Santos Limited · ASX:STO
Santos — Investor Day (November 2011)
62 slides from Santos's investor day presentation, Nov 10, 2011
Slide 1: 2011 Investor Seminar
For personal use only 2011 Investor Seminar 10 November 2011
Slide 2: Disclaimer and Important Notice
Disclaimer and Important Notice For personal use only 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 rang
Slide 3: Today's agenda
Today’s agenda For personal use only Introduction David Knox Corporate Strategy Peter Cleary Eastern Australia Business Unit James Baulderstone WA & NT Business Unit John Anderson Q&A followed by morning tea Asia Pacific Business Unit Martyn Eames GLNG Peter Cleary Q&A Exploration & Subsurface Trevo
Slide 4: A leading energy company in Australia and Asia
A leading energy company in Australia and Asia For personal use only Australia A leading domestic gas Fergana Basin producer for 50 years Phu Khanh Basin Bay of Bengal LNG Timor Sea Nam Con Son Basin Delivering a unique Bonaparte Basin South Sumatra portfolio from existing East Java Basin Papua New
Slide 5: Transformational growth pipeline
Transformational growth pipeline For personal use only Upside Likely Sanctioned Producing potential sanction Cooper Basin Cooper shale Offshore Victoria Reindeer / Amadeus Queensland CSG Fletcher/Finucane Devil Creek Zola John Brookes Australia Gunnedah Cooper infill Halyard/Spar Winchester Kipper C
Slide 6: Delivering material production growth
Delivering material production growth For personal use only Production growth to 80-90 mmboe by 2020 from sanctioned and likely sanction projects alone mmboe 90 Production (mmboe) 80 70 60 50 40 30 20 10 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Producing Sanctioned Likely sanction Chart i
Slide 7: Safety
Safety For personal use only A balanced focus on personnel and process safety Personnel Process safety safety Santos TRCFR performance Safety critical compliance long-term trend (Employees and contractors) Total recordable case frequency 100% rate (per million hours worked) 7 6 95% 5 4 90% 3 3.1 85%
Slide 8: Working with local landholders and communities
Working with local landholders and communities For personal use only Australia’s largest domestic gas producer, Santos has a 50-year track record of safe, sustainable operations We are committed to working with local landholders and contributing to communities We will work in partnership with agricu
Slide 9: Corporate Strategy
For personal use only Drilling rig and Chim Sáo wellhead platform, Vietnam Corporate Strategy Peter Cleary VP Strategy & Corporate Development 9
Slide 10: Santos vision and strategy
Santos vision and strategy For personal use only LNG markets LNG CHANNEL DOMESTIC CHANNEL Focused Strong Asian A leading Australian growth energy base company in Australia and Asia Strategic domestic gas positions in EA and WA 10
Slide 11: Strong Australian base
Strong Australian base For personal use only Santos presence in every major basin Bonaparte Darwin Proposed pipeline Browse Existing pipeline Santos assets Carnarvon NT Mt Isa Qld Amadeus WA Surat/Bowen Cooper Brisbane SA NSW Gunnedah Perth Pt Bonython Adelaide Sydney Canberra Vic Melbourne Gippslan
Slide 12: Strong demand for Australian gas
Strong demand for Australian gas For personal use only Demand set to quadruple by 2025 PJ/a 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 LNG exports Domestic gas demand 12 Source: Santos and Wood Mackenzie
Slide 13: Asia is the global growth engine
Asia is the global growth engine For personal use only 900 World primary energy 9 World population 180 World GDP* consumption 8 800 160 7 700 140 6 120 600 Quadrillions BTU BTU Billions of people Trillions US$ 5 500 Quadrillions 100 Asia Asia Asia 4 80 400 3 60 300 2 40 200 Rest of World Rest of Wor
Slide 14: Asia's distinct LNG demand groups
