Slide 1: Santos reports record annual free cash flow
ASX / Media Release 20 February 2020 Santos reports record annual free cash flow of $1.1 billion, 7% increase in net profit and 13% increase in full-year dividends Full-year (US$m) 2019 2018 Change Product sales 4,033 3,660 10% EBITDAX1 2,457 2,160 14% Underlying profit1 719 727 -1% Net profit after
Slide 2: Following completion of the ConocoPhillips acquisition
“Following completion of the ConocoPhillips’ acquisition, we expect to take a final investment decision on the Barossa project to backfill Darwin LNG in the second quarter. “Barossa is making good progress towards FID, with technical assurance processes well advanced and key contracts for the FPSO,
Slide 3: Conference call and live webcast
Conference call and live webcast Santos will host a conference call and live webcast for analysts and investors today at 11:00am AEDT. Dial-in numbers for the conference call are listed below. Please quote passcode ID: 10003979. For locations within Australia dial toll-free 1800 870 643 or toll 02 9
Slide 4: Santos 2019 Full-year results
Santos 2019 Full-year results 20 February 2020
Slide 5: 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 6: 2019 Full-year highlights
2019 Full-year highlights Record free cash flow. Unit production costs lower FREE CASH FLOW1 REPORTED NPAT2 UNDERLYING NPAT2 112% $1,138 13% $674 7% $719 -1% million million million SALES REVENUE UNIT PRODUCTION COSTS TOTAL DIVIDENDS $4,033 10% $7.24 -10% 11c 13% million per boe US5 cps final divide
Slide 7: Safety and environment
Safety and environment Santos is committed to being the safest oil and gas operator in Australia and preventing harm to people and the environment Injury frequency rates vs activity levels Loss of containment incidents Rate per million hours worked No of onshore wells Count of Tier 1 and Tier 2 1.0
Slide 8: Disciplined Operating Model drives strong free cash flow
Disciplined Operating Model drives strong free cash flow Record free cash flow of $1,138 million Free cash flow1 $million 2016 – 19 +452% FREE CASH FLOW $3 billion 1,138 1,006 2019 FREE CASH FLOW BREAKEVEN2 $29/bbl 618 2019 FREE CASH FLOW YIELD3 ~10% 206 2016 2017 2018 2019 1 Operating cash flows le
Slide 9: Continuing to drive lower-cost operations
Continuing to drive lower-cost operations Disciplined Operating Model delivering lower cash production costs across the operated assets Western Australia Cooper Basin Queensland & NSW $/boe $/boe $/boe -28% -17% -5% 10.19 9.32 8.68 8.17 7.30 7.77 5.83 5.77 5.51 2017 2018 2019 2017 2018 2019 2017 201
Slide 10: Diversified growth leveraging existing infrastructure
Diversified growth leveraging existing infrastructure Targeting 2C conversion of >300 mmboe over 2020-21 from Barossa and Dorado 2P reserves & 2C contingent resources1 (excluding ConocoPhillips acquisition) mmboe Northern Australia & Asset hub Growth projects Timor-Leste Cooper Basin 6 Queensland 15
Slide 11: Resilience and opportunity in a lower carbon future
Resilience and opportunity in a lower carbon future Long-term aspiration to achieve net-zero emissions by 2050 2020 Climate Change Report released in line with the G20’s Task Force Santos emission intensity (Scope 1, equity share) ktCO2e/mmboe on Climate-related Financial Disclosures (TCFD) -17% 65
Slide 12: FEED commenced on Carbon Capture & Storage project
FEED commenced on Carbon Capture & Storage (CCS) project Cooper Basin Carbon Capture and Storage is a scalable opportunity up to ~20 mtpa CO2 storage potential. FEED commenced on 1.7 mtpa CCS project CCS provides an opportunity to achieve large-scale emissions reductions at low abatement cost + Exis
Slide 13: Finance & capital management
Finance & capital management Anthony Neilson CFO
Slide 14: Financial discipline
Financial discipline Strong financial and operating performance driving shareholder value + Record free cash flow up 13% to $1,138 million Record free cash flow generation + 2016-2019 free cash flow $3 billion + 2019 free cash flow breakeven $29 per barrel before hedging + Normalised unit production
Slide 15: Diversified and balanced portfolio
Diversified and balanced portfolio Strong, sustainable free cash flow through the oil price cycle 2019 sales volumes Free cash flow1 + Portfolio sales volumes balanced between mmboe $ million + CPI-linked gas contracts – +13% ~35% of 2019 sales volumes + Oil-linked liquids and gas contracts – 1,138
Slide 16: Our Operating Model in action
Our Operating Model in action 2019 normalised upstream unit production costs down 8% to $6.97 per boe. Continued capital efficiency focus lowering average onshore well costs Western Australia Cooper Basin Queensland & NSW production cost production cost production cost DISCIPLINED $/boe $/boe $/boe
Slide 17: 2019 Full-year financial snapshot
2019 Full-year financial snapshot Free cash flow up 13% to $1.1 billion $ million 2019 2018 Change Product sales revenue 4,033 3,660 10% EBITDAX 2,457 2,160 14% Underlying profit1 719 727 (1)% Net profit after tax 674 630 7% Operating cash flow 2,046 1,578 30% Free cash flow2 1,138 1,006 13% Full-ye
Slide 18: Record free cash flow generation
Record free cash flow generation Free cash flow up 13% to $1,138 million Operating cash flow Investing cash flow1 Free cash flow1 $ million $ million $ million +30% +59% +13% 2,046 (908) 1,138 1,006 1,578 (634) (630) 1,248 (572) 618 840 206 2016 2017 2018 2019 2016 2017 2018 2019 2016 2017 2018 2019
Slide 19: Underlying earnings
Underlying earnings Higher sales revenue and EBITDAX. Underlying profit stable Product sales revenue EBITDAX Underlying profit1 $ million $ million $ million +10% +14% -1% 4,033 2,457 727 719 3,660 2,160 3,100 2,594 1,428 1,199 318 75 2016 2017 2018 2019 2016 2017 2018 2019 2016 2017 2018 2019 1 Und
Slide 20: Cash generative Operating Model continues to drive value
Cash generative Operating Model continues to drive value Diversified portfolio delivering EBITDAX growth and strong margins across all assets 2019 Full-year results summary1 Nth + Total revenue up 11% on 2018 due to higher volumes with Cooper Qld the resumption of full production from PNG LNG follow
Slide 21: Production and sales volumes
Production and sales volumes PNG LNG resumes full production and Quadrant acquisition provides significant boost Production Sales volume mmboe mmboe 75.5 94.5 84.1 83.4 78.3 61.6 59.5 58.9 2016 2017 2018 2019 2016 2017 2018 2019 Major shutdown + PNG earthquake impact Own product Third party Major sh
Slide 22: Production costs
Production costs Continued cost discipline. Normalised unit production costs down 8% to $6.97/boe 2019 upstream unit production costs Upstream unit production costs $/boe + Sustained cost improvement and operating efficiencies + Unit upstream production costs $7.24 per boe, down 10%, -10% impacted b
Slide 23: Capital expenditure
Capital expenditure Record number of onshore wells and successful Dorado appraisal 2019 capital expenditure $1,016 million Onshore efficiencies. + Cooper Basin drilled 115 wells More wells for less capex per well + GLNG drilled a record 393 wells $568m + Western