Santos Limited · ASX:STO
Santos — Investor Day (November 2003)
27 slides from Santos's investor day presentation, Nov 26, 2003
Slide 1: Setting the Scene
Setting the Scene Santos 2003 Investor Seminar John Ellice-Flint Managing Director Santos Ltd 26 November 2003
Slide 2: Welcome
Title Slide - Welcome Good morning everyone and thank you for coming to visit us here in Adelaide. | know how busy you all are, particularly at this time of the year. It's two years now since our inaugural investor conference and this is a chance to bring you up to date on what we are doing and wher
Slide 3: How are we going?
Slide 1 — How are we going? This is a slide we showed two years. At that time we were getting the building blocks in place but we had a long way to go in just about everything. We were reorganising the Company, we were just starting on business improvement, we were establishing a portfolio planning
Slide 4: Oil and Natural Gas Liquids Production
Slide 2 — Oil and Natural Gas Liquids Production Oil is an increasingly scarce commodity. This chart shows global oil and liquids production since 1930, with projections to the middle of the century. This is based on geological predictions made by the Association for the Study of Peak Oil and Gas. S
Slide 5: Energy Security: Mood Change
Slide 3 —- Energy Security: Mood Change This ad from a current BP advertising campaign in the US catches the change in mood on energy security. The man says, “There’s not much we can do about our dependence on foreign oil. We only have so many reserves.” BP replies, “Over the next 10 years, we’re in
Slide 6: China Oil Importer
Slide 4 — China Oil Importer One of the important dynamics in the oil market at present is the rapid rise in Chinese consumption. Until about 10 years ago China used to be an oil exporter. Now it is a significant importer. This results from the growth of the Chinese economy, which is reflected in ma
Slide 7: Oil Price Remains Strong
Slide 5 — Oil Price Remains Strong One of the consequences of declining non OPEC oil reserves and increased alignment within OPEC is strength in oil prices. This slide shows Tapis oil prices since 1990. During the 1990s oil prices averaged around US$20 a barrel but over the last four years they have
Slide 8: World Gas Production
Slide 6 — World Gas Production Another important trend is the growing use of natural gas around the world, particularly for power generation. World gas production has grown two and a half times since 1970. Gas now comprises around one quarter of world energy consumption. The use of gas is growing mo
Slide 9: Global Gas Trade is Increasing
Slide 7 — Global Gas Trade is Increasing Use of gas is also being encouraged by increasing transportability, both by pipeline and tanker. Since 1991 international trade in gas through pipelines has increased from 11 percent to 21 percent of gas production. Gas used for LNG has also grown quickly, fr
Slide 10: Energy Themes
Slide 8 - Energy Themes So in summary, | believe there are five key energy themes which will affect companies and which investors need to consider: e Sovereign risk and energy security are becoming more important: e Oil reserves are likely to be increasingly concentrated in OPEC countries; e Oil pri
Slide 11: Key Messages
Slide 9 - Key Messages Obviously the sector trends don’t only affect Santos, but the sector as whole. What about Santos itself? We have to continue to be a low cost marginal producer while developing as many value adding production projects as possible. Compared with many E&P companies, particularly
Slide 12: Growing portfolio of frontier acreage
We also have a growing portfolio of exciting frontier acreage, which Jacques Gouadain, Trevor Brown, Tim Dibb and Rick Wilkinson will discuss. Finally, and importantly for investors, will all this activity make money for you? The short answer is that it will and Peter Wasow and Don Priestley will pu
Slide 13: Santos' Strategy: How
Slide 10 — Santos’ Strategy: How Santos’ strategy remains the same as it was in May 2001, namely to: e Leverage our base business; our Australian gas franchise; e Through option generation, and e Portfolio management 13 of 27
Slide 14: Santos' Strategy: Where
Slide 11 — Santos’ Strategy: Where Strategy is about “how” we achieve our aim of being the premier Australian energy company and this slide shows “where” we will do it. e The focus of our domestic gas franchise is in Australia, particularly eastern Australia; e Our high impact exploration is offshor
Slide 15: Production Profile
Slide 12 — Production Profile What are some of today’s highlights? One of the key messages is our growing production profile. Approved developments include our sanctioned projects; Mutineer Exeter and Bayu Undan. This slide also shows the potential impact of our captured opportunity portfolio which
Slide 16: Growing Oil and Liquids Production
Slide 13 - Growing Oil and Liquids Production Not only is production expected to grow but the contribution from oil and liquids is also expected to grow by around seventy percent between 2003 and 2006. This will be particularly important for margins. 16 of 27
Slide 17: Base Business
Slide 14 - Base Business One of the highlights of the base business is the success in optimising production from our Cooper Basin gas play. We are now also in the early days in achieving success in optimising Cooper Basin oil production. | am excited by the potential in the bottom water drive oil pl
Slide 18: Capturing Growth
Slide 15 — Capturing Growth The cash we harvest from the base business is being aggressively reinvested in high value projects as quickly as possible. This is a picture of the proposed FPSO for the Mutineer Exeter development. The remarkable thing about this FPSO isn’t the technical specifications b
Slide 19: Team delivering high standards
They are a team that challenges themselves and have set high standards of excellence. Later today Paul Moore and Janet Hann will provide you with more details. 19 of 27
Slide 20: Contracting More Gas
Slide 16 — Contracting More Gas We are also expanding the gas business quickly. Over the last twelve months we have successfully signed major new gas contracts adding close to seven hundred petajoules to our gas portfolio. Yesterday we announced short-term contracts with TXU and Origin for added sup
Slide 21: Exploration
Slide 17 — Exploration We are also planning another active exploration program for 2004. This includes new high impact wells in Indonesia, the United States and Australia in addition to those already announced. The important point to note here is that this is only our second year of high impact but
Slide 22: Business Improvement Program
Slide 18 —- Business Improvement Program Cost leadership is another critical part of our strategy. Many of you would be familiar with our Business Improvement Program. Altogether, the program has delivered a reduction in capital costs of around nine percent since it was announced in May 2001, primar
Slide 23: Santos Continuous Improvement Program
Slide 19 —- Santos Continuous Improvement Program We are now moving to make step rather incremental change through the Santos Continuous Improvement Program or SCIP. This initiative will be focussed on: e Improving key business processes to add value; e Simplifying the organisation; e Further attack
Slide 24: Managing Well
Slide 20 —- Managing Well Not only are we a low cost operator, but as you can see from this slide, we are trending in the right direction. Unit production costs are falling. Unit depletion costs are also expected to fall. Don Priestley will have more to say about this. 24 of 27
Slide 25: How Are We Going
Slide 21 — How Are We Going So how are we going compared with two years ago? We have successfully implemented the strategy and continue to refine it as we go along but in essence it remains the same as it was in May 2001. Our external relationships continue to develop, as is shown by the quality of
Slide 26: The process of improvement never stops
The process of improvement never stops but we are way ahead of where were two years ago. 26 of 27
Slide 27: Close
Slide — Close So in conclusion, key things to watch out for today are: e Production growth; e Progress on Mutineer Exeter and Bayu Undan; e Cooper Basin oil; e Exploration in the Otway Basin, East Java, East Kalimantan and the USA; e Cost control; and e Our targets. It’s a full program but we have a