Asia’s distinct LNG demand groups For personal use only Established markets South Korea Japan 100 100 Growing markets 50 50 100 China 0 0 00 05 10 15 20 25 00 05 10 15 20 25 50 100 Taiwan 100 0 50 India 00 05 10 15 20 25 0 50 00 05 10 15 20 25 0 00 05 10 15 20 25 15 15 Vietnam Thailand 10 10 5 5 0 0
Slide 15: Asia Pacific LNG demand is strong
Asia Pacific LNG demand is strong For personal use only Asian demand for LNG to nearly double by 2025 mtpa 350 300 250 200 150 100 50 - 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Established Growing Emerging 15 Source: Wood Mackenzie, Santos view of emerging markets
Slide 16: Asian LNG pricing
Asian LNG pricing For personal use only Three distinct gas pricing structures for long-term LNG contracts; Asia to remain an oil-linked market Gas-on-gas market Oil-linked market Henry Hub NBP Oil Product JCC-linked Henry Hub 16
Slide 17: Australian LNG key to future supply
Australian LNG key to future supply For personal use only By 2020, a third of global LNG production could come from Australia 120 Bonaparte LNG 110 APLNG (T2) >100 mtpa Pluto expansion by 2020 100 Gorgon expansion LNG output by project (mtpa) Browse LNG 90 Arrow LNG 80 Ichthys LNG 70 Wheatstone LNG
Slide 18: Santos' unique LNG Portfolio
Santos’ unique LNG Portfolio For personal use only Darwin (Santos 11.5%) PNG (Santos 13.5%) Conventional gas supply First gas exports from PNG GLNG (Santos 30%) Bonaparte (Santos 40%) CSG-to-LNG Floating LNG 18
Slide 19: Santos equity LNG production
Santos equity LNG production For personal use only Santos equity LNG production fromGLNG T1 discovered resources existing mtpa 5 BLNG 4 GLNG T2 3 2 GLNG T1 1 Excludes PNG LNG expansion PNG LNG Darwin LNG 0 2010 2020 19
Slide 20: Santos' LNG customers and partners
Santos’ LNG customers and partners For personal use only PNG LNG Bonaparte LNG Darwin LNG GLNG 20
Slide 21: Transforming to oil-linked pricing
Transforming to oil-linked pricing For personal use only 70% of 1.4bn boe 2P reserves Asset base is transformed exposed to oil prices through sanctioned projects Cooper to GLNG Production (mmboe) 80 Oil-linked Legacy domgas NSW 70 CSG 60 EA legacy 50 domgas contracts 40 Asia LNG domgas 30 WA legacy
Slide 22: Eastern Australia Business Unit
For personal use only Kahlua pilot, Gunnedah Basin, Australia Eastern Australia Business Unit James Baulderstone VP Eastern Australia 22
Slide 23: Eastern Australia – capturing the future
Eastern Australia – capturing the future For personal use only High-growth Permanent structural shift in east coast gas demand causing market upward pressure on gas prices Resource Large, high quality reserve and resource base across captured Eastern Australia Operating Track record of reserve expan
Slide 24: East coast market dynamics have shifted
East coast market dynamics have shifted For personal use only A permanent structural shift in the east coast gas demand will cause higher gas prices and provide opportunity for commercialisation PJ/a East coast gas demand 4,000 3,500 3,000 2,500 2,000 Gas prices will trend 1,500 towards oil-linked 1
Slide 25: 10,600+ PJ of gas resources in eastern Australia
10,600+ PJ of gas resources in eastern Australia (YE2010) For personal use only Santos has a significant resource base with geographic and geological diversity, from which to build reserves and accelerate production SE Qld Amadeus Basin# (Non-GLNG)* 2P 123 2P 157 2C 121 2C 1,056 NSW CSG^ 2P 1,216 2C
Slide 26: Significant Cooper conventional gas resource potential
Significant Cooper conventional gas resource potential For personal use only Latest US drilling and completion techniques coupled with higher prices provide potential to produce a further 5,700 PJ of conventional gas Cooper conventional reserves/resources* (>16 Tcf original gas in place) 48% Multi-w
Slide 27: Cooper conventional – infill
