Slide 1: 2017 First-half results
2017 First-half results 24 August 2017 Santos 2017 HY Results Page 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: 2017 First-half highlights
2017 First-half highlights Significant turnaround in underlying performance Forecast free cash flow breakeven reduced Balance sheet strengthened Forecast free cash flow breakeven1 Net debt + US$302 million free cash 4.5 + Ample liquidity of 43.50 24% flow generated in the first- 36% US$4.2 billion i
Slide 4: Safety and environment
Safety and environment 2016 injury performance was our best on record but first-half results show we cannot be complacent Lost Time Injury Frequency Rate three year rolling average + Actions underway to address increase in low 2012 – 1H 2017 severity incidents including risk awareness Rate per milli
Slide 5: Our strategy
Our strategy Three phase strategy to deliver a low-cost, reliable and high performance business + Execute and bring on-line growth opportunities across the core portfolio + Focused exploration strategy to Grow identify new high-value gas targets + Find and unlock sixth core long-life natural gas ass
Slide 6: Core portfolio provides stable production and growth
Core portfolio provides stable production and growth Santos’ core assets provide stable base production for the next decade Growth opportunities include Barossa backfill to Darwin LNG and PNG LNG expansion Delivering Australia’s lowest cost onshore High margin conventional production operations Nort
Slide 7: Delivering more gas to the domestic market
Delivering more gas to the domestic market Santos has scale, capacity and optionality to sell into both domestic and export markets Darwin McArthur + Santos committed to delivering Very large in-place gas resource in increased gas supply to the mid-Velkerri shale play domestic market Eastern Queensl
Slide 8: 2017 First-half financial results
2017 First-half financial results Anthony Neilson CFO Santos 2017 HY Results Page 8
Slide 9: 2017 First-half financial snapshot
2017 First-half financial snapshot Net loss of US$506 million, after US$689 million after tax net impairment. EBITDAX up 46% to US$718 million and underlying NPAT up US$161 million to US$156 million Free cash flow Unit upstream Operating cash flow Net debt breakeven1 production costs US$662 million
Slide 10: Production and sales volumes
Production and sales volumes Higher production and sales from the core assets. 2017 sales volume guidance upgraded to 77-82 mmboe Production Sales volume mmboe mmboe 43.2 40.9 40.1 31.1 30.5 29.4 29.5 28.3 33.4 30.9 1H15 2H15 1H16 2H16 1H17 1H15 2H15 1H16 2H16 1H17 Oil Sales gas and ethane LNG LPG C
Slide 11: Transforming underlying earnings
Transforming underlying earnings Cost-out and efficiency gains combined with higher realised prices drive higher earnings. First-half underlying NPAT increased to US$156 million compared to a loss in 1H 2016 Product sales revenue EBITDAX Underlying NPAT US$ million US$ million US$ million 1,453 800
Slide 12: Strong free cash flow generation
Strong free cash flow generation First-half free cash flow (before asset sales) of US$302 million continues trend of improving free cash flow in a lower oil price environment Operating cash flow Investing cash flow1 Free cash flow1 US$ million US$ million US$ million 306 302 662 1H15 2H15 1H16 2H16
Slide 13: Capital expenditure
Capital expenditure First-half capex US$321 million. 2017 capex guidance maintained at US$700-750 million + First-half capital expenditure of US$321 million Capital expenditure1 US$ million + includes Muruk acquisition and exploration drilling costs 673 (Exploration) 615 + Barossa appraisal drilling
Slide 14: Impairment
Impairment Previously announced non-cash net impairment of US$689 million, primarily due to lower oil prices + In determining the carrying value of its assets, GLNG: net impairment of US$867 million Santos considers a range of asset and macro + as a result of the changes in assumptions, predominantl
