Slide 1: Santos 2018 Full-year results
Santos 2018 Full-year results 21 February 2019
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: 2018 Full-year highlights
2018 Full-year highlights Clear strategy and disciplined Operating Model driving strong cash flow and financial strength RECORD FREE CASH FLOW1 RECORD UNDERLYING NPAT RECORD EBITDAX 112% $1,006 63% $727 129% $2,160 51% million million million RECORD SALES REVENUE FINAL DIVIDEND 2P RESERVES $3,660 18
Slide 4: Balanced portfolio
Balanced portfolio Balanced portfolio generates strong cash flows through the oil price cycle 2018 2P reserves 2019F Production + Portfolio play of five core long-life assets mmboe mmboe + All assets free cash flow positive at <US$40/bbl Northern Australia + Significant growth opportunities in all f
Slide 5: Reserves and resources
Reserves and resources 2P reserves increased by 20% to 1,022 mmboe after production (395% RRR) Near-term major growth project FIDs potential to commercialise >300 mmboe 2C to 2P reserves 2P Reserves 2C Contingent resources mmboe mmboe 1,800 59 1,022 192 Includes >300 mmboe Northern Australia 543 2C
Slide 6: Targeting portfolio production of >100 mmboe by 2025
Targeting portfolio production of >100 mmboe by 2025 Strong base platform. Significant growth opportunities in all five core assets Stable, cash generative base production. Disciplined growth leveraging existing infrastructure + Cash generative, disciplined Operating Model 2019F production 2025F pro
Slide 7: Quadrant Energy acquisition completed
Quadrant Energy acquisition completed CPI-linked contracts balance portfolio in a volatile oil price environment + Low cost conventional domestic natural gas assets backed by medium to long-term CPI- linked offtake contracts providing strong and stable cash flows Materially strengthens portfolio + O
Slide 8: Safety and sustainability
Safety and sustainability Our vision is to be the safest and lowest-cost operator Safety Lost time injury frequency rate (LTIFR) + Implementation of Santos Safety Strategy Rate per million hours worked No of onshore wells + 2018 saw significant improvement in safety performance despite major ramp- u
Slide 9: Finance & capital management
Finance & capital management Anthony Neilson CFO
Slide 10: Financial discipline
Financial discipline Strong financial and operating performance driving shareholder value + Excluding the impact of shutdowns, production costs down 6% to $7.62/boe Continued cost efficiencies + Cooper Basin production costs down 12% to $8.17/boe + Average onshore well costs continue to decline + Re
Slide 11: 2018 Full-year financial snapshot
2018 Full-year financial snapshot Underlying profit up 129% to $727 million $ million 2018 2017 Change Product sales revenue 3,660 3,100 18% EBITDAX 2,160 1,428 51% Underlying profit1 727 318 129% Net profit (loss) after tax 630 (360) nm Operating cash flow 1,578 1,248 26% Free cash flow2 1,006 618
Slide 12: Strong underlying earnings
Strong underlying earnings Underlying NPAT up 129% to $727 million Product sales revenue EBITDAX Underlying NPAT1 $ million $ million $ million +18% +129% +51% 3,660 2,160 727 3,100 2,594 2,442 1,454 1,428 1,199 318 54 75 2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2017 2018 1 The calculation
Slide 13: Strong free cash flow generation
Strong free cash flow generation Free cash flow up 63% to $1,006 million Operating cash flow Investing cash flow1 Free cash flow1 $ million $ million $ million +26% +63% 1,578 (1,550) 1,006 1,248 618 811 840 -9% (634) (630) (572) 206 (739) 2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2017 2018
Slide 14: Cash generative Operating Model continues to drive value
Cash generative Operating Model continues to drive value Diversified portfolio delivering EBITDAX growth and strong margins across all assets 2018 Full-year results summary1 + Sales revenue up 18% due to a strong operating Cooper Qld Nth PNG WA Santos performance and higher commodity prices Basin &
Slide 15: Production and sales volumes
Production and sales volumes Core asset production higher in 2018. Quadrant acquisition provides significant boost in 2019 Production Sales volume mmboe mmboe 71-78 88-98 84.1 83.4 61.6 59.5 58.9 78.3 57.7 64.3 2015 2016 2017 2018 2019F 2015 2016 2017 2018 2019F Core assets Non-core assets Own produ
