Slide 1: Santos reports record free cash flow and underlying earnings, and higher final dividend
ASX / Media Release 16 February 2022 Santos reports record free cash flow and underlying earnings, and higher final dividend Full-year (US$million) 2021 2020 Change Production (mmboe) 92.1 89.0 3% Sales volume (mmboe) 104.2 107.1 -3% Product sales revenue 4,713 3,387 39% EBITDAX1 2,805 1,898 48% Und
Slide 2: CEO comments and 2022 guidance
Santos Managing Director and Chief Executive Officer Kevin Gallagher said Santos delivered record production, free cash flow and underlying earnings in 2021, as strong base business performance positioned the company to benefit from higher commodity prices. “The highlight of the year was the complet
Slide 3: 2022 Annual General Meeting
2022 Annual General Meeting The 2022 Annual General Meeting will be held on Tuesday 3 May 2022. The closing date for receipt of nominations from persons wishing to be considered for election as director is Thursday 24 February 2022. Live webcast A video presentation on the 2021 full-year results is
Slide 4: 2021 Full-year results
2021 Full-year results 16 February 2022
Slide 5: Disclaimer and important notice
Disclaimer and important notice This presentation contains forward looking statements that are subject to risk factors associated with the oil and gas industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which c
Slide 6: Merger has created a company of size and scale
Merger has created a company of size and scale Well-placed to fund sustainable growth, energy transition and deliver increased returns to shareholders Strong free cash generation $2.3 billion proforma free cash flow for the merged group1 Diversified portfolio with increased Merger added 416 mmboe in
Slide 7: 2021 Full-year results
2021 Full-year results Record sales revenue, free cash flow and underlying profit FREE CASH FLOW1 PROFIT AFTER TAX2 UNDERLYING PROFIT2 $1,504 112% 103% $658 284% $946 -60% 230% million million million SALES REVENUE EBITDAX FINAL DIVIDEND $4,713 39% $2,805 48% 8.5 70% million million US cents per sha
Slide 8: Cash generative base business through the cycle
Cash generative base business through the cycle Diversified, balanced portfolio that is well positioned to generate strong and sustainable free cash flows Free cash flow Oil price $million US$/bbl 2016 – 21 free cash flow >$5.2 billion1 FCF breakeven oil price (unhedged) 2,400 2,339 80 Average reali
Slide 9: Health, safety and environment
Health, safety and environment Our “Always Safe” value is at the centre of everything we do Injury frequency rates Loss of containment Number of injuries per million hours worked Number of Tier 1 and Tier 2 incidents 1.2 1.0 15 0.8 10 0.6 0.4 5 0.2 0.0 0 2017 2018 2019 2020 2021 2017 2018 2019 2020
Slide 10: Diversified reserve and resource position of 4.9 billion boe
Diversified reserve and resource position of 4.9 billion boe Diversified portfolio with increased interest in long-life, low-cost assets YE21 2C resources and 2P reserves mmboe 373 60 30 4.9 billion boe 2P plus 2C: 1,220 + 2P reserves increased by 835 mmboe before production 2C + Oil Search merger a
Slide 11: Energy markets
Energy markets Investment in affordable, reliable and lower emissions energy required to ensure demand is met Global Liquids Supply/Demand1 Oil price1 MMbbl/d US$/bbl Investment in new, lower emission oil and gas 110 100 supply is required to ensure energy supply 90 remains affordable and reliable d
Slide 12: Decarbonisation and carbon storage
Decarbonisation and carbon storage Santos’ three operated CCS hubs support the decarbonising of natural gas and enable the production of clean fuels including hydrogen and ammonia Santos Three-Hub Strategy Santos’ CCS projects offer a strategic competitive advantage enabling + Emission reductions fo
Slide 13: Our focus is to supply critical fuels more sustainably
Our focus is to supply critical fuels more sustainably Net-zero Scope 1 and 2 emissions target by 2040 Areas of focus Category Types of initiatives Improving efficiency across operated assets + Comprises a portfolio of >25 projects planned for 2022 Operational efficiency Avoid and minimise + Include
Slide 14: Portfolio optimisation
