Santos Limited · ASX:STO
Santos — Investor Day (November 2014)
85 slides from Santos's investor day presentation, Nov 26, 2014
Slide 1: 2014 Investor Seminar
2014 Investor Seminar For personal use only 26 November 2014
Slide 2: Disclaimer and important notice
Disclaimer and important notice For personal use only 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 rang
Slide 3: Welcome and introduction
Welcome and introduction For personal use only David Knox Managing Director and Chief Executive Officer Hides Gas Conditioning Plant, PNG LNG
Slide 4: World population and energy demand
7.2 8.3 For personal use only 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
Slide 5: Vision and strategy
Vision and strategy Our vision is to be a leading energy company in Australia and Asia For personal use only Driving value and performance in base business and unlocking Australia resources to meet gas demand Leveraging existing LNG LNG infrastructure and capabilities Building a material position in
Slide 6: Strategy has transformed Santos
Strategy has Portfolio transformed from domestic gas producer transformed Santos to leading Australian and Asian E&P, and regional For personal use only LNG player Significant exposure to Transformation of Santos’ portfolio % of production rising gas prices LNG 50% of production sold to Asia Asian m
Slide 7: Growing shareholder returns
Growing shareholder Strong project delivery positions Santos for growth returns and higher shareholder returns For personal use only Strong technical capabilities drive successful project delivery: ─ GLNG 90% complete ─ PNG LNG ─ Fletcher Finucane Project ─ Cooper gas growth ─ Peluang ─ Reindeer / D
Slide 8: Strong GLNG project delivery in 2014
Strong GLNG project GLNG is 90% complete delivery in 2014 On track for first LNG in the second half of 2015, For personal use only within US$18.5 billion budget Gas LNG plant Gas supply transmission and port pipeline Over 600 wells drilled since FID Pipeline complete and gassed-up All T1 and T2 modu
Slide 9: Safety performance
Safety performance Lost time injury frequency rate of 0.6 per million hours worked For personal use only Safety performance (employees and contractors) Rate per million Work hours hours worked (million) 2 60 50 40 1 30 20 10 0 0 2008 2009 2010 2011 2012 2013 YTD 2014 Santos GLNG Bechtel and Saipem L
Slide 10: Today's agenda
2014 Investor Seminar Today’s agenda For personal use only Welcome and introduction David Knox LNG markets Peter Cleary Business outlook Andrew Seaton GLNG upstream Trevor Brown GLNG downstream Rod Duke Q&A followed by morning tea Exploration Bill Ovenden Technology and Innovation Diana Hoff Eastern
Slide 11: LNG markets
LNG markets For personal use only Peter Cleary Vice President LNG Markets and Eastern Australia Commercial
Slide 12: Global LNG demand and supply outlook
Global LNG demand and A gap between LNG supply and demand continues to supply outlook widen into the next decade For personal use only Global LNG demand vs. LNG supply by region mtpa 600 500 250 400 120 mtpa mtpa US 300 Other Atlan5c Other Middle East 200 Other Pacific Qatar 100 Australia 0 2000 2005
Slide 13: Impact of US LNG
Impact of US LNG US LNG is not expected to overwhelm the market For personal use only Global LNG demand vs. US LNG supply in 2025 mtpa 500 450 ~75 mtpa 400 120 Contestable market Unsanctioned 350 US LNG US supply ~50-80 mtpa 300 250 200 Available supply* from 335 operational and under 150 constructi
Slide 14: LNG pricing
LNG pricing Different indexation offers buyers options in terms of risk, not delivered price For personal use only Henry Hub-linked vs Oil-linked LNG pricing US$/mmbtu Oil-linked LNG 20 at US$120/bbl 15 $0.60 $3 10 Oil-linked LNG at US ~15-22% HH $3 $80/bbl 5 0 Henry Hub Long Term Liquefication Plan
Slide 15: Domestic gas prices for industrial users
Domestic gas prices for End user gas pricing increasing across the Asian industrial users region supporting further LNG imports For personal use only CHINA JAPAN, KOREA, TAIWAN A$10-23/GJ A$16-27/GJ VIETNAM A$10-11/GJ INDONESIA A$5-10/GJ AUSTRALIA A$6-9/GJ Source: Asian country prices for industrial
