Santos Limited · ASX:STO
Santos — Macquarie Australia Conference 2015
39 slides from Santos's conference presentation, May 7, 2015
Slide 1: Macquarie Australia Conference
Macquarie Australia Conference 7 May 2015 GLNG Plant, Curtis Island
Slide 2: 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 3: Santos overview
Santos overview A leading energy company in Australia and Asia Driving value and performance in Australia the base business Bay of Bengal and unlocking Phu Khanh resources to meet Nam Con Son Offshore Malaysia gas demand West Natuna Leveraging East Java Papuan existing and new LNG Timor Sea LNG infr
Slide 4: Summary
Summary Focus on operating cash flow and GLNG delivery Safety: 2015 LTIFR of zero Operating efficiency and cost savings GLNG project delivery Robust funding position Focus on shareholder returns LNG storage tanks, Curtis Island 4 | MACQUARIE AUSTRALIA CONFERENCE - MAY 2015
Slide 5: Safety performance
Safety performance 2015 lost time injury frequency rate of zero Safety performance (employees and contractors) Rate per million Work hours hours worked (million) 2 1.9 60 50 1.2 40 1.1 1 0.9 30 0.7 0.64 0.67 20 10 0 0 0 2008 2009 2010 2011 2012 2013 2014 2015* Santos GLNG Bechtel and Saipem Lost tim
Slide 6: Full-year summary and business outlook
Full-year summary and 2014 production growth, record sales and significant project business outlook milestones Focus on generating operating cash flow and GLNG delivery Safety & Project Delivery Cost Savings Performance Production up 6% to 54.1 mmboe GLNG approaching 95% 2015 Capex 44% lower than 20
Slide 7: Focus on operating efficiency and cost savings
Focus on operating Delivering higher production and lower capex efficiency and cost savings Production up 15% Capital expenditure down 40% mmboe A$million 14 1,000 14.0 944 12 12.2 800 10 8 600 566 6 400 4 200 2 0 0 Q1 2014 Q1 2015 Q1 2014 Q1 2015 7 | MACQUARIE AUSTRALIA CONFERENCE - MAY 2015
Slide 8: Focus on operating efficiency and cost savings
Focus on operating Responding to the market environment efficiency and cost Driving efficiencies and reducing costs savings Production cost per barrel down 12% 12% drop in first quarter 2015 production cost per $/boe barrel compared to 2014 full-year 16 16.0 Working with suppliers to reduce costs 14
Slide 9: World population and energy demand
7 8.3 BILLION BILLION PEOPLE PEOPLE World population in 2014 (United Nations) World population in 2030 (US National Intelligence Council) 1.3 50 % BILLION MORE PEOPLE ENERGY have no access to electricity required by 2030 (International Energy Agency) (US National Intelligence Council) 9 | MACQUARIE
Slide 10: Global LNG demand and supply outlook
Global LNG demand and A gap between LNG supply and demand continues to supply outlook widen into the next decade Global LNG demand vs. LNG supply by region mtpa 600 500 215 mtpa 350 400 90 mtpa mtpa Other Atlantic 300 US Other Middle East 200 Qatar Other Pacific 100 Australia 0 2000 2005 2010 2015 2
Slide 11: Santos' LNG portfolio
Santos’ LNG portfolio Leveraging existing and new LNG infrastructure and capabilities Darwin 11.5% equity, 3.7 mtpa plant capacity LNG sales revenue up 340% LNG First LNG in 2006, 450+ cargoes delivered A$m Fully contracted to 2022 300 Multiple options for backfill and expansion Producing emerging 2
Slide 12: PNG LNG project
PNG LNG project Successful delivery of the project ahead of schedule. 87 LNG cargoes shipped in first 12 months Santos well positioned for potential expansion Delivered ahead of schedule and now producing ahead of expectations PNG LNG Drilling ─ All eight Hides development wells completed successful
Slide 13: GLNG project update
GLNG project update On track for first LNG around the end of the third quarter of 2015 GLNG provides positive free cash flow at US$40/bbl oil Surface LNG plant Gas supply facilities & and port pipelines Over 9,000 PJ of dedicated All upstream compression hubs Gas introduced into the LNG plant reserv
Slide 14: Gas supply
