Santos Limited · ASX:STO
Santos — Investor Day (December 2009)
50 slides from Santos's investor day presentation, Dec 9, 2009
Slide 1: 2009 Investor Seminar: Delivering Transformational Growth
For personal use only 2009 Investor Seminar Delivering Transformational Growth 9 December 2009 1 Disclaimer & 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 reflect
Slide 2: Our View of Energy World Is Unchanged
Our View of Energy World Is Unchanged For personal use only Fundamentally Unprecedented Asian economic growth driving energy demand Rising CO2 emissions Security of supply becoming increasingly important To meet energy needs while reducing emissions… Gas must have an increasing share of the fuel mix
Slide 3: A Warming World Needs More Gas
A Warming World Needs More Gas For personal use only Global warming could reach as high as 7 degrees by the turn of the century if greenhouse gases grow unabated The Copenhagen Diagnosis Nov 2009* 400 CO2 concentration (ppm) 350 1769: James Watt’s steam engine marks Industrial Revolution 300 250 200
Slide 4: Gas Is an Underutilised Fuel for Power Generation
Gas is an Underutilised Fuel for Power Generation in China, India and Australia For personal use only Power Generated from Natural Gas (%) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% M nd Au ny Th re Ca ysia a Ca ia lia n UK a y Ge ea da NZ US ni al in pa o d a la ra na r or ap Ch In It rm Ko a Ja ai st
Slide 5: China LNG Factor: How Big Ultimately?
China LNG Factor: How Big Ultimately? For personal use only Qinhuangdao LNG Currently 3 operating LNG Dalian LNG Caofeidian LNG receiving terminals at (Tangshan) Guangdong, Fujian and Shandong LNG Shanghai with a total capacity of 9.6mtpa plus Rudong LNG (Jiangsu) Wuhaogou peaking terminal (0.5mtpa)
Slide 6: Continue to See Strong Long Term LNG Pricing
Continue to See Strong Long Term LNG Pricing For personal use only Asian Term Prices $18 Late 2006 Recent contracts $16 2008-09 point to strong underlying demand Ex-ship LNG Price ($/MMBtu) $14 Pricing reflects new Ex-Ship LNG Price ($/MMBtu) US$12.40/MMBtu $12 Oil Parity Mid 2006 supply-demand equi
Slide 7: The Santos Strategy
The Santos Strategy For personal use only Using quality assets, Santos will safely deliver: Base business Eastern Australia: Margin growth and resource conversion Indonesia: Established business with incremental growth WA: Growing a material domestic gas business LNG growth GLNG: The leading CSG to
Slide 8: Which We Are Commercialising
Which We are Commercialising For personal use only 1,500 2P Reserves (mmboe) Proven and probable 1,000 CAGR = 12% (2P) reserves exceed 1 billion barrels of oil equivalent Management team 500 focused on continuing track record of growing 2P reserves 0 2004 2005 2006 2007 2008 2008 with PNG LNG Base +
Slide 9: Twin Themes of Strategy
Twin Themes Of Strategy For personal use only Twin themes for shareholder value creation Building a better base business Delivering transformational growth 17 Delivering Without Compromising Safety 40% reduction in TRCFR during 2009 Santos TRCFR performance (Employees & Contractors) 10 8 6 TRCFR 4 3
Slide 10: The Delivery Model / Agenda
The Delivery Model For personal use only Corporate Centre Disciplines Business Units Strategy, Finance, Technical WA & NT Public Affairs & Ray Betros John Anderson Investor Relations Peter Wasow Eastern Australia Exploration Mark Macfarlane Legal, Corporate Trevor Brown Development & Asia Pacific Co
Slide 11: Eastern Australia Business Unit
For personal use only Eastern Australia Business Unit Mark Macfarlane Vice President, Eastern Australia 21 Eastern Australia – The Next 40 Years Today’s pioneers capitalising on gas demand growth for the next 40 years Opening up market channels Reserves growth Cost and reliability and extension impr
Slide 12: Demand for Eastern Australia Gas
Demand for Eastern Australia Gas For personal use only Demand will nearly triple within 10 years… 2400 2000 Planned 1600 LNG Projects PJ/a 1200 800 Carbon driven fuel switching 400 10 Year Historic Average 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: AEMO, EnergyQuest, Santos, Company
Slide 13: Reports of the Cooper's Death are Greatly Exaggerated
