Santos Limited · ASX:STO
Santos — FY2003 Earnings Presentation
24 slides from Santos's earnings presentation, Feb 24, 2004
Slide 1: Santos 2003 Full Year Results
Santos 2003 Full Year Results Accelerating the pace of change John Ellice-Flint Chief Executive Officer 24 February 2004 1 Disclaimer & Important Notice This presentation contains forward looking statements that are subject to risk factors associated with the oil and gas industry. It is believed tha
Slide 2: 2003 – At a glance
2003 – At a glance 2003 2002 NPAT ($million) $327 $322 Operating cashflow ($million) $897 $821 Dividend (cps) 30c 30c TSR (%)1 20% 2% Gearing (%)2 23% 29% Production (mmboe) 54.2 57.3 1 Source: Bloomberg 2 Net debt/ (Net debt + equity) 3 2003 Operational Performance Year End 31 Dec 2003 2002 Gas Com
Slide 3: 2003 Gas Commercialisation
2003 Gas Commercialisation PJ (Net Santos) 600 500 400 300 200 100 0 Bayu LNG Casino Cooper Basin East Spar 5 2003 Exploration Review • Disappointing drilling results • Growing acreage in key areas • Increased quality opportunities 6 3
Slide 4: 2003 Oil Program Success
2003 Oil Program Success • Base building projects (including water floods) • Bottom water drive opportunities • New Technology Pelican Oil Development 2003 P11 BOL 4,000 800 Oil Production (bopd) Cumulative Oil (kbbl) P11 ESP P8 JetPump 2,000 400 P12 BOL P12 Jet Pump 0 Apr 0 Apr Oct Oct Jan Jan Jan
Slide 5: 2003 2P Reserves Review
2003 2P Reserves Review (mmboe) 710 (54) 24 636 (40) 25 (29) 1 Acquisitions Production Commercialisation Exploration Divestment Revisions 2002 2003 9 Moomba Critical Path Stage 1 & 2 Stage 3 Stage 4 Stage 5 & 6 • Storage gas • Gas rate 500 TJ/d • Full gas processing • LRP resumes May 3 Jan (100 TJ/d
Slide 6: Moomba Incident – the Impact
Moomba Incident – the Impact • Production impact - Sales Gas and Ethane – 2.7 mmboe - Natural Gas Liquids – 1.0 mmboe - Oil – 0.1 mmbbl • Net profit impact - $25 to $30 million • Cashflow impact - $35 to $40 million 11 Accelerating the pace of change 12 6
Slide 7: Development Profile 2001 and 2003
Development Profile 2001 The Challenge Bayu-Undan Bayu-Undan Scotia Scotia Liquids Liquids 01 02 03 04 05 06 07 08 09 10 Gas Oil & Liquids 13 Development Profile 2003 Delivered The Opportunity Bayu-Undan Bayu-Undan LNG LNG Gas Gas Evans Evans Shoal Shoal Bayu-Undan Bayu-Undan Mutineer Mutineer Scoti
Slide 8: Major Projects
Major Projects 15 Exploration Program 2002 - 2004 250 250 Amrit Melville 200 200 Nuri Agung Resource mmboe Resource mmboe 150 150 Titan & Calypso 100 100 Casino Maleo 2003 50 50 Exeter 2002 Norfolk 0 0 0 10 20 30 40 50 Number of Wells Legend Pre Drill Expected Discovered Exploration Program Mean Res
Slide 9: Strategic Gas Exploration Focus
Strategic Gas Exploration Focus East Java 22 TCF 160 BCF 4 Wells 1 Well 1 Well 150 BCF (LNG) 9 Wells 550 BCF 1 Well Market Annual Demand Gas Exploration Wells Total Gas Wells - 16 17 High Margin Oil Exploration Kutei 3 Deep water Wells East Java 1 Well Carnarvon 2 Wells Otway Oil Exploration Wells 1
Slide 10: Sustainability – 'Doing the right thing'
Sustainability Sustainability for Santos means economic progress, protecting the environment and being socially responsible. ‘Doing the right thing’ 19 2003 Sustainability Initiatives Project Key Facts Greenhouse Management Policy formation & measurement Produced Formation Water Measurement system e
Slide 11: Scope for Improvement
SCIP - taking us to the next level Scope for Improvement Santos Continuous Shared Improvement Program Services Centralised Business Operation Services Improvement Improvement Projects Strategy Process Defined Re-organisation Starting Starting the the Journey Journey Working Working on on the the Cor
Slide 12: Finance – Successful In Creating Value
Finance Peter Wasow Chief Financial Officer 24 February 2004 23 Successful In Creating Value Production growth 5-8% -5% Production grows 9% Cash flow Reserve Reserves TSR Margin growth 10% replacement 14% grow grows EPS growth 10% ratio 150% 20.3% 148% 0% Replacement cost shrinks Finding Cost US$1.2
