Slide 1: Investor Presentation cover note
Santos Ltd A.B.N. 80 007 550 923 Ground Floor, Santos Centre 60 Flinders Street Adelaide South Australia 5000 GPO Box 2455 Adelaide South Australia 5001 Telephone: 08 8116 5000 International: +61 8 8116 5000 Company Secretary For personal use only Facsimile: 08 8116 5623 To: Company Announcements Of
Slide 2: Delivering the Strategy
For personal use only Delivering the Strategy March 2009 1
Slide 3: Disclaimer & Important Notice
Disclaimer & 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 range
Slide 4: Securing our Energy Future
Securing our Energy Future For personal use only Natural Gas will play a vital role in meeting the energy requirements for Australia and the Asia Pacific region… Natural gas can meet new base load power generation requirements in Eastern Australia: - Lowering the carbon intensity of power generati
Slide 5: Natural Gas Consumption
Natural Gas Consumption For personal use only Sources: BP Statistical review of World Energy 2008 4
Slide 6: Natural Gas – Australia's strategic advantage
Natural Gas – Australia’s strategic advantage For personal use only On 2007 consumption levels, eastern Australia has over 400 years of possible CSG resources alone … Australian domestic gas demand: > 1 Tcf pa CSG 200+ Tcf Resource Eastern Australian gas Potential demand: 0.6 Tcf pa 250+ Tcf R
Slide 7: Eastern Australia Coal Seam gas: A globally significant play
Eastern Australia Coal Seam gas: A globally significant play For personal use only 1970 2007 NOC IOC Partial list for comparison Soviet Russian NOC Reserves Full IOC Access (78%) (85%) Russia 300 Canada 164 ME US 37 28 743 177 Iran 90 Algeria 159 Malaysia CSG +40bboe 33 Qatar 16 Resource potential N
Slide 8: The Santos strategy
The Santos strategy For personal use only Using quality assets, Santos will safely deliver: Base business Eastern Australia: price and volume growth Indonesia: steady business with incremental growth WA & NT: exploit asset position Significant growth in LNG GLNG: transformational growth PN
Slide 9: Strategy delivery in 2008: Base Business
Strategy delivery in 2008 For personal use only Base Business – Australia & Indonesia Target Delivery Production 54 – 56 mmboe 3 54.4 mmboe in line with guidance Progress next phase of projects to schedule 3 Kipper – on track for first gas 1H11 3 Oyong Phase 2 – on track for first gas 3Q09 Reindeer
Slide 10: Strategy delivery in 2008: Significant growth in LNG
Strategy delivery in 2008 For personal use only Significant growth in LNG Target Delivery Introduce a partner into GLNG and FEED entry 3 Sale of 40% interest in GLNG to PETRONAS for US$2.5 billion* 3 Bechtel appointed downstream FEED contractor 3 GLNG dedicated CSG 2P reserves increase by 142% 3 Fai
Slide 11: Strategy delivery in 2008: Focussed Growth in Asia
Strategy delivery in 2008 For personal use only Focussed Growth in Asia Target Delivery Vietnam: Chim Sao 3 Successful test of Chim Sao North appraisal well Deferral of first oil into 2011 Bay of Bengal: progress exploration program 3 2D seismic survey complete 3 3D seismic survey underway 10
Slide 12: Strong operating performance
Strong operating performance For personal use only 2008 Full Year Result Change on 2007 Production 54.4 mmboe (8%) Sales Revenue $2.8 billion 11% EBITDAX $3.7 billion 99% Net Profit After Tax $1.7 billion 359% Underlying Net Profit $572 million 42% Operating Cash Flow $1.5 billion 21% Total Dividend
Slide 13: Track record of reserves growth