Portfolio optimisation Optimise portfolio to reduce gearing and conduct a review of the capital management framework including returns to shareholders Review capital Optimise portfolio Optimise balance sheet management framework Targeting $2-3 billion in asset Aim for less than 25% gearing + Returns
Slide 15: Oil Search integration synergies
Oil Search integration synergies On track to deliver $90-115 million per annum of integration synergies Oil Search integration synergies $30 million initial synergies (run-rate) captured1 + $90-115 million annual run-rate (pre-tax)1 through: + Set up integration team using capability from previous a
Slide 16: 2022 strategic priorities
2022 strategic priorities 1 Maximise free cash. Sensitivity ~$450m for every $10 above target FCF BE of <$25/bbl 2 Deliver integration and merger synergies target of $90-115 million 3 Optimise portfolio, target $2-3 billion in asset sale proceeds 4 Review capital management framework 5 Continue to e
Slide 17: Finance and Capital Management
Finance and Capital Management Anthea McKinnell Chief Financial Officer 14
Slide 18: Financial discipline
Financial discipline Strong base business and disciplined approach to capital allocation + Generated $1.5 billion free cash flow in 2021 Strong, cash-generative base + Proforma1 cash flow of merged group for 2021 was $2.3 billion facilitating final dividend business of 8.5 cents per share, 70% frank
Slide 19: 2021 Full-year financial snapshot
2021 Full-year financial snapshot Strong base business delivered $1.5 billion of free cash flow and record underlying profit. Reported results include Oil Search from 11 December 2021 $ million 2021 2020 Change Product sales revenue 4,713 3,387 39% EBITDAX 2,805 1,898 48% Underlying profit1 946 287
Slide 20: Strong free cash flow generation
Strong free cash flow generation On a proforma basis, the merged company delivered more than $2.3 billion free cash flow Operating cash flow Investing cash flow1 Free cash flow1 Oil price $ million $ million $ million US$/bbl 3,209 (908) Average realised oil price (870) 2,400 2,339 80 (102) 2,200 93
Slide 21: Underlying earnings
Underlying earnings Record sales revenue, EBITDAX and underlying profit Product sales revenue EBITDAX Underlying profit1 $ million $ million $ million Average realised oil price 2,805 946 5,000 4,713 80 4,500 2,457 70 4,033 4,000 2,160 727 719 3,660 60 3,500 3,387 1,898 3,100 50 3,000 2,594 1,428 2,
Slide 22: Production and sales volumes
Production and sales volumes Record production in 2021. 2022 guidance 100-110 mmboe and sales volumes 110-120 mmboe Production volume Sales volume mmboe mmboe +50% ~110-120 120 ~100-110 120 107.1 104.2 100 89.0 92.1 100 94.5 84.1 83.4 78.3 80 75.5 80 61.6 59.5 58.9 60 60 40 40 20 20 0 0 2016 2017 20
Slide 23: Production costs
Production costs Lower unit costs in 2021 despite COVID-19 impacts and unfavourable FX impacts Upstream unit production costs1 $/boe + Unit production costs reduced by 3% to $7.76/boe + Sustained cost improvement and operating efficiencies 8.45 8.00-8.50 8.07 8.05 8.04 were offset by COVID-19 cost i
Slide 24: Upstream unit production costs
Upstream unit production costs Synergy cost reductions realised in Northern Australia. Partially offset by COVID-19 related costs and foreign exchange increases Total unit production cost Western Australia Northern Australia & Timor-Leste Disciplined $/boe production cost $/boe production cost $/boe
Slide 25: Cash generative Operating Model continues to drive value
Cash generative Operating Model continues to drive value Diversified portfolio of assets delivering strong margins. Increased exposure to PNG LNG following merger 2021 Full year results summary1 Cooper Qld Nth Aust + Group EBITDAX margin increased to 58% due PNG2 WA Santos Basin & NSW & T-L3 to high
Slide 26: Capital expenditure - Sustaining
Capital expenditure - Sustaining Sustaining and restoration capex self-funded within the disciplined operating model and included in forecast free cash flow breakeven of <$25/bbl + Increased sustaining capex in 2022 primarily due to higher interest in PNG LNG and Sustaining capex PNG operated assets
Slide 27: Capital expenditure – Major Growth Projects
Capital expenditure – Major Growth Projects 2022 Major projects capex funded from free cash flow at an average oil price of $65/bbl + Major projects ~$1,150-$1,300 million assumes current equity interests in all projects Forecast 2022 free cash flow1 and major projects capex + Unsanctioned projects