Reports of the Cooper’s Death are Greatly Exaggerated For personal use only Cooper Gross Reserves and Unrisked Resource Potential Conventional Reserves/Resources Aspirational 75% 2P Recovery Factor 2,866 PJ Cooper infill 2P Current Produced 6,317 PJ Booked Contingent Resources 1,584 PJ 2P Reserves 1
Slide 14: Reports of the Cooper's Death: Unrisked Resource Potential
Reports of the Cooper’s Death are Greatly Exaggerated For personal use only Gross Unrisked Resource Potential Moomba Unconventional Resources Developed TOOL DARA Booked Contingent Conventional Resources 4,750 PJ Shale ROSE EPSI Undeveloped Gas MTRE Unconventional Gross gas thickness ~1600 feet Tight
Slide 15: Delivering Sanctioned Projects - Henry and Kipper
Delivering Sanctioned Projects - Henry For personal use only Leveraging Casino infrastructure to add reserves and production Henry Project (50%, operator) Otway Basin, Victoria Sub-sea tie back to existing Casino infrastructure Offshore installation vessels mobilised Start-up 1H 2010 2P reserves ~ 7
Slide 16: Oil Production and Development Cost Improvement
Oil Production For personal use only Significant oil opportunity remains in the basin 2009 delivery in line with Cooper Oil Drill Target Selection forecast, notwithstanding 250 Initial Rate, bopd 2008 2010 200 reduced drilling activity Forecast 150 2009 4 well Charo campaign 100 2007 exceeded expect
Slide 17: Production Cost & Reliability Improvement
Production Cost & Reliability Improvement For personal use only Contemporary performance achieved through implementing proven systems as well as upgrading asset condition Long term benefits through Maintenance Spend/Downtime reliability improvement 130 20 Investing in maintenance in 120 110 2010 Dow
Slide 18: Western Australia & Northern Territory
For personal use only Western Australia & Northern Territory John Anderson Vice President, Western Australia & Northern Territory 35 Western Australia and Northern Territory WA & NT Business Unit is focused on two key themes… 1. Building a leading domestic gas business in Western Australia 2. Maximi
Slide 19: Strong Base with Growth Opportunities
Strong Base with Growth Opportunities For personal use only Upside Likely Sanctioned Producing Potential Sanction Carnarvon NFE Spar/Halyard Reindeer John Brookes Domestic Hub growth New gas hub Upside Gas playing out Significant portfolio upside with shallow water, Market opportunity – Accessing in
Slide 20: Hub-led Strategy
Hub-led Strategy For personal use only Santos supplies gas via one of two existing hubs and one new hub under construction… Reindeer Focused NFE John Brookes Spar / Halyard Varanus Is. East Spar Devil Creek Legend …with focused NFE in shallow water close Santos acreage Gas pipeline to existing hubs
Slide 21: Hub 2: Devil Creek/Reindeer
Hub 2: Devil Creek/Reindeer For personal use only Devil Creek / Reindeer – Reindeer new gas hub 220 PJ YE 08 2P Reserves Creation of 3rd WA gas hub Under development – first gas Q4 2011 45% working interest Focused NFE Shallow water offshore platform 45kms south west of Dampier Two train production
Slide 22: Bayu Undan / Darwin LNG; Floating LNG
Bayu Undan / Darwin LNG For personal use only Santos’ first producing LNG asset 2nd largest equity participant and only Australian participant (11.4%) 79mmboe YE 08 2P Reserves Bayu Undan - producing ~1.1bcf raw gas per day (gross) - Approximately 103,000 bbl/d liquids (gross) DLNG 3.5mpta plant - T
Slide 23: Northern Australia LNG
Northern Australia LNG For personal use only Exploration success… Montara Legend Crux Santos acreage Argus Territory of Asmore & Oil field WA-274-P Cartier Islands Gas field WA-410-P Ichthys WA-274-P Poseidon WA-274-P North Concerto Cornea Echuca Prelude Shoals Torosa Ichthys Caswell Burnside WA-411
Slide 24: Exploiting Other Assets
Exploiting Other Assets For personal use only Carnarvon late life producers: 1.9 mmboe YE 08 2P Reserves Thevenard Island - Producing asset - 35.71% working equity Legendre - Producing asset - 22.56% Working equity Other Assets: Jabiru Challis - Producing asset - 10.31% Working equity Mereenie and P
Slide 25: Asia Pacific Business Unit
