In both cases, the information gained during these appraisal campaigns significantly increased the likelihood of the Company moving to a full field development with the objective of achieving major new oil production in 2006.

Charles also briefed you regarding the Otway Basin in south east Australia where Woodside recently discovered two gas fields and signed a Heads of Agreement for the sale of its share to TXU Electricity Ltd. With a final investment decision now due in 2004, the supply of 30 petajoules per annum from the Otway gas assets is intended to commence in 2006.

In Algeria, the Ohanet gas and liquids stripping development remains on schedule and on budget, with project progress of 94% at year end 2002. Ohanet will provide Woodside's first overseas revenue stream, with first production forecast this year.

The Greater Sunrise gas project in the Timor Sea did not make the progress that we had hoped for and has not yet secured gas customers. Nonetheless, a major review was undertaken of alternative supply and development options including to the domestic market in the Northern Territory and beyond, and as LNG for export using the new Floating LNG technology. The conclusion was that sales into the domestic market cannot be made profitably in the forseeable future. However the processing and sale of gas as LNG is commercially viable for Asian markets or for a mix of Asian and US markets. The project received greater certainty last month through ratification of the Timor Sea Treaty and the signing of the International Unitisation Agreement by the Australian and Timor-Leste Governments.

The final category of 2002 activity, Horizon 3, relates to growing reserves and creating long term business opportunities.

During 2002, Woodside grew its hydrocarbon reserves for the seventh consecutive year. After replacing annual production of 64.2 million barrels of oil equivalent, Proved Reserves were increased by 5.8% to 977 million barrels of oil equivalent and Probable Reserves increased by 7.4% to 1,304 million barrels of oil equivalent. This resulted in a Reserves Replacement Ratio of 187% at the Probable level on a 3-year rolling average basis.

In contrast to most of our peers, Woodside's reserve increases came from the exploration, appraisal and development of hydrocarbons, rather than through the acquisition of reserves. This is reinforced by our low finding cost of $1.37 Australian per barrel of oil equivalent.

The exploration programme in 2002 saw two significant domestic oil discoveries in the Carnarvon Basin of offshore Western Australia at Norfolk-1 and Exeter-1, plus a significant Mauritanian oil and gas discovery at Banda-1. In addition in 2002, Woodside lifted its international exposure with farm-ins entered into in the Canary Islands, Algeria and in the Gulf of Mexico.

Gas marketing efforts to commercialise our longer term reserves have been ongoing. I have already mentioned the marketing activities of the Greater Sunrise gas field and we have also been involved in discussions regarding our Blacktip and Browse Basin gas.

STRATEGY

Having discussed our 2002 operational performance, I would now like to outline our strategy for future growth.

HORIZON 1 Firstly, Horizon 1 will involve the continued optimisation of production and profitability, particularly during the next three years when production from existing assets is expected to decline. This will be achieved by concentrating on cost efficiency, detailed production management or "barrel chasing and pursuing opportunities that have a short lead time from discovery to production.

A Profitability Enhancement Programme (PEP) was launched at the end of 2002 with the objective of achieving substantial cost and capital savings through working smarter and with greater cost discipline. We are focusing on eradicating waste from the organisation and creating a permanent culture of cost consciousness. Specific targets for PEP will be announced within the next few weeks.

HORIZON 2

In Horizon 2, we have three major projects to progress towards their final investment decisions, all of which are currently planned for 2004. These are the development of at least two oil fields in the Enfield area, the Chinguetti oil field in Mauritania and development of the Otway gas discoveries. On the basis that activities move ahead as planned, new production from Enfield, Otway and Chinguetti will come on-stream in 2006.

HORIZON 3

The third and longer-term Horizon 3 seeks to replace reserves and replenish the long-term growth portfolio. This will be facilitated by aggressive marketing of uncommitted gas reserves and pursuing exploration in the Companys four current focus areas of Australia, West Africa, North Africa and the USA. Over time, a greater emphasis is expected in the United States. The Company will continue to search for one or two additional areas where prospectivity, country risk and commercial terms offer attractive exploration prospects and the opportunity to build a long term business.

Our major exploration programme for 2003 will include at least 18 planned exploration wells within a total budget of A$356 million. Of the 18 wells planned, 9 are scheduled for Australia, 2 in West Africa, 6 in the Gulf of Mexico Shelf and 1 in the Gulf of Mexico Deepwater. Our first success this year was on the domestic front with Stybarrow-1, which intersected a 23 metre gross oil column just 14 kilometres west of Enfield in the Carnarvon Basin of offshore Western Australia. Woodside is a 50% joint venture partner with BHP Petroleum which operates the Stybarrow permit.

Our interest in the United States and in the Gulf of Mexico in particular is critical to balancing the risk in our long term portfolio. Woodside's entry into the region provides access to deep markets, with short discovery-to-production cycles, significant remaining prospectivity, low country risk and one of the most favourable fiscal regimes.

Earlier this year, to balance our deep water Gulf of Mexico activities, Woodside and Pioneer Natural Resources Company of the United States agreed to a joint two-year, 8 well campaign over the shallow water Texas Shelf region. The well programme has a particular focus on gas with the potential for early tie back.

I would personally like to thank all staff for their hard work and dedication to ensure that Woodside creates value for its shareholders. In particular, I note that one of our most senior and long-standing executives, Chris Cronin, will be retiring this year. He has made a key contribution to Woodside in the 23 years he has been with the Company. On behalf of Woodside and its shareholders, I wish Chris a happy retirement.