Slide 16: Production costs
Production costs Continued cost discipline. Normalised unit production costs down 6% to $7.62/boe + Sustained cost improvement and operating efficiencies Upstream unit production costs $/boe + Unit upstream production costs $8.05/boe impacted by shutdowns at PNG LNG and Bayu Undan / Darwin LNG + exc
Slide 17: Capital expenditure
Capital expenditure 2018 full-year capex $759 million. 2019 guidance ~$1.1 billion 2018 capital expenditure1 Onshore efficiencies. 2019 capex guidance1 $759 million More wells for less capex per well ~$1.1 billion + Cooper Basin ~100 wells + Cooper Basin 4-rig program drilled 85 wells ~$500m + GLNG
Slide 18: Debt and liquidity
Debt and liquidity Net debt at year-end $3.55 billion. Ample liquidity of $3.3 billion + Quadrant Energy acquisition delivers stable free cash flows Cash, debt and undrawn debt facilities2 underpinned by medium to long-term CPI-linked contracts $million + Net debt $3.55 billion + Gearing of 33% at y
Slide 19: Drawn debt maturity profile
Drawn debt maturity profile Gross debt of $4.9 billion at 31 December 2018 includes new debt facilities associated with Quadrant Energy acquisition Drawn debt maturity profile as at Drawn debt maturity profile excluding PNG 31 December 20181 Breakdown of drawn debt LNG as at 31 December 20181 facili
Slide 20: Quadrant Energy acquisition
Quadrant Energy acquisition Acquisition completed 27 November 2018 PURCHASE PRICE & EFFECTIVE DATE MATERIAL COMBINATION SYNERGIES + Quadrant Energy acquisition completed 27 November 2018. + Targeting combination synergies of $30 to $50 million per annum Effective date 1 January 2018 (pre-tax)1 + On
Slide 21: Operations review
Operations review Kevin Gallagher Managing Director & CEO
Slide 22: Low-cost operations maintained
Low-cost operations maintained Disciplined Operating Model delivering improved capital efficiency and more activity leading to higher production and reserves additions Well cost discipline Activity levels increasing3 Cost and maintained1,2 efficiency focus4 No of wells $/boe $million DISCIPLINED -8%
Slide 23: Cooper Basin
Cooper Basin Cooper Basin production growing again + Production up 8% to 15.5 mmboe Average daily net production + Achieved highest monthly average oil production rates since 2009 kboe/d + Disciplined focus on sustainable cost reduction and efficiencies 46.1 + Unit production costs down 12% to $8.17
Slide 24: Cooper Basin reserves
Cooper Basin reserves Disciplined low-cost Operating Model enables improved capital efficiency and more wells leading to higher production and improved reserves replacement 2P reserves replacement ratio Wells drilled Drilling program % No of wells per year + Activity levels increasing within the ~10
Slide 25: Cooper Basin resource opportunity
Cooper Basin resource opportunity Deep inventory of contingent and prospective resource project opportunities provides the foundation for ongoing development of the Cooper Basin Moomba South appraisal 2C contingent resource to Cooper Basin more than 2P 2P reserve maturation (mmboe as at 31 Dec 2018)
Slide 26: Queensland and NSW
Queensland and NSW GLNG on track to meet ~6 mtpa annualised sales run-rate including LNG volumes redirected to the domestic market by the end of 2019 GLNG equity gas production building + 2018 LNG equivalent production ~5.5 mt + First gas from Roma East 480-well project + 86 wells online. Forecast 3
Slide 27: Western Australia
Western Australia Quadrant acquisition adds scale, operatorship and increased exposure to CPI-linked gas contracts + On a 2018 pro-forma basis, Quadrant significantly increases the scale of Santos’ WA business Pro-forma 2018 Santos WA Quadrant Total + Production up by 168% to 28.7 mmboe Production +
Slide 28: Western Australia exploration and appraisal
Western Australia exploration and appraisal Significant near-term development opportunities in shallow, shelf waters of the Carnarvon and Bedout Basins + Van Gogh (Ningaloo Vision) infill program successfully completed (Santos 52.5%) + Two new dual-lateral wells online January 2019 provided signific
Slide 29: Northern Australia