Track record of reserves growth For personal use only 2P Reserves (mmboe) Impressive & consistent 1,200 5-Yr CAGR = 12% 1013 growth in both 2P and 2C 1,000 879 1029 819 800 774 Proven and probable 774(2P) reserves 819 now exceed 879 643 600 1 billion barrels 643 of oil equivalent (boe) 400 2008
Slide 14: 2008 Reserves: Strong growth and a rich harvest
2008 Reserves: Strong growth and a rich harvest For personal use only Activities in 2008 Results for 2008 Harvesting Re-investing • Cash surplus of $1.5 billion Opening reserves Production and Exploration and Closing reserves generated3 GLNG sale conversion • 2P reserves 879 mmboe 2P 148 mmboe 2P 28
Slide 15: Long debt profile with high flexibility
Long debt profile with high flexibility For personal use only Debt Maturity Profile Less than 15% of gross debt 600 matures in next two years Average term to maturity 6.6 years 500 Greater than 25% matures beyond ten years 400 All A$ debt and 87% of US$ A$ millions 300 debt is floating rate 20
Slide 16: Santos "Beyond the 2P"
Santos “Beyond the 2P” For personal use only Near term oil development Significant oil prospects in Chim Sao/Dua in Vietnam PNG LNG – Expansion Multiple TCF gas prospects opportunities in Bay of Bengal PNG LNG – significant project underpinned by Near-term oil and gas development world class gas res
Slide 17: Growth in LNG
For personal use only 16 Growth in LNG
Slide 18: 2020 LNG growth aspiration
2020 LNG growth aspiration For personal use only Kutei LNG Kutei Santos: 20-50% PNG LNG DLNG1 & Bayu-Undan Santos: 17.7% Santos 11.4% PLNG DLNG2 DLNG GLNG Santos (Op): Petrel 95% Santos (Op): Tern 100% Santos (Op): 60% Santos (Op): Evans Shoal 40% Browse Santos: Barossa Caldita 40% GLNG Browse LNG S
Slide 19: Coal Seam Gas Assets
For personal use only Coal Seam Gas Assets 18
Slide 20: Santos CSG assets are world class
Santos CSG assets are world class For personal use only Gunnedah is emerging as one of the world’s best… Gas Coal Field Permeability Saturation Flow Rate Spacing GIP/Well Content Thickness Fairview zzz zzz zzz zzz zzz zzz zz Roma zz zzz zz zz zz zz zz Scotia zzz zz zzz zzz zz zzz zzz Gunnedah zzz zz
Slide 21: Santos' leading CSG acreage position
Santos’ leading CSG acreage position For personal use only Denison Greater Scotia Bowen Gladstone 6500 km2 (gross) Basin 2500 km2 (gross) Queensland Exploration stage 27 TJ/d production Same coals as Fairview Production since 2002 Greater Roma 7700 km2 (gross) High quality resource F
Slide 22: Production delivery
Production delivery For personal use only CSG production capacity is not constrained by well capacity Total Santos Operation CSG Sales Capacity Growth (gross) 160 Compressor Site 3 140 Fairview-Wallumbilla Operational & Water Pipeline Tie-in & Disposal Limit Compressor Site 2 Increased 120 Completed
Slide 23: Outstanding drilling performance
Outstanding drilling performance For personal use only Since Q3 2007 drilling time in Typical CSG wells are now Roma has halved 8 drilled in 3 days, down from 7 days/well in 2007 7 Record drilling time of Drilling Time: days/well 6 2.9 days 5 Significant savings in overall well cost 4 3 2 1 0
Slide 24: Key CSG highlights in 2008
Key CSG highlights in 2008 For personal use only CSG delivers results… Bowen Gladstone Queensland Basin 2P reserves growth Fairview delivered at 5c/GJ 46 wells drilled finding cost Record drilling time of 2.9 days and continuing Roma to improve 76 wells drilled Brisbane Increased Fairview
Slide 25: Water management strategy
Water management strategy For personal use only Diversified water management strategy is being implemented Reverse Osmosis Cropping Injection Well Community Use 24
