meetings were held at various Santos offices and sites including in Adelaide,Sydney,Perth and Gladstone,providing further o
258、pportunity for familiarisation with each locations operations and personnel,and presentations from the local management team.1.5 Review of Board,Board Committees and director performance As specified in the Board Charter,reviews of Board,Committee and individual Director performance are conducted an
259、nually.At least once every three years,the annual review of the Board,Committees and individual Directors is carried out by an independent consultant.The scope of the external review is agreed in advance with the Board.Internal reviews are facilitated by the Chairman,in consultation with the Nominat
260、ion Committee,and involve questionnaires and formal interviews with each Director culminating in a written report prepared by the Chairman.Where the review relates to the performance of the Chairman,the two senior independent non-executive Directors conduct the review.|25Internal Board review proces
261、sINTERNAL BOARDREVIEWAn internal Board review was conducted in late 2013/early 2014 in accordance with the process outlined in this Section.The review included an assessment of the performance of individual Directors including the Chairman and examined the workings,performance and effectiveness of t
262、he Board and the Boards Committees.In undertaking the review,one-on-one interviews were conducted with each member of the Board and members of the Companys Senior Leadership Team who interact regularly with the Board.A key aspect of this review was to focus on Board succession,as a number of Board m
263、embers have held office for some time.The review:assessed the mix of skills,experience and personalities currently represented on the Board;considered the optimal mix of skills,experience and personalities that the Board may desire over the medium-term given the Companys current plans;and made recom
264、mendations for Board succession planning over the medium term.As a result of the Boards review two independent non-executive Director appointments were made in 2014,Mr Scott Douglas Sheffield and Ms Yasmin Anita Allen.Implement initiatives to improve Board effectivenessReview performance,structure,o
265、bjectives and the purpose of Board CommitteesFeedback from Directors and review of individual Director performanceFeedback from Senior Executives26|Santos Annual Report 2014Corporate Governance Statement continuedPART 2:BOARd RESPONSIBILITIES Relevant policies and charters See Board Charter The Boar
266、d Charter was last updated in August 2014.The Boards overriding objective is defined in the Board Charter as“to safely and sustainably increase shareholder value within a business framework,which protects shareholders interests”.The Board seeks to ensure that Management implements sound strategies a
267、nd develops an integrated framework of risk management and control.2.1 Responsibilities The Board is responsible for the overall corporate governance of the Company,including approving the strategic direction and financial objectives,oversight of the performance and operations of the Company,establi
268、shing goals for Management and monitoring the attainment of these goals.Each Director is required to ensure they are able to devote sufficient time to discharge their duties and to prepare for Board and Committee meetings and associated activities.The Board Charter confirms that the Company Secretar
269、y,through the Chairman,is accountable to the Board for the effectiveness of corporate governance processes,ensuring adherence to the Boards principles and procedures and coordinating all Board business.All Directors have direct access to the Company Secretary and the Company Secretary has a direct r
270、eporting line to the Chairman.The Board is responsible for:overseeing the Companys strategic direction and management of the Company;approving the annual capital and operating budget;approving delegations of authority to Management;approving significant acquisitions and disposals of assets;approving
271、 significant expenditure decisions outside of the Board-approved corporate budget;approving and monitoring financial performance against strategic plans and corporate budgets;approving ethical standards and Codes of Conduct;selection,evaluating and succession planning for Directors,the CEO and Compa
272、ny Secretary and generally endorsing the same for the CEOs direct reports;setting the remuneration of Directors and the CEO and generally endorsing of the same for the CEOs direct reports;and overseeing the integrity of risk management processes and systems.delegation of AuthorityThe Board delegates
273、 management of the Companys resources to the Companys executive management team under the leadership of the CEO to deliver the strategic direction and goals approved by the Board.This is formally documented in the Companys Delegation of Authority.Responsibilities delegated by the Board to Management
274、:the conduct and operation of the Companys business in the ordinary course;implementing corporate strategies;and operating under approved budgets and written Delegations of Authority.|27The Companys Delegation of Authority has previously been the subject of an extensive review and a substantially re
275、structured,simplified and updated version was adopted in June 2012.The Delegation of Authority incorporates increased accountability for personnel exercising delegated authority and continued to be applied rigorously by the Company in 2014.Performance evaluation of Senior Executives is regularly und
276、ertaken(usually twice a year)by the Managing Director.The Chairman undertakes the Managing Directors annual review.The results of these reviews are used in determining succession plans,performance and development plans and future remuneration in consultation with the People and Remuneration Committe
