Slide 1: 2016 Full-year results
2016 Full-year results 17 February 2017 1
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: Overview
Overview Kevin Gallagher Managing Director and CEO 3
Slide 4: Santos strategy
Santos strategy Create shareholder value by becoming a low-cost, reliable and high performance business + New leadership team and simplified operating model to deliver a low- Transform cost, reliable and high performance business + Focus on five core long-life natural gas assets + Identify and devel
Slide 5: 2016 in review
2016 in review Strong progress made to stabilise the business, reduce costs and strengthen the balance sheet. Stabilise the business Reduce costs Strengthen the balance sheet + Excom appointed + Free cash flow breakeven + A$1,040 million institutional reduced to US$36.50/bbl placement, followed by S
Slide 6: 2016 Full-year financial snapshot
2016 Full-year financial snapshot Net loss of US$1,047 million, after US$1.1 billion after tax GLNG impairment at half-year. EBITDAX down 18% to US$1,199 million and Underlying NPAT up 29% to US$63 million Free cash flow Unit upstream Operating cash flow Net debt breakeven production costs US$857 mi
Slide 7: Turnaround strategy starting to deliver
Turnaround strategy starting to deliver Free cash flow breakeven reduced to US$36.50/bbl + US$370 million in free cash 2016 free cash flow (before asset sales) by month US$million flow (before asset sales) over last eight months of 200 -US$164m US$370m 2016 + Strong operating 150 performance in 2016
Slide 8: Institutional placement and SPP
Institutional placement and SPP Institutional placement and share purchase plan successfully raised A$1.24 billion Proceeds to be used to strengthen the balance sheet and pursue growth opportunities that are aligned to the core business and strategic plan Strengthen the balance sheet Pursue growth o
Slide 9: Strong safety performance has been maintained
Strong safety performance has been maintained Lowest three-year rolling average lost time injury frequency rate (LTIFR) in five years, with a number of operations achieving record LTI-free periods Lost Time Injury Frequency Rate three year rolling average 2012 – 2016 Rate per million hours worked 1.
Slide 10: 2016 Full-year financial results
2016 Full-year financial results Anthony Neilson CFO 10
Slide 11: Financial priorities
Financial priorities Focus on reducing costs, increasing free cash flow, debt reduction and capital management + Unit production cost/boe down 18% to US$8.45/boe Reducing costs + Capex down 51% to US$625 million + US$635 million positive free cash flow (including net asset sale Increasing free cash
Slide 12: Financial performance
Financial performance EBITDAX down 18% to US$1,199 million. Underlying NPAT up 29% to US$63 million Full-year Full-year + Revenue up 6% to US$ million Var 2016 2015 US$2.6 billion due to higher sales volumes partially offset by lower Product sales revenue 2,594 2,442 6% oil and LNG prices Other reve
Slide 13: Production
Production Record annual production of 61.6 mmboe due to growth in LNG volumes mmboe 70 + Highest annual production due 61.6 55-60 to ramp-up of GLNG and strong 60 57.7 performance from core assets 54.1 51.0 50 + 2017 guidance 55-60 mmboe, influenced by: 40 + asset sales, -2.8 mmboe (Victoria, Stag,
Slide 14: Sales volumes
Sales volumes Record annual sales volumes of 84.1 mmboe due to growth in gas and LNG sales volumes mmboe 90 + Highest annual sales volumes 84.1 73-80 due to ramp-up of GLNG own 80 and third party sales and strong 70 64.3 performance from PNG LNG 63.7 58.5 60 + 2017 guidance 73-80 mmboe, 50 influence
Slide 15: Sales revenue
Sales revenue Sales revenue up due to higher gas and LNG sales volumes, offset by lower prices Full-year Full-year + Higher sales revenues due to US$ million Var higher gas and LNG volumes, 2016 2015 partially offset by lower prices Sales Revenue (incl. third party) and third party crude volumes Sal
Slide 16: Production costs
Production costs Upstream unit production costs down 18% to US$8.45/boe Full-year Full-year Var US$ million 2016 2015 Production costs 520 597 (13)% + Upstream unit production costs down 18% to US$8.45/boe Production cost 8.45 10.35 (18)% + GLNG down 26% (US$/boe) + PNG LNG down 12% Other operating
Slide 17: Capital expenditure
Capital expenditure 2016 capex down 51% to US$625 million 2017 capex guidance maintained at US$700-750 million Full-year capital expenditure + 2016 capex 51% lower due to US$million + Completion of GLNG 3,500 + Completion of PNG LNG development drilling 3,300 3,000 + Drilling efficiencies in Cooper
Slide 18: Cash flow
Cash flow US$635 million in free cash flow before funding, including US$429 million net proceeds from asset sales. Free cash flow breakeven reduced to US$36.50/bbl Full-year Full-year Var US$million 2016 2015 Operating cash flow 857 811 6% + Operating cash flow up 6% to US$857 million Net cash from
Slide 19: Debt reduction
Debt reduction Net debt reduced to US$3.5 billion as at December 2016. Gearing reduced to 33% Balance sheet strengthened. Refinancing capability and capacity improved + Placement in December 2016 plus 2016 movement in net debt completed SPP provide flexibility for US$million refinancing debt maturit
Slide 20: Debt structure provides flexibility
