Slide 1: Santos reports 2020 half-year results (ASX media release)
ASX / Media Release 20 August 2020 Santos reports 2020 half-year results Half-year (US$m) 2020 2019 Change Product sales 1,668 1,974 -16% EBITDAX1 995 1,260 -21% Underlying profit1 212 411 -48% Net (loss)/profit after tax (289) 388 -174% Free cash flow1 431 638 -32% Interim dividend (UScps) 2.1 6.0
Slide 2: CEO comments (media release continued)
“Consistent application of our disciplined operating model continues to deliver cost reductions and efficiencies, with unit production costs down 6 per cent to US$6.81/boe (excluding the ConocoPhillips acquisition). “The acquisition of ConocoPhillips assets in northern Australia and Timor-Leste was
Slide 3: Live webcast
Live webcast Santos will host a live webcast for analysts and investors today at 11:00am AEST. To access the live webcast, register on Santos’ website at www.santos.com. This ASX announcement was approved and authorised for release by Kevin Gallagher, Managing Director and Chief Executive Officer. P
Slide 4: Santos 2020 half-year results
Santos 2020 half-year results 20 August 2020
Slide 5: Disclaimer and important notice
Disclaimer and important notice This presentation contains forward looking statements that are subject to risk factors associated with the oil and gas industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which c
Slide 6: Highlights
Highlights Low-cost, diversified portfolio generating strong cash flow. Growth project optionality maintained for when business conditions improve Record production and Lowered free cash flow Strong free cash flow sales volumes break even oil price With an even stronger Delivered $431 million
Slide 7: 2020 half-year results
2020 half-year results Strong operational and cost performance delivered $431 million of free cash flow and $212 million underlying profit. Reported loss includes previously announced impairment FREE CASH FLOW1 REPORTED LOSS AFTER TAX2 UNDERLYING PROFIT2 $431 $(289) $212 112% -32% -174% -48% million
Slide 8: Safety and environment
Safety and environment Ongoing improvement in personal and process safety metrics despite COVID-19 Injury frequency vs activity levels Loss of containment incidents Frequency per million hours worked No of onshore wells Count of Tier 1 and Tier 2 1.0 600 35 500 30 0.8 25 400 0.6 20 300 0.4 15 200 10
Slide 9: Sustainability
Sustainability For over 65 years, Santos has been safely and sustainably exploring and developing Australia’s natural gas resources + In 2018, we set an aspiration to achieve net-zero emissions by 2050 Climate + On track to achieve medium-term emissions targets + Review of industry association membe
Slide 10: COVID-19 response
COVID-19 response Business continuity through the pandemic + “Always Safe” is one of Santos’ core values + Everyone across our assets and offices has had to work in new ways over the past months while remaining always safe and maintaining business continuity + Preventative and response controls defi
Slide 11: Targeting 2020 free cash flow breakeven of <$25 per barrel
Targeting 2020 free cash flow breakeven of <$25 per barrel Diversified and balanced portfolio supportive of strong, sustainable free cash flow through the oil price cycle 1H20 production volumes Free cash flow1 Oil price mmboe $ million $/bbl + First half free cash flow $431 million + Targeting 2020
Slide 12: Finance & capital management
Finance & capital management Anthony Neilson CFO
Slide 13: Financial discipline
Financial discipline Our disciplined low-cost operating model is built for these challenging times + Lower costs are being realised from a decisive, disciplined response to the COVID-19 Targeting free cash flow pandemic whilst maintaining safety, integrity and 2020 production-related spend breakeven
Slide 14: 2020 half-year financial snapshot
2020 half-year financial snapshot Strong operational and cost performance delivered $431 million of free cash flow. Underlying profit lower due to 34% decrease in the average realised oil price $ million 1H20 1H19 Change Product sales revenue 1,668 1,974 -16% EBITDAX 995 1,260 -21% Underlying profit
Slide 15: Strong free cash flow generation
Strong free cash flow generation At similar average oil prices to 2016, first half 2020 operating cash flow and free cash flow were each $0.5 billion stronger Operating cash flow Investing cash flow1 Free cash flow1 Oil price $ million $ million $ million US$/bbl 1,051 (413) (407) (391) 700 80 Avera
Slide 16: Underlying earnings
Underlying earnings Fixed price domestic gas contracts and strong realised LNG prices shielded first half revenues from lower oil prices Product sales revenue Oil price EBITDAX Underlying profit1 $ million US$/bbl $ million $ million Average realised 1,974 1,260 411 80 oil price 1,680 1,668 995 1,44
