Slide 1: Santos 2017 Full-year results
Santos 2017 Full-year results 21 February 2018
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: Turnaround delivered ahead of plan
Turnaround delivered ahead of plan Santos now well-positioned to unlock significant shareholder value and capitalise on a clear strategy to Build and Grow the business Strengthened the balance sheet Simplified the portfolio Reduced costs and increased efficiencies Advanced significant growth o
Slide 4: 2017 Full-year highlights
2017 Full-year highlights Significant turnaround in business performance Forecast free cash flow breakeven reduced Balance sheet strengthened Forecast free cash flow breakeven1 Net debt 36.50 + $618 million free cash flow 3.5 + Ample liquidity of 32 generated $3.2 billion in cash and 2.7 undrawn bil
Slide 5: Strong free cash generation
Strong free cash generation $1.4 billion turnaround in free cash generation in two years Free cash flow1 + 2018 forecast free cash flow breakeven ~$36/bbl2 US$ million + includes all 2018 forecast capex 618 + Every $10/bbl increment in oil price above free cash 206 flow breakeven increases free cash
Slide 6: Build & Grow
Build & Grow Execute and bring on-line growth opportunities across the core portfolio BUILD & GROW NORTHERN PNG QUEENSLAND AUSTRALIA + Further debottlenecking of + Commercialise uncontracted Eastern Qld gas + Barossa field existing PNG LNG plant + Roma East sanctioned identified as lead + PNG LNG ex
Slide 7: Sustainability
Sustainability SAFETY & ENVIRONMENT LOST TIME INJURY FREQUENCY RATE Three year rolling average (2012 – 2017) + Increased focus on process safety and incidents with rate per million hours worked potential for significant harm 1.2 1.0 + Continued focus on compliance to safety critical 0.8 maintenance
Slide 8: LNG Marketing and Trading
LNG Marketing and Trading Santos and ENN Ecological in discussions to establish an LNG trading joint venture Chinese gas demand + Builds on the existing strategic relationship between Santos mtpa and ENN 350 + The LNG trading joint venture will: 300 + focus on the increasing LNG demand across growin
Slide 9: Driving sustainable shareholder value
Driving sustainable shareholder value Being a low-cost, reliable and high performance business underpins the significant organic growth options across the core portfolio DISCIPLINED CORE LONG-LIFE GAS MAXIMISE FREE OPERATING MODEL ASSET PORTFOLIO CASH FLOW + Core long-life gas assets positioned to p
Slide 10: Finance & capital management
Finance & capital management Anthony Neilson CFO
Slide 11: Financial priorities
Financial priorities Significant progress in 2017 on our financial priorities REDUCING INCREASING REDUCING DEBT CAPITAL COSTS FREE CASH FLOW MANAGEMENT + EURO 1 billion Subordinated + Free cash flow Notes redeemed + Net debt $618 million and replaced by + Unit upstream $2.7 billion + $412 million $8
Slide 12: 2017 Full-year financial snapshot
2017 Full-year financial snapshot Underlying profit up 433% to $336 million. Net loss of $360 million incorporates $703 million after tax net impairment ($689 million taken at half-year results) US$ million 2017 2016 Change Product sales 3,107 2,594 20% EBITDAX 1,428 1,199 19% Underlying profit1 336
Slide 13: Strong free cash flow generation
Strong free cash flow generation Free cash flow up 200% to $618 million continues trend of improving free cash generation Operating cash flow Investing cash flow1 Free cash flow1 US$ million US$ million US$ million 618 1,248 2015 2016 2017 206 840 2016 2017 811 (634) (630) 2015 (1,550) 2015 2016 201
Slide 14: Production and sales volumes
Production and sales volumes Core asset production 4% higher. Core asset sales volumes 5% higher Production volume Sales volume mmboe mmboe 61.6 59.5 84.1 57.7 83.4 64.3 2015 2016 2017 2015 2016 2017 Core assets Other assets Own product Third party + Core asset production increased 4% to 51.8 mmboe,
Slide 15: Sales revenue
Sales revenue Sales revenue higher due to higher oil and LNG prices, and higher LNG sales volumes US$ million 2017 2016 Var + Sales revenue up 20% to $3.1 billion Sales Revenue (incl. third party) + Average realised LNG price up 21% to $7.31/mmbtu Gas, ethane and liquefied gas 2,205 1,784 24% + High
