Oil Search : 2020 Transparency Report

A B S O LU T E

TRANSPARENCY

Transparency Report 2020

OIL SEARCHTRANSPARENCY REPORT 2020

Overview

TRANSPARENCY REPORT

Oil Search supports, advocates for and is committed to transparency in how the benefits from oil and gas activities are shared with governments and communities and believes it is an essential part of responsible resource development.

We recognise that payments to governments are important for regulatory stability and socio-economic progress. By voluntarily disclosing our payments and contributions, we aim to build an understanding of the economic benefits generated by our activities, and how this supports economic and social development in the jurisdictions in which we operate.

Our commitment to transparency is underpinned by the principles of our Social Responsibility Policy, our United Nations Global Compact (UNGC) membership and our support for Extractive Industries Transparency Initiative (EITI) implementation in Papua New Guinea (PNG). We have been an EITI Supporting Company since 2013 and are an active participant in PNG's EITI Multi‑Stakeholder Group (MSG).

Our contributions support economic growth and stability in countries where we operate, and include employing and training local staff, using and helping to develop local suppliers, and paying taxes, levies and royalties. We are committed to sustainable development and playing an active role in improving the lives of citizens and communities through initiatives across health care, infrastructure and education. Our renewed Sustainability Model defines our ambitions to be a Net Zero energy company by 2050, including reducing our GHG intensity by more than 30% across operated assets by 2030. We have a plan that focuses on low cost, low greenhouse gas emission intensity growth projects that are aligned with the objectives of the Paris Agreement and contribute to the global energy transition; to undertake near term carbon abatement and emission reduction programs within our existing operated assets; and a comprehensive Energy Transition review in 2021.

The Oil Search 2020 Transparency Report brings together information on all our payments to governments, our socio-economic contributions to our people, suppliers, shareholders and local communities, as well as our approach to tax transparency.

It covers countries where we had substantive activities during 2020. See the 2020 Basis of Preparationfor more information on the data presented.

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Contents

1. Overview

1. Message from Oil Search's Chief Financial Officer XX Total paid to governments
   XX Total socio-economic contribution XX Socio-economic contribution
   XX Tax strategy
   XX Independent auditor's report

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OIL SEARCHTRANSPARENCY REPORT 2020

Message from Oil Search's Chief Financial Officer

"Oil Search's contribution enables governments to provide critical services and infrastructure, and to invest in the sustainable development and future prosperity of their countries and communities."

At Oil Search, we have had a longstanding commitment to transparency as it is an essential part of good corporate governance. It strengthens stakeholder relationships by building trust and understanding and holds us and other industry stakeholders to account.

We have disclosed information on our payments to government for the last 11 years and have continually sought ways to improve our disclosures through consultation with governments and independent auditors. We publish data by country, including a detailed breakdown of our socio-economic contribution in PNG and North America. We have also disclosed information about our tax strategy, including the role of subsidiaries, transfer pricing and our use of tax concessions and credits.

In 2020, our tax, royalty and other payments to governments in PNG, North America and Australia totalled US$114 million. Of this, 53% or US$60 million, was paid in PNG. Our effective tax rate in 2020 on core profits before abnormal items was 30.3%, compared to 30.4% in 2019 and remains comparable to a corporate tax rate of 30%. Our 2020 final effective tax rate was adjusted to 12.3% as a result of the tax effect of one-off exceptional items related to impairments and provisions.

Oil Search's contributions enable governments to provide critical services and infrastructure, and to invest in the sustainable development and future prosperity of their countries and communities.

In addition, our investment creates local employment, supplier and contractor opportunities, and returns for investors. In 2020, our socio-economic contribution in PNG and the USA was US$895 million, with our USA contribution almost twice that of 2019 as we continue to invest in the region as our projects develop. This includes US$25 million directed at community investment through contributions to the Oil Search Foundation and other initiatives within local communities.

We are continually seeking to improve our reporting and welcome feedback on this report [e-mail].

Peter Fredricson

Chief Financial Officer

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Total paid to governments

Payments to governments (US$ Million)	2020
Papua New Guinea	61
United States of America	23
Australia	30
Total payments to governments	114

Total socio-economic contribution

Socio-economic contribution in PNG and the USA (US$ Million)	2020
Total paid to governments	84
Total paid to suppliers and contractors	672
Total community investment	25
Total paid to shareholders	1
Total paid to employees	113
Total socio-economic contribution	895

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