Gas supply Over 9,000 PJ of dedicated 2P reserves and 2C resources at the end of 2014 YE 2014 GLNG dedicated 2P and 2C GLNG has an integrated gas supply portfolio of (GLNG share PJ) indigenous gas, Santos portfolio gas, third party 10,000 supply and gas storage 9,033 GLNG proved reserves grew by 22%
Slide 15: GLNG third party gas supply
GLNG third party gas Third party gas generates significant value for the supply project Secured 2,228 PJ Santos Supplier Quantity TJ/day Starts Term Delivery point Price basis portfolio and third party supply Santos portfolio 750 PJ 140 2015 15 years Wallumbilla Oil-linked ‘Horizon’ Attractive oil-l
Slide 16: GLNG upstream
GLNG upstream Upstream is now supplying gas to the plant Performance of Fairview wells Fairview well performance as at March 2015 continues to exceed expectations 347 wells connected Optimum water Optimum gas ─ Well capacity expected to be ~600 capacity (TJ/day) capacity (bbl/day) TJ/day by the end
Slide 17: GLNG Surface facilities
GLNG Surface facilities Upstream gas hubs are supplying gas to the LNG plant and have produced above nameplate capacity Existing 170 TJ/day existing gross gas capacity at Fairview and Scotia 160 TJ/day gross gas capacity Fairview Hub 5 4 ML/day water handling facilities Operational 250 TJ/day gross
Slide 18: GLNG downstream
GLNG downstream Commissioning well underway and expect first LNG around the end of the third quarter of 2015 LNG Train 1 piping and cabling nearing completion with loop testing well advanced LNG Train 2 piping installation and cable pulling underway Gas introduced to plant in March 2015 and flare li
Slide 19: GLNG expenditure guidance
US$18.5 billion1 capex from FID to the end of 2015 GLNG expenditure guidance 2016-20 average capex estimate A$900 million average per annum GLNG provides positive free cash flow at US$40/bbl oil Vast majority of 2016-20 expenditure is the upstream, and Capital expenditure estimate includes: FID to e
Slide 20: GLNG Milestones
GLNG Milestones On track for first LNG around the end of the third quarter of 2015, within US$18.5 billion budget Milestone Date Marine crossing tunnelling completed February 2014 Last Train 1 module installed June 2014 First LNG tank hydrotested July 2014 Pipeline commissioning commenced August 201
Slide 21: Bayu-Undan / Darwin LNG
Bayu-Undan / Darwin LNG Solid production. Phase 3 offshore expansion completed ahead of schedule. Multiple feed gas options for backfill and expansion emerging Maintain high margin asset Site for new ─ track record of reliable delivery LNG trains (450+ cargoes since 2006; above contract production)
Slide 22: Browse Basin
Browse Basin Appraisal planning and evaluation of development Greater Crown and concepts progressing Lasseter Browse Basin Multi-tcf resource position established on the back of Crown and Lasseter discoveries Concept evaluation and appraisal strategy to underpin development options underway Opportun
Slide 23: Bonaparte Basin Barossa Caldita
Bonaparte Basin Successful carried appraisal drilling program supports Barossa Caldita standalone capability for LNG expansion or backfill Bonaparte Basin Appraisal program completed ─ Barossa-2 drilled in the core of the field intersected 88 metres of net pay across a 217 metre gross interval, a 10
Slide 24: Asia Pacific
Asia Pacific Building a high-margin business in Asia, accounting for 27% of Santos’ 2014 production Block 123, Vietnam Exploration drilling planned for 2016 Warim, Indonesia Bangladesh Block 12W, Vietnam Data acquisition planning Block SS-1 seismic Chim Sào has produced over underway by operator cam
Slide 25: Eastern Australia market opportunity
Eastern Australia Leveraging value from portfolio of resources and market opportunity infrastructure Tripling of east coast gas demand and associated higher prices Gas demand Cooper Basin capacity build on track to meet 2015+ contracts driving growth Moomba infrastructure critical to meet forecast e
Slide 26: Eastern Australia gas market portfolio
Eastern Australia Positioned to capitalise on the changing market gas market portfolio dynamics with Cooper playing central role Changing market dynamics Santos’ integrated value proposition Tripling of Eastern Australia Gas Demand (PJ) 2,500 2015 Transition Resources year LNG 2,000 Production APLNG