Cooper conventional – infill For personal use only The Cooper Basin remains significantly under-drilled compared to North American experience… Cowralli (Cooper Basin) cross-section Multi-well pad drilling (50-100 acre spacing) Second well being drilled First well completed Cowralli cross-section dem
Slide 28: Leading the way on unconventional exploration
Leading the way on unconventional exploration For personal use only Targeting production and ~5,000 PJ resource by 2015 Prove gas content and Achieve gas flow Demonstrate 2P reserve recoverable volumes to surface commercial flows bookings 2004–2010 2011–2012 2012–2013 2013+ Acquired the Vertical wel
Slide 29: Cooper unconventional
Cooper unconventional For personal use only Numerous unconventional plays are being pursued with Santos having the only independently certified 2C shale and unconventional resource bookings in the Cooper Basin Moomba field Developed TOOL DARA conventional Resource potential* (PJ) Booked 2015 URG pla
Slide 30: NSW CSG
NSW CSG For personal use only Gunnedah Basin coals are world-class, with appraisal program confirming confidence and known resources in excess of 12,000 PJ NSW CSG industry Queensland Goondiwindi $1.5 billion already invested Over 1,000 potential new jobs PEL 6 Significant local gas production for t
Slide 31: Gunnedah is a world-class CSG resource
Gunnedah is a world-class CSG resource For personal use only Focus on demonstrating deliverability (current pilots >2.5 TJ/day), reserves build and finalise commercialisation path Excellent coal thickness PEL 238 total pilot production history (up to 90 metres) 4,000 9,000 Tintsfield Dewhurst 3,500
Slide 32: Santos has a proven operating capability
Santos has a proven operating capability For personal use only Resource to reserve Reliability and cost Technology conversion efficiencies utilisation Four years of continued Cooper Reliability focus reducing Pad drilling reducing gas 2P reserve build downtime and maintenance costs mob/demob times T
Slide 33: Major infrastructure is owned and operated
Major infrastructure is owned and operated For personal use only Owning and operating key infrastructure enables Santos to commercialise its resources and bring on production quickly Majority owner- Mt Isa operator position South 15 major satellite Australia facilities Gas storage facilities Brisban
Slide 34: Commercialisation options and flexibility
Commercialisation options and flexibility For personal use only Value created by leveraging portfolio scale to accelerate development and meet customer demand Dual channels to market provide ideal Existing pipeline commercialisation Santos assets flexibility, including gas swaps Mereenie Consolidate
Slide 35: Long-term licence to operate
Long-term licence to operate For personal use only Santos is committed to work collaboratively with land owners, local communities and governments to co-exist Operations affect only ~1% of the surface area, ensuring long- Co-existence term co-existence is achievable for the benefit of landholders an
Slide 36: Eastern Australia is capturing the future
Eastern Australia is capturing the future For personal use only Well positioned to capitalise on the changing market dynamics, ultimately leading to growing margins Today’s key themes Revenue and costs per barrel* Revenue $/boe High-growth 80 market 70 60 Resource captured 50 40 Operating capability
Slide 37: Western Australia & Northern Territory Business Unit
For personal use only Devil Creek gas plant, Western Australia Western Australia & Northern Territory Business Unit John Anderson 37 VP WA&NT
Slide 38: WA&NT – a material business
WA&NT – a material business For personal use only Strong growth market, linked to Asian resource demand WA domestic Supplying the domestic market from gas two gas hubs Strong growth options to be tested in 2012 Arrested decline in oil production Targeting material increase in new oil Carnarvon oil p