Slide 16: Business outlook
Business outlook For personal use only Andrew Seaton Chief Financial Officer Unloading the first PNG LNG cargo at TEPCO Futtsu-2 Terminal
Slide 17: Business outlook
Business outlook Project delivery on track Disciplined approach to future investment For personal use only Focus on operating efficiencies in volatile oil price environment Clear production growth outlook Operating cash flow increases by: ~100% by 2016 at US$100/bbl ~65% at US$90/bbl (consensus) Sig
Slide 18: Production guidance
Production guidance 2014 production guidance narrowed to 53-55 mmboe For personal use only 2015 production guidance 57-64 mmboe, growth driven by PNG LNG at plateau and GLNG start-up Production 2014 production guidance narrowed to 53-55 mmboe mmboe YTD September 2014: 39 mmboe 70 57-64 Q4 2014: 14-1
Slide 19: Capex guidance
Capex guidance Capex decreasing as LNG projects are completed 2015 guidance $2.7 billion For personal use only 2014 guidance unchanged at $3.5 billion Capital expenditure 2015 guidance (excluding capitalised interest) (excludes capitalised interest) ─ Growth ~$1.9 billion $billion ─ GLNG $750 millio
Slide 20: Focus on operating efficiency
Focus on operating Managing the business for a volatile oil efficiency price environment For personal use only Reducing unit production costs Production cost per boe Targeting 9% reduction in unit production $ costs in 2015 compared to 2014 16.1 14.6 Fixed costs businesses (i.e. Cooper) beneficiarie
Slide 21: Balance sheet and funding
Balance sheet and Strong liquidity position and minimal debt maturities in funding the near term For personal use only Continued proactive approach to capital management Debt maturity profile $2.1 billion in cash and undrawn debt Notes mature in 2070, with Santos option to redeem in 2017 facilities
Slide 22: GLNG upstream
GLNG upstream For personal use only Trevor Brown Vice President Queensland Fairview Hub 5
Slide 23: Project overview
Project overview GLNG is 90% complete On track for first LNG in the second half of 2015, For personal use only within US$18.5 billion budget Drilling ~800 CSG wells over 2011-15, in addition to existing pre-FID wellstock Existing and sanctioned gross upstream compression capacity 725 TJ/day, additio
Slide 24: Fairview well performance
Fairview well performance Performance continues to exceed expectations – gross field well capacity expected to be ~500 TJ/day by the For personal use only end of 2014 Reservoir performance Fairview well performance as at October 2014 213 wells connected continues to exceed expectations Optimum gas O
Slide 25: Roma well performance
Roma well performance Online and dewatering, supporting average individual well capacity of 0.5 TJ/day For personal use only 76 development wells Roma well performance as at October 2014 76 wells connected online and dewatering 4 wells are flowing >0.5 TJ/d, Optimum gas capacity (TJ/day) Optimum wat
Slide 26: Upstream gas processing
Upstream gas processing Gas hub construction is complete and commissioning is well advanced For personal use only 170 TJ/day existing gross gas capacity at Existing Fairview and Scotia 160 TJ/day gross gas capacity Fairview Hub 5 4 ML/day water handling facilities Construction and commissioning comp
Slide 27: Fairview Hub
For personal use only Fairview Hub 5 160 TJ/day capacity - construction and commissioning complete 27 | 2014 INVESTOR SEMINAR
Slide 28: Fairview Hub
For personal use only Fairview Hub 4 250 TJ/day capacity - construction complete and commissioning underway 28 | 2014 INVESTOR SEMINAR
Slide 29: Roma Hub
For personal use only Roma Hub 2 145 TJ/day capacity - construction complete and ready for commissioning 29 | 2014 INVESTOR SEMINAR
Slide 30: Incremental gas supply and infrastructure projects