277、e,and generally for review by the Board in relation to Management succession planning.Performance reviews were conducted during the year in accordance with this process for each of the Senior Executives,including the Managing Director.These reviews impacted on the short-term incentives for the Senio
278、r Executives and included the following criteria:analysing performance against agreed measures;examining the effectiveness and quality of the individual in their given role;assessing key contributions;identifying areas of potential improvement;and assessing whether expectations of shareholders and o
279、ther stakeholders have been met.Details of the remuneration received by the Managing Director and Senior Executives,including short-and long-term incentives,relating to Company and individual performance targets,are set out in the Remuneration Report commencing on page 52 of the Annual Report.Detail
280、s of non-executive Director remuneration are also set out in the Remuneration Report.2.2 Access to information and independent professional advice The Board Charter sets out the circumstances and procedures pursuant to which a Director may seek independent professional advice at the Companys expense
281、.Those procedures require prior consultation with,and approval by,the Chairman and assurances as to the qualifications and reasonableness of the fees of the relevant adviser.A copy of the advice and letter of instruction is usually required to be provided to the Board.Pursuant to a deed executed by
282、the Company and each Director,a Director also has the right to access all documents that have been presented to meetings of the Board or to any Committee of the Board or otherwise made available to the Director while in office.This right continues for a term of seven years after ceasing to be a Dire
283、ctor,or such longer period as is necessary to determine any relevant legal proceedings that commenced during that term.Information in respect of indemnity and insurance arrangements for Directors and certain Senior Executives appears in the Directors Report on page 74 of the Annual Report.28|Santos
284、Annual Report 2014Corporate Governance Statement continuedPART 3:BOARd COMMITTEES Relevant policies and charters See Audit&Risk Committee Charter Environment,Health,Safety and Sustainability Committee Charter Finance Committee Charter Nomination Committee Charter People and Remuneration Committee Ch
285、arter 3.1 Role and membership The Board has established a number of Committees to assist with the effective discharge of its duties.The role of each Committee is set out in Section 3.3.All Committees are chaired by and comprise only independent non-executive Directors,except the Environment,Health,S
286、afety and Sustainability Committee,which includes the Managing Director as a member in accordance with the Charter of that Committee.Other composition requirements specific to each Committee are set out in Section 3.1.Non-Committee members may attend Committee meetings by invitation.Each Committee o
287、perates under a specific charter approved by the Board.Board Committees conduct their own internal review of their performance,structure,objectives and purpose from time to time.In 2014,the Audit Committees responsibilities were expanded to include additional responsibilities in relation to risk and
288、 a revised Charter was adopted in October 2014,following a review by that Committee.The Committee was renamed the Audit&Risk Committee in light of its expanded role.Prior to the change to the Audit&Risk Committees Charter each of the Boards other Committees exercised oversight of risk in their respe
289、ctive areas including environmental,health,safety and sustainability risk(EHSS Committee),financial,funding and capital management risk(Finance Committee)and organisational,human resource and related risks(People and Remuneration Committee).While those Committees continue to exercise oversight in th
290、eir respective areas,the Audit&Risk Committee has overarching oversight in relation to risk as a whole.Board Committees have access to internal and external resources,including access to advice from independent external consultants or specialists.The Chairman of each Committee provides an oral,and,w
291、here appropriate and practicable,a written report together with the minutes and recommendations of the Committee at the next Board meeting.Following is a summary of the membership of the Board Committees.Board Committee membershipAudit&Risk Committee Environment,Health,Safety and Sustainability Comm
292、ittee1 Finance Committee Nomination Committee1 People and Remuneration Committee KC BordaNon-executive Director(Chairman)Member Chairman MemberPR Coates2Non-executive Director MemberMember KA Dean Non-executive Director MemberMember MemberRA FranklinNon-executive Director Chairman MemberDJW Knox Exe
293、cutive Director(Managing Director)Member GJW MartinNon-executive Director MemberChairmanChairman JS HemstrichNon-executive Director ChairpersonMember H Goh3Non-executive DirectorMemberMemberSD Sheffield4Non-executive DirectorMember YA Allen5Non-executive DirectorMemberNotes:1.Mr RM Harding ceased to
294、 be a member of the Environment,Health,Safety and Sustainability Committee and the Nomination Committee upon his retirement at the 2014 Annual General Meeting held on 16 May 2014.2.Mr PR Coates was appointed as a member of the Environment,Health,Safety and Sustainability Committee on 14 May 2014.3.M
295、r H Goh was appointed as a member of the Audit&Risk Committee on 22 October 2014.4.Mr SD Sheffield was appointed as a member of the Finance Committee on 14 May 2014.5.Ms YA Allen was appointed as a member of the Environment,Health,Safety and Sustainability Committee on 22 October 2014.|29Following a
