1. Australian American Chamber of Commerce Energy Conference Australian Oil & Gas Fiscal Regime Michael Anderson, Ernst & Young LLP 30 January 2014 – Houston

2. Page 2 Australian American Chamber of Commerce Energy Conference Australian tax landscape snapshot ► Corporate tax rate of 30%, proposed to be reduced to 28.5% from 1 July 2015 but with introduction of 1.5% parental leave levy ► 2011-12 fiscal year O&G directly contributed A$8.8bn of A$350bn tax revenue ► Australia imposes direct income tax and various indirect taxes, including: ► Goods and services tax (“GST”) ► Excise and customs duties ► Payroll tax (varies by state) and Fringe Benefits Tax taxes paid by employers ► Fringe benefits tax on noncash employee benefits ► Stamp Duty (varies by state) ► Specific O&G resource taxes, include: ► Petroleum Resource Rent Tax, recently expanded to include onshore projects ► State/Territory (non- Federal) based royalties ► Level of taxation in Australia as a proportion to GDP has moved in a relatively small range over the last two decades ► But corporate tax contribution has been slowly declining ► Tax-to-GDP ratio is low by international standards compared with other OECD countries (5 th lowest, USA 3 rd lowest)

3. Page 3 Australian American Chamber of Commerce Energy Conference Tax Policy ► Change in federal government from Labor to Coalition in September 2013 ► Coalition campaigned on improving business certainty in Government actions ► Maintaining electoral promises such as repeal of mineral resources rent tax and removal of carbon tax ► Release of its position regarding 96 unlegislated tax measures going back to 2001 ► Reducing / streamlining regulations that can act as a brake on investment ► Government sees the resources sector as an important contributor of total tax revenues to achieve Budget surplus in 4 years. The following measures seek to protect the revenue base ► Removal of immediate deduction for the acquisition cost of exploration assets to a deduction over 15 years or effective life ► Narrowing the interpretation of exploration expenditure ► R&D removal of benefit for greater than $20bil turnover ► Repeal loss carry back rules ► Specific reforms or measures to encourage investment include ► Removal of carbon tax ► Removal of mineral resource rent tax ► Exploration development incentive, but no movement to introduce flow through mining company

4. Page 4 Australian American Chamber of Commerce Energy Conference Australia developments and hot topics Exploration expenditure ► Proposed repeal of immediate deductions for petroleum titles first used for exploration ► Definition of exploration expenditure, particularly treatment of “feasibility” and front end engineering design (FEED) costs ► Recent case law (Esso Australia Resources, ZZGN) ► Draft ATO ruling regarding the “definition” of exploration for PRRT purposes ► Time writing and cost allocation systems Petroleum resource rent tax Other ► Amendment of TARP definition to bring in mining information and other non-asset, land linked intangible value drivers ► General anti avoidance – asset leasing structures ► Tax corporate governance

5. Page 5 Australian American Chamber of Commerce Energy Conference Australia developments and hot topics Base erosion profit shifting ► Introduction of transparency provisions publicly reporting taxpayer details ► Reductions to thin capitalization safe harbor limit and proposed foreign affiliate debt dumping rule ► Focus on what constitutes taxable activity ► New transfer pricing legislation implemented focusing on the arm’s-length conditions ► Increased transfer pricing enforcement activity by Australian Taxation Office (ATO) Transfer pricing Audit activity ► Resource sector, private equity and M&A activity have seen continued audit activity ► Active use by ATO of GAAR to attack perceived aggressive taxation arrangements ► ATO has used court proceedings to secure foreign controlled monies perceived at flight risk in tax disputes