Incremental gas supply Incremental infrastructure and field development and infrastructure projects projects tracking on or ahead of schedule For personal use only and on or under budget Comet Ridge to Wallumbilla pipeline loop mechanically complete ─ On schedule and under budget, increases capacity
Slide 31: Ready for operations
Ready for operations Significant progress in 2014 and preparing for the operations phase of our project For personal use only Brisbane control room Well site Fairview Hub 5 31 | 2014 INVESTOR SEMINAR
Slide 32: GLNG downstream
GLNG downstream For personal use only Rod Duke Vice President Downstream GLNG GLNG plant site, Curtis Island
Slide 33: Gas transmission pipeline
Gas transmission pipeline 420-kilometre pipeline is complete and gassed-up to Curtis Island For personal use only 42-inch diameter 420-kilometre pipeline Gassing-up commenced in October and gas has reached Curtis Island Pipeline control from Brisbane Operations Centre Surface reinstatement work comp
Slide 34: LNG plant site
October 2014 2013 For personal use only LNG plant site - Significant construction progress over the past 12 months First commissioning gas expected in December 2014 34 | 2014 INVESTOR SEMINAR
Slide 35: LNG train
October 2014 2013 For personal use only LNG train 1 - All 82 modules are set on their foundations Piping installation and cable pulling are well advanced 35 | 2014 INVESTOR SEMINAR
Slide 36: LNG train
October 2014 2013 For personal use only LNG train 2 - All 29 modules are set on their foundations Piping installation and cable pulling are under way 36 | 2014 INVESTOR SEMINAR
Slide 37: LNG tanks
2013 October 2014 For personal use only LNG tanks - Hydrostatic testing of both tanks complete Insulation and piping installation underway 37 | 2014 INVESTOR SEMINAR
Slide 38: LNG jetty
October 2014 2013 For personal use only LNG jetty - LNG loading jetty substantially complete and subcontractor demobilised from site 38 | 2014 INVESTOR SEMINAR
Slide 39: Commissioning and operations
Commissioning and Integrated commissioning and operations team operations in place For personal use only 78 Santos GLNG staff October 2014 embedded in integrated Bechtel/GLNG commissioning and start-up team LNG plant commissioning team includes GLNG operators Experienced GLNG partner secondees worki
Slide 40: GLNG downstream milestones
GLNG downstream Significant milestones achieved in 2014 For personal use only On track for first LNG in the second half of 2015, within US$18.5 billion budget Milestone Date Marine crossing tunnelling completed February 2014 Last Train 1 module installed June 2014 First LNG tank hydrotest July 2014
Slide 41: Exploration
Exploration For personal use only Bill Ovenden Head of Exploration Tanumbirini-1 side wall core
Slide 42: Exploration performance
Exploration performance Exploration is a competitive advantage for Santos For personal use only 2P+2C finding costs (2009-2013) Santos is a leading low cost US$/boe explorer Conventional only finding cost better than average for peers Leading resource replacement ratio Peer companies All companies S
Slide 43: Exploration strategy
Exploration strategy Pursuing the best rocks and leveraging our infrastructure positions For personal use only Strengthen position in focus super basins Targeted entry to frontier basins Develop leading Australian unconventional position 2015 seismic acquisition 2015 exploration drilling Work with r
Slide 44: Exploration portfolio
Exploration portfolio Significant acreage capture is reloading the exploration portfolio with attractive opportunities For personal use only Material deepwater Malaysian Australia Browse oil prospects Asia WA-502, 504 Malaysia DW-S Consolidate Phu Khanh Vietnam India acreage position with Block 124
Slide 45: Browse Basin
Browse Basin Lasseter and Crown are Santos’ largest operated Lasseter-1 discoveries; they have materially increased our Browse For personal use only resource position Lasseter-1 and Crown-1 are Crown-1 Lasseter-1 Santos’ two largest operated discoveries Discovered gas with liquids at both reservoir
Slide 46: McArthur Basin