Northern Australia Successful delivery of the Bayu Undan infill well project. Barossa FEED progressing Bayu Undan / Darwin LNG + 3-well Bayu Undan infill project delivered 40% under budget and the final well brought on-line more than three months ahead of schedule + Increased liquids production Baro
Slide 30: PNG growth through expansion
PNG growth through expansion Potential expansion involves the construction of three additional trains at the PNG LNG site Upstream expansion + Santos farm-in to P’nyang proposal received and under negotiation + Potential P’nyang development to utilise existing PNG LNG infrastructure plus proposed Tr
Slide 31: Summary
Summary Low-cost, diversified portfolio generating strong cash flow. Balance sheet supportive of growth strategy and sustainable dividends Record free cash flow and underlying profit Cost discipline maintained Strong reserves add Dividend reinstated Quadrant Energy acquisition complete. Inte
Slide 32: Appendix
Appendix Santos
Slide 33: Sales revenue
Sales revenue Low cost, diversified portfolio buoyed by higher commodity prices Average realised crude Average realised LNG $million 2018 2017 Var oil price up 30% price up 36% Sales Revenue (incl. third party) 75.05 10.08 Gas, ethane and liquefied gas 2,518 2,198 15% 57.85 7.41 Crude oil 757 579 31
Slide 34: Financial performance
Financial performance EBITDAX up 51% to $2.2 billion. Underlying NPAT up 129% to $727 million $million 2018 2017 Var + Total revenue up 18% to $3.8 billion due to higher oil and Total revenue 3,773 3,198 18% LNG prices, and higher crude oil volumes Production costs (474) (481) (1)% + Higher third pa
Slide 35: Quadrant Energy acquisition accounting
Quadrant Energy acquisition accounting Purchase price allocation Income statement + Under AASB 3, all assets acquired and liabilities assumed in a business combination Quadrant post- Santos are recognised at acquisition date fair value, known as purchase price allocation Year-ended 31 Dec 2018 Conso
Slide 36: Quadrant Energy summary financials
Quadrant Energy summary financials Key metrics US$ million, year-ended 31 December 2016 2017 2018 Product sales 643 726 714 Other revenue (+) Tolling revenue - 19 27 (+) Other revenue 2 15 23 (+) Hedging gain 137 63 (13) Total revenue 782 823 751 (-) Production costs (138) (138) (149) (-) Other oper
Slide 37: Significant items
Significant items Reconciliation of full-year net profit to underlying profit $million 2018 2017 Net profit/(loss) after tax 630 (360) Add/(deduct) significant items after tax Impairment losses 94 703 Net gains on asset sales (94) (59) Fair value adjustments on hedges 48 34 One-off acquisition and d
Slide 38: Liquidity and net debt as at 31 December 2018
Liquidity and net debt as at 31 December 2018 $3.3 billion in cash and committed undrawn debt facilities Liquidity ($million) 31 Dec 2018 31 Dec 2017 Cash 1,316 1,231 Undrawn bilateral bank debt facilities 2,020 2,020 Total liquidity 3,336 3,251 Debt ($million) Export credit agency supported loan fa
Slide 39: 2018 Full-year segment results summary
2018 Full-year segment results summary Corporate Cooper Queensland Northern Western US$million PNG Asia explor’n & Total Basin & NSW Australia Australia elimins Revenue 1,146 1,016 630 184 422 181 194 3,773 Production costs (127) (71) (70) (74) (108) (42) 18 (474) Other operating costs (68) (80) (52
Slide 40: 2017 Full-year segment results summary
2017 Full-year segment results summary Corporate Cooper Queensland Northern Western 2017 US$million PNG Asia explor’n & Total Basin & NSW Australia Australia elimins Revenue 851 769 534 153 352 256 283 3,198 Production costs (134) (68) (55) (75) (107) (68) 26 (481) Other operating (88) (73) (46) - (
Slide 41: 2019 Guidance
2019 Guidance 2019 capex guidance 2019 guidance + Western Australia ~$400m including Sales volumes 88-98 mmboe + Corvus-2 appraisal Production 71-78 mmboe + Dorado 2-well appraisal + Roc South-1 NFE Upstream $7.50-8.00/boe + Thevenard abandonment production costs Capital + Cooper Basin ~$300m includ
Slide 42: Oil price hedging
Oil price hedging Oil price hedging provides protection to oil price downside 2019 Open oil price positions 2019 Swaps (barrels) 990,000 1. When Brent price is above the call strike price, Santos Brent fixed swap price ($/bbl) US$63.23 realises Brent price less the difference between the long call p