Santos Limited · ASX:STO
Santos — H1 2006 Earnings Presentation
19 slides from Santos's earnings presentation, Aug 24, 2006
Slide 1: Delivering Results: 2006 Interim Results
Delivering Results 2006 Interim Results Webcast 24 August 2006 1 Disclaimer & Important Notice 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 stat
Slide 2: Webcast Agenda; Record Financial Result
Webcast Agenda Operational and financial highlights Financial performance Outlook Eastern Australian Gas Cooper Oil Project Managing Costs Timor/ Bonaparte Indonesia Identify New Areas 3 Record Financial Result John Ellice- Ellice-Flint CEO & Managing Director 2006 Interim Result Production 28.7 mmb
Slide 3: EHS Performance; 2006 First Half Highlights
EHS Performance Injury Frequency (12 month rolling average) 10 Full Year 2002 8 2006 APPEA avg Full Year 2004 Full Year 2003 TRCFR* 6 Full Year 2005 4 2 0 2003 2004 2005 2006 *TRCFR = Total Recordable Case Frequency Rate = Number of recordable injuries per million man hours worked 5 2006 First Half
Slide 4: Underlying Profit Up 68%
Delivering Results Peter Wasow Chief Financial Officer Overview Financial performance Outlook Eastern Australian Gas Cooper Oil Project Managing Costs Timor/ Bonaparte Indonesia Identify New Areas 7 Underlying Profit Up 68%... $m * Significant items detailed 2006 Profit in reference slides Improveme
Slide 5: Production Growth Continues; Sales Grow Faster
Production Growth Continues mmboe 34 2.8 3.0 32 0.9 28.7 30 1.2 1.0 28 26.3 Darwin John Field decline 26 Casino Brookes and other Fairview LNG 24 Production 22 20 18 16 14 12 10 1st Half 2005 1st Half 2006 9 Sales Grow Faster $m Controllable Market 1400 222 1,313 1300 1200 53 (12) 6 1100 27 1,019 3r
Slide 6: Production Costs Controlled; Margins Higher
Production Costs Controlled $m Volumes $6.47/boe 190 12 3 185 $6.28/boe 180 5 170 165 Other cost increases 160 New Acquisitions Fields 150 140 130 120 110 100 90 80 70 1st Half 2005 1st Half 2006 Production Cost Production Cost 11 Margins Higher $/boe netback 36 7.50 33.83 34 32 30 28 1.16 0.20 (0.1
Slide 7: EBITDAX for 1st Half Tops $1bn; Depreciation, Depletion & Amortisation
EBITDAX for 1st Half Tops $1bn $m 1100 227 23 (3) 1,007 1000 Other Costs 900 800 65 695 700 Prices 600 Volumes 500 400 300 200 100 0 1st Half 2005 1st Half 2006 13 Depreciation, Depletion & Amortisation $m Increased Volumes Rate Increase 300 273 18 271 (8) 8 (4) (7) 275 255 (5) 250 YE 05 Asset East
Slide 8: Exploration & Evaluation Expensed; Impairment charge
Exploration & Evaluation Expensed 1st Half 1st Half 2006 2005 $m Incurred Expensed Incurred Expensed Seismic, G&G, studies 45 45 34 34 Drilling 130 63 76 37 Banjar Panji incident provision 24 24 - - Total 199 132 110 71 15 Impairment charge Impairment (write down) / reversal ($m) Half Year Half Year
Slide 9: NPAT: Further Structural Improvement; Cash Flow Growth Remains Strong
NPAT : Further Structural Improvement $m 2006 Profit Improvements Volume related 600 500 52 (20) 400 (32) 27 370 139 290 (86) Higher 300 Higher E&E Other net Volumes costs 200 Significant Higher 100 Items Prices 0 2005 YTD 2006 YTD Actual Actual 17 Cash Flow Growth Remains Strong First half operatin
Slide 10: Record Development Continues
