Santos Limited · ASX:STO
Santos — Merrill Lynch Investor Conference 2004
61 slides from Santos's conference presentation, Sep 27, 2004
Slide 1: Meeting the Challenge - Merrill Lynch Investor Conference
Slide 2: Introduction and key message
Slide 1 e What a challenging year it’s been, starting from the fire at Moomba on New Year’s Day. e The aim of this presentation is to provide you with an update on all our developments. e However the simple message is this: > Over its first 50 years Santos has until recently been largely reliant on
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Slide 4: Disclaimer
Slide 2 e You can see here our disclaimer.
Slide 5: Disclaimer & Important Notice
Disclaimer & Important Notice Santos
Slide 6: Presentation outline in four parts
Slide 3 ¢ Today’s presentation is in four parts. Some of you will be familiar with Santos but others may not be, so first I will describe who we are and how we’re changing. ¢ Second, | will review our existing projects and some of our exciting new projects. Altogether we’re looking at a substantial
Slide 7: Presentation Outline
Presentation Outline
Slide 8: Who are we?
Slide 4 © Who are we? e Santos is a major Australian based oil and gas company with around 1,600 employees. e We are Australia’s largest domestic gas producer, supplying gas to all the mainland Australian states. ¢ Our 2003 production was 54.2 million boe, 70% gas and 30% oil and gas liquids. From n
Slide 9: 1. Who Are We?
1. Who Are We? Je Basi ouuine Production: EXO OF Aton Santos
Slide 10: Strategy released in 2001
Slide 5 ¢ Inearly 2001 we released our strategy, which is to: e Leverage our base business; e Through option generation, and ¢ Portfolio management ¢ This strategy has remained consistent.
Slide 11: Santos' Strategy: How
Santos’ Strategy: How Domestic gas franchise Core competencies Exploration Acquisitions Cost leadership Gas commercialisation Production optimisation Superior capital allocation
Slide 12: Options generated through portfolio management
Slide 6 e This slide gives an example of some of the options capable of being generated through exploration and the portfolio management activities we have been undertaking. Deals so far in 2004 include: e A major gas swap of 150 Petajoules between the Cooper Basin Joint Venture and Origin in Queens
Slide 13: Exploration Options
Exploration Options Santos .
Slide 14: Operational targets to achieve first-quartile performance
Slide 7 ¢ We have set ourselves explicit operational targets to implement our strategy and achieve first-quartile performance. e We aim to replace our reserves with new high value/low cost reserves at no more than US$5.50 per boe. We were close to achieving this in 2003 with a cost of US$5.62 per bo
Slide 15: Creating Value
Creating Value anlar) Replacemen Gost shrinks if for prices of ANG
Slide 16: Changing the way we do business
Slide 8 e Inorder to achieve these targets we are quickly changing the way we do business. e Five years ago we allowed minimal internet access across the company. Now all our employees utilise the internet in many facets of improving our business efficiency such as a recent successful online auction
Slide 17: How Are We Changing?
How Are We Changing? __» Leading systems
Slide 18: New projects replacing old production
Slide 9 e Perhaps our most visible changes are those in our production base and | will now turn to the second section of my presentation: New Projects Replacing Old. e Sixty percent of our production currently comes from our legacy assets in the Cooper Basin and a further 20% comes from a small numb
Slide 19: 2. New Projects Replacing Old
2. New Projects Replacing Old
Slide 20: Existing assets and Moomba fire recovery
Slide 10 First I will look at three existing assets. As many of you may know, we had a fire at our Moomba plant on New Year’s Day. While it affected our first-half results, this incident is now behind us. In early September we announced the full recovery of the plant. The insurance claim is progress
Slide 21: Managing existing assets
Managing existing assets : Santos 10
Slide 22: Status of new projects
Slide 11 e As I mentioned at the beginning of this presentation, our top priority is to bring on a range of new projects as quickly as possible. e This chart summarises the status of projects that are due to come on-line over the next couple of years. e There has been good progress, with Bayu-Undan
Slide 23: Developing New Assets
Developing New Assets Bayu-Undan Liquids Minerva 1
Slide 24: Mutineer-Exeter oil field development
Slide 12 ¢ One of our most important new projects is the Mutineer-Exeter oil field development in the Carnarvon Basin. e This project is being developed in only three years, which is a short timeframe compared with typical Carnarvon Basin oil field developments. This enables a significant increase i
Slide 25: Mutineer-Exeter Field Development
Mutineer-Exeter Field Development Mutineer Manifold Exeter Manifold Santos 12
Slide 26: Step change in average oil price
Slide 13 ¢ While Mutineer-Exeter would be economic at just about any oil price experienced over the last 20 years, it will obviously be particularly attractive if oil prices remain at the levels experienced since 2000. e This graph clearly shows that there has been a step change in the average oil p
Slide 27: Global Oil Prices
Global Oil Prices 13
Slide 28: Longer-term development opportunities
Slide 14 ¢ We also have a range of longer-term development opportunities. e The majority of these projects require concerted efforts on gas commercialisation and our strategies are designed to achieve this. In the nearer term we are establishing gas facility hubs through deals such as the recent Pat