Slide 27: World scale unconventional resource potential
World scale Work program: understanding geology, targeting unconventional resource sweet spots, testing well designs to lower costs and potential increase flow rate McArthur Basin Exploration Development Pre-discovery Exploration Development Appraisal Appraisal Thick stacked marine shale with rich l
Slide 28: Unconventional Resources
Unconventional Resources Encouraging results across all play types ˃ 10 deep coal ‘add-on’ frac stages now flow tested across Cooper Basin; averaging 0.3 Condensate mmscf/d with up to 1 mmscf/d achieved with associated condensate volume. Patchawarra Rich Deep ˃ PEL 570 liquids-rich Deep Coal Play; d
Slide 29: Summary
Summary Focus on operating cash flow and GLNG delivery Safety: 2015 LTIFR of zero Operating efficiency and cost savings GLNG project delivery Robust funding position Focus on shareholder returns LNG storage tanks, Curtis Island 29 | MACQUARIE AUSTRALIA CONFERENCE - MAY 2015
Slide 30: Reference Slides
Reference Slides May 2015 Hides Gas Conditioning Plant, PNG LNG
Slide 31: 2014 Full-year financial result
2014 Full-year Growth in production, sales revenues and EBITDAX financial result Underlying profit of $533 million, up 6% Non-cash impairments of $1.6 billion after tax 2014 Full-year Change on 2013 Production 54.1 mmboe +6% Sales revenue $4,037 million +12% EBITDAX $2,153 million +8% EBIT (excludin
Slide 32: 2014 production of 54.1 mmboe
Production 2014 production of 54.1 mmboe – highest in 5 years 2015 guidance of 57-64 mmboe 2014 Q-on-Q production growth Production kboe/day › Successful start-up of the PNG LNG project ahead 200 of schedule in April 2014 156 - 175 − PNG LNG producing ahead of expectations 180 8% › Cooper gas and oi
Slide 33: 2014 Full-year financials
2014 Full-year Underlying profit up 6% to $533 million financials Non-cash impairments of $1.6 billion after tax NPAT and underlying profit Reconciliation of underlying profit $million $million 800 800 60 (90) 600 188 700 (54) 516 504 533 692 400 271 662 (45) 600 (30) 608 200 500 563 533 533 0 504 5
Slide 34: Capex in 2014 $3.6 billion excluding capitalised interest
Capital expenditure Capex in 2014 $3.6 billion excluding capitalised interest 2015 forecast spend 44% lower than 2014 Full-year capital expenditure A$billion Breakdown of 2014 capital expenditure (excludes capitalised interest) -13% 4 4.1 3.6 4.1 Other EA, Exploration, -44% PNG LNG , $234m $426m $32
Slide 35: Balance sheet and funding
Balance sheet and Robust funding position: $2.6 billion in liquidity funding Minimal debt maturities until 2017 A$0.6 billion in cash and A$2.0 billion Debt maturity profile Notes mature in 2070, with undrawn debt facilities as at 31 March Santos option to redeem in 2017 A$million 2015 3,000 Forecas
Slide 36: Dividends
Dividends Final dividend maintained at 15 cents per share, fully franked, with underwritten DRP Full-year dividend 35 cents, up 17% Fully-franked dividends declared per share Final dividend maintained at Cents per share 15 cents per share fully 50 PNG LNG FID franked First PNG LNG Brings full-year d
Slide 37: Impairment
Impairment Non-cash impairment charge of $1.6 billion after-tax Impairment loss by asset*0 200 400 600 800 1000 Significant fall in global commodity prices A$million and a follow-on reduction in future oil price assumptions Gunnedah Basin 566 808 ─ Oil producing assets affected ─ Oil exploration and
Slide 38: 2015 guidance
2015 guidance Item 2015 guidance Production 57-64 mmboe Production costs $14.2-14.6/boe DD&A expense $17.5-18.0/boe Capital expenditure (including exploration & evaluation)1 $2 billion 1 Capital expenditure guidance excludes capitalised interest, which is forecast at approximately $135 million in 20
Slide 39: Contact information
Contact information Head Office Adelaide Andrew Nairn Ground Floor, Santos Centre Group Executive Investor Relations 60 Flinders Street Direct: + 61 8 8116 5314 Adelaide, South Australia 5000 Email: andrew.nairn@santos.com GPO Box 2455 Andrew Hay Adelaide, South Australia 5001 Telephone: +61 8 8116