Santos Limited · ASX:STO
Santos — Investor Day (November 2022)
72 slides from Santos's investor day presentation, Nov 8, 2022
Slide 1: ASX / Media Release
ASX / Media Release 8 November 2022 2022 Investor Briefing Day Santos today announced a new Purpose, Strategy and business organisation as the company reaffirmed its commitment to delivering strong shareholder returns and achieving net-zero emissions (scope 1 and 2, equity share) by 2040. Speaking a
Slide 2: Guidance
Guidance 2022 production guidance is maintained at 103-106 million barrels of oil equivalent (mmboe) and sustaining capital expenditure guidance is maintained at approximately US$1.1 billion. Major projects capital expenditure in 2022 is expected to be approximately US$1.2 billion, the mid-point of
Slide 3: 2022 Investor Briefing Day
2022 Investor Briefing Day 8 November 2022
Slide 4: Disclaimer and important notice
2022 Investor Briefing Day 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
Slide 5: Agenda
2022 Investor Briefing Day Agenda Session 1 Session 2 12:25pm Welcome to Country 3:10pm Santos Energy Solutions Michael Kumatpi Marrutya O’Brien Brett Woods President 12:30pm Delivering Long Term Shareholder Value 3:40pm Environment, Social and Governance Kevin Gallagher Managing Director and Chief
Slide 6: Delivering Long Term Shareholder Value
2022 Investor Briefing Day Delivering Long Term Shareholder Value Kevin Gallagher Managing Director and Chief Executive Officer 8 November 2022 I 3
Slide 7: Santos strategy is robust and resilient to external volatility
2022 Investor Briefing Day Santos strategy is robust and resilient to external volatility The macro environment Volatile macro environment Energy security is a top priority for countries in our region Our industry faces government policy and regulatory challenges Strong customer demand for our produ
Slide 8: Santos' new purpose and strategy
2022 Investor Briefing Day Santos’ new purpose and strategy Our purpose is to provide cleaner energy that is both affordable and sustainable to help create a better world for everyone Clean fuels Decarbonisation Backfill and sustain 2022 2030 2040 2050 8 November 2022 I 5
Slide 9: New organisation to deliver Santos' strategy
2022 Investor Briefing Day New organisation to deliver Santos’ strategy Santos Energy Solutions is our transition business to a cleaner energy future Upstream Gas and Liquids Santos Energy Solutions North America Three LNG projects PNG LNG Low carbon processing of Santos’ Alaskan carbon-neutral and
Slide 10: Investment proposition
2022 Investor Briefing Day Investment proposition A natural gas company with a pathway to decarbonise the business Upstream Gas and Liquids Santos Energy Solutions Capital management Three LNG projects and Gross CCS storage capacity Returns to shareholders two domestic gas businesses across three hu
Slide 11: Outlook to 2030
2022 Investor Briefing Day Outlook to 2030 Targeting backfill for existing assets plus Pikka Phase 1 to deliver sustainable equity upstream production in the range of 100-140 mmboe from 2025-2045 Upstream gas and liquids production 1 mmboe, Santos share 180 Bayu-Undan decline 120 60 Upstream base bu
Slide 12: Free cash flow from operations
2022 Investor Briefing Day Free cash flow from operations Strong free cash flow generation. PNG LNG project finance is due to be repaid mid‑2026 liberating on average ~$650 million per annum additional cash ~$7.5 bn 3 Free cash flow from operations Free cash flow per share 1 $million US$ per share 1
Slide 13: Cash sources and uses to 2030
2022 Investor Briefing Day Cash sources and uses to 2030 ~$17-33 billion in forecast cash available for returns to shareholders and unsanctioned development projects to 2030 2022-2030 Forecast cash sources and uses $billion 40 Incremental free cash ~$6 bn incremental flow from average spot LNG surpl
Slide 14: Health, safety and environment
2022 Investor Briefing Day Health, safety and environment Personal safety performance is improving in 2022 Injury frequency Loss of containment Number of injuries per million hours worked Number of Tier 1 and Tier 2 incidents 1.2 20 0.9 15 0.6 10 0.3 5 0 0 2017 2018 2019 2020 2021 Sept 22 YTD 2017 2
Slide 15: Committed to our goal to achieve net-zero Scope 1 & 2 emissions by 2040
2022 Investor Briefing Day Committed to our goal to achieve net-zero Scope 1 & 2 emissions by 2040 Santos is on track to achieve all three 2025 targets ahead of schedule, enabling us to focus on 2030 targets 2025 2030 2040 Economically reduce emissions by more than Scope 1 and 2 (Absolute target) Ta
