Santos Limited · ASX:STO
Santos — FY2006 Earnings Presentation
27 slides from Santos's earnings presentation, Feb 22, 2007
Slide 1: 2006 Full Year Results
2006 Full Year Results John Ellice- Ellice-Flint - Chief Executive Officer Peter Wasow - Chief Financial Officer 22 February 2007 1. Webcast Agenda John Ellice- Ellice-Flint CEO & Managing Director Operational and financial highlights Financial performance Strategic value drivers and outlook Cooper
Slide 2: Strong Operating Performance
Strong Operating Performance Production Sales Revenue EBITDAX 61.0 mmboe 9% $2,769m 12% $2,144m 17% 80 3000 2500 A$m A$m mmboe 60 2000 2000 1500 40 1000 1000 20 500 0 0 0 2004 2005 2006 2004 2005 2006 2004 2005 2006 NPAT Production Costs/bbl 2P Reserves Underlying A$683m 7% A$6.41/bbl 3% 819 mmboe 6
Slide 3: Banjar Panji Incident; Increase in Contingent Resources
Banjar Panji Incident • Santos 18% non-operated interest • Mud flow commenced May 2006 • Response effort managed by a National Mitigation Team • Financial impact remains uncertain 5. 14% Increase in Contingent Resources Over 2.2 billion boe of contingent resource Australia Offshore Australia Onshore
Slide 4: 2006 Delivers On Strategic Targets
Webcast Agenda Peter Wasow Chief Financial Officer Operational and financial highlights Financial performance Strategic value drivers and outlook Cooper Basin oil Eastern Australian gas Western Australian oil and gas LNG projects Asian growth 7. 2006 Delivers On Strategic Targets Production Growth 6
Slide 5: Production Grows 9%, Margin Grows 12%
Production Grows 9% mmboe 65 11.6 61.0 (1.2) 59.8 60 56.0 (0.4) (6.2) USA 55 Cyclone impact 50 Mutineer Natural New 45 Exeter decline projects 40 35 30 2005 2006 Continuing Operations 2006 2007 outlook 59- 59-61 mmboe 9. Margin Grows 12% Netback $/boe $/boe (Cash margin per boe sold) Controllable It
Slide 6: Reserve Replacement Cost Under Control; Reserves Grow
Reserve Replacement Cost Under Control Annual RRC per barrel 20 20 15 15 US$/boe A$/boe 10 10 Recycle Ratio 5 3yr ave (US$) 5 2.5 2.0 0 0 2003 2004 2005 2006 1.5 Times 1.0 Netback per barrel 35 0.5 30 25 0.0 A$/boe 2003 2004 2005 2006 20 15 10 … price leverage captured 5 0 2003 2004 2005 2006 11. Re
Slide 7: Shareholders Benefit; Operating Performance Remains Strong
…and Shareholders Benefit 4.0 25% EPS ROCE 3.5 EBITDAX per share Target 20% 3.0 Target 2.5 15% $/share 2.0 1.5 10% 1.0 5% 0.5 0.0 0% 2004 2005 2006 2004 2005 2006 13. Operating Performance Remains Strong NPAT ($m) 800 762 (123) 56 (12) (40) 700 683 639 643 600 Significant Operating Exploration Signi
Slide 8: Behind the Headline: Significant Items
Behind the Headline: Significant Items 2006 2005 Impairment reversal/ (write down) (14) 77 Gain on asset sales 41 39 Moomba insurance recovery - 24 Restructuring - (4) Accelerated depreciation East Spar - (13) Banjar Panji 1 well incident (67) - Total (40) 123 15. Banjar Panji Incident Estimated Ins
Slide 9: Production Costs Reducing; Higher Industry Costs Drive Up DD&A
Production Costs Reducing Production Cost $/boe $/boe 7.00 6.59 (0.11) (0.07) 6.41 0.01 6.40 Volume Costs USA 6.00 5.00 4.00 3.00 2005 2006 Continuing Operations 2006 17. Higher Industry Costs Drive Up DD&A $m 800 127 (11) 27 692 (24) 700 668 Reserves Imp/ USA 600 561 6 (18) Revisions Other Volume E