Slide 17: Production and sales volumes
Production and sales volumes Achieved record half-year production at 38.5 mmboe. Expecting stronger second half due to CoP acquisition and higher WA domestic gas volumes Half year production Half year sales volume mmboe mmboe ~44.5-49.5 ~54-60 37.0 38.5 45.2 46.9 40.9 40.1 38.0 31.1 29.5 28.0 1H16 1
Slide 18: Production costs
Production costs 6% reduction in upstream unit production costs (excluding CoP) as cost reduction initiatives announced in March are flowing through Upstream unit production costs1 $/boe + Sustained cost improvement and operating efficiencies 8.45 8.07 8.05 -6% + Upstream production cost guidance fo
Slide 19: Cash generative Operating Model continues to drive value
Cash generative Operating Model continues to drive value Diversified portfolio of core assets delivering strong margins despite lower prices 2020 First half results summary1 Cooper Qld Nth Aust + Fixed price domestic gas contracts and strong PNG WA Santos Basin & NSW & T-L2 realised LNG prices shiel
Slide 20: Capital expenditure
Capital expenditure 2020 guidance maintained at ~$750m for sustaining capex and ~$150m for major growth 1H20 capital expenditure $372 million1 Starting to drill more horizontal onshore wells + Comprising $330m sustaining and $42m major growth, predominantly related to the Barossa project Onshore cap
Slide 21: Debt and liquidity
Debt and liquidity Net debt $3,748 million. Ample liquidity of over $3 billion + Net debt $3,748 million (includes Net debt Cash, debt and undrawn debt $million facilities at 30 June 20201 $399 million AASB 16 lease liabilities) including $million CoP acquisition, as at 30 June 2020 + Gearing 34% (i
Slide 22: Drawn debt maturity profile
Drawn debt maturity profile CoP acquisition facility due 2022 to be re-financed with ≥ 5 year debt. Debt markets are strong, liquid and very supportive. No other material near-term maturities Drawn debt maturity profile1 Breakdown of drawn Drawn debt maturity profile excluding PNG debt facilities1 L
Slide 23: ConocoPhillips integration update
ConocoPhillips integration update The integration of the ConocoPhillips’ Western Australian business into Santos is progressing well. Expecting upper end of $50-75 million per annum synergy guidance Integration process Synergy delivery + Leveraging in-house integration team and expertise + The integ
Slide 24: Asset performance
Asset performance Kevin Gallagher Managing Director & CEO
Slide 25: Five core assets
Five core assets Diversified portfolio of core assets, each with major growth opportunities and flexibility on commitment timing Santos-operated asset hubs Non-operated asset Northern Australia Western Australia Cooper Basin QLD & NSW PNG and Timor-Leste Cash-generative assets with growth optionalit
Slide 26: Offshore conventional business
Offshore conventional business Following commencement of the 12-year, fixed-price US$ denominated Alcoa contract in mid June, Santos now supplies ~50% of Western Australia’s domestic gas requirements + WA EBITDAX margin maintained at 72% Strong cash highlighting benefit of fixed price domestic margi
Slide 27: Gas and oil infill and tieback opportunities
Gas and oil infill and tieback opportunities Lower cost brownfield, short-cycle projects Van Gogh: Phase 2 oil infill Spartan: Backfill to Varanus Island Bayu-Undan: Infill to extend field life + Three dual lateral wells targeting + Single well subsea development + Planning for another phase of infi
Slide 28: Barossa development
Barossa development Value improvement work underway targeting reduced project costs. Targeting FID-ready by end 2020, subject to business conditions Barossa development + FID deferred, major contracts sustained and 2020 expenditure minimised + Undertaking value engineering to reduce cost + Reviewing
Slide 29: Dorado development
Dorado development Competitive pre-FEED for FPSO and tendering for wellhead platform underway to support FEED entry in 2H 2020. FID targeted for 2021, subject to business conditions Dorado development concept + Shallow water depth allows for simple wellhead platform (WHP) and FPSO + Initial phase of
Slide 30: Integrated onshore business with market optionality
Integrated onshore business with market optionality Onshore assets connected to domestic markets and long-term Asian demand for LNG + Growth self-funded by low-cost disciplined operating Australia’s model lowest cost onshore operator + Driving capital efficiency to unlock oil and previously uneconom
Slide 31: Cooper Basin operating model
Cooper Basin operating model Self-funded growth in reserves and production Wells drilled 2P reserves replacement ratio Production volume Targeting ~901 wells in 2020, Targeting >100% RRR on three year Targeting ~17-19 mmboe by 2025 including 6 horizontal wells rolling average No wells per year % thr