Slide 26: Gunnedah Basin
Gunnedah Basin For personal use only 40 TCF prospective resource Secured access to majority acreage positions New South Wales (up to 21,000 km2 gross) Farmin agreements with Gunnedah - Australian Coalbed Methane PEL 450 PEL PEL 1 - Gunnedah Gas PEL 12 462 Coonabarabran Quirindi - Macquarie Energ
Slide 27: Gladstone LNG
For personal use only Gladstone LNG
Slide 28: GLNG: The leading CSG to LNG project
GLNG: The leading CSG to LNG project For personal use only Environmental applications commenced Freehold land acquired for Pre-FEED by Foster liquefaction facilities Wheeler and Bechtel Significant project PETRONAS selected Environmental Impact status awarded as partner Statement lodgement 2005 2007
Slide 29: GLNG: Building the team
GLNG: Building the team For personal use only Growth in GLNG team to 220 employees Senior secondees from PETRONAS into GLNG including: - Project Director Downstream - GM LNG Operations - GM Marketing Plans for an additional 120 new employees in 2009 Organisation in place to deliver New Bri
Slide 30: GLNG: Building the reserves
GLNG: Building the reserves For personal use only 2P reserves up 142% to 3,246PJ Emerald 95% of 2P reserves uncontracted Proposed Gladstone and available for GLNG project Pipeline 2008 program successful in converting resources to reserves, and conversion of possible to Arcadia proved and probab
Slide 31: PNG LNG & Darwin LNG
For personal use only PNG LNG & Darwin LNG 30
Slide 32: PNG LNG on track
PNG LNG on track For personal use only Steady progress toward final investment decision Pre FEED work on two train 6.3 mtpa plant 9 Hides & Angore Marketing Representative Juha Agreement 9 Kutubu & Agogo Gobe Coordinated Development and Operating Agreement 9 Gas Agreement 9 FEED Entry Deci
Slide 33: Darwin LNG & Timor/Bonaparte/Browse
Darwin LNG & Timor/Bonaparte/Browse For personal use only Multiple pathways to growth Darwin LNG Barossa Santos 11.4% Evans Caldita Shoal Bayu-Undan Base project continues to deliver with potential upside unfolding Darwin Indian Petrel Timor Bonaparte Ocean Tern Santos has material contingent
Slide 34: Eastern Australia Gas
For personal use only Eastern Australia Gas
Slide 35: Demand for Eastern Australia gas
Demand for Eastern Australia gas For personal use only Demand will more than double within 10 years… 1800 1600 Planned 1400 LNG Projects PJ/a 1200 1000 Carbon driven fuel switching 800 10 Year Historic Average 600 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: NEMMCO, Santos, company anno
Slide 36: Gas power generation …underutilised
Gas power generation …underutilised For personal use only Gas is underutilised in Eastern Australia for electricity generation Gas Penetration as % of Power Generated 80% 80% 70% 70% 60% 56.1% 60% 50% 50% 40% 36.6% 40% 30% 30% 20% 20% 8.6% 8.6% 9.0% 10% 5.7% 10% 1.5% 1.0% 0% 0% SA Ge ea Au ia Ca ia
Slide 37: Enviable existing gas infrastructure
Enviable existing gas infrastructure For personal use only Mt Isa Townsville Supply and demand centres are effectively Gladstone Fairview networked Ballera Roma Further investment is Wallumbilla Brisbane Moomba needed to enhance deliverability from some emerging supply areas Gunnedah Sydney Adel
Slide 38: Unconventional Cooper gas resources
Unconventional Cooper gas resources For personal use only Measured and considered program to define potential Moomba USA unconventional gas production has Developed doubled since 1992 TOOL DARA Conventional STO mean contingent resource >4 TCF High graded 3 play types coincident with Undevelope