McArthur Basin McArthur Basin shale play opener shows great promise Tanumbirini-1 For personal use only ~25,000km2 acreage footprint Adjacent to existing pipeline infrastructure / access to regional road and rail links Well drilled to calibrate the rocks and interpretation models in central basin lo
Slide 47: Hides deep
Hides deep Drilling ahead, seeking gas to support PNG LNG T3 For personal use only Exploration target below the existing Hides field and gas processing plant Large well-constrained anticline with a primary objective approximately 700 metres beneath the proven Toro reservoir Ideally located to underp
Slide 48: Malaysia
Malaysia Two well program targeting material oil in a proven prolific play fairway offshore deepwater Malaysia For personal use only Farmed into a 25% equity position in Deepwater Block-S Partners: INPEX (operator) and PETRONAS High quality deepwater sandstone reservoirs in large structural traps, a
Slide 49: 2015 exploration schedule
2015 exploration schedule Delivers on our exploration strategy across super basins, frontier basins and unconventional basins For personal use only Santos Well Name Basin / Area Target Timing Interest % Hides Deep Papuan, PNG Gas 24 Drilling Prospect-1 Offshore Malaysia Oil 25 Drilling Prospect-2 Of
Slide 50: Technology driving performance and delivery
Technology driving performance and delivery For personal use only Diana Hoff Vice President Technical, Engineering and Innovation Saxon 185 drilling Fairview multi-well pads Photo to be updated 50 | 2014 INVESTOR SEMINAR
Slide 51: GLNG drilling and completions
GLNG drilling and Multi-well pads continue to drive greater efficiency, completions lower costs and a smaller environmental footprint For personal use only Fairview deviated well drilling cost performance Current Saxon rig fleet designed for multi-well pad drilling: ─ Skid forwards and backwards, re
Slide 52: Eastern Australia drilling and completions
Eastern Australia drilling Next generation rigs in the Cooper Basin and completions For personal use only Cooper Basin Ensign rigs 970 and 971: ─ 1500hp diesel-electric rigs ─ Capable of drilling to 20,000 ft / 6100 m ─ Mast Height: 136 ft / 41 m with a static hook load of 750,000 lbs (12 lines) ─ G
Slide 53: Advanced drilling technology
Advanced drilling Simulated drilling environments technology For personal use only Rig contractor simulators optimise training and safety by verifying personnel skills prior to arriving on well site. Highly realistic training environment with no risk to personnel or assets Recreate rig specific mode
Slide 54: Surface Engineering
Surface Engineering Virtual Plant engineering technology driving information availability and minimising operational downtime For personal use only System based on Intergraph’s industry leading ‘SmartPlant’ suite of engineering software ─ Engineering information fully aligned with physical assets ─
Slide 55: Eastern Australia
Eastern Australia For personal use only James Baulderstone Vice President Eastern Australia Moomba processing plant, Cooper Basin
Slide 56: Eastern Australia market opportunity
Eastern Australia Leveraging value from portfolio of resources and market opportunity infrastructure For personal use only 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 criti
Slide 57: Eastern Australia gas market
Eastern Australia Positioned to capitalise on the changing market gas market portfolio dynamics with Cooper playing central role For personal use only Eastern Australia gas demand (PJ) Gas prices likely to remain robust at >A$8/GJ 2,500 2015 Transition Transformation of gas market re-rates Santos’ p
Slide 58: Cooper Basin well placed to meet growing demand
Cooper Basin well placed Legacy infrastructure and existing resource base to meet growing demand provides great competitive advantages For personal use only Cooper gas drilling & well capacity1 build Cooper Basin gas production Wells drilled Well capacity (mmscfd) capacity growing after a decade 80
Slide 59: Cooper infrastructure expansion (CIEP)