Slide 16: Production costs
Production costs Production costs down 8% primarily due to cost saving initiatives + Unit upstream production costs down 4% to $8.07/boe US$ million 2017 2016 Var + Cooper Basin down 13% to $9.32/boe Production costs 481 520 (8)% + Queensland down 8% to $5.92/boe Production cost (US$/boe) 8.07 8.45
Slide 17: Financial performance
Financial performance EBITDAX up 19% to $1.4 billion. Underlying NPAT up 433% to $336 million US$ million 2017 2016 Var Total revenue/income 3,264 2,747 19% + Revenue up 19% to $3.3 billion due to higher oil and LNG Production costs (481) (520) (8)% prices, and higher LNG sales volumes Other operati
Slide 18: Capital expenditure
Capital expenditure Full-year capex $682 million. 2018 capex guidance maintained at $825-875 million + Capital expenditure of $682 million Capital expenditure1 US$ million + includes Muruk acquisition and exploration drilling costs 1,288 (Exploration) + Barossa appraisal drilling (Northern Australia
Slide 19: Net debt reduced to $2.7 billion
Net debt reduced to $2.7 billion Target $2 billion in net debt by the end of 2019 + Net debt reduced to $2.7 billion1 through a Movement in net debt to 31 December 2017 combination of free cash flow, previously announced $ million asset sales and proceeds from the Share Purchase Plan 3,492 (96) + Fo
Slide 20: Drawn debt maturity profile
Drawn debt maturity profile Euro hybrid redeemed and replaced with more efficient long-term debt funding. Early repayment of $600 million 2019 ECA supported loan facility occurred in 2017 Drawn debt maturity profile as at Breakdown of drawn debt Drawn debt maturity profile excluding 31 December 2017
Slide 21: Summary
Summary In 2018 the focus remains on reducing costs, increasing free cash flow, reducing debt and disciplined capital management REDUCING INCREASING REDUCING DEBT CAPITAL COSTS FREE CASH FLOW MANAGEMENT + Forecast 2018 group + Cost out continuing free cash flow + Capital management + Target $2 billi
Slide 22: Operations review
Operations review Kevin Gallagher Managing Director & CEO
Slide 23: Northern Australia
Northern Australia Three significant multi-Tcf resource hubs well positioned for backfill or expansion of existing infrastructure + Bonaparte Basin Barossa Caldita + Two-well appraisal campaign strengthened Barossa (Santos 25%) as lead candidate for Darwin LNG backfill Bayu-Undan + Significant incre
Slide 24: Northern Australia
Northern Australia Strong Darwin LNG performance and successful Barossa appraisal campaign + Darwin LNG continues to achieve excellent reliability and Asset KPIs 2017 2016 availability (Santos 11.5%) Production (mmboe) 4.0 4.2 + 51 LNG cargoes shipped in 2017 Sales volume (mmboe) 4.0 4.2 + 3.3 milli
Slide 25: PNG
PNG Well-positioned to participate in PNG LNG expansion + Muruk appraisal, 21 kilometres from Hides Western area farm-in + Multi-Tcf contingent resource potential; excellent reservoir quality P’nyang and flow rates Muruk & Karoma Juha Hides + Seismic acquisition over Muruk and adjacent Karoma prospe
Slide 26: PNG
PNG Record PNG LNG performance + EBITDAX 23% higher due to higher LNG prices, strong Asset KPIs 2017 2016 operating performance and lower unit costs Production (mmboe) 12.6 12.2 + 110 LNG cargoes shipped in 2017 Sales volume (mmboe) 12.0 11.8 + PNG LNG maximum day rate of 8.9 mtpa achieved, 30% abov
Slide 27: Onshore East Coast Australia
Onshore East Coast Australia Australia’s lowest-cost onshore operations set to benefit from supplying domestic and export markets + Sustainable structural cost reductions now embedded + Lower Cooper Basin costs and increased Queensland exploration expected to deliver reserves + GLNG additions over t
Slide 28: Queensland
Queensland1 Stronger asset performance due to ramp-up of GLNG and lower costs + EBITDAX 72% higher due to increased upstream production, higher Asset KPIs 2017 2016 third-party volumes, lower cost operations and higher LNG prices Production (mmboe) 11.5 9.5 + Unit production costs down 8% to $5.92/b
Slide 29: Cooper Basin