Slide 16: Market Outlook
2022 Investor Briefing Day Market Outlook Jane Norman Vice President Strategy 8 November 2022 I 13
Slide 17: Energy must be affordable, reliable and lower emissions
2022 Investor Briefing Day Energy must be affordable, reliable and lower emissions Today ~80% of global energy supply comes from hydrocarbons, this cannot be replaced overnight. Focus must be on decarbonisation not de-fossilisation Global Energy Supply by Source 1 Santos supports a just energy trans
Slide 18: Demand for gas forecast to grow by 20% by 2040
2022 Investor Briefing Day Demand for gas forecast to grow by 20% by 2040 Fuels account for ~80% of today’s energy consumption and are forecast to remain a significant proportion of the global energy consumption Global gas consumption by sector 172 More than half the world’s natural gas consumption
Slide 19: Oil demand remains strong amid supply constraints
2022 Investor Briefing Day Oil demand remains strong amid supply constraints Significant underinvestment in supply and the recovery of oil demand post COVID-19 has resulted in a tight global oil market Global liquids demand and Russian exports 1 Dated Brent MMbpd US$/bbl 140 Forecast 140 120 120 100
Slide 20: Strong long-term demand for LNG
2022 Investor Briefing Day Strong long-term demand for LNG Santos offers a diversified portfolio of LNG projects, proximal to growing Asian demand. Global LNG demand forecast to increase by approximately 70% by 2040 Global LNG supply and demand 1 Mtpa 1,000 800 600 ~60-80 Mtpa of additional regas ca
Slide 21: Santos is well positioned to supply into strong Asian demand
2022 Investor Briefing Day Santos is well positioned to supply into strong Asian demand Santos is a leading global independent LNG supplier and well-positioned to benefit from increasing demand. Targeting ~25% of Santos LNG portfolio to be exposed to JKM-linked pricing by 2025 Santos LNG supply Sant
Slide 22: Australian domestic gas demand
2022 Investor Briefing Day Australian domestic gas demand New gas supply required to meet demand and ensure gas prices remain affordable West coast domestic gas market 1 South eastern domestic gas market – NSW, VIC, ACT, TAS 2 PJ/annum PJ/annum 2,000 400 1,500 300 1,000 200 500 100 0 0 2022 2023 202
Slide 23: Decarbonisation requires large scale-up of CCS
2022 Investor Briefing Day Decarbonisation requires large scale-up of CCS Significant shortfall to meet the forecast CCS capacity under the IEA NZE scenario Global forecast CCS capacity 1 Global CO2 capture in IEA NZE 2 Global CCS status 2 MtCO2 pa MtCO2 pa Under IEA NZE scenario 1,200 MtCO2/year ca
Slide 24: Higher carbon prices supportive of Santos Energy Solutions
2022 Investor Briefing Day Higher carbon prices supportive of Santos Energy Solutions Global carbon prices have continued to rise as governments and companies work towards net-zero targets Carbon price 1 2022 US Inflation Reduction Act, Per ton (local currency) projects eligible for tax credits 100
Slide 25: Upstream Gas and Liquids
2022 Investor Briefing Day Upstream Gas and Liquids Brett Darley President 8 November 2022 I 22
Slide 26: Upstream Gas and Liquids
2022 Investor Briefing Day Upstream Gas and Liquids Production to 2040+ from Upstream assets Upstream Gas and Liquids LNG business Domestic gas business Gladstone LNG East Coast PNG LNG West Coast Papua LNG (unsanctioned) Bayu-Undan and Barossa to DLNG EBITDAX: $2.6 billion in H1 2022 1 1. Santos 20
Slide 27: Santos' LNG portfolio
2022 Investor Briefing Day Santos’ LNG portfolio Disciplined and phased investment to backfill and sustain core LNG assets beyond 2040 PNG LNG Gladstone LNG Bayu-Undan and Barossa to DLNG Status Producing Producing Producing Santos share ~3.7 ~2.6 ~1.6 LNG capacity, mtpa Reservoir type Conventional
Slide 28: PNG LNG and GLNG upstream performing strongly
2022 Investor Briefing Day PNG LNG and GLNG upstream performing strongly GLNG equity production growth year-on-year PNG production (includes operated oil assets) Unit cost Upstream Queensland production Unit cost mmboe, Santos share $/boe mmboe, Santos share $/boe 50 10 14 10 13.3 13.5 12.8 12 12.1
Slide 29: Strong GLNG upstream production and cost out
2022 Investor Briefing Day Strong GLNG upstream production and cost out Low cost development focus supporting strong production GLNG gas production Strong GLNG gas production Mean time between failure Driving down operating cost and TJ/d (gross) Scotia and Arcadia production Years (Roma) 5.0 increas