Record Development Continues 1st Half 2006 - $497m 1st Half 2005 - $463m Exploration 107 79 Bayu-Undan Liquids 1 23 Bayu-Undan LNG 7 20 Mutineer-Exeter 25 22 John Brookes 0 79 Cooper Gas 90 97 Cooper Oil D&D 91 32 EQ/NT 43 12 USA 20 23 Indonesia 74 21 Southern Aust 11 38 Corporate & Other 28 17 120
Slide 11: Consistent Growth Strategy; Strong Competitive Position
Consistent Growth Strategy Strong cashflow underpins active exploration program Identify New Core Areas Asia, Middle East, USA Mature Emerging Core Areas Indonesia, Timor/Bonaparte, PNG Enhance Existing Core Areas Eastern and Western Australia 2001 2003 2005 2007 2009 2011 2013 21 Strong Competitive
Slide 12: EA Gas Reserves & Resources; Eastern Australian Gas Prices
EA Gas Reserves & Resources Uncontracted 2P reserves and large contingent resource… resource… 4000 3500 Reserves/Resources (PJ) 3000 2500 2000 1500 1000 500 0 Contracted Volumes 2P Reserves Contingent Resources • Acquisitions driven by strategic considerations • Uncontracted gas across both conventi
Slide 13: Cooper Oil Project; Managing Costs
Cooper Oil Project Project is off to an encouraging start… start… • Exploration, exploitation and Enhanced Oil Recovery Cooper Oil Production 12 • 700+ mmbbl oil in place 10 Cooper Oil Project Production (kbbl/day) • Four rigs operational 8 6 • Program to date 4 Base – 42 wells drilled 2 – 37 succes
Slide 14: Timor/Bonaparte LNG; Indonesia
Timor/Bonaparte LNG First Bayu- Bayu-Undan LNG a significant milestone • Strategy to prove up nn Timor rabbee Gra gas resource for LNG G ldeerr Barossa Goulburn Goulburn Caald expansion Evans Graben Graben C Sahul Platform Shoal Caldita • Evans Shoal South ab en Money Money Shoal Shoal Gr Platform P
Slide 15: Identify New Core Areas; Summary
Identify New Core Areas Investing in longer term growth options… options… Kyrgyzstan 2006 regional studies and seismic acquisition Vietnam Dua-4X discovery, 1 well in 2H 2006 Egypt USA 1 well in 2H 2006 1 well in 2H 2006 … new country entry in Vietnam 29 Summary Santos continues to deliver on commit
Slide 16: Reference slides: Prices & Exchange Rates
Reference slides 31 Prices & Exchange Rates Half Year Half Year Change 2006 2005 % Realised Oil Prices (USD/bbl) 68.44 49.67 +37.8 AUD/USD Exchange Rate 0.7459 0.7401 -0.8 (after hedging) Realised Oil Price (AUD/bbl) 92.20 65.94 +39.8 USA Gas Price (USD/mcf) 7.42 6.47 +14.7 Australian Gas Prices (AU
Slide 17: Cost of Sales; 2006 First Half Results
Cost of Sales Half Year Half Year Change 2006 2005 % Production Costs 185 165 12.1 Pipeline Tariffs 22 17 29.4 Royalties 44 54 -18.5 PRRT 26 22 18.2 Total Operating Costs 277 258 7.4 Gas Purchases 42 59 Inventory Movement (21) (17) D,D&A 271 273 - 0.8 Cost of Sales 569 573 - 0.7 33 2006 First Half R
Slide 18: Significant Items (after tax); 2006 Second Half Sensitivities
Significant Items (after tax) Half Year Half Year 2006 2005 Impairment (write down) / reversal (20) 68 Incremental depletion and depreciation due to impairment reversal 2 (8) Banjar Panji provision (19) - Accelerated depreciation due to East Spar Shut-in - (12) (37) 48 35 Reference No. 15 August, 20
Slide 19: Cash Flow Growth Strong
Cash Flow Growth Strong Half yearly operating cash flow ($ million) 900 800 700 Tax change 600 500 13% CAGR 400 300 200 Moomba incident 100 H1 94 H1 95 H1 96 H1 97 H1 98 H1 99 H1 00 H1 01 H1 02 H1 03 H1 04 H1 05 H1 06 37 19