Slide 10: Capital Expenditure; 2006: A Good Year
Capital Expenditure $m Exploration Delineation Development Other 0 100 200 300 400 500 600 700 2005 2006 2007 Forecast Total $959m $1,306m $1,180m 19. 2006: A Good Year NPAT $m Operating cash flow $m 800 762 1600 700 683 643 639 1400 600 1200 Tax change 500 1000 400 13% CAGR 300 800 200 600 Moomba i
Slide 11: A Portfolio of Growth Businesses
Webcast Agenda John Ellice- Ellice-Flint CEO & Managing Director Operational and financial highlights Financial performance Strategic value drivers and outlook Cooper Basin oil Eastern Australian gas Western Australian oil and gas LNG projects Asian growth 21. A Portfolio of Growth Businesses 1. Coo
Slide 12: Cooper Basin Oil – 2006 Results
Cooper Basin Oil High value opportunity Santos competitive advantage Largest onshore Australian Oil prices higher for longer oil acreage position: 27,000km2 Utilising modern rigs and Over 700 mmbbl original proven technology to increase oil in place recovery factors Unique capabilities, Ability to e
Slide 13: Cooper Basin Oil – Production Outlook; Eastern Australian Gas
Cooper Basin Oil – Production Outlook Significant near and medium term production impact 35,000 30,000 Barrels per day (Santos share) Actual Projected 25,000 20,000 15,000 10,000 5,000 Base 0 2004 2005 2006 2007 2008 2009 2010 25. Eastern Australian Gas Strong market growth Santos is well positioned
Slide 14: EA Gas – Supply and Demand; CSG Business
EA Gas – Supply and Demand Significant uncontracted demand to place Santos’ Santos’ 1P, 2P & 3P reserves 1,400 1,200 1,000 Total Market Demand* 800 PJ/a 600 Remaining Uncontracted Total Contracted Market 3P - Santos Share 400 Remaining Uncontracted Remaining Uncontracted 2P - Santos Share 200 1P - S
Slide 15: EA Gas – CSG Growth; Western Australian Oil and Gas
EA Gas – CSG Growth 65% increase in CSG production in 2006 • Integrated Fairview acquisition CSG Sales (Santos share) • Added 380 PJ of 2P reserves 200 Scotia Fairview • Finding cost of 7c/GJ 150 • Drilled 40 wells TJ/day • Capex A$124 million 100 • Installed Fairview to Wallumbilla 50 pipeline 0 20
Slide 16: WA Oil & Gas – Gas Production Outlook and Exploration
WA Oil & Gas – Gas Production Outlook Production increasing into higher price environment • John Brookes ramp-up 120 - 200 PJ uncontracted 2P 100 reserve TJ/day Sales 80 • Reindeer follow up opportunity 60 - 300 ̶ 500 PJ resource 40 - Feasibility study underway 20 - First production target 2010 0 20
Slide 17: LNG Projects; LNG Projects - PNG
LNG Projects Favourable LNG dynamics Santos well positioned Booming demand for LNG Multiple LNG opportunities Large gas resources a Significant contingent resource prerequisite positions with quality assets PNG LNG Hides field critical to PNG LNG Santos 40% interest in 8+ tcf Darwin LNG expansion of
Slide 18: LNG Projects - Darwin; Asian Growth
LNG Projects - Darwin Santos well positioned for Darwin second train Santos 40% • Material acreage ConocoPhillips (Op) 60% position Abadi Sunrise Barossa • Appraisal ongoing Evans Shoal Santos (Op) 40% Caldita • 8+ tcf resource Shell 50% Osaka Gas 10% • Aligned with DLNG1 ConocoPhillips Santos 10.6%