Cooper infrastructure Stage 1 on track, taking Moomba average processing expansion (CIEP) capacity to ~420 TJ/day sales gas For personal use only CIEP approved scope is on schedule and on budget CIEP program Peak CIEP capex in 2015, significant reduction thereafter on track Moomba facilities provide
Slide 60: World scale potential
World scale Work program: understanding geology, targeting unconventional resource sweet spots, testing well designs to lower costs and For personal use only potential increase flow rate McArthur Basin Exploration Development / Pre-discovery Exploration Appraisal Appraisal Development Thick stacked
Slide 61: Unconventional Resources
Unconventional Resources Encouraging results across all play types For personal use only ˃ Langmuir-1 flowed at peak rate of 1.5 mmscfd Nappamerri Multiple ˃ Moomba-194 five stage frac achieved peak rate of 3.5 mmscfd Trough Targets ˃ 3D seismic acquired in Gaschnitz area for sweet spot identificati
Slide 62: Narrabri Gas Project Progress
Narrabri Gas Project Legacy rehabilitation complete, new world class Progress facilities now constructed For personal use only Legacy rehabilitation complete World class centralised water handling constructed Well positioned for commercial development 62 | 2014 INVESTOR SEMINAR
Slide 63: Narrabri Gas Project Progress
Narrabri Gas Project Pilots drilled, flow lines laid, gas flowing Progress For personal use only Ensign Heavy Drill Rig on Dewhurst 22 Northern Flowlines Construction Dewhurst 26 – 29 Flare During Testing 63 | 2014 INVESTOR SEMINAR
Slide 64: Narrabri Gas Project Progress
Narrabri Gas Project Strong support from the Government and Progress Narrabri community For personal use only Government Community Land Access & Regulatory Support Support Over 95% of land access Growing support from Chief Scientist Report secured for initial phase 1 local groups confirms industry c
Slide 65: Narrabri Gas Project Phased Development
Narrabri Gas Project Initial appraisal is concentrating on a material reserve Phased Development sweet spot For personal use only Successfully demonstrated triple-stack drilling Drilling ability, staying in seam >85% of the time 200 TJ/day with up to 425 well sets EIS 1,000Ha footprint across a proj
Slide 66: Narrabri Gas Project Appraisal Update
Narrabri Gas Project Drilled 9 of 16 planned wells targeting project technical risks Appraisal Update For personal use only Likely 30% reduction in 2P reserves in 2014 to match phased development Operating 5 pilot production facilities Developing detailed sub-surface models to finalise future Pilot
Slide 67: Acreage with potential to underpin NSW Energy Supply
Acreage with potential to Santos acreage covers seven sub-basins across the underpin NSW Energy Gunnedah Basin For personal use only Supply Prospective Basins Taroom Bohena Trough Bellata Including initial methane sweet Maules Creek spot phase 1 development Bando Tooraweena Murrurundi 67 | 2014 INVE
Slide 68: Eastern Australia market opportunity
Eastern Australia Leveraging value from portfolio of resources and market opportunity infrastructure For personal use only 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 criti
Slide 69: Asia Pacific
Asia Pacific For personal use only John Anderson Vice President Asia Pacific, WA & NT PNG LNG, near Port Moresby and Spirit of Hela LNG vessel
Slide 70: Asia Pacific Strategy
Asia Pacific Strategy Focused Asia Pacific portfolio underpinned by high margin, long-life projects For personal use only Large Core PNG yet-to-find countries Proximity potential and anchor Vietnam to demand assets Indonesia centres Access to existing PNG exploration infrastructure Core ASIA countri
Slide 71: Positioning and outlook
Positioning and outlook Long life production assets and material prospect inventory For personal use only Santos is the fourth largest independent E&P company in Asia Papua New Guinea 2014 Entitlement production (mboe/d) ─ Anchor equity in world-class, long-life LNG project ─ Positioning for LNG gro
Slide 72: PNG LNG – anchor asset