Slide 15: Net debt reduced to US$2.9 billion
Net debt reduced to US$2.9 billion Target US$2 billion in net debt by the end of 2019 + Net debt reduced to US$2.9 billion through 2017 first-half movement in net debt US$million a combination of free cash flow, previously announced asset sales and proceeds from the Share Purchase Plan 3,492 (116) 3
Slide 16: Re-financing Euro hybrid to reduce interest costs
Re-financing Euro hybrid to reduce interest costs Euro hybrid to be redeemed and Santos expects to issue new lower-cost debt in the near- term. Targeting significant annual interest cost savings Drawn debt maturity profile as at 30 June 20171 US$million + Euro hybrid to be redeemed at the first call
Slide 17: Hedging reduces impact of commodity price volatility
Hedging reduces impact of commodity price volatility Prudent oil price hedging retains exposure to oil price upside at zero cost 2017 Zero-cost three-way collar hedge Zero-cost three-way collar hedge Short call $70 Open oil price positions 2017 2018 US$62.85 Realised Price (US$/bbl) Long put Zero-co
Slide 18: Operations review
Operations review Kevin Gallagher Managing Director and CEO Santos 2017 HY Results Page 18
Slide 19: PNG
PNG Record PNG LNG performance drives higher EBITDAX. Expansion of PNG LNG likely and details evolving + EBITDAX higher due to strong operating Asset KPIs 1H17 1H16 performance, lower unit costs and higher Production (mmboe) 6.2 5.9 LNG prices Sales volume (mmboe) 5.8 5.7 + PNG LNG operated at ~8.2
Slide 20: PNG - Muruk gas discovery
PNG - Muruk gas discovery Material gas field 21 kilometres northwest of Hides. Follow-up potential, Karoma prospect Drilling and testing results Approvals and forward plan + Muruk-1 and sidetracks encountered two + Muruk-2 appraisal well located ~10 kilometres separate pools, Muruk A and Muruk B fro
Slide 21: Northern Australia
Northern Australia Strong Darwin LNG performance and successful Barossa two-well appraisal campaign + EBITDAX 22% higher mainly due to higher LNG Asset KPIs 1H17 1H16 prices Production (mmboe) 2.1 2.2 + DLNG operated at ~3.4 mtpa annualised rate Sales volume (mmboe) 2.2 2.2 in the first-half Sales r
Slide 22: Northern Australia exploration and appraisal
Northern Australia exploration and appraisal Barossa two-well appraisal campaign strengthens position as lead candidate for DLNG backfill Northern Australia + Two-well Barossa appraisal drilling campaign successfully completed (Santos 25%) + successful production test of Barossa-6 Barossa strengthen
Slide 23: Cooper Basin
Cooper Basin Lower forecast costs allowing increased drilling activity and acceleration of planned program + EBITDAX 51% higher due to lower cost Asset KPIs 1H17 1H16 operations, improved productivity and higher oil prices Production (mmboe) 7.1 7.7 + Unit production cost down 12% to Sales volume (m
Slide 24: Cooper Basin cost base materially lower
Cooper Basin cost base materially lower 58% reduction in drilling costs and 93% improvement in drilling efficiency since 2014 Cooper gas development drill, frac, complete costs Wells drilled with 2 rigs US$million per well -58% +93% 6.6 52 4.8 39 4.2 31 27 2.8 2014 2015 2016 2017F 2014 2015 2016 201
Slide 25: GLNG
GLNG GLNG LNG sales expected to ramp-up to ~6mtpa by end of 2019 and remain at that level + EBITDAX 140% higher reflecting the Asset KPIs 1H17 1H16 ramp-up of Train 2 and higher LNG prices Production (mmboe) 5.6 4.3 + Upstream unit production cost down 19% Sales volume (mmboe) 10.6 9.1 to US$6.0/boe
Slide 26: GLNG cost base materially lower
GLNG cost base materially lower Proven cost performance now allows GLNG to increase drill, complete and connect activities. Acceleration of development activity will unlock more near term gas supply Roma drill, complete, connect Roma development drilling US$million per well Average days (rig release
Slide 27: WA Gas
