Corporate Governance and Ethics in Oil Search Limited

The report examines the corporate governance practices and ethical considerations in Oil Search Limited, a prominent oil and gas company listed on the Australian Securities Exchange. It discusses the company's introduction, orientation of the board, legitimacy theory, and references.

Running head: GOVERNANCE AND ETHICS
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Governance and ethics

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Executive summary
The report is related to Corporate Governance with regard to Oil Search Limited which has
earned a reputation in the energy industry as far as the sector of oil and gas is concerned. It is
listed on the Australian Securities Exchange. The ethical aspect has also been taken into
consideration accordingly as far as Oil Search Limited is concerned.

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Table of Contents
Introduction of the company......................................................................................................4
Corporate Governance...............................................................................................................4
Orientation of the Board.............................................................................................................5
Legitimacy theory......................................................................................................................7
References..................................................................................................................................8

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Introduction of the company
The company is for the case study is Oil Search Limited. It is under the ambit of the
energy industry. It is the largest oil and gas company incorporated and headquartered in
Papua New Guinea and has been listed in the official list of companies of the Australian
Securities Exchange. It has emerged as a multinational company in terms of oil and gas
thereby having its operations in Yemen, Egypt, Libya and Iraq taking account of the
prevalence of oil fields in abundance in these countries. Since its inception, it has carved a
niche of itself in the energy industry thereby becoming the biggest oil and gas company of
Papua New Guinea thereby investing heavily in the oil and gas industry of Papua New
Guinea. In the recent past, it has also engaged in activities related to sustainable development
by the virtue of the setting up of the Oil Search Foundation. It implies the relief operations in
order to be responsive towards major calamities and natural disasters in order to make sure
that the people affected by such natural disasters are not displaced. Oil Search Limited has
driven the economy of Papua New Guinea to a considerable level as far as the transformation
of the lifestyles of people is concerned. The project related to Liquefied Natural Gas has been
recently undertaken by Oil Search Limited as far as Papua New Guinea is concerned. The
mission of imply that proper Oil Search Limited is to imply that proper returns are generated
as far as the comprehensive solution to the shareholders are concerned. Such returns are to be
qualitative in nature as far as the production and exploration of oil and gas are concerned. It is
also committed towards leadership in an incredible manner as far as the welfare of the
employees and contractors are concerned. It also encourages creativity with regard to the
achievement of its goals and objectives in the desired manner. It is also responsible for the
actions undertaken and the subsequent results of the actions. It also encourages the
management of diversity at the workplace taking into consideration the different cultural
backgrounds of people. It also engages in collaborations by forging partnerships with other
firms, various communities and the government. It is also determined to undertake the
necessary steps and precautions in terms of improvement as far as the overall modus operandi
at the organisational level is concerned. Its strategy implies that it would optimize the
utilization of its assets in terms of oil and gas by the operations in a proper and appropriate
manner thereby leading to the prevention of the misuse of these assets to a certain extent as
far as the concept of economic viability is concerned. It also encourages investment to a
huge level thereby leading to the rewarding of the shareholders in the desired manner as far

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as liquidity and financial management in an effective and efficient manner is concerned
thereby elucidating upon the strategy in the desired manner as far as the meeting of goals and
objectives are concerned.
Corporate Governance
Oil Search Limited is geared towards the application of the practices related to
Corporate Governance at a huge level. The investors are helped in an effective manner with
respect to the making of the correct decisions. The Oil Search Board comprises of the
chairperson along with one executive director and eight non-executive directors. The non-
executive directors would be known as independent directors. The basis of the election of the
chairperson would imply that such a person is not only an independent director but also
should not have acted as a managing director for Oil Search Limited previously. As a result,
the chairperson for Oil Search Limited is an independent director. There are no independent
members of the Oil Search Board. As implied by the annual report of Oil Search Limited, the
chairperson has stated that Oil Search Limited has increased its profits to a certain extent
form the previous year thereby generating an amount of three hundred and forty one million
US Dollars. It has also attracted a cash flow of a skyrocketing amount of eight hundred and
fifty five million US Dollars as a result of the prices of oil and Liquefied Natural Gas to a
significant level as reported by the chairperson Richard Lee. The chairperson has also stated
the unfortunate event related to the earthquake occurred in February 2018 at the Highlands of
Papua New Guinea and the safety measures it undertook in the desired manner. The
managing Director of Oil Search Limited Peter Botten has reported that the work hours and
productivity decreased during 2018 as implied by the annual report due to the earthquake at
the Highlands of Papua New Guinea in order to imply that the safety and security of the staff
of Oil Search Limited is of utmost priority (Oil Search 2019 a). The approach relating to
remuneration involves fairness as implied by the remuneration report of the Oil Search
Limited. Such a remuneration report has been formulated in compliance with Section 300A
of the Corporations Act of 2001 as far as the remuneration for the directors and executives
are concerned. It is also purported to meet the standards of the companies listed under the
Australian Securities Exchange (Oil Search 2019 b). The rewarding of the executives and the
employees of Oil Search Limited is also taken into consideration in terms of the remuneration
to be disbursed. It is imperative that the priorities for the Oil Search Limited on an immediate
basis imply the striving towards the growth and progress in a rapid manner along with the