Slide 39: Strong domestic demand driven by resources
Strong domestic demand driven by resources For personal use only Mining sector growth significantly outpaces other sectors, underpinned by strong Asian demand for WA mineral exports PJ/a 500 450 400 34% 350 300 21% 250 31% 40% 200 150 100 30% 28% 50 9% 7% 0 2011 2012 2013 2014 2015 2016 2017 2018 20
Slide 40: Strategic position in two domestic gas hubs
Strategic position in two domestic gas hubs For personal use only Strong growth options exist to add to this unique portfolio in 2012 Varanus Island Halyard-Spar online in June 2011 Winchester Hurricane on budget and on schedule Reindeer Beam exploration well planned for Spar John Brookes Q2 2012 Va
Slide 41: Zola and Winchester drilling in 2012
Zola and Winchester drilling in 2012 For personal use only Zola >100m of net gas pay in excellent Winchester quality reservoir WA-323-P Multiple development options available Corvus - LNG (multiple options) - Domestic gas John Brookes New high resolution 3D acquired Indian Ocean Follow-up appraisal
Slide 42: Carnarvon Oil
Carnarvon Oil For personal use only Arrested decline in mature oil production 10,000 Mutineer- Exeter gross oil production Mutineer-Exeter 9,000 8,000 Two successful workovers in 2011 7,000 6,000 - New generation electrical subsurface BOPD 5,000 pumps installed 4,000 3,000 - Field life extended 2,00
Slide 43: Fletcher/Finucane oil development
Fletcher/Finucane oil development For personal use only Targeting FID by Q1 2012 with first oil by 2H 2013 Successful Finucane South exploration well in May 2011 Currently in FEED on Fletcher Finucane tie-back to Mutineer-Exeter 17km pipeline & umbilical 14km pipeline & umbilical 43
Slide 44: Material Bonaparte Basin position
Material Bonaparte Basin position For personal use only A critical region for Santos now… Caldita Barossa Santos 40% Darwin LNG Evans Shoal Conditional sale Continued strong production Joint NT/P48 NT/P69 Barossa Petroleum Development Evans NT/P61 35-day planned shutdown in 2012 Area Shoal Caldita J
Slide 45: Bonaparte LNG on schedule
Bonaparte LNG on schedule For personal use only BLNG building momentum; >2Tcf resource Santos 40% equity and carried to FID (GDF SUEZ 60% and operator) 150 people working on the project Substantial progress on pre-FEED: Granherne (upstream) and DORIS Engineering (downstream) Project remains on sched
Slide 46: Browse Basin
Browse Basin For personal use only Drilling to commence in 2012 Well positioned Argus Territory of Ashmore - Material prospects WA-274-P & Cartier Islands WA-410-P - All Santos operated Crown WA-274-P - Liquids rich Poseidon Ichthys - Materiality could provide stand- Echuca alone development options
Slide 47: 2012 is a key year for Santos in WA&NT
2012 is a key year for Santos in WA&NT For personal use only In 2012, Santos will have three offshore operated rigs in WA&NT drilling seven firm exploration and appraisal wells 7-9 A material business Beam Clark WA domestic gas Crown Hoss Hurricane Winchester 3 3 Zola Carnarvon oil Petrel 8* Browse*
Slide 48: Questions
For personal use only Drilling rig, Cooper Basin, Australia Questions
Slide 49: Asia Pacific Business Unit
For personal use only Chim Sáo FPSO, Vietnam Asia Pacific Business Unit Martyn Eames VP Asia Pacific 49
Slide 50: Focused growth in Asia Pacific
Focused growth in Asia Pacific For personal use only High-margin Asia’s growing energy needs driving higher domestic gas prices business Santos’ Asia Pacific production revenue increasingly oil-linked Established Indonesian business with strong track record of Strong track project delivery record Ch
Slide 51: Indonesia – established business