Slide 32: Cooper Basin value optimisation
Cooper Basin value optimisation Capital efficiency focus and optimise infrastructure Promising initial results from Increasing Cooper Basin infrastructure utilisation horizontal wells + Record total liquids throughput at Port Bonython + First well in the program was Vertical well Horizontal well San
Slide 33: Moomba carbon capture and storage
Moomba carbon capture and storage 1.7 mtpa CCS project rapidly progressing in FEED and targeting FID-ready by end-2020 Current project: Store 1.7 mtpa Moomba vented CO2 with first injection in 2024 Industry leading cost: Targeting full life cycle cost <A$30/tCO2 in Phase 1 Primary objective: Large-s
Slide 34: Queensland
Queensland Record upstream GLNG production driven by strong ramp at Roma and Arcadia Strong gas production GLNG sales gas production Arcadia production growing Arcadia sales gas production TJ/d (gross) TJ/d (gross) + Record upstream gas + Production increased by production 100% to 30 TJ/d 30 622 642
Slide 35: Narrabri gas project
Narrabri gas project Strong demand for natural gas in New South Wales 100% of Narrabri gas earmarked for the domestic market Wilga Park Power Station generation capacity 22MW + Gas supply MOUs signed with Perdaman, Brickworks and Weston Energy + Near-term supply to local industry + Current Narrabri
Slide 36: Summary
Summary Low-cost, diversified portfolio generating strong cash flow. Growth project optionality maintained for when business conditions improve Record production and Lowered free cash flow Strong free cash flow sales volumes break even oil price With an even stronger Delivered $431 million in
Slide 37: Appendix
Appendix
Slide 38: Financial performance
Financial performance EBITDAX down 21% to $995 million. Underlying profit down 48% to $212 million $million 1H20 1H19 Variance + Total revenue down 15% due lower average LNG and liquids Total revenue 1,728 2,043 (15%) prices as a result of the COVID-19 pandemic. This is partially offset by higher do
Slide 39: Sales revenue
Sales revenue Fixed-price domestic gas portfolio cushions impact of lower oil prices Average realised crude oil price Average realised LNG price $million 1H20 1H19 Variance US$/bbl US$/mmBtu Sales Revenue (incl. third party) -34% -14% 72.11 9.97 Gas, ethane and liquefied gas 1,253 1,364 (8%) 8.57 Cr
Slide 40: Free cash flow
Free cash flow Calculation of 2020 first-half free cash flow $million 1H20 Operating cash flows 838 Deduct Investing cash flows (1,119) Add Net acquisitions and disposals 709 Add Major growth capex1 48 Deduct Lease liability payments (45) Free cash flow 431 Lease liability payments are now treated a
Slide 41: Significant items
Significant items Reconciliation of half-year net (loss)/profit to underlying profit $million 1H20 1H19 Net (loss)/profit after tax (289) 388 Add/(deduct) significant items after tax Impairment losses 526 26 Net gains on asset sales - (7) Fair value gains on hedges (27) 4 One-off acquisition and dis
Slide 42: Liquidity and net debt as at 30 June 2020
Liquidity and net debt as at 30 June 2020 Net debt $3,748 million. Ample liquidity of over $3 billion Liquidity ($million) 30 Jun 2020 31 Dec 2019 Cash 1,262 1,067 Undrawn bilateral bank debt facilities 1,870 1,870 Total liquidity 3,132 2,937 Debt ($million) Export credit agency supported loan facil
Slide 43: 2020 guidance
2020 guidance 2020 guidance maintained 2020 guidance item Guidance Production (mmboe) 83-88 mmboe Sales volumes (mmboe) 101-107 mmboe Capital expenditure – base ($m) ~750 million Capital expenditure – major growth ($m) ~150 million Upstream production costs (base business)1 6.70-7.10/boe Upstream pr
Slide 44: 2020 half-year segment results summary
2020 half-year segment results summary Corporate Cooper Queensland Northern Western US$million PNG explor’n & Total Basin & NSW Australia1 Australia elimins Revenue 471 506 273 146 285 47 1,728 Production costs (66) (36) (32) (71) (88) 9 (284) Other operating costs (27) (39) (19) - (2) (45) (132) Th
Slide 45: 2019 half-year segment results summary
2019 half-year segment results summary Corporate Cooper Queensland Northern Western US$million PNG explor’n & Total Basin & NSW Australia Australia elimins Revenue 568 522 328 85 437 103 2,043 Production costs (61) (33) (37) (35) (114) 7 (273) Other operating costs (41) (39) (24) - (3) (38) (145) Th
Slide 46: Oil price hedging
Oil price hedging Oil price hedging provides protection to oil price downside Hedging positions Unit H2 2020 2021 Volume hedged mmbbl 9.7 5.4 Average weighted price - floor US$/bbl 38 40 Average weighted price - ceiling US$/bbl 49 51 2020 Half-year results 43