For personal use only Asia Pacific Business Unit Martyn Eames Vice President, Asia Pacific 49 The Santos Strategy & Asia Pacific Leverage Asia’s growing energy needs to develop material & sustainable exploitation focused businesses Base business Eastern Australia: Margin growth and resource conversi
Slide 26: Asia Pacific - Vision & Strategy
Asia Pacific – Vision & Strategy For personal use only Leverage Asia’s growing energy needs to develop material & sustainable exploitation focused businesses Deliver base business safely and cost effectively Execute key projects Focused growth primarily through exploitation in proven fairways Exit n
Slide 27: Madura Offshore PSC; Sampang PSC
Madura Offshore PSC For personal use only Maleo performing beyond expectation; incremental growth from Peluang Maleo - Production start-up 29 Sept. Peluang-1 2006 Maleo Madura Island - Gross gas production ~ 110 mmscf/d Surabaya - Reserve upgrade at end 2009 Madura forecast Grati Offshore PSC Proces
Slide 28: Papua New Guinea LNG
Papua New Guinea LNG For personal use only PNG LNG Project FID approval signals next step in LNG growth strategy FID approved on 8 December 2 SPAs executed, remaining two expected to be executed by early-2010 Financial Close early in 2010 First sales are targeted for 2014 Initial equity determinatio
Slide 29: Vietnam; Bay of Bengal
Vietnam For personal use only Attractive oil project providing medium term growth with upside Chim Sao Project reshaped for value China Vietnam Revised Field Development Plan Burma submitted to government for approval Laos Principal contracts covering EPCI and FPSO lease executed in October South Ch
Slide 30: Kyrgyz Republic; Summary
Kyrgyz Republic For personal use only Potential for medium term exploitation business. Key tests in 2010 & 2011 Leading acreage position Kazakhstan Bishkek 2D seismic complete Talas Shallow prospects drilled in Kyrgyz Republic Naryn 2009 secured prospective Uzbekistan Andizhan Jalal-Abad acreage and
Slide 31: GLNG Overview
For personal use only GLNG Rick Wilkinson President, GLNG and Queensland 61 Overview We have the energy to deliver… ̶ Two trains The Project ̶ Milestones achieved ̶ Comprehensive CSG program Operational ̶ Reserves growth ̶ Technology innovation Excellence & ̶ Scalability Innovation ̶ Ramp gas strate
Slide 32: The Project - Two Trains
The Project – Two Trains For personal use only Upstream Pipeline LNG Plant Shipping Customers Fairview Arcadia Train 1 3.6mtpa FOB 1 Train: Roma 600 TJ/d CSG CSG LNG Portfolio 2 Trains: Gas 1,200 TJ/d Train 2 7.2mtpa FOB Storage 63 The Project – Milestones Achieved GLNG is meeting key milestones … E
Slide 33: The Project - Milestones Achieved
Operational Excellence and Innovation For personal use only GLNG has a comprehensive program to prove up reserves and deliverability Since January 2008 we have: Well Production Comparison March 2009 vs October 2009 Nine rigs operating 12 120 continuously Gas Production Rate (TJ/d) - four purpose-bui
Slide 34: Operational Excellence and Innovation
Operational Excellence and Innovation For personal use only Roma reserve growth 1P 2P 3P 2008 corehole 2008 pilot well Reserve Position 0 10 km Year End 2008 Operational Excellence and Innovation Roma reserve growth 1P 2P 3P 2008 corehole 2008 pilot well 2009 corehole 2009 pilot well Reserve Positio
Slide 35: Roma Reserve Growth
Operational Excellence and Innovation For personal use only Technology innovation will realise value and opportunities Pad Drilling 2-9 wells/pad Gas to processing station Water to plantation/crops Reduced rig moves CAPEX and OPEX savings Facility simplification Economies of scale Operator efficienc
Slide 36: Technology Innovation and Scalability
Operational Excellence and Innovation For personal use only Technology innovation will realise value and opportunities Approx 150 TJ/d Gas withdrawal Gas injection Approx 200 TJ/d Storage Gas supply optimisation Gas export Gas input Ramp management Gas withdrawal Gas injection ~150 TJ/d ~200 TJ/d Ex
Slide 37: Gas Storage and Ramp Gas Strategy
Operational Excellence and Innovation For personal use only Depleted conventional reservoirs suitable for storage … Storage wells Queensland Proposed pipeline Gladstone Roma Arcadia Fairview Wallumbilla Roma Legend Santos/Petronas Gas field JV permits Gas pipeline 25km Other Santos acreage Proposed
Slide 38: Storage Reservoirs; Preparing for Train 2