Indonesia – established business For personal use only Strong base business in East Java with increased margins and incremental growth Increased margins from rising Oyong Wortel Maleo domestic gas prices − New gas volumes sold at ~US$5-6 Madura Island per MMBTU with escalation Surabaya − New Maleo g
Slide 52: Indonesia – East Java
Indonesia – East Java For personal use only East Java performing beyond expectation; incremental growth from Wortel and Peluang Sampang PSC − Oyong gross production ~2,400 bbl/d (oil) and ~60 MMscf/d (gas) − Wortel, Oyong extension jackets and pipeline in place and drilling underway − Oyong infill w
Slide 53: Indonesia – South Sumatra CSG
Indonesia – South Sumatra CSG For personal use only Santos farm-in to two CSG licences in South Sumatra Leverages Santos’ CSG experience in Australia and operating experience in Indonesia Perabumulih Ogan Komering II PSC Farm-in agreement with Sugico OIG 7,8,9,10 OIG 6 gives Santos 60% equity and OI
Slide 54: Vietnam – Chim Sáo delivered
Vietnam – Chim Sáo delivered For personal use only Chim Sáo project currently Dua oilfield delivering ~30,000 bbl/day; Chim Sáo north-west additional volumes intersected oil discovery Dua development area Santos equity of 31.9%, Chim Sáo oilfield Premier operator Chim Sáo production Chim Sáo expecte
Slide 55: Vietnam – next steps
Vietnam – next steps For personal use only Medium-term growth through existing oil opportunities supplemented by longer term penetration of the domestic gas market Chim Sáo upside potential to be Vietnam China Burma established through further Laos exploration and appraisal in 2012 Santos continues
Slide 56: Bay of Bengal
Bay of Bengal For personal use only Exploration-driven opportunity to meet growing gas markets in Bangladesh and India India Bangladesh − Chittagong market significantly Bangladesh Sangu India under-supplied − Free-market gas rights obtained; Block 16 Burma discussions with buyers underway Bay of Be
Slide 57: Bangladesh – exploration program
Bangladesh – exploration program For personal use only Multi-well exploration program targeting short to long term gas production 3D seismic on Magnama and Bangladesh Sangu area completed in 2010 Sangu Chittagong Current Sangu production ~14 Hatia MMscf/d; Chittagong plant Block 16 (Sangu) South San
Slide 58: PNG LNG
PNG LNG For personal use only A landmark project for PNG and key component of Santos’ LNG growth Papua New Guinea 100km 6.6 mtpa, two-train development, Hides operated by ExxonMobil PDL 1 Fully contracted to Sinopec, TEPCO, Osaka Gas and CPC PDL 3 PRL 9 Santos 13.5% equity LNG Plant First LNG due 20
Slide 59: PNG LNG project update
PNG LNG project update For personal use only On target for first LNG in 2014 At the LNG plant site, construction of process trains, tanks and jetty are well underway Earthworks and early construction activities at Hides plant site and Komo airfield underway; rate of progress improving Stringing and
Slide 60: PNG expansion
PNG expansion For personal use only Existing infrastructure will provide strong platform for PNG LNG expansion Hides Deep Prospect – PDL 1 PDL 1: Hides Deep Hides and Angore SW Prospect NE Hides Deep-1 development drilling will provide better understanding of potential Currently evaluating deeper Ko
Slide 61: Central Asia
Central Asia For personal use only Exploration opportunity targeting short-term oil Kyrgyz Republic acreage prospectivity Kazakhstan Bishkek reduced following 2D seismic program; country exit in preparation Kyrgyz Republic Option acreage secured in Tajikistan; Tashkent Jalalabad initial 2D seismic h
Slide 62: Focused portfolio delivering growing margins
Focused portfolio delivering growing margins For personal use only Asia Pacific will contribute ~20% of Santos’ production in 2012 Revenue Revenue and costs per barrel* US$/boe High-margin 60 business 50 40 Strong track record 30 20 Landmark LNG 10 project 0 2010 2012 2015 Focused exploration Produc