Slide 30: Bayu-Undan extension of field life
2022 Investor Briefing Day Bayu-Undan extension of field life Field life extended during a high LNG price environment Key work programs in extending Bayu-Undan field life Phase 3C infill program: included two platform wells and one subsea well that currently provide 40% of total field production Wel
Slide 31: Barossa Project Federal Court decision
2022 Investor Briefing Day Barossa Project Federal Court decision Barossa drilling operations suspended following Federal Court decision to set aside the acceptance by the regulator of the drilling and completion activities environmental plan. Santos is appealing the decision with a hearing on the a
Slide 32: Santos domestic gas portfolio
2022 Investor Briefing Day Santos domestic gas portfolio Diversified portfolio with strong cash flows and backfill opportunities to sustain production Cooper Basin Eastern Queensland Western Australia Status Producing Producing Producing Santos share 270 ~45 610 capacity, TJ/d Reservoir type Convent
Slide 33: Cooper Basin
2022 Investor Briefing Day Cooper Basin Disciplined operating model delivering short capex cycle business Production Wet weather impact Drill, complete, connect capex Continuous cost out focus mmboe $million 16.8 Three La Nina events has brought widespread rain Growth self-funded within the 267 15.5
Slide 34: Unlocking gas volumes in the heart of Moomba
2022 Investor Briefing Day Unlocking gas volumes in the heart of Moomba Significant resource close to infrastructure with Granite Wash upside Developing Moomba South Patchawarra Delivers well inventory for 2-3 drilling rigs of continuous drilling in the Moomba Area leveraging our existing infrastruc
Slide 35: Western Australia domestic gas
2022 Investor Briefing Day Western Australia domestic gas Near-field backfill options and Bedout Basin gas Expecting lower gas production in 2023 Reindeer end of continuous production in 2023, with ongoing intermittent cyclic production Lower production from Spar due to early water breakthrough Near
Slide 36: Upstream unsanctioned projects
2022 Investor Briefing Day Upstream unsanctioned projects Pipeline of phased and disciplined projects connected to domestic and Asian markets Dorado Narrabri Papua LNG Description Liquids-rich, Low CO2 resource with nearfield Domestic gas project which will supply the Key strategic medium term growt
Slide 37: Decommissioning activities
2022 Investor Briefing Day Decommissioning activities We are proactively completing our decommissioning activities in a disciplined, phased and focused approach Thevenard Island decommissioning Approach to decommissioning Disciplined and phased work programs with ~$200 million of annual sustaining c
Slide 38: Pikka Phase 1
2022 Investor Briefing Day Pikka Phase 1 Bruce Dingeman President 8 November 2022 I 35
Slide 39: Pikka Phase 1 currently in early execution phase
2022 Investor Briefing Day Pikka Phase 1 currently in early execution phase Pikka Phase 1 Overview First oil 2026 Pikka Nameplate capacity 80,000 barrels of oil per day gross Alaska Expected plateau duration 6-8 years Capex to nameplate capacity $2.6 billion gross (2022 real), $1.3 billion Santos sh
Slide 40: Strong stakeholder support underpinning Pikka Phase 1
2022 Investor Briefing Day Strong stakeholder support underpinning Pikka Phase 1 Key regulatory approvals are in place and strong community support for the project Stakeholder Overview Exploration drilling operations Oil industry drives the The oil and gas industry remains the single most important
Slide 41: Pikka Phase 1 will be net-zero emissions equity Scope 1 and 2
2022 Investor Briefing Day Pikka Phase 1 will be net-zero emissions equity Scope 1 and 2 Carbon abatement and offset options are being developed to be net-zero from first oil Two agreements in place with Native Alaskan Corporations to explore the feasibility of technical and nature-based carbon offs
Slide 42: Santos Energy Solutions
2022 Investor Briefing Day Santos Energy Solutions Brett Woods President 8 November 2022 I 39
Slide 43: Sustainable value generation through the energy transition
2022 Investor Briefing Day Sustainable value generation through the energy transition Positioned to decarbonise the base business and develop new revenue streams through carbon services and clean fuels Santos Energy Solutions Low carbon processing of Santos’ Decarbonisation and carbon and third-part
Slide 44: Santos' Energy Solutions progress in 2022