The Right People For personal use only PETRONAS is the right partner for Santos … Operator of MLNG, Bintulu, Sarawak 25 years’ supply LNG to Asia 3rd largest LNG producer in the world One of the largest owner-operator LNG fleets in the world …with unrivalled skill and experience 75 The Right People
Slide 39: The Right People: PETRONAS
The Right People For personal use only We have the energy! 77 Beyond Train 2 T5 T4 T1 T2 T3 0 500 metres
Slide 40: The Right People: Capability Footprint
For personal use only Concept Concept Pre- Project Screening Definition Commitment Sanction RFSU Close out Design Select Gate Gate Gate Gate Gate Gate Gate Gate Technical Ray Betros Executive Vice President, Technical 79 Technical Excellence Outstanding project delivery achieved by the integration o
Slide 41: The Right People: We have the energy
Gunnedah Basin – Next Major Play in Coal Seam Gas For personal use only Basin master position with >50 tcf prospective potential… ESG operated areas Wilga Park Power Station Narrabri (STO 47.65%)* PEL PPL 3 New PAL 2 South Wales - Net 2P reserves** - 211 PJ 434 PEL 238 Gunnedah - Net 3P reserves** -
Slide 42: Technical Excellence
Proposed Shaw River Power Station For personal use only Targeting FID 2H 2010 Power generation consistent Proposed Shaw River with commercialisation of Power Station Site Santos’ extensive gas Mortlake Willatook Victoria resources Camperdown Orford Terang SRPS now targeting FID in Koroit 2nd half 20
Slide 43: Gunnedah Basin - Next Major Play in Coal Seam Gas
Exploration Performance – Conventional For personal use only Exploration Capex (A$mm) Cumulative Mean Resource Adds (mmboe) 300 500 Peluang, Burnside 250 Netherby, Frigate Deep, Ichthys North 400 Magnama, Reindeer (Gnu) 200 Barossa, Chim Sao, Wortel 300 150 200 Henry, Caldita 100 100 50 Oyong, Maleo
Slide 44: Proposed Shaw River Power Station
Exploration Strategy For personal use only Applying subsurface skills on captured CSG opportunities Queensland CSG exploration, appraisal and development is benefiting from the Denison application of conventional Trough Dawson River Bowen Basin subsurface skills and technology Fairview Scotia combin
Slide 45: Exploration and Subsurface
Exploration Spend For personal use only A$mm Exploration Spend (A$mm) 300 250 CSG Conventional 200 150 100 50 0 2008 2009 2010 2011 2012 % Exploration % of Total Capex 25 20 15 10 5 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 89 Spar Deep Spar Deep gas opportunity, located beneath the Spar G
Slide 46: Exploration Performance - Conventional; Finding Costs
Alabuka West – Kyrgyz Republic For personal use only 2D Seismic Profile Alabuka West oil opportunity, located in the Kyrgyz Republic Northern Fergana Basin, Nanai Permit Targeting a structural trap of Palaeogene age reservoirs Resource upside of greater Line 1089275 than 50mmboe Schematic Cross-Sect
Slide 47: Exploration Strategy
For personal use only Outlook and Funding Peter Wasow Executive Vice President & Chief Financial Officer 93 Delivering Transformational Growth Asset quality is transformed… 100% 75% Mature assets Production 50% Long life assets on plateau John Brookes, Reindeer, with high 25% free cash Kipper, Otway
Slide 48: Exploration Spend; Spar Deep
Building a Better Base Business For personal use only Base business CAPEX excluding exploration and LNG 1200 1000 800 $m 600 400 200 0 2008 2009 2010 2011 2012 EA WA&NT Asia 95 Production and sales grow to record levels Sanctioned projects drive production higher: 7% CAGR 2009-2012 Production and Sa
Slide 49: Alabuka West; 2010 Forward Exploration Drilling Schedule
Funding Growth For personal use only Objective is to minimise equity employed while maintaining current investment grade credit rating - Prudent targets ensure access to debt capital through the cycle Implications: - Maximise debt consistent with rating, allowing for uncertainty - Lump sum contracti
Slide 50: Outlook and Funding
Our strategy delivers… For personal use only Performance from the base business LNG growth - LNG at more than 50% of revenue - With equity in 4 LNG projects Focussed growth in Asia Thereby realising our vision to be a leading Australian company providing energy for Australia and Asia 100 2009 Invest