Slide 28: Debt and liquidity at 31 December 2021
Debt and liquidity at 31 December 2021 Gearing reduced to 27.5%. Net debt increased due to Oil Search merger Net debt Gearing Cash, debt and undrawn debt $million % facilities at 31 December 20211 5,500 40 $million + Gearing 27.5% 5,157 5,000 4,749 Cash + Net debt $5,157 million (includes 35 2,976 D
Slide 29: Summary
Summary Disciplined low-cost operating model ensures we can sustain our base business and remain resilient through the cycle + Targeting free cash flow breakeven oil price <$25/bbl in 2022 + Forecast free cash flow for 2022 post hedging is >$2 billion at $70/bbl oil price Disciplined approach + 2022
Slide 30: Growth Projects and Asset Performance
Growth Projects and Asset Performance 27
Slide 31: Barossa progressing on budget and schedule
Barossa progressing on budget and schedule Barossa project progressing as planned Barossa development + Project 25 per cent complete and progressing on budget and schedule + FPSO hull, topsides, and turret all under construction in Korea, Singapore, and Indonesia respectively + Subsea hardware manuf
Slide 32: Moomba CCS provides step change in emission reduction
Moomba CCS provides step change in emission reduction FID taken in November on one of the largest and lowest-cost CCS projects, with first injection expected in 2024 Low-cost CCS project due to Existing CO2 separation units + Existing separation equipment delivering high purity CO2 + Existing wells
Slide 33: PNG Growth
PNG Growth Sequential development planned for Papua LNG and P’nyang Papua LNG P’nyang + Significant activity during 2021 in preparation for FEED-entry in 2022 + Fiscal Stability Agreement executed in 2021 + Retention Licence extended a further 5 years + Technical work underway focusing on facilities
Slide 34: Dorado
Dorado FEED continues targeting FID-ready mid-2022 Phase 1 liquids development + Estimated gross capital cost of ~$2 billion1 + Low CO2 (~1.5%) and high-quality fluid expected to earn a premium to regional pricing benchmarks + Entered Stage 2 Assessment Phase of Offshore Project Proposal (OPP) + Pro
Slide 35: Pikka Phase 1
For Internal Use only Pikka Phase 1 Targeting FID-ready by mid year. Low GHG intensity first phase of Pikka development Phase 1 nearing completion of FEED activities and Indicative production profile for Pikka Phase 1 targeting FID-ready by mid year kbbl/d 100 + First step in developing world-class
Slide 36: Creating value from midstream infrastructure portfolio
Creating value from midstream infrastructure portfolio Unique portfolio of strategic midstream infrastructure assets generating stable and material EBITDA of ~$370 million per annum, excluding GLNG MIDSTREAM INFRASTRUCTURE ASSETS Moomba Port Bonython Darwin LNG Varanus Island Devil Creek Annual capa
Slide 37: Papua New Guinea producing assets
Papua New Guinea producing assets Merger increased equity in Tier 1 PNG LNG project and added operatorship of PNG’s oil fields + PNG LNG continues to perform consistently with 8.4 million tonnes of LNG and 110 cargoes loaded during 2021 + PNG EBITDAX margin improved to 84% in 2021 PNG LNG + 2021 uni
Slide 38: Offshore conventional business
Offshore conventional business Bayu-Undan approaching end of field life in 2022-23 with Barossa as backfill for Darwin LNG from 1H 2025. Western Australia’s largest domestic gas supplier + Western Australia EBITDAX margin improved to 77% Strong cash + WA unit production cost at $6.38 per boe margin,
Slide 39: Growing production and improving efficiency
Growing production and improving efficiency Applying Santos’ disciplined low cost operating model has delivered significant cost reductions Maintaining strong production Western Australia production1 Stable unit production costs Western Australia upstream mmboe production cost + Western Australia’s
Slide 40: Integrated onshore business with market optionality
Integrated onshore business with market optionality Onshore assets connected to domestic markets and long-term Asian demand for LNG with strong growth options + Growth self-funded within the low cost disciplined Operating Model Australia’s lowest cost + Driving capital efficiency to unlock additiona
Slide 41: Cooper Basin