296、re details of the membership requirements of each Committee,as outlined in each Committees Charter.The Board reviews Committee membership on at least an annual basis and believes that each Committees membership currently satisfies the membership requirements.Details of the qualifications and experie
297、nce of each Director can be found on pages 67 of the Annual Report.Board CommitteeMembership RequirementsAudit&Risk Committee At least three independent non-executive Directors Collectively the members,will have sufficient accounting and financial expertise and understanding of the oil&gas industry,
298、to be able to discharge the Audit&Risk Committees responsibilities At least one member who is also a member of the EHSS Committee To be chaired by an independent non-executive Director who is not the Chairman of the Board.Environment,Health,Safety and Sustainability Committee At least three independ
299、ent non-executive Directors and the Managing Director.Finance Committee At least three independent non-executive Directors who are financially literate and at least one will have past employment experience in finance,requisite professional certification or other comparable experience or background w
300、hich results in the individuals financial sophistication.Nomination Committee At least three independent non-executive Directors,chaired by the Chairman of the Board.People and Remuneration Committee At least three independent non-executive Directors,including the Chairman of the Board.3.2 Board and
301、 Committee meetings In 2014,a total of 10 Board meetings were held,including a strategy meeting.This exceeded the minimum requirements set out in the Board Charter.In addition to formal meetings,the Directors participated in a site visit to Roma,Fairview and Gladstone in June 2014 and the EHSS Commi
302、ttee participated in a site visit to Port Bonython in May 2014.Members of Management attend relevant parts of Board and Committee meetings,at which they report to Directors within their respective areas of responsibility.Where appropriate,advisers to the Company attend meetings of the Board and of i
303、ts Committees.Board meetings regularly include a session at which the non-executive Directors meet without the Managing Director or other members of Management present.Details of the Board and Committee meetings held and Directors attendances at those meetings appear in the Directors Report on page
304、38 of the Annual Report.3.3 Role and activities of committees Audit&Risk CommitteeIn 2014,the Audit Committees role was expanded to include oversight of the Companys risk management and internal control framework and as a result it was renamed the Audit&Risk Committee.The Audit&Risk Committee assist
305、s the Board to meet its oversight responsibilities by reviewing,reporting and making recommendations in relation to financial reporting,enterprise risk management,internal control systems,the internal and external audit functions and reserves and resources reporting.During 2014,the Audit&Risk Commit
306、tee met with the external auditor,Ernst&Young,without Management present,after each Audit&Risk Committee meeting.The qualifications and experience of the members of the Audit&Risk Committee are set out on pages 67 of the Annual Report.Finance CommitteeThe role of the Finance Committee includes:respo
307、nsibility for considering and making recommendations to the Board on the Companys capital management strategy and the Companys funding requirements and specific funding proposals;formulating and monitoring compliance with treasury policies and practices;and the management of credit,liquidity and com
308、modity market risks.Environment,Health,Safety and Sustainability CommitteeThe role of the Environment,Health,Safety and Sustainability(EHSS)Committee includes:monitoring and review of the Environment,Health and Safety and Sustainability policies and related systems and their compliance with all appl
309、icable environment,health and safety legislation;monitoring and review of all aspects of environment,and health and safety risks,which are relevant to the Companys operations;receipt and consideration of reports on all major changes to the Companys environment and health and safety responsibilities;
310、receipt and consideration of reports on any significant system failure,accident or other incident;review of the regular internal and external environmental,health and safety audits;and monitoring and reviewing the appropriateness and implementation of the Companys environment,health,safety and susta
311、inability governance arrangements.30|Santos Annual Report 2014Corporate Governance Statement continuedDuring 2014 the Committee reviewed the EHS performance of each of the Business Units and the Drilling and Completions department.In May 2014,the committee held the Directors EHS Awards for recognisi
312、ng outstanding EHS performance and innovation,from a total pool of 59 submissions received.The Committee also conducted a field trip to Santos Port Bonython facility near Whyalla,South Australia where it was able to discuss and observe some of the key EHS and Process Safety programs in place while a
313、lso being able to observe a strong EHS culture and commitment from local management.Nomination CommitteeIt is the responsibility of the Nomination Committee to devise the criteria for,and review membership of the Boardincluding the re-election of incumbent Directors and nominations for new appointme
314、nts,to maintain an appropriate balance of skills,experience,diversity and expertise on the Board.When a Board vacancy exists or where it is considered that the Board would benefit from the services of a new Director with particular skills,experience or background,the Nomination Committee has respons