PNG LNG – anchor asset PNG LNG delivered April 2014, ahead of schedule For personal use only 44 cargoes delivered thus far PNG LNG Project Delivery and Development Drilling ─ All 8 initial development wells successfully completed ─ First of two Angore development wells spud in October 2014 Opportuni
Slide 73: PNG – footprint expansion
PNG – footprint expansion Santos continues to position itself in discovered resources and prospective exploration acreage that For personal use only could play an important role in LNG expansion PNG LNG remains the preferred commercialisation route, but Santos’ broad acreage position sets up strateg
Slide 74: Indonesia – footprint expansion
Indonesia – footprint Ande Ande Lumut leverages our Indonesian operating expansion expertise in offshore, shallow water developments For personal use only Project Santos (50%, operator) and participants AWE (50%) Project Long-life oil project scope Installation of a wellhead platform and a permanent
Slide 75: Vietnam – footprint expansion
Vietnam – footprint Chim Sáo and Dua performing strongly expansion For personal use only Recently acquired Block 124 PSC bolsters position in the frontier Phu Khanh basin Chim Sáo and Dua ─ Strong oil production currently averaging >30 kbbl/d ─ Dua field successfully tied-back to Chim Sáo with first
Slide 76: Asia Pacific is core to Santos
Asia Pacific is Santos’ Asia Pacific business unit has successfully core to Santos delivered key projects and grown through focused For personal use only additions of high impact exploration acreage Asia Pacific 32% Vietnam Santos total Q3 production: Bangladesh Malaysia 14.0 mmboe PNG Indonesia 76
Slide 77: Western Australia and Northern Territory
Western Australia and Northern Territory For personal use only Brett Woods General Manager, WA & NT Jack Bates, Lasseter, Browse Basin
Slide 78: Western Australia and Northern Territory
Western Australia and Three business themes delivering high margins with Northern Territory significant growth options For personal use only Strong reservoir performance Carnarvon Work-over campaign delivered under budget oil FPSO dry-docking in Q1 2015 Continued strong performance and high margins
Slide 79: Browse and Bonaparte Basins
Browse and Bonaparte Opportunities being progressed to deliver next phase Basins of growth For personal use only Barossa/Caldita Second of three well appraisal program underway Bayu Undan Darwin LNG Phase 3 drilling program, first gas Successful shutdown 1H 15 completed, continued excellent performa
Slide 80: Browse Basin Greater Crown and Lasseter
Browse Basin Major discoveries have provided momentum to drive Greater Crown and appraisal planning and evaluation of development For personal use only Lasseter concepts Multi-tcf resource position underpinned by Crown and Lasseter discoveries Significant upside with material multi-tcf prospects de-
Slide 81: Bonaparte Basin Barossa Caldita
Bonaparte Basin Three well appraisal drilling programme underway, Barossa Caldita supported by concept evaluation and pre-FEED studies For personal use only Drilling second of three well appraisal programme: ─ Barossa-2 successful well, intersecting comparable reservoir quality to Barossa-1ST1 (ca 1
Slide 82: WA domestic gas opportunity
WA domestic gas WA domestic gas assets supports volume growth with opportunity, capacity and higher margins For personal use only growth Market opportunities ─ Near term capacity and reserves in the event of third party project delays ─ Capturing market pricing of $7-9/GJ for legacy contract roll-of
Slide 83: 2014 Investor Seminar
2014 Investor Seminar For personal use only 26 November 2014
Slide 84: Appendix
Appendix For personal use only Santos prepares an Annual Reserves Statement for each calendar year which is published at or around the same time as its full year audited accounts. Accordingly, the 2014 Annual Reserves Statement is still in the process of preparation and finalisation and will not be
Slide 85: Contact information
Contact information For personal use only 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