Santos Limited · ASX:STO
Santos — Non-Deal Roadshow (March 2008)
53 slides from Santos's roadshow presentation, Mar 5, 2008
Slide 1: ASX cover note: Investor Presentation Singapore / Hong Kong / London
Santos Ltd A.B.N. 80 007 550 923 Ground Floor Santos Centre 60 Flinders Street Adelaide SA 5000 For personal use only GPO Box 2455 Adelaide SA 5001 Telephone: 08 8116 5000 Facsimile: 08 8116 5623 To: Company Announcements Office ASX Ltd From: Company Secretary Date: 5 March 2008 Subject: Investor Pr
Slide 2: Santos Investor Presentation Singapore, Hong Kong and London
For personal use only Santos Investor Presentation Singapore, Hong Kong and London March 2008 1.
Slide 3: Disclaimer & Important Notice
Disclaimer & Important Notice For personal use only This presentation contains forward looking statements that are subjectsubject to risk factors associated with the oil and gas industry. It is believed believed that the expectations reflected in these statements are reasonable, but they they may be
Slide 4: Santos - Vision and Competencies
Santos - Vision and Competencies For personal use only Vision: To become a leading energy company in South East Asia Recognised for: • Safety and sustainability across all activities • Basin excellence • Low cost, fast moving explorer and producer, emerging LNG player • Agile, innovative niche playe
Slide 5: Santos - Key Statistics
Santos - Key Statistics For personal use only Leading Australian based Exploration & Production company • Commenced operations in 1954 • Market cap ~ US$7.3 billion • 1,774 employees 2007 Production Total 59.1 mmboe • Daily production Crude oil 11.9 mmboe - ~625 mmcfd gas LPG - ~50,000 bbl/day liqui
Slide 6: Transforming Santos: a Leader in Asian Energy
Transforming Santos: a Leader in Asian Energy For personal use only Building Asian Position Emerging Extending franchise Player in LNG Series of growth A leader in assets for globally priced gas Australia Legacy assets in exploitation phase, price growth 5.
Slide 7: Santos: At the Inflection Point
Santos: At the Inflection Point For personal use only Gladstone LNG transforms Santos: Shift from domestic to global gas pricing Leadership position in East Australian Gas Leadership position in Coal Seam Gas Santos is therefore positioned for a step change in the value of the large scale resources
Slide 8: Outlook
Outlook For personal use only Strong reserves growth from existing discoveries • Contingent resources commercialized Creating significant investment opportunities • Delineation, development and LNG facilities 2008 production outlook 56-58 mmboe • Return to growth in 2009 Project milestones provide c
Slide 9: Reserves Grow Strongly, at Low Cost
Reserves Grow Strongly, at Low Cost For personal use only 2P Reserves Reserve Replacement Cost 1,000 20 800 15 600 A$/boe mmboe 2P 10 400 5 200 1P 0 0 2004 2005 2006 2007 2004 2005 2006 2007 1P 2P 2007 replacement rate 175% 178% 3 yr ave replacement rate 178% 234% 8.
Slide 10: Santos is Relatively Undervalued
Santos is Relatively Undervalued EV/BOE of 2P reserves For personal use only $60 $50 $40 Domestic Peer Average AUD $32.38/boe International $30 Peer Average $22.77/boe $20 $10 $0 ko na din h x E il os e ide ch w co ier ry cO da ac r AW llo Ni ntu lg a Da nt So r em n ds Be ea Ad Tu Lu Sa Ro Ca Ve oo
Slide 11: Contingent Resources Grow
Contingent Resources Grow For personal use only 2.6 bn boe (14.5 tcf) of contingent resource: 22% 3yr CAGR LNG 7.3 tcfe CSG 5.5 tcf • PNG LNG • Fairview • Darwin LNG2 • Roma Other 160 mmboe East Aust Gas 0.7 tcfe • Asia: oil & gas • Cooper • WA: oil & gas • Otway 100% exposed to global pricing 10.
Slide 12: Creating Strong Leverage
Creating Strong Leverage For personal use only 3,000 2P Reserves (mmboe) 2,500 2,000 1,500 7 To global markets 1,000 Reserves grow 6 A$ Revenue ($bn) To domestic markets 500 ~ 300% at low cost11 5 0 4 2008 2009 2010 2011 2012 2013 2014 2015 3 Leverage to revenues: 2 >200% growth22 1 0 120 2008 2009
Slide 13: Result highlights
Result highlights For personal use only 2007 Full Year Result Change Production 59.1 mmboe (3%) Sales Revenue $2,489 million (10%) EBITDAX $1,733 million (19%) NPAT $441 million (32%) Operating Cash Flow $1,214 million (22%) Full Year Dividend 40 cps Unchanged 2P Reserve Replacement Ratio 178% Total
Slide 14: Santos' Five Business Areas
Santos’ Five Business Areas For personal use only LNG Growth Business Asian Growth Inflection point in East Australian gas and LNG values is the focus of this presentation Western Australia Oil & Gas East Cooper Basin Australian Oil Gas Growth Business Legend Exploration Production 13.