Slide 39: 2008 Full Year Results
For personal use only 2008 Full Year Results 38
Slide 40: Net profit after tax
Net profit after tax For personal use only 2007 2008 2007 Significant Underlying Operating Underlying Significant 2008 Reported Items Profit Items Profit Items Reported $m 359 45 404 168 572 1,078 1,650 1,650 1,500 1,350 1,200 1,050 900 750 600 450 300 150 0 2007 2008 39
Slide 41: Underlying profit
Underlying profit For personal use only 2007 Exploration Interest 2008 Underlying Price Volume Prod costs DD&A Expense & FX Underlying $m 404 232 (101) (43) 12 28 40 572 650 575 500 425 350 275 200 2007 2008 40
Slide 42: Significant items
Significant items For personal use only 2008 2008 $m Pre tax Post tax Gain on PETRONAS sell down 1,698 1,188 Impairment write-downs (217) (140) Change in the fair value of embedded derivatives (12) (9) Remediation and related costs of (31) (22) Moonie to Brisbane pipeline incident Capital losses not
Slide 43: 2009 guidance
2009 guidance For personal use only Item 2009 Guidance 2008 Actual Production 53 – 56 mmboe 54.4 mmboe Production costs $550 - $570 $543 million million Depreciation, Depletion & $12.80 per boe $12.20 per boe Amortisation (DD&A) expense Royalty related taxation expense1 $80 to $100 $115 million (aft
Slide 44: Cash on hand $1.6bn, gearing 10%
Cash on hand $1.6bn, gearing 10% For personal use only 2007 year end 2008 year end Repay- Increase Gross Cash Net ments in cash Net Cash Gross debt on hand debt in '08 FX effect* on hand debt on hand debt 0 -506 -500 -1,839 -1,000 -2,039 -2,059 1,352 A$M 1,553 -1,500 249 -269 -2,000 201 -2,500 * USD
Slide 45: Reference Slides
For personal use only 44 Reference Slides
Slide 46: 2009 Forward Exploration Schedule
2009 Forward Exploration Schedule For personal use only Well Name Basin / Area Target Upside Resource Potential Santos Timing Comments (mmboe) Interest 50 - 100 - 0 – 50 % 100 500 Gulf of Suez / Drilling with South East July 1 Oil 9 40 Q1 09 Egypt full carry East Java / Peluang 1 Gas 9 67.5 Q1 09 In
Slide 47: Australia - Milestones
Australia - Milestones For personal use only Project 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 FEED FID Startup Fairview CSG 115 TJ/Day Henry Discovered FEED FID Startup (VIC/P44 July 2005 Stage 2) Discovered FID Startup Kipper 1986 Patricia- FEED Startup Pre-FEED FID Baleen Plant Upgra
Slide 48: LNG - Milestones
LNG - Milestones For personal use only Project 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Pre-FEED FEED FID Startup Gladstone LNG Hides Field Pre-FEED FEED FID Discovered Startup PNG LNG 1987 Discovered Startup DLNG 1 (Bayu 1995 Undan) Pre-production Production Milestone 47
Slide 49: Asia - Milestones
Asia - Milestones For personal use only Project 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Discovered FEED FID Startup 2001 Oyong Ph2 FEED FID Startup Wortel Country Pre-FEED FID Startup Chim Sao Entry 2006 Dua Magnama, Hatia Wells 3D Seismic Country Bangladesh Entry 2007 2D Seismic 3D S
Slide 50: Indonesia
Indonesia For personal use only Stable base production West Natuna - Oil (Oyong) Kutei - Gas (Maleo) Indonesia West Papua Near field development East Java opportunities Oyong, Maleo Strengthening domestic Indian Ocean gas market 500km Australia Exploration upside Legend Santos acreage 49
Slide 51: Indonesia – Oyong & Wortel
Indonesia – Oyong & Wortel For personal use only Oyong Phase 1 (oil) - First oil achieved in September Java Sea 2007 Oyong Maleo Oyong Phase 2 (gas and oil) Sampang PSC - 60km pipeline to Grati Surabaya - Gas sales to PT Indonesia Power Madura Offshore PSC - Engineering and construction in progr
