Woodside Petroleum Ltd|Financial Statements 123
D.4 Provisions Restoration
benefits Other Total
USm USm USm USm
Year ended 31 December 2018
At 1 January 2018    
Changeinprovision  () () ()
discount  - - 
Carrying amount at 31
December 2018    
Current    
Non-current   - 
Net carrying amount    
Year ended 31 December 2017
At 1 January 2017    
Change in provision   () ()
Unwinding of present value
discount  - - 
Carrying amount at 31
December 2017    
Current    
Non-current    
Net carrying amount    
Recognition and measurement
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
Restoration of operating locations
Provision is made for the obligation to restore operating locations.
The provision is first recognised in the period in which the
obligation arises. The nature of restoration activities includes the
removal of facilities, abandonment of wells and restoration of
aected areas.
Restoration provisions are updated annually, with the
corresponding movement recognised against the related
exploration and evaluation assets or oil and gas properties.
Over time, the liability is increased for the change in the present
value based on a pre-tax discount rate appropriate to the risks
inherent in the liability. The unwinding of the discount is recorded
as an accretion charge within finance costs. The carrying amount
capitalised in oil and gas properties is depreciated over the useful
life of the related asset (refer to Note B.3).
Costs incurred that relate to an existing condition caused
by past operations and do not have a future economic benefit
are expensed.
Employee benefits
Provision is made for employee benefits accumulated as a result
of employees rendering services up to the end of the reporting
period. These benefits include wages, salaries, annual leave and
long service leave.
Liabilities in respect of employees’ services rendered that are not
expected to be wholly settled within one year after the end of
the period in which the employees render the related services are
recognised as long-term employee benefits.
These liabilities are measured at the present value of the
estimated future cash outflow to be made to the employees using
the projected unit credit method. Liabilities expected to be wholly
settled within one year after the end of the period in which the
employees render the related services are classified as short-term
benefits and are measured at the amount due to be paid.
for the year ended 31 December 2018
Key estimates and judgements
(a) Restoration obligations
The Group estimates the future removal costs of oshore oil and gas
platforms, production facilities, wells and pipelines at dierent stages
of the development and construction of assets or facilities. In most
instances, removal of assets occurs many years into the future.
This requires judgemental assumptions regarding removal date,
future environmental legislation, the extent of reclamation activities
required, the engineering methodology for estimating cost, future
removal technologies in determining the removal cost, and liability
specific discount rates to determine the present value of these cash
flows. The proportion of the non-current balance not expected to be
settled within 15 years is 58% (2017: 63%).
(b) Long service leave
Long service leave is measured at the present value of benefits
accumulated up to the end of the reporting period. The liability is
discounted using an appropriate discount rate. Management uses
judgement to determine key assumptions used in the calculation
including future increases in salaries and wages, future on-cost rates
and future settlement dates of employees’ departures.
(c) Legal case outcomes
Provisions for legal cases are measured at the present value of the
amount expected to settle the claim. Management is required to
use judgement when assessing the likely outcome of legal cases,
estimating the risked amount and whether a provision or contingent
liability should be recognised.