315、ibility for proposing candidates for consideration by the Board.Areas of focus for the Nomination Committee in 2014 included Board renewal,as a number of Directors were in their third term,and enhancing gender diversity on the Board.As a result,during 2014,the Nomination Committee oversaw the search
316、 for two new independent non-executive Directors and recommended the final candidates to the Board for approval,resulting in the appointments of Mr Scott Douglas Sheffield on 24 February 2014 and Ms Yasmin Anita Allen on 22 October 2014.These appointments enhance the skills,experience and diversity
317、represented on the Board.People and Remuneration CommitteeThe People and Remuneration Committee is responsible for reviewing the remuneration policies and practices of the Company including:the compensation arrangements for the Non-executive and Executive Directors(including the Managing Director),a
318、nd Senior Leadership Team;development and succession plans for the Managing Director and Senior Leadership Team;the Companys superannuation arrangements;employee share and option plans;reviewing and reporting to the Board on measurable objectives for achieving gender diversity;an annual assessment o
319、f the gender diversity objectives and progress in achieving them;and reviewing and reporting on remuneration analysed by gender.In 2014,the Committee oversaw the implementation of various changes to the Short-Term Incentive(STI)and Long-Term Incentive(LTI)programs including the deferral of a 30%port
320、ion of STI awards to senior executives and the extension of the LTI performance period from three years to four years.The Committee has access to,and regularly uses,independent advice and comparative studies on the appropriateness of remuneration arrangements.Further details of 2014 activities are s
321、et out in the Remuneration report commencing on page 52 of the Annual Report.The structure and details of,and policies and strategy in relation to,the remuneration paid to non-executive Directors,the Managing Director and other Senior Executives during the period are set out in the Remuneration Repo
322、rt commencing on page 52 of the Annual Report and notes 29 and 30 to the financial statements commencing on page 128 of the Annual Report.|31PART 4:RISK MANAGEMENT Relevant policies and charters See Board Charter Audit&Risk Committee Charter Risk Management Policy 4.1 Risk management systemsThe Boar
323、d is responsible,with the assistance of the Audit&Risk Committee,for overseeing the implementation of,and ensuring there are adequate policies in relation to,the Companys risk management and internal compliance and control systems.These systems require Management to be responsible for identifying an
324、d managing the risks that may have a material impact on the Companys objectives,and to review the systems if any irregularity or inadequacy becomes apparent.These risks include financial,non-financial and operational risks impacting areas such as project delivery,production,reputation,environment an
325、d safety,exploration and investment.The Board Charter specifies that risk management arrangements will include:Board Committees;financial reporting;Management reporting;organisational structures,procedures,manuals and policies;audits;environment,health and safety standards;comprehensive insurance pr
326、ograms and appointment of specialist staff and external advisors.The Audit&Risk Committee assists the Board in performing its role in relation to risk management by periodically reviewing the effectiveness of Santos enterprise risk management framework and reporting,and making recommendations,to the
327、 Board.A review of the Companys risk management framework was undertaken by the Committee in 2014 with the assistance of an independent risk management expert consultant.The review concluded that the companys risk management framework was sound and effective in identifying and managing risk.The revi
328、ew also made a number of process improvements and recommendations which were adopted and are currently being implemented.An Enterprise-Wide Risk Management approach,based on the relevant International Standard(ISO31000:2009)forms the basis of the Companys Risk Management activities.This approach is
329、incorporated in the Companys Risk Management Policy and aims to ensure that business risks facing the Company are consistently identified,analysed and evaluated,and that active management plans and controls are in place for the ongoing management of these risks.Independent validation of controls is
330、undertaken by internal audit as part of the Companys risk-based approach.The risk&internal audit function is independent of the external auditor and reports to the Audit&Risk Committee,which reviews the findings and recommendations made by the risk&internal audit function.The head of risk&internal a
331、udit is appointed by the Audit&Risk Committee.4.2 Management reporting on risk As risk management is embedded throughout the Company,reporting of these risks occurs at a number of levels.All regular reports to the Board on strategic,project and operational issues incorporate an assessment by Managem
332、ent of the associated risks,which ensures that the Board is in a position to make fully-informed business judgements on these issues.In addition to the formal reporting arrangements,the Board and Management give ongoing consideration to the effectiveness of the Companys risk management and internal
333、compliance and control systems,and whether there is scope for further improvement of these systems.The Board confirms that it has received a report from Management as to the effectiveness of the Companys management of its material business risks for the 2014 financial year.The Board also receives written certifications from the Managing Director and the CFO in relation to the Companys financial re
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