Slide 15: LNG Growth Business
For personal use only LNG Growth Business 14.
Slide 16: GLNG Creates Value Inflection Point
GLNG Creates Value Inflection Point For personal use only East Australian Gas LNG Darwin LNG1 Cooper CSG PNG LNG East Qld to Darwin LNG2 Otway LNG Browse Gippsland Kutei LNG linked 300% pricing Gladstone LNG frees reserves Santos’ Santos’ large gas resources growth from East Coast volume and price c
Slide 17: Coal Seam Gas: A Game Changing Resource Play
Coal Seam Gas: A Game Changing Resource Play For personal use only 3P 61+ tcf* 3P 113+ tcf* CSG Resource Potential 250+ tcf* *Source: Carnarvon and Browse Basin: Wood Mackenzie CSG: ABARE: Australian Gas Supply Demand Balance to 2019-20 16.
Slide 18: Energy Market Differentials
Energy Market Differentials Prices available in domestic and export markets For personal use only 14.00 Average Asian Domestic Australian 12.00 netback range (2) LNG Price (1) 10.00 8.00 $A/GJ 6.00 4.00 2.00 Santos average realised gas price 0.00 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-
Slide 19: Santos' Leading CSG Acreage Position
Santos’ Leading CSG Acreage Position For personal use only Denison 100 km Bowen Gladstone Basin Greater Scotia • 0.8 million acres (net) • 0.5 million acres (net) • Exploration stage • 27 TJ/d production • Same coals as Fairview Queensland • Production since 2002 Greater Fairview • 0.8 million acres
Slide 20: Santos: a Leader in Coal Seam Gas
Santos: a Leader in Coal Seam Gas For personal use only Santos CSG reserves Santos operates 2 of top 5 fields growth actual forecast Coal Seam Gas Production 25 55 50 20 45 Productioion (mmcf/day) 40 35 15 30 tcf 25 10 20 15 5 10 5 0 0 2006 2007 2009 2013 w ah ully Sth tia on eat rth est ine ley yle
Slide 21: Gladstone LNG: Transforming Santos
Gladstone LNG: Transforming Santos For personal use only • GLNG exposes Santos’ 100 km large scale gas resources Bowen Basin Gladstone to international markets: - Access LNG pricing Fairview - Access LNG market volumes - Access higher rates • CSG resources: Roma Queensland - Large position, captured
Slide 22: Gladstone LNG: Progress & Milestones
Gladstone LNG: Progress & Milestones For personal use only Progress • Freehold land acquired (up to 10 mtpa) • Queensland significant project status • Pre- Pre-FEED marine studies complete Coal Export • Environmental applications lodged • Strong interest from potential partners: evaluation underway
Slide 23: PNG LNG Takes Shape
PNG LNG Takes Shape The PNG LNG Project has built significant momentum… For personal use only • Pre FEED work on 6.3 mtpa plant Juha completed Hides & Angore • Material ramp up of project team Kutubu & Agogo and expenditure Gobe • Joint venture alignment and key commercial terms near complete • Mark
Slide 24: Eastern Australian Gas Growth Business
For personal use only Eastern Australian Gas Growth Business 23.
Slide 25: Santos: Leader in East Australian Gas
Santos: Leader in East Australian Gas Mt Isa For personal use only Santos Non- Non-CSG East Australian gas reserves and resources Denison Gladstone 3 Trough 2.5 Fairview Scotia Roma Wallumbilla Ballera 2 Moomba Brisbane tcf 1.5 1 0.5 Pt Bonython 0 Sydney 2P Mean contingent Adelaide resource (2C) Can
Slide 26: Implications for Value of Santos
Implications for Value of Santos For personal use only Eastern Australia gas value 14 Broker LNG 12 price forecasts, netted back to 10 plant inlet value1 8 $A/GJ 6 4 Broker EA gas price forecasts 2 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Consensus High Low 1 Broker oil price forecasts convert
Slide 27: Catalysts for 2008/09
Catalysts for 2008/09 For personal use only 2008 2009 2010 2011 2012 2013 2014 2015 GLNG FEED Q4 ‘08 FID Q4 ‘09 Start Up Partner selection and Reserves build confirmed by YE08 PNG LNG FEED Q1 ‘08 FID 2H ‘09 Start Up DLNG2 LNG FEED 1H ‘09 FID 2H ‘10 Start Up Cooper Oil Drilling Inventory Build (Onsho
Slide 28: Delivery Track Record in 2007
Delivery Track Record in 2007 For personal use only October 2007 February 2007 July 2007 November 2007 May 2007 August 2007 December 2007 May 2007 September 2007 27.