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well-being of the staff in the desired manner in addition to motivating them to deliver
incredible performance thereby incentivising them in a proper and appropriate manner. It
also emphasises upon the health and safety of the staff taking account of the evacuation of the
staff as a result of the earthquake. It is committed to imply the aspect of fairness in terms of
remuneration as per the level of the contribution of the employees.
Orientation of the Board
As observed form the annual report, the Oil Search Board is committed towards the
progress and growth in the future in a rapid manner in the desired level as far as emerging as
a pioneer in the energy industry is concerned. It plans to make immense contribution to the
oil and gas industry at the global level. It is also geared towards the making of profits and
revenues to a huge level as far as further investment with regard to progress and development
is concerned. It is also intended to carve a niche of itself in the oil and gas industry in the
manner concerned. The contingency theory would be handy for Oil Search Limited as far as
the responding to the situation in the desired manner is concerned in order to ensure that the
necessary steps and measures are undertaken on an immediate basis as far as the
responsiveness to the situation is concerned. Such an aspect is exemplified by the rescue
operations undertaken by the Oil Search Limited during the occurrence of the earthquake at
the Highlands of Papua New Guinea in February 2018. As a result, it is imperative that he
most likely orientation of the Oil Search Board is the meeting of goals and objectives in a
strategic manner. It also implies the aspect related to the improvements in terms of safety of
the staff in an effective and efficient manner. It also implies the policy relating to
sustainability as far as the protection of environment is concerned. The remuneration for the
work undertaken is also paid duly to the staff in the desired manner along with the aspect
related to promotions and increments. As a result, it has constituted a Health, Safety and
Sustainability Committee to delve into the concerned matters. The contingency theory also
implies the aspect of leadership on part of the Oil Search Board as far as the motivation of the
staff to deliver incredible performance is concerned with reference to the meeting of the
demands of the situation in the desired manner as far as the favourable outcomes are
concerned. It would help Oil Search Limited to attract more and more employees accordingly
(Alexander, 2017). The profits have also increased from 2017. It is inferred that the
satisfaction of the employees is of utmost importance as far as their paid leaves are
concerned. It also plans to expand itself in Alaska by the virtue of buying oil at a high quality

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in the desired manner as far as exploration is concerned. As implied by the annual report, it
has also purchased a portfolio of oil assts prevalent in the North Slope of Alaska in the
desired manner (Steinbach et al., 2017). It is also involved in the activities related to drilling
at regular periods as far as oilfields are concerned. It is also oriented to protect human rights
and civil liberties at the global level. It is also in compliance with the Modern Slavery Act of
2018 of Australia with regard to the rights of the employees.
Additionally, the theory related to ethics is also applicable to the modus operandi of
the Oil Search Limited taking account of the clearance of the allegations made against the
Government of Papua New Guinea by the Union Bank of Switzerland on the matter relating
to loan thereby implying that there is no involvement of Oil Search Limited with regard to the
loan. It has also been observed that there has been no major controversy for Oil Search
Limited in terms of being involved in conduct which are misleading or deceptive in nature as
implied by Section 18 of Australian Consumer Law which is laid out by Schedule 2 of the
Competition and Consumer Act of 2010. As a result, it does not encourage any kind of
activity which involves red herring. It is imperative that the Oil Search Limited is committed
to comply with the basic ethics in terms of conducting business as far as Corporate
Governance in the desired manner is concerned taking account of the theory of ethics. It also
implies the resolution of issues pertaining to ethical dilemmas in terms of the arriving of
decisions in a comprehensive manner as far as the overall modus operandi of the Oil Search
Limited. Additionally, there are certain principles with regard to the governance of Oil
Search Limited in an effective and efficient manner thereby resulting in the compliance with
ethics in an effective manner as implied by the annual report of 2018.
It is hereby observed that the theories as aforesaid have played a key role in terms of
the shaping up of the structure of Oil Search Limited in a proper and appropriate manner.
These theories also imply that the Oil Search Board has taken the appropriate steps and
initiatives for the well-being of the organisation as far as the modus operandi of the Oil
Search Limited in an incredible manner is concerned (Peels, 2016). The progress and
development of the Oil Search Limited can also be taken into consideration as a result of the
theories. The comprehensive solution to be provided to the stakeholders is also taken into
consideration as far as the initiatives of the Oil Search Board are concerned. It would help in
the Corporate Governance for Oil Search Board in an effective and efficient manner without
any kind of major hurdles or obstacles. The main objective of the Oil Search Board is to
ensure that the members of the Board discharge their duties in a diligent manner thereby