Slide 52: Vietnam
Vietnam For personal use only Prospective, lightly explored China Vietnam basins Burma Song Hong Laos Basin Multiple, material play types 101-100/04 PSC Oil and gas potential Thailand South China Sea Rapidly growing markets Phu Khanh Cambodia Basin Strong regulatory regime 123 PSC Nam Con
Slide 53: Vietnam – Nam Con Son Basin
Vietnam – Nam Con Son Basin For personal use only Two oil discoveries Chim Sao/Dua (STO 37.5%) - Reservoir and facilities studies complete South China - Assessing options for FPSO Sea - Target first oil in 2011 Swan Nam Con Son Basin 12W PSC Jack-up Rig Chim Cong Wellhead Platform Dua oil discover
Slide 54: Bay of Bengal – India / Bangladesh
Bay of Bengal – India / Bangladesh For personal use only Material Gas targets India Enormous, underexplored, prospective Bangladesh tertiary delta near rapidly emerging India markets Sangu India - PSC’s signed March 2007 Burma Bay of Bengal - Processing of 17,250 2D seismic survey completed –
Slide 55: 2008 Impairment write-downs
2008 Impairment write-downs For personal use only $m $m CGU Pre-tax Post-tax Reason Jeruk 70 39 Decreased oil price, increased discount rates, Oyong 58 33 increased operating costs Sangu 20 20 Reserves writedown Ballera Plant plant Cooper Basin 45 32 shutdown Patricia Baleen 22 15 Subsurface assets
Slide 56: Underlying profit
Underlying profit For personal use only $m 2008 2007 Net profit after tax 1,650 359 Net gain sale GLNG assets (1,188) − Insurance recoveries (33) − Capital loses not previously brought to account (28) − Net gain on redetermination of unitised Bayu-Undan field − (33) Gain on sale of available-for-sal
Slide 57: 2009 sensitivities
2009 sensitivities For personal use only NPAT Impact Sensitivity Change A$m US dollar oil price US$1/bbl 13 Gas Price 10 cent/GJ 14 A$/US$ exchange rate 1 cent 9 Interest rates 1% 8 56
Slide 58: Prices & exchange rates
Prices & exchange rates For personal use only 2008 2007 Change % Realised Oil Prices (USD/bbl) 98.991 80.35 +23 AUD/USD Exchange Rate (after hedging) 0.8428 0.8724 −3 Realised Oil Price (AUD/bbl) 117.45 92.10 +28 Gas Prices (AUD/GJ) 4.42 3.95 +12 1 Amended from US$106.38 disclosed in 4Q 2008 Activit
Slide 59: FUELS hybrid issue
FUELS hybrid issue For personal use only A$600m FUELS on issue, step up date of 30 September 2009 The Margin above BBSW will increase from 1.55% to 3.80% on step up date unless Santos gives notice before that date or each subsequent Dividend Date to: - Redeem FUELS at their Face Value - Convert
Slide 60: Reserves & resources
Reserves & resources For personal use only PROVED PLUS PROBABLE RESERVES (SANTOS SHARE) BY ACTIVITY Sales gas (incl. Crude oil Condensate LPG Total ethane & LNG) mmbbl mmbbl 000 mmboe PJ tonnes Reserves year end 2007 4271 79 43 2982 879 Production -230 -10 -3 -251 -54 Additions 1536 14 2 258 280 Acq
Slide 61: Reserves & resources
Reserves & resources For personal use only The information in this reserves statement has been compiled by Greg Horton, a full-time employee of the Company. Greg Horton is qualified in accordance with ASX Listing Rule 5.11 and has consented to the form and context in which this statement appears. In
Slide 62: Contact information
Contact information For personal use only Registered and head office Andrew Nairn Share Register Group Executive Investor Relations Adelaide Level 10, Santos Centre Ground Floor, Santos Centre Direct: + 61 8 8116 5314 60 Flinders Street Facsimile: +61 8 8116 5131 Adelaide, South Australia 5000 Email