Debt structure provides flexibility Refinancing and terming-out maturities will commence in 2017 Drawn debt maturity profile as at 31 December 20161 Breakdown of drawn debt facilities US$million as at 31 December 2016 1,800 Euro hybrid notes mature in 2070, with Santos option to 1,600 1,572 redeem o
Slide 21: Hedging reduces impact of commodity price volatility
Hedging reduces impact of commodity price volatility Significant oil price leverage remains 2017 Zero-cost three-way collar hedge + 11 million barrels hedged in 2017 using zero-cost three- $65 way collars Long Put $60 US$50 Short Put 4,385 + ~30% of oil-linked production $55 US$40 Realised Price (US
Slide 22: Operations review
Operations review Kevin Gallagher Managing Director and CEO 22
Slide 23: Focus on five core long-life natural gas assets
Focus on five core long-life natural gas assets Portfolio simplification to drive improved performance and further productivity gains Cooper Basin GLNG PNG Northern Australia WA Gas + Build + Build gas + Strengthen + Large resource + Robust production supply position base domestic gas demand + Incre
Slide 24: Cooper Basin
Cooper Basin Delivering a low cost, cash flow positive business Cooper Basin Asset KPIs 2016 2015 Production (mmboe) 15.1 15.5 Sales volume (mmboe) 23.5 20.8 Revenue (US$m) 768 851 Production cost 10.7 12.7 (US$/boe) EBITDAX (US$m) 265 293 Capex (US$m) 173 440 Ballera Moomba + Cooper Basin cash flow
Slide 25: GLNG
GLNG Transforming GLNG to deliver steady-state operations and a cash flow positive business Aiming to ramp-up GLNG LNG sales from current levels to ~6mtpa over three years GLNG Asset KPIs1 2016 2015 GLNG Production (mmboe) 9.5 4.2 Mahalo Sales volume (mmboe) 19.8 5.5 Revenue (US$m) 540 123 Productio
Slide 26: PNG
PNG Independent resource certification supports extended LNG production at current plateau rates Muruk discovery (Santos 20%) appraisal underway PNG Asset KPIs 2016 2015 Production (mmboe) 11.9 11.4 Muruk Hides Sales volume (mmboe) 11.8 10.9 Papua New Guinea Revenue (US$m) 444 566 Production cost 4.
Slide 27: Northern Australia
Northern Australia Extensive discovered resource to backfill and expand existing LNG infrastructure Barossa appraisal commenced with first of two wells spudded Northern Australia Asset KPIs 2016 2015 Production (mmboe) 4.2 4.3 Barossa Caldita Sales volume (mmboe) 4.2 4.3 Bayu-Undan Revenue (US$m) 14
Slide 28: WA Gas
WA Gas Low cost operations with capacity and reserves to meet short and long-term demand WA Gas Asset KPIs 2016 2015 Production (mmboe) 8.9 9.4 Sales volume (mmboe) 8.8 9.4 Revenue (US$m) 184 227 Production cost 5.1 5.0 (US$/boe) EBITDAX (US$m) 210 162 Capex (US$m) 13 34 Varanus Island + Production
Slide 29: Non-core assets
Non-core assets Packaged and run separately for value as a standalone business Portfolio to be continually optimised to maximise value Asset KPIs 2016 2015 Non-core assets Production (mmboe) 11.7 12.7 Onshore Offshore Asia Australia Australia Sales volume (mmboe) 11.7 12.9 + Indonesia + Narrabri + W
Slide 30: Reserves
Reserves 1P reserves increased by 61 mmboe before production (106% organic RRR) 2P reserves increased by 6 mmboe before production (19% organic RRR) + Higher WA Gas due to reserves upgrade at Reindeer Reconciliation of 2P reserves + Higher PNG LNG due to positive mmboe Hides field performance and 14
Slide 31: Summary
Summary Disciplined, focused strategy to drive shareholder value + Free cash flow breakeven reduced to US$36.50/bbl1 Turnaround + Free cash flow positive for last eight months of 2016 + Five core long-life natural gas assets at the heart of a disciplined, Portfolio simplification focused strategy, e
Slide 32: Appendix
2016 Full-year results Appendix 32
Slide 33: Significant items
Significant items Reconciliation of full-year net loss to underlying profit Full-year Full-year US$million 2016 2015 Net profit/(loss) after tax (1,047) (1,953) Add/(deduct) significant items after tax Impairment losses 1,101 2,014 Net gains on asset sales (17) (1) Other 26 (11) Underlying profit 63
Slide 34: 2016 Segment results summary
2016 Segment results summary Corporate Full-year 2016 Cooper Northern Other explor’n & US$million Basin GLNG PNG Australia WA Gas Assets elimins Total Revenue 768 540 444 145 184 411 135 2,627 Production costs (162) (61) (56) (73) (45) (164) 41 (520) Other operating (77) (74) (38) - (5) (16) (116) (
Slide 35: 2015 Segment results summary
2015 Segment results summary Corporate Full-year 2015 Cooper Northern Other explor’n & US$million Basin GLNG PNG Australia WA Gas Assets elimins Total Revenue 851 123 566 215 227 473 23 2,478 Production costs (197) (36) (61) (81) (47) (215) 40 (597) Other operating (83) (25) (47) (1) (4) (19) (21) (
Slide 36: Liquidity and net debt
Liquidity and net debt US$4.3 billion in cash and committed undrawn debt facilities as at 31 December 2016 Liquidity (US$million) 31 Dec 2016 31 Dec 2015 Cash 2,026 839 Undrawn bilateral bank debt facilities 2,313 2,637 Total liquidity 4,339 3,476 Debt (US$million) Export credit agency supported loa
Slide 37: 2017 Guidance
2017 Guidance After adjusting for asset sales, 2017 sales volumes expected to be between 73 and 80 mmboe and production to be between 55 and 60 mmboe 2017 Guidance + 2017 Sales and production volumes influenced by: Sales volumes 73-80 mmboe + asset sales, -2.8 mmboe (Victoria, Stag, Production 55-60