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leading to the desired results as far as the welfare of the employees are concerned in addition
to the well being of Oil Search Limited as an organisation (Menzel, 2016). It also implies the
expansion of Oil Search Limited at the global level in the desired manner thereby being able
to make its prevalence in the global market in the desired manner as far as the industry
relating to energy is concerned. It is also committed to the aspect related to health and safety.
Legitimacy theory
The legitimacy theory plays an important role in the addressing of the issues
pertaining to the rapidly changing environment. As a result, it is imperative that the aspect
relating to communications at the internal level of the organisation would be improved by the
application of the legitimacy theory in the desired manner. It would help in the reduction of
communication gaps to a massive level amongst the employees thereby enhancing the
improvements in terms if communication at the internal level. It would also result in the
disclosure of various kinds of information as far as the beneficial interests of Oil Search
Limited are concerned. It would help in the enhancement of corporate communication in an
incredible manner. It would also result in the communication of the information in terms of
Corporate Social Responsibility in a proper and appropriate manner as far as the initiatives to
be undertaken by the management of the Oil Search Limited is concerned thereby leading to
the circulation of the information of the policies and activities of Corporate Social
Responsibility on part of Oil Search Limited in a proper and appropriate manner without any
kind of major hindrances or obstacles. The issues relating to the communication at the
internal level would also be resolved in a timely manner by the application of the legitimacy
thereby leading to the fostering of amicable relationships amongst the employees of Oil
Search Limited as far as cohesion is concerned. It would also imply the benefit of the society
as far as the aspect related to community welfare by the virtue of Corporate Social
Responsibility is concerned. The legitimacy theory would also imply the providing of
information over the activities in terms of the initiatives to be undertaken for sustainable
development on part of Oil Search Limited as far as the protection of environment is
concerned. It would also imply the implementation of the formulated strategies by Oil
Search Limited as far as communication is concerned by the virtue of the disclosures of the
information pertaining to the strategy accordingly. The key thing in this aspect is the welfare
of the society as a whole. It would also imply the communication of the ethics to be followed
on part of Oil Search Limited as far as the activities relating to the conducting and

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undertaking of business are concerned (Hummel & Schlick, 2016). It would also help in the
validation of the policies of the Oil Search Limited as a result of the recording of the views of
the employees in the desired manner as far as the enhancement of the aspect pertaining to
communication is concerned. As a result, it is imperative that the legitimacy theory would
play an extremely vital role with regard to the growth and development of Oil Search Limited
as far as Corporate Governance is concerned.
Conclusion
It is observed that the aspect of ethics and Corporate Governance has been justified and
appropriate taking account of the scenario of Oil Search Limited in the desired manner. The
main objectives of the Oil Search Board have also been discussed and demonstrated as far as
its orientation is concerned. The structure and remuneration of the directors and executives
have also been explained and described in a proper and appropriate manner as far as the
constitution of Oil Search Board is concerned. The theories which are applicable have also
been taken into consideration.

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References
Alexander, E. (2017). After rationality: Towards a contingency theory for planning.
In Explorations in planning theory (pp. 45-64). 4th ed. Abingdon: Routledge.
Hummel, K., & Schlick, C. (2016). The relationship between sustainability performance and
sustainability disclosure–Reconciling voluntary disclosure theory and legitimacy
theory. Journal of Accounting and Public Policy, 35(5), 455-476.
Menzel, D. C. (2016). State of the art of empirical research on ethics and integrity in
governance. In Ethics in public management (pp. 24-54). 4th ed. Abingdon:
Routledge.
Oil Search, (2019 a). Board Committes. Corporate Governence. [online] Oil Search.
Retrieved from https://www.oilsearch.com/who-we-are/corporate-governance/board-
committees#Board%20and%20Board%20Committee%20charters
Oil Search, (2019 b) Annual Reports. Investors. [online] Oil Search. Retrieved from
Peels, R. (2016). Responsible belief: A theory in ethics and epistemology. 6th ed. Oxford:
Oxford University Press.
Steinbach, A. L., Holcomb, T. R., Holmes Jr, R. M., Devers, C. E., & Cannella Jr, A. A.
(2017). Top management team incentive heterogeneity, strategic investment behavior,
and performance: A contingency theory of incentive alignment. Strategic
Management Journal, 38(8), 1701-1720.