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Oil Search taps Wulff as CEO Botten to retire

Oil Search's board has selected leading internal candidate Keiran Wulff to replace longstanding managing director Peter Botten, kicking off a lengthy transition process carefully designed not to add to the external uncertainty affecting the oil and gas producer since the change of government in Papua New Guinea.

Dr Wulff, who was first recruited to Oil Search in 1993, will take over the role on February 25 next year when Mr Botten, who has led the company for 25 years, steps down from the board.

Chairman Rick Lee foreshadowed the upheaval in leadership in May, saying the succession plan for Mr Botten was "well advanced".

The date of Mr Botten's retirement from Oil Search has been a source of market speculation for several years, with analysts pointing to the difficulty of duplicating his close links in PNG that are so important for the $11.1 billion company.

Some had even suggested that a change in leadership could leave it vulnerable to a takeover, especially after a softening in the share price earlier this year as political changes in PNG delayed progress on a critical $US14 billion ($20.7 billion) LNG expansion.

But speaking to The Australian Financial Review ahead of the formal announcement of his appointment as CEO designate, Dr Wulff rejected any suggestion that Oil Search was vulnerable, pointing to the managed transition process that will see Mr Botten remain with the company until he retires in August 2020.

"This process with Peter has been planned for a long period of time," he said. "Peter has been such a strong leader, we've made sure that we're not just overnight going to be in a situation where there's a vacuum and there's certainly not."

"There's never a good time for a leader of 25 years to leave and it's just a matter of making sure the company is well prepared when it does occur."

Still, some in the market immediately voiced doubts whether the company is indeed prepared given Mr Botten's critical role as the leader of company strategy and internal organisation as well as political and market engagement.

"Given Botten's cornerstone role at Oil Search he cannot be simply replaced, and we have doubts whether Oil Search is functionally prepared for this departure," said Credit Suisse energy analyst Saul Kavonic.

"Botten is a legend of the region's LNG industry and cannot be easily replaced after a spectacular 25-year innings."

Shares in Oil Search dipped as much as 2.1 per cent in early trading and were down 2 per cent at $7.175 about 20 minutes into the session.

Dr Wulff, who currently leads Oil Search's operation in Alaska, will keep those responsibilities until mid-December, taking the company's important oil project there into the engineering and design phase.

Success under Botten's leadership

Mr Botten, among the three longest standing chief executives of ASX-listed companies, has taken Oil Search from a $250 million explorer into the big league, primarily through its stake in the ExxonMobil-led PNG LNG venture, which started production in 2014.

Should the next phase of expansion in PNG go ahead as planned, plus the Pikka oil project in Alaska, Oil Search is set to more than double its production base again over the next five years.

"Under his leadership, Oil Search has grown from a small exploration and production company to a regionally significant oil, gas and LNG producer and exporter," Mr Lee said on Tuesday.

"Peter is recognised as one of the world's most successful corporate executives, as well as a leader in environmental, social governance and corporate social responsibility."

Mr Lee said Mr Botten had decided, with full support from the board, that now was the right time to transition the leadership as Oil Search starts on its next phase of growth.

He said that after an extensive internal and external search process, the board had agreed unanimously that Dr Wulff was the best person to succeed Mr Botten, "with the necessary experience, leadership skills and vision to take Oil Search into the future".

Wulff's remuneration

Dr Wulff said the political upheaval in PNG and the public and political concerns over the UBS loan to the government for the purchase of Oil Search shares had "zero" impact on the transition process.

"It's been a long planned process that the board has gone through and those activities or circumstances have had zero impact and that’s categorical," he said.

A geologist by training, Dr Wulff worked at Oil Search from 1993 until 2008, before leaving for roles in Australia to be closer to his young family. That included managing director of Western Australian junior explorer and producer Buru Energy.

He rejoined Oil Search in 2015, taking charge of the cost and efficiency drive after the crash in oil prices, and leading negotiations that saw Oil Search enter the Papua LNG project, now led by French major Total.

Dr Wulff will receive fixed pay of $1.7 million plus short-term and long-term incentives and is on an ongoing contract with no fixed term.

That compares with Mr Botten's fixed salary of $2.374 million, which will continue until his retirement date, when he will receive six months' pay plus accrued leave. He is subject to a non-compete clause until August 2021 in return for a further $2.374 million over those 12 months.

Mr Botten will remain as chairman of the Oil Search Foundation and of the Hela Provincial Health Authority, positions that are pro bono.

Dr Wulff will hand over leadership of the Alaskan business to the unit's current chief operating officer, Bruce Dingeman, in December.

Source: https://www.afr.com/companies/energy/oil-search-taps-wulff-as-longstanding-ceo-botten-to-retire-20190930-p52w87

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