Continuing our sustainability journey

AWE recognises that our operations have long-time horizons and managing them sustainably is vitally important. For a number of years sustainability has been part of our overall business strategy, focusing primarily on the health and safety of our employees. In recent years we have extended our view of sustainability more broadly – including aspects such as the environment, our reputation, corporate governance and the teaming of our people. We have also sought to formalise the concept of sustainability further into our business.

In our inaugural Sustainability Report 2008, we laid out our sustainability reporting commitments for future years, and began to implement processes for measuring and reporting our sustainability performance with a strong focus on developing a system to measure and monitor our greenhouse gas emissions. This is AWE’s second sustainability report which confirms our commitment to alignment of our sustainability objectives with our core business objectives as well as highlighting our sustainability performance during 2009.

Formalising AWE’s sustainability vision

For AWE, sustainability is about integrating the economic, social and environmental considerations into our core business, meeting stakeholder expectations and delivering superior business outcomes. We believe this can be achieved through our sustainability vision, which entails:

• valuing and maintaining the health and safety of our people;
• building a unified team which delivers valuable returnsfor our shareholders and provides challenging,
  satisfying and rewarding careers to our people;
• being a good corporate citizen applying best practice corporate governance to create value;
• respecting and contributing positively to the communities in which we operate and upholding
  our reputation; and
• conserving the diversity and sensitivity of the natural environments in which we operate.

These objectives recognise the stakeholders most valuable to us: our employees, communities and investors, to whom we rely on to provide a productive workforce, give us access to land and reserves, and to finance the growth of our business.

Sustainability at AWE begins at the board level, which is pivotal to embedding corporate responsibility within the organisation. This is achieved through our AWE vision and is linked directly to management incentives, of which one-third is now comprised of aspirations and targets around sustainability. From 2010, our employees will be rewarded for both individual and company success, by delivering a new company wide long term incentive plan that rewards all employees for company success linked equally to three key performance areas of “Base Business Delivery”, “Growth” and “Sustainability”.

The board has assigned accountability to me, the Managing Director of AWE, for integrating sustainability into our core business practice. For 2009, senior management has been responsible for determining the key areas for public reporting. This has been selected on a materiality basis, using reporting frameworks such as the Global Reporting Index G3, API/IPIECA Oil and Gas Guidance on Voluntary Sustainability Reporting so that we report the information that we believe relevant to our stakeholders. We found these to be health and safety and climate change for which we have collected and reported data over the 2009 period. In selecting our reporting boundary, we have reported greenhouse gas emissions and safety data associated with the operated facilities as well as our net share of non-operated production operation. We believe that this approach best reflects the overall impacts of our operations.

For collecting and reporting data, we have given ownership for the measurement frameworks at the site level as we believe this enables further integration of sustainability objectives into the business.

Sustainability is also embedded in our investment decision making process. As we continue to pursue growth opportunities which create shareholder value, we understand that growth must be sustainable, whilst our clear objective is to replace reserves, sustain production and grow the company to the benefit
of our shareholders.

Sustainability performance highlights 2009

Our sustainability performance in 2009 was pleasing. We made significant progress in developing our reporting frameworks, collecting data and reporting of our performance in the aspects that we believe to be the most important to our business: climate change and safety. We saw sustainability integrated more strongly into our business – now representing one-third of our overall business vision and key performance indicators against which our employees’ performance is measured.

In 2009, we have seen a strong focus in Australia on the complex issues surrounding climate change and greenhouse gas emissions reductions. In response to this, AWE responded for the first time to the Carbon Disclosure Project, which was a valuable process in understanding our exposure to climate change and communicating this information to our investors. In responding to the CDP, AWE is also committed to minimising our impact on the environment. We hope to achieve this through initiatives such as our agreement with Air Liquide, which will reduce our carbon dioxide venting emissions from our BassGas joint venture by 25% from 2010.

Another highlight was the progress we made on employee and contractor safety over the past 12 months, reducing lost time injury frequency rate (“LTIFR”) from 2.34 to 0 across all of our operated and non-operated sites. This is a strong achievement for AWE as we believe a safe working environment is fundamental to a sustainable business.

In all of the communities that we work in, we continue to aim to leave them in “better shape” after we leave. Our community engagement programs continued in 2009, including AWE along with joint venture partner Mitsui becoming the national champion of the highly successful youth mentoring program, Big Brothers Big Sisters (“BBBS”) in New Zealand.

Looking forward

Over the next year, we wish to continue formalising and embedding sustainability into the core of the business. In the years ahead, our focus will again be on safety and the environment and we will also be seeking to understand how AWE is perceived by stakeholders, and how we can maintain and improve our reputation for integrity, transparency and sensitivity in all areas of our operations. We understand that our social license to operate is contingent on government and community confidence that our operations are properly conducted and provide benefit to the community. We aim to engage with our internal (employees) and external (communities and investors) stakeholders, using two-way consultation we will create open discussions to understand and address material stakeholder issues and commit to improving on and reporting on these issues in subsequent sustainability reports.

Continuing our sustainability journey....

In 2008, we incorporated an overview of our sustainability performance into our Annual Report for the first time. In recognition that communicating sustainability information to our stakeholders is essential, we committed to developing a sustainability measurement and reporting framework, to establishing a data collection methodology, and to reporting a set of measures and performance indicators covering the environmental and social performance. For 2009, we are proud to present our achievements against those commitments.

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