Cooper Basin Transformed to low-cost, efficient drill-complete-connect operations + EBITDAX 27% higher due to lower cost operations, improved Asset KPIs 2017 2016 productivity and higher oil prices Production (mmboe) 14.4 15.1 + Improved drilling cycle times have led to embedded and Sales volume (mm
Slide 30: Cooper Basin Growth – Moomba South
Cooper Basin Growth – Moomba South Renewed exploration and appraisal focus in underexplored areas beneath a mature field. Significant resource potential adjacent to Moomba Plant LOWER PATCHAWARRA VC50 DEPTH STRUCTURE A A’ + Thick gas-saturated Patchawarra sequence intersected but not developed in hi
Slide 31: Western Australia Gas
Western Australia Gas Low cost operations with capacity and reserves to meet short and long-term demand + Higher production, sales volumes and revenues Asset KPIs 2017 2016 + Low-cost, high margin conventional domestic gas assets Production (mmboe) 9.2 8.9 generating strong free cash flow Sales volu
Slide 32: Other assets
Other assets Packaged and run separately for value as a standalone business. Portfolio to be continually optimised to realise value Asset KPIs 2017 2016 + Strong performance from Asian assets Production (mmboe) 7.7 11.8 + EBITDAX $177 million Sales volume (mmboe) 7.7 11.7 + Continued strong free cas
Slide 33: 2018 strategic priorities
2018 strategic priorities Business focus aligned with the core strategy Focus on business improvement and operational efficiencies to further reduce costs and maximise operating cash flow Disciplined allocation of free cash to repay debt and build production levels across core assets Disciplined exp
Slide 34: Appendix
Appendix Santos
Slide 35: Reserves
Reserves 1P reserves increased by 44 mmboe before production (90% organic RRR) 2P reserves increased by 19 mmboe before production (62% organic RRR) 2P organic reserve replacement ratio (RRR) 2P reserves % mmboe + Improving trend of 2P organic 100 848 reserve replacement Other WA Gas + Developed 2P
Slide 36: Significant items
Significant items Reconciliation of full-year net loss to underlying profit US$million 2017 2016 Net profit/(loss) after tax (360) (1,047) Add/(deduct) significant items after tax Impairment losses 703 1,101 Net gains on asset sales (59) (17) Other items 52 26 Underlying profit 336 63 Santos 2017 Fu
Slide 37: Liquidity and net debt as at December 2017
Liquidity and net debt as at 31 December 2017 $3.2 billion in cash and committed undrawn debt facilities Liquidity (US$million) 31 Dec 2017 31 Dec 2016 Cash 1,231 2,026 Undrawn bilateral bank debt facilities 2,020 2,313 Total liquidity 3,251 4,339 Debt (US$million) Export credit agency supported loa
Slide 38: 2017 Full-year segment results summary
2017 Full-year segment results summary Corporate Cooper Northern Other 2017 US$million QLD PNG WA Gas explor’n & Total Basin Australia Assets elimins Revenue 833 764 532 153 262 346 282 3,172 Production costs (134) (68) (55) (75) (54) (123) 28 (481) Other operating (88) (73) (46) - (20) (13) (70) (3
Slide 39: 2016 Full-year segment results summary
2016 Full-year segment results summary Corporate Northern 2016 US$million Cooper Basin QLD PNG WA Gas Other Assets explor’n & Total Australia elimins Revenue 768 540 444 145 184 411 135 2,627 Production costs (160) (61) (56) (73) (46) (166) 42 (520) Other operating (77) (74) (38) - (5) (16) (116) (3
Slide 40: 2018 Guidance
2018 Guidance 2018 guidance maintained 2018 Guidance + Production and sales guidance maintained + Upstream unit cost guidance maintained at Sales volumes 72-78 mmboe $8.2-8.8/boe Production 55-60 mmboe + Higher costs due to planned DLNG/Bayu-Undan shutdown + Lower production from PNG LNG and Moomba
Slide 41: Impairment
Impairment Net impairment of $703 million after tax taken in 2017, primarily due to lower oil prices + In determining the carrying value of its assets, Previously announced impairments taken at 2017 half- Santos considers a range of asset and macro year: assumptions, including oil price, exchange ra
Slide 42: Oil price hedging
Oil price hedging Oil price hedging provides protection to oil price downside 2018 Zero-cost three-way collar hedge Open oil price positions 2018 2019 Zero-cost three-way collars (barrels) 11,439,500 - $70 Short call Realised Price (US$/bbl) US$60.30 Brent short call price ($/bbl) US$60.30 - $60 Lon