Slide 19: Asian Growth - Vietnam and Indonesia
Asian Growth - Vietnam Two oil discoveries, with follow- follow-on opportunities follow-on • Blackbird and Dua oil 25km discoveries • Accelerating seismic into Q1 Swan gas field 2007, drilling into Q4 2007 • Commencing development planning • Swan gas field development Dua oil discovery potential 12
Slide 20: Asian Growth - India; Production Outlook
Asian Growth - India High potential region • Attractive frontier basin India India • Work program Bangladesh Kolkata - 1 exploration well - 2D and 3D seismic Ganges-Brahmaputra Burma - Estimated cost A$90m Delta • Emerging market with sound energy fundamentals 0 100 Legend ki lometres Santos Acreage
Slide 21: Summary; Reference Slides
Summary • Large scale, low risk opportunity 1. Cooper Basin oil • Unique competitive advantage • Acreage and infrastructure • CSG new legacy asset 2. Eastern Australian gas • Flexibility through hub strategy • Positioned for increasing demand 3. Western Australian oil • Increasing gas production int
Slide 22: 2007 Forward Exploration Schedule; Project Status
2007 Forward Exploration Schedule Well Name Basin / Area Target Upside Resource Potential (mmboe) Santos Interest Timing 0 – 50 50 -100 100 - 250 % RAD 2X Egypt Oil 9 50 Q1 07 Mahogany Surat/Bowen Oil 9 53.8 Q1 07 Stitch Surat/Bowen Oil 9 50 Q1 07 Hurricane-2 Dampier Oil 9 31.3 Q2 07 Totem-1 Dampier
Slide 23: Netback; 2007 Capital Expenditure Outlook
Netback $m 2006 2005 Sales Revenue 2,769 2,463 Operating Costs 648 663 Netback 2,121 1,800 Sales Volumes (mmboe) 64.1 61.1 Netback $/boe 33.10 29.46 45. 2007 Capital Expenditure Outlook $m 2007 2006 Exploration 173 258 Delineation 251 254 Development 756 794 TOTAL 1,180 1,306 Acquisitions (before as
Slide 24: Capital Expenditure Details; Operating Costs
Capital Expenditure Details $m 2006 Exploration – 25 wells 258 Delineation – Cooper Basin, Mutineer-Exeter, USA, other 254 Development – Mutineer-Exeter, Bayu-Undan LNG, John Brookes, Casino, Oyong, Maleo 612 Other – Cooper Basin equipment replacement 182 1,306 2007 Forecast Exploration – 14 wells 1
Slide 25: Production Costs; Operating Cash Flow
Production Costs $m Increase in Volumes 400 30 (8) (6) 8 390 390 382 380 East Spar 369 (9) 6 Costs USA 370 360 360 New USA Acquisitions Fields/ 350 Volume 340 330 320 310 300 2005 2005 2006 2006 Production Cost Continuing Continuing Production Cost $6.59/boe Operations Operations $6.41/boe $6.68/boe
Slide 26: Operating Performance; 2007 Sensitivities
Operating Performance EBITDAX ($m) up 17% 2,300 275 (6) 4 43 2,144 (80) 2,064 2,000 Gas Costs Other USA 1,838 (34) 1,804 24 Prices 1,700 Moomba Volume Liquids Incident Prices 1,400 1,100 800 2005 2006 2006 EBITDAX EBITDAX EBITDAX Continuing Operations 51. 2007 Sensitivities Sensitivity Change NPAT i
Slide 27: Prices & Exchange Rates; Disclaimer & Important Notice
Prices & Exchange Rates Change 2006 2005 % Realised Oil Price (US$/bbl) 67.71 54.76 24 Realised Oil Price (A$/bbl) 89.35 73.83 21 Average Gas Price A$/GJ 3.78 3.62 4 A$/US$ Exchange Rate 75.78 74.17 (2) (after hedging) 53. Disclaimer & Important Notice This presentation contains forward looking stat