Cooper Basin Operating model is delivering reserve replacement, cost discipline and self-funded growth Lower production Cooper Basin production Targeting >100% 2P RRR Reserves replacement ratio (RRR) mmboe % three year rolling average + Production impacted by lower + Sustained 2P reserves drilling a
Slide 42: Strong GLNG upstream production and cost out
Strong GLNG upstream production and cost out Record upstream GLNG production driven by strong ramp at Roma and Arcadia Strong gas production GLNG sales gas production Driving down operating cost Mean time between failure TJ/d (gross) by increasing production Years (Roma) + Strong upstream production
Slide 43: Appendix
Appendix Santos
Slide 44: Financial performance
Financial performance EBITDAX up 48% to $2,805 million. Underlying profit up 230% to $946 million $million 2021 2020 Total revenue 4,837 3,512 + Total revenue up 38% due to higher realised prices across all Production costs (715) (716) products Other operating costs (347) (274) + Average realised oi
Slide 45: Sales revenue
Sales revenue Higher realised prices across all products Average realised crude oil price Average realised LNG price $million 2021 2020 Variance US$/bbl US$/mmBtu +60% +45% Sales Revenue (incl. third party) 76.11 9.25 Gas, ethane and liquefied gas 3,464 2,505 38% Crude oil 688 531 30% 6.39 47.70 Con
Slide 46: Free cash flow
Free cash flow Calculation of 2021 full-year free cash flow $million 2021 Operating cash flows 2,272 Deduct Investing cash flows (137) Deduct Net acquisitions and disposals (1,008) Add Major growth capex 524 Deduct Lease liability payments (147) Free cash flow 1,504 Lease liability payments are trea
Slide 47: Significant items
Significant items Reconciliation of full-year net profit/(loss) to underlying profit $million 2021 2020 Net profit/(loss) after tax 658 (357) Add/(deduct) significant items after tax Impairment losses 6 653 Net gains on asset sales (44) - Fair value losses/(gains) on hedges 173 (30) One-off acquisit
Slide 48: Drawn debt maturity profile
Drawn debt maturity profile No significant near-term debt maturities until 2024, excluding PNG LNG project finance which is funded from project cash flows Drawn debt maturity profile1 Breakdown of drawn Drawn debt maturity profile excluding PNG debt facilities1 LNG project finance1 $million % $milli
Slide 49: Liquidity and net debt as at 31 December 2021
Liquidity and net debt as at 31 December 2021 Net debt $5,157 million. Liquidity of $5,611 million Liquidity ($million) 31 Dec 2021 31 Dec 2020 Cash 2,976 1,319 Undrawn bilateral bank debt facilities 2,635 1,870 Total liquidity 5,611 3,189 Debt ($million) Export credit agency supported loan faciliti
Slide 50: 2022 guidance
2022 guidance 2022 guidance item Guidance Production (mmboe) 100-110 mmboe Sales volumes (mmboe) 110-120 mmboe Capital expenditure – base including restoration ($m) ~1,100 million Capital expenditure – major projects ($m) ~1,150-1,300 million Capital expenditure – contingent major projects, subject
Slide 51: 2021 Full-year segment results summary
2021 Full-year segment results summary Northern Corporate Queensland Western US$million Cooper Basin PNG Australia & explor’n & Total & NSW Australia Timor-Leste elimins Revenue 1,000 973 736 903 1,105 120 4,837 Production costs (143) (79) (67) (234) (215) 23 (715) Other operating costs (101) (98) (
Slide 52: 2020 Full-year segment results summary
2020 Full-year segment results summary Northern Corporate Queensland Western US$million Cooper Basin PNG Australia & explor’n & Total & NSW Australia Timor-Leste elimins Revenue 919 793 451 466 742 141 3,512 Production costs (131) (76) (56) (284) (198) 29 (716) Other operating costs (60) (78) (41) -
Slide 53: Oil Search acquisition accounting
Oil Search acquisition accounting Purchase price allocation Income statement + Under AASB 3 Business Combinations, all assets acquired and liabilities assumed in Oil Search post- Santos a business combination are recognised at acquisition date fair value, known as Year-ended 31 Dec 2021 Consolidated
Slide 54: Oil price hedging and dividend franking
Oil price hedging and dividend franking Open oil price positions1 2022 Dividend franking Zero cost collars (barrels) 4,000,000 50 + Dividend franking account balance as at 31 Dec 2021: Average floor price ($/bbl) US$94 million Average ceiling price ($/bbl) 66.14 + 2021 final dividend will substantia