Slide 29: Transforming Santos: a Leader in Asian Energy
Transforming Santos: a Leader in Asian Energy For personal use only Building Asian Position Emerging Extending franchise Player in LNG Series of growth A leader in assets for globally priced gas Australia Legacy assets in exploitation phase, price growth 28.
Slide 30: Reference Slides
For personal use only 29. Slides Reference
Slide 31: 2008 Forward Exploration Schedule
2008 Forward Exploration Schedule For personal use only Well Name Basin / Area Target Upside Resource Potential (mmboe) Santos Timing Interest 0 – 50 50 - 100 100 - 500 % Hatia 1 Bay of Bengal / Bangladesh Gas 9 37.5 Q1 08 Johnson 1 Barrow / Australia Oil 9 37.5 Q2 08 Chim Ung 1 Nam Con Son / Vietna
Slide 32: Vietnam Update
Vietnam Update Exploration and Development Timeline For personal use only 2006 2007 2008 2009 2010 Country Entry Block 12 Block 12 Block 101 Exploration Block 12, 101 Seismic Block 12 Development Block 12 Production Country/Basin Entry Seismic Program 1stst Production Well Scheduled Well Oil Discove
Slide 33: East Java Portfolio Update
East Java Portfolio Update For personal use only Java Sea 0 50 kilometres Wortel Oyong Online Q2 2010 Online September 2007 Avg Production 40 - 60mmscf/d 45% Working Interest Kangean (Subject to FID) Avg Production 8,000bbls/d Islands Madura Island Madura Offshore PSC Sampang PSC Jeruk Maleo Maleo M
Slide 34: Mutineer–Exeter Production Update
Mutineer–Exeter Production Update For personal use only • Reduced oil rates since December 2007 - electrical damage to FPSO swivel impacted sub sea pumps • Shut-down for temporary repairs early February 2008 - Leased facility: opex relief, repair capex not to JV account - Full repair planned end 200
Slide 35: Darwin LNG Train Update
Darwin LNG Train 1 Update For personal use only • Increase in Santos Equity - 10.64% to 11.39% • Above budget 2007 production • Excellent operating efficiency • Optimisation studies commenced to investigate de- bottlenecking opportunities 34.
Slide 36: Darwin LNG Train Update
Darwin LNG Train 2 Update For personal use only Santos 40% • Key seismic appraisal results ConocoPhillips (Op) 60% on track to allow greater Abadi Sunrise clarity on LNG growth Barossa Evans Shoal options Caldita Bayu Santos Shell (Op) 40% 25% • 6,000 km2 3D over Undan Petronas 25% Osaka Gas 10% Bar
Slide 37: Reindeer Gas Project Update
Reindeer Gas Project Update Sanction of New Domestic Gas Processing Hub 1Q08 For personal use only - Santos 45% - New onshore gas plant at Devils Creek, 40km SW of Dampier • Facilities comprise - Offshore gas platform - 105km 16” subsea pipeline - Onshore gas processing (215 TJ/d) - Connection to Da
Slide 38: Net Profit After Tax
Net Profit After Tax For personal use only (A$ million) Significant 800 Items Net 42 (138) 700 643 (18) 27 Gas 600 Liquids (16) Prices (83) Prices in A$ Volume Operating 500 (53) 40 & Mix Costs 441 (3) DD&A 400 PRRT/ Other E&E APT Expensed 300 Ded’ns 200 2006 2007 NPAT NPAT Note: P&L movements alloc
Slide 39: Production
Production For personal use only (mmboe) 65 61.0 (0.7) (0.6) (4.8) 4.2 59.1 60 Mutineer Bayu net 55 Exeter entitlement issues change Natural New 50 decline volumes 45 40 35 30 2006 2007 38.
Slide 40: Margins
Margins For personal use only Netback (A$/boe) Cash margin per boe sold Controllable Items 40 35 32.80 0.69 (1.53) 1.24 (0.49) (0.41) (1.50) 30.80 A$ Volumes Gas Costs Moonie to 30 Liquids PRRT/ & Mix Prices Brisbane Prices Pipeline APT 25 Remediation 20 15 10 2006 2007 39.
Slide 41: EBITDAX
EBITDAX For personal use only (A$ million) 2,400 2,200 2,144 (106) 63 (283) 40 2,000 Gas Significant Liquids (26) (81) Prices Items Prices (18) 1,800 in A$ Volume Operating 1,733 Net & Mix Costs PRRT/ Other 1,600 APT Ded’ns 1,400 1,200 1,000 2006 2007 40.