Slide 29: Developing New Assets
Developing New Assets « Sole « Golden Beach 4 Kipper « US expioration « Onshore Aust oil « Onshore Aust gas Petrel-Tern Evans Shoal Indonesia exploration | Egypt exploration Otway exploration Hides Indonesia exploration ¢ Otway exploration Santos 14
Slide 30: 3. Exploration: leverage and strategy stages
Slide 15 I will now turn to my third topic: exploration. Santos is more leveraged to exploration than any other major Australian E&P company and more so than many of its global peers. Our program has the potential to provide a substantial boost to oil and gas reserves. Our strategy since 2001 has re
Slide 31: Exploration: The Journey So Far
3. Exploration: The Journey So Far 1 Building a portfolio .. of opportunities we Ventures/Interatonal Alice Drilling the Anew opportunities 15
Slide 32: Exploration strategy: basin excellence
Slide 16 ¢ Our exploration strategy is focused on basin excellence. We begin by identifying basins where we can build competitive advantages. e The key to this is understanding the basin from its basic building blocks, the rocks. ¢ Once focus areas have been identified, we set about becoming a leade
Slide 33: Exploration: Basin Excellence Strategy
Exploration: Basin Excellence Strategy ny » Leader in technical 7 > East Java understanding + Establish substanti |» Kutel acreage position Guar » Early entrant/low cost | Suez » Balance technical and |» Southern commercial risk to bul Margins a strong portfolio Timer Sea > Select partners w complem
Slide 34: 2004 exploration: portfolio and Jeruk 1
Slide 17 e Turning to 2004 the exploration story is in two parts. During the first half the focus was on building and optimising our portfolio as preparation for the high-impact drilling stage, which has now begun. ¢ The most important drilling result during the first-half was the Jeruk 1 well, seen
Slide 35: Active Portfolio Management
Active Portfolio Management 17
Slide 36: Indonesia, Kutei and southern Australia exploration focus
Slide 18 e In Indonesia, we have built a substantial acreage position in East Java, close to recent large discoveries and on trend with major existing fields. We are currently drilling Jeruk 2, to be followed immediately by Agung 1 using the same rig. e In the Kutei Basin we have taken interests in
Slide 37: Active Drilling Program
Active Drilling Program Bonaparte Basin Caldita/Meiville Cooper Basin Venus, Stilton, Yangtse, Plasi Otway Basin 7 Martha, Callister, Amrit 18
Slide 38: 4. Dividends and capital management
Slide 19 e | will now turn to my fourth topic, dividends and capital management. e Santos is unusual among E&P companies in having a long history of paying solid dividends, currently over 4%. This is good in providing returns to shareholders and in capital discipline. e Santos also has a history of
Slide 39: Dividend and Capital Management
«, Dividend and Capital Management 19
Slide 40: Santos investment case
Slide 20 ¢ Tosum up, | would like to reiterate the Santos investment case. e I have discussed the impending commencement of production from a range of new projects to improve our production profile following the 2004 trough and we are intent on bringing those projects online safely, quickly and on b
Slide 41: Why Santos?
Why Santos? 20
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Slide 45: Prices & Exchange Rates
Prices & Exchange Rates 22
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Slide 49: 2004 Second Half Sensitivities
2004 Second Half Sensitivities 24
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Slide 51: Upcoming Exploration
Upcoming Exploration Sasin/ Arca SV Se Gh Sahin 7 Oy ES ae mm i oe oa | a 13 ee y | AO, ee j a DD ; Hag wos oS Be Oe é Oe 25
Slide 52: Jeruk well, Sampang PSC
Slide 26 e¢ The Jeruk 2 well in Sampang PSC in the East Java Basin follows up the encouraging Jeruk 1 result 1.6 km to the west e Jeruk | tested a large closure (> 40 km2) in Oligocene reefal carbonates that has proven to be hydrocarbon bearing but due to drilling difficulties, could not be conclusi
Slide 53: Sampang PSC
Sampang PSC Top Kujung Limestone Depth Structure 26
Slide 54: Agung prospect and Kujung carbonate
Slide 27 e This slide shows the typical seismic expression of a build-up facies of the Oligocene Kujung carbonate typical of several nearby discoveries. Many of the giant fields in Java and Sumatra are found in similar geologic settings e Santos has recently farmed out an interest in the North Bali
Slide 55: Proposed Agung
_ Proposed Agung 1 Top Kujuing Limestone 27
Slide 56: Amrit frontier prospect
Slide 28 ¢ Amrit is a large frontier prospect e This will be Santos’ first deep water operated well and is testing a new play concept that was validated by the earlier Hill | exploration well drilled last year closer to the coast in shallower water. e Success at Amrit leaves Santos well positioned t
Slide 57: Otway Deep Water
Otway Deep Water 28
Slide 58: Khefren 1X well
Slide 29 e The Khefren 1X well is the first of 8 planned wells to be drilled under the Devon farmin completed last month. e¢ The well will take around 90 days to drill and is a test along trend from the recent BP 80mmbbls plus discovery 6 kms to the north. e This well could verify a new technique th
Slide 59: Gulf of Suez
Gulf of Suez BP Saqqara discovery ae 5 ey 2003, 30 mimbe Santos . 29
Slide 60: Pohon well
Slide 30 ¢ The Pohon well tests a large, toe-thrust anticline. The seismic profile shows the reflective upper Miocene primary target interval which is the same reservoir interval as that in the West Seno field, further west that has recently commenced production and become Indonesia’s first deepwate
Slide 61: Popodi PSC
| Popodi PSC Santos . 30