2022 Investor Briefing Day Santos’ Energy Solutions progress in 2022 Moomba CCS train tie-ins completed on site CSIRO Direct Air Capture pilot units construction commenced Cooper Basin Electrification Phase 2 FEED entry achieved Port Bonython hydrogen mobility study concept select completed CO2 stor
Slide 45: Creating value from midstream infrastructure portfolio
2022 Investor Briefing Day Creating value from midstream infrastructure portfolio Unique portfolio of strategic midstream infrastructure assets Midstream infrastructure assets Moomba Port Bonython Darwin LNG Varanus Island Devil Creek Annual capacity Gas: 400 TJ/d Liquids: 20 mmboe LNG: 3.7 mtpa wit
Slide 46: Three Santos-operated CCS and clean fuels hubs
2022 Investor Briefing Day Three Santos-operated CCS and clean fuels hubs Santos is developing three CCS hubs with >30 mtpa gross CO2 storage capacity. Moomba CCS currently under construction Moomba Darwin and Western Hub Bayu-Undan Hub Australia Hub Dili NORTHERN AUSTRALIA Port Moresby & TIMOR-LEST
Slide 47: Santos' three CCS and clean fuels hubs
2022 Investor Briefing Day Santos’ three CCS and clean fuels hubs Santos’ clean fuels hubs leverage existing infrastructure and depleted reservoirs to deliver strong free cash flows Moomba Hub Darwin and Bayu-Undan Hub Western Australia Hub CTAP Element Operational efficiencies Cooper Basin electrif
Slide 48: Santos Energy Solutions CCS business
2022 Investor Briefing Day Santos Energy Solutions CCS business Targeting equivalent returns to the Upstream business to deliver sustainable value for Santos Working interest Gross CO2 capacity CO2 EBITDA potential 1 % mtpa customer $million 600 Moomba Hub Moomba CCS Phase 1 66.7 1.7 Equity 400 Moom
Slide 49: CCS market opportunity for third-party CO2
2022 Investor Briefing Day CCS market opportunity for third-party CO2 Emerging CO2 markets present significant opportunity for Santos to generate revenue from carbon management services CCS represents a large-scale, low cost means to reduce emissions and provide Hub customer CO2 potential identified
Slide 50: Moomba Hub Update
2022 Investor Briefing Day Moomba Hub Update Ambitious decarbonisation agenda progressing underpinned by Moomba CCS Moomba CCS project remains on track for 2024 first injection Project execution 28% complete DAC Unit Trial Site Marabooka 19 and Strzelecki 36 injector well drilling to commence later
Slide 51: Uncommitted Santos Energy Solutions projects
2022 Investor Briefing Day Uncommitted Santos Energy Solutions projects Santos continues to invest in emerging decarbonisation and clean fuels technologies and transform energy usage to deliver a step change in emissions reduction Direct Air Capture Cooper Electrification Port Bonython Hydrogen Mobi
Slide 52: Darwin and Bayu-Undan CCS hub update
2022 Investor Briefing Day Darwin and Bayu-Undan CCS hub update Emerging Asian CO2 market demand being pursued as Bayu-Undan CCS FEED continues to progress on schedule Darwin and Bayu-Undan CCS Hub Darwin LNG tank commercial optimisation Overview Bayu-Undan CCS targeting technical package FEED compl
Slide 53: Western Australia CCS Hub Update
2022 Investor Briefing Day Western Australia CCS Hub Update Third-party CCS solutions being developed with a range of industrial emitters in hard to abate sectors Reindeer CCS Varanus Island Offshore WA CO2 storage permit Overview Represents attractive emissions abatement Repurposing infrastructure
Slide 54: Santos' Carbon Solutions
2022 Investor Briefing Day Santos’ Carbon Solutions Prioritising nature-based carbon offset projects across our areas of operation provides dual benefits of decarbonisation in line with our targets and social outcomes for local communities PNG reforestation project Alaska forestry management Soil ca
Slide 55: ESG
2022 Investor Briefing Day ESG Janette Hewson Executive Vice President 8 November 2022 I 52
Slide 56: Respectful partnerships – First Nations peoples
2022 Investor Briefing Day Respectful partnerships – First Nations peoples Our objective is to proactively partner with First Nations groups and communities to build respectful and mutually beneficial relationships and deliver positive outcomes Listening and respect for culture “This partnership wit
Slide 57: Resilient communities – building strength in regions
2022 Investor Briefing Day Resilient communities – building strength in regions Our objective is to improve living standards, build respectful relationships, and create stronger communities in the areas we operate Local jobs and education Co- benefits employing and upskilling 100% local workforce in