Slide 42: DD&A
DD&A For personal use only Higher industry costs driving up DD&A (A$ million) 900 800 (16) 759 (36) (87) 692 46 700 26 Other Infrastructure Lower assets 600 Reserves Future Volume Revisions Costs 500 400 300 200 2006 2007 $11.35/boe $12.84/boe 2008 forecast: ~$12.30/boe 41.
Slide 43: Capital Investment
Capital Investment For personal use only (A$ million) 1,600 Other Exploration 1,400 Indonesia Exploration Oyong Phase 2 1,200 Asia Chim Sao (Vietnam) Reindeer 1,000 WA WA Oil JKN-MBA pipeline 800 Cooper Oil Cooper Oil Henry 600 EA Gas Cooper & EQ Gas DLNG2 400 Bayu Undan PNG 200 LNG Fairview GLNG 0
Slide 44: Cooper Basin Oil
Cooper Basin Oil For personal use only 2007 results below expectations, 2008 program at reduced pace 2007 actual • 132 wells, 73% success • 2P reserves added 8 mmbbl • Capex $306m • Production rate ~ 9,100 bopd net to Santos • Full cycle F&D cost ~ A$45/bbl 2008 outlook • 94 wells, capex $260m • Pro
Slide 45: Significant Items
Significant Items For personal use only 2007 2006 Pre- Pre-tax Post- Post-tax Pre- Pre-tax Post- Post-tax Impairment write-down - - (16) (14) Gain on asset sales 33 33 42 41 USA sale (68) (68) - - Bayu Undan redetermination 47 33 - - Sidoarjo mudflow incident (8) (8) (67) (67) Moonie pipeline incide
Slide 46: Sidoarjo Mudflow Incident
Sidoarjo Mudflow Incident For personal use only Estimated Insurance Net Costs Accrual Expensed $m $m $m December 2007 Pre-tax 97 22 75 Post-tax 97 22 75 December 2006 Pre-tax 89 22 67 Post-tax 89 22 67 Change Post-tax 8 - 8 45.
Slide 47: EBITDA reconciliation
EBITDA reconciliation For personal use only $m 2007 EBITDA1 as reported 1,496 Amounts typically treated as “below the line”: USA loss on sale 68 Gain on asset sales (33) Moonie pipeline incident, excluding 24 accelerated depreciation Bayu Undan redetermination (47) Embedded derivatives revaluation l
Slide 48: Underlying Profit
Underlying Profit For personal use only $m 2007 2006 NPAT 441 643 Significant Items: Impairment write-down - 14 Gain on asset sales - (41) USA loss on sale 68 - Sidoarjo mud-flow incident 8 67 Gain on sale investments (33) - Moonie pipeline incident costs 26 - Embedded derivatives revaluation loss/(
Slide 49: 2008 Sensitivities
2008 Sensitivities For personal use only Sensitivity Change NPAT impact (A$m) US dollar oil price US$1/bbl 13 A$/US$ exchange rate 1 cent 10 Interest rates 1% 15 Gas Price A$0.10 / GJ 15 48.
Slide 50: Prices & Exchange Rates
Prices & Exchange Rates For personal use only Change 2007 2006 % Realised Oil Price (US$/bbl) 80.35 67.71 19 Realised Oil Price (A$/bbl) 92.10 89.35 3 Average Gas Price A$/GJ 3.95 3.71 6 A$/US$ Exchange Rate 87.24 75.78 (15) (after hedging) 49.
Slide 51: The Rising Price of Energy
The Rising Price of Energy Normalised World Energy Prices For personal use only 4.5 4 Gas: Santos Realised 3.5 Gas: VENCorp Spot Gas: Henry Hub Spot 3 Gas: NBP Spot 2.5 Crude: WTI Spot Coal: Spot 2 Coal: Contract 1.5 Uranium: Spot 1 0.5 0 1 2 3 4 5 6 7 00 01 02 03 04 05 06 07 l-0 l-0 l-0 l-0 l-0 l-0
Slide 52: The Rising Price of Energy
The Rising Price of Energy Eastern Australia versus Western Australia Gas Price Trends For personal use only Source: EnergyQuest Quarterly Report, February 2008 51.
Slide 53: Rising Commodities
Rising Commodities For personal use only “Global fertiliser prices were at record levels in 2007… 2007… 800 Global Fertiliser Prices, 2000 - 2007 700 600 DAP, U.S. Gulf 500 US $/ton 400 300 200 100 MAP, Vancouver Urea, Arab Gulf, prilled 0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-