Slide 13: Gas Prices Up
Gas Prices Up Sales Revenue ($ million) 1600 60 1 (13) (61) 1,478 1,465 Gas Liquid volumes prices Gas Liquid 1400 prices volumes 1200 1000 2002 2003 25 Turning The Corner On Production Costs ($ million) (5) 21 300 270 (10) 264 275 250 New MBP leak Saving 225 prod’n 200 175 150 (25) 125 450 6 429 410
Slide 14: Netback Per Barrel Climbs
Netback Per Barrel Climbs Netback ($/boe) Market Management 23 Movements Action 22 2.36 (2.64) 21 1.66 (0.15) (0.60) 20 (0.15) 19.11 18.64 Mix/ 19 18.36 Volumes PRRT Production 18 US$ Oil FX Gas Costs Price Prices 17 16 15 2002 2003 27 Minor Exposure To USD (USD) 2003 2004 100% 100% 80% 80% 60% 60%
Slide 15: EBITDAX Exceeds $1b For Fourth Year
EBITDAX Exceeds $1b For Fourth Year EBITDAX ($million) 1300 47 (60) 1087 (25) 46 (10) 1100 (7) 1061 6 (23) Higher gas Lower Lower FX volumes Higher Lower dividends prices Stock Sale losses PRRT prodn & other costs movement of revenue OCA 900 700 2002 2003 29 Profit After Tax – Marginal Increase Net
Slide 16: Cash Flow Growth Is Strong
Cash Flow Growth Is Strong Half yearly operating cash flow ($ million) 600 500 400 300 200 100 1'94 1'95 1'96 1'97 1'98 1'99 1'00 1'01 1'02 1'03 12% CAGR 31 Business Improvement Program Significantly exceeded 2003 target of $130m savings A$m A$m Key Initiatives: 190 Achievement 180 Production Optimi
Slide 17: Drilling Continues To Improve
Drilling Continues To Improve Offshore Onshore USA A$/ft A$/ft US$/ft 1800 200 250 1600 190 225 1400 180 1200 200 1000 170 175 800 160 600 150 150 400 140 125 200 0 130 100 1998 2001 2002 2003 1998 2001 2002 2003 Esenjay Santos Santos 01 02 03 Carnarvon Otway Cooper Basin Onshore US 33 Capital Effic
Slide 18: Capital & Production Outlook
Capital & Production Outlook Capital (A$million) Production (mmboe) 1200 120 1000 100 7% growth 800 80 Captured Captured Opportunities 600 60 Opportunities 400 40 Approved Approved 200 Development 20 Development 0 0 2003 2004 2005 2006 2007 2008 2003 2004 2005 2006 2007 2008 2009 2010 35 Affordabili
Slide 19: 2004 - 2006 Targets
2004 - 2006 Targets Production growth 6% to 8% Production grows EBITDA* Reserve Reserves growth ps Margin Netback (06) replacement ≥10% ≥A$22* grow grows ratio >140% ROCE* ≥ 10% Replacement cost shrinks Reserve replacement cost ≤US$5.50 * At an average price of A$39 37 8
Slide 20: Reference Slides
Reference Slides 38 Prices & Exchange Rates Full Year 2003 2002 % Change Realised Oil Prices (USD/bbl) 29.01 25.12 +15.5 AUD / USD Exchange Rate 0.6654 0.5615 +18.5 (after hedging) Realised Oil Price (AUD/bbl) 43.59 44.74 -2.3 USA Gas Price (USD/mcf) 5.59 3.33 +67.9 Australian Gas Prices (AUD/gj) 2.
Slide 21: Production Volumes
Production Volumes (mmboe) Gas Liquids 60 57.3 (1.6) 0.2 (1.2) (0.5) 54.2 55 Australian USA Crude Naphtha Liquids 50 Liquids Gas Gas Oil 17.6 & LPG 15.9 45 40 35 30 Gas Gas 25 39.7 38.3 20 15 10 2002 2003 40 Cost of Sales Full Year 2003 2002 % Change Production Costs 264 270 -2.2 Pipeline Tariffs 33
Slide 22: Profit
Profit Full Year 2003 2002 % Change Gross Profit 491 608 Profit on Sale of Non-Current Assets 60 6 Other Revenue 24 45 SG&A Expenses (45) (41) Borrowing Costs (35) (47) Income Tax (106) (176) Net Profit after Tax before Write Downs 389 395 +1.5 Write downs (after tax) (62) (73) Net Profit after Tax
Slide 23: Little Dry Hole Cost Remains
Little Dry Hole Cost Remains Capitalised Exploration & Development in non producing areas (A$ million) Dry hole cost 56 Browse, Houtman, Perth, Duntroon, Otway Basins, US Early stage commercialisation 204 Hides gas, Evans Shoal Late stage commercialisation 161 Kipper, Sole, Golden Beach, Oyong, Male
Slide 24: 2004 Sensitivities
2004 Sensitivities • US$1 change in the unhedged oil price per barrel leads to change of A$15 million in profit after tax • One cent movement in the exchange rate will cause a profit after tax movement of A$5 million • A 1% change in interest rates will cause a profit after tax movement of A$7 milli