WA Gas Low cost operations with capacity and reserves to meet short and long-term demand + EBITDAX lower due to settlement of a revised Asset KPIs 1H17 1H16 gas sales agreement in 1H 2016 Production (mmboe) 4.3 4.7 + Production lower due to lower Varanus Island nominations offset by higher customer
Slide 28: Other assets
Other assets Packaged and run separately for value as a standalone business. Portfolio to be continually optimised to maximise value + EBITDAX 13% higher due to due to higher Asset KPIs 1H17 1H16 prices + Sale of Victoria and Mereenie completed in Production (mmboe) 4.2 6.2 1H17 Sales volume (mmboe)
Slide 29: Summary
Summary Create shareholder value by becoming a low-cost, reliable and high performance business + A disciplined strategy focussed on five core long-life natural gas assets, each with significant upside potential + strong operating performance. 2017 production and sales volume guidance upgraded + Tur
Slide 30: 2017 First-half results Appendix
2017 First-half results Appendix Santos 2017 HY Results Page 30
Slide 31: Financial performance
Financial performance EBITDAX up 46% to US$718 million. Underlying NPAT up US$161 million to US$156 million First-half First-half + Product sales revenue up 22% US$ million Var 2017 2016 driven by favourable product Product sales revenue 1,453 1,191 22% pricing and higher LNG volumes, Other revenue/
Slide 32: Sales revenue
Sales revenue Sales revenue up due to higher LNG sales volumes and higher prices First- First- + Sales revenue increased by 22% US$ million half half Var due to higher LNG sales volumes 2017 2016 reflecting the ramp-up of GLNG Sales Revenue (incl. third party) and strong performance from PNG LNG, co
Slide 33: Production costs
Production costs Upstream unit production costs improved 8% to US$8.08/boe First-half First-half Var + Upstream unit production costs US$ million 2017 2016 down 8% to US$8.08/boe Production costs 239 273 (12)% + GLNG down 19% to US$6.0/boe Production cost + Cooper Basin down 12% to 8.08 8.80 (8)% (U
Slide 34: Cash flow
Cash flow Operating cash flow up 127% to US$662 million. Free cash flow breakeven reduced to US$33/bbl1 First-half First-half Var + Operating cash flow up 127% to US$million 2017 2016 US$662 million Operating cash flow 662 291 127% + Net proceeds from asset sales in Net cash from 2017 include Victor
Slide 35: Significant items
Significant items Reconciliation of half-year net loss to underlying profit First-half First-half US$million 2017 2016 Net profit/(loss) after tax (506) (1,104) Add/(deduct) significant items after tax Impairment losses 689 1,061 Net gains on asset sales (51) 4 Other 24 34 Underlying profit 156 (5)
Slide 36: Liquidity and net debt as at June 2017
Liquidity and net debt as at 30 June 2017 US$4.2 billion in cash and committed undrawn debt facilities Liquidity (US$million) 30 Jun 2017 31 Dec 2016 Cash 2,226 2,026 Undrawn bilateral bank debt facilities 2,020 2,313 Total liquidity 4,246 4,339 Debt (US$million) Export credit agency supported loan
Slide 37: 2017 First-half segment results summary
2017 First-half segment results summary Corporate First-half 2017 Cooper Northern Other explor’n & US$million Basin GLNG PNG Australia WA Gas Assets elimins Total Revenue 395 358 250 78 135 170 110 1,496 Production costs (69) (34) (27) (35) (25) (61) 12 (239) Other operating (37) (33) (22) (3) (8) (
Slide 38: 2016 First-half segment results summary
2016 First-half segment results summary Corporate First-half 2016 Cooper Northern Other explor’n & US$million Basin GLNG PNG Australia WA Gas Assets elimins Total Revenue 353 224 210 71 74 217 56 1,205 Production costs (85) (31) (26) (37) (23) (91) 20 (273) Other operating (40) (35) (19) - (2) (8) (
Slide 39: 2017 Guidance
2017 Guidance 2017 sales volumes expected to be between 77 and 82 mmboe and production to be between 57 and 60 mmboe 2017 Guidance Sales volumes 77-82 mmboe Production 57-60 mmboe Upstream production costs US$8-8.25/boe DD&A US$700-750 million Capital expenditure US$700-750 million Capital expenditu