Slide 58: Resilient communities – the Santos Foundation
2022 Investor Briefing Day Resilient communities – the Santos Foundation A focus on capacity-building and community needs, building on the strengths of the Oil Search Foundation Health Supported PNG rollout of 145,000 childhood vaccinations delivered by Provincial Health Authorities (PHAs) Support t
Slide 59: People and culture performance
2022 Investor Briefing Day People and culture performance Building an inclusive workplace and growing an organisational learning culture Female participation across Santos 1 Supporting working parents 40% Board members Gender ~$1 million Childcare subsidies 38% 42% pay paid by Santos in 2021 Executi
Slide 60: Responsible environmental management
2022 Investor Briefing Day Responsible environmental management Our objective is to minimise the environmental impacts of our operations and activities and to work with our communities and partners to deliver positive environmental outcomes Biodiversity Waste Water 43,000 hectares of land secured as
Slide 61: Governance – transparency and ethical conduct
2022 Investor Briefing Day Governance – transparency and ethical conduct We are committed to a culture that values high standards of ethical and socially responsible conduct and transparent disclosures Governance and Board oversight Human rights and modern slavery Transparent disclosures Robust corp
Slide 62: Finance and Capital Management
2022 Investor Briefing Day Finance and Capital Management Anthea McKinnell Chief Financial Officer 8 November 2022 I 59
Slide 63: Financial discipline
2022 Investor Briefing Day Financial discipline Record revenue and free cash flow, continued capital management and balance sheet to fund growth Record revenues Capital management Strong balance sheet Record free cash flow 1 2022 returns to shareholders 2 Strong liquidity 1 $2.7 billion $543 >$5.5 b
Slide 64: Capital management framework
2022 Investor Briefing Day Capital management framework Disciplined operating model Cash from operations Sustaining capital 1 Free cash flow from operations Maintain strong balance sheet Returns to shareholders Invest in major projects Invest in the energy transition Target gearing range 15-25% Base
Slide 65: Cost discipline
2022 Investor Briefing Day Cost discipline Continued focus on cost discipline and merger synergies Unit production cost Disciplined Operating Model $/boe Core portfolio free cash flow breakeven at ≤$35/bbl oil price through the oil price cycle 10 Each core asset free cash flow positive at ≤$35/bbl,
Slide 66: Santos' tax and royalty contributions
2022 Investor Briefing Day Santos’ tax and royalty contributions We pay tax and royalties in the countries in which we operate with over $960 million tax paid in 2022 1 Papua New Guinea US$million Timor-Leste US$million 2021 29 2021 197 2022 2 510 2022 2 140 Australia US$million 2021 218 2022 2 314
Slide 67: Production and capex guidance
2022 Investor Briefing Day Production and capex guidance 2023 production guidance 91-98 mmboe Upstream Gas and Liquids 1 Sustaining capex Major project capex 2 mmboe Excluded from FCF from operations Included in FCF from operations $million $million ~1,835 103 -106 ~1,200 ~1,100 ~85 91-98 ~100 ~100
Slide 68: Liquidity and access to debt capital
2022 Investor Briefing Day Liquidity and access to debt capital Strong liquidity and competitive access to debt capital across multiple markets Committed bank liquidity profile 1 Focus on maintaining strong liquidity and competitive finance cost $million 850 Liquidity of $5,579 million comprising $3
Slide 69: Strong balance sheet
2022 Investor Briefing Day Strong balance sheet Rapid de-gearing whilst providing increased returns to shareholders Gearing Strong balance sheet 3 % Gearing of 20.8% 40 38.0 Net debt of $3,833 million (down ~25% since 2021) 20 Gearing 25% Returns to shareholders 20.8 Gearing 15% Initial share buy-ba
Slide 70: Wrap-up and Q&A
2022 Investor Briefing Day Wrap-up and Q&A Kevin Gallagher Managing Director and Chief Executive Officer 8 November 2022 I 67
Slide 71: Definitions and abbreviations
2022 Investor Briefing Day Definitions and abbreviations Absolute When used in reference to emissions reduction targets means reduction against the total Local spend Local spend is spend in an area or region that includes some or all of community investment, emissions at the relevant point in time,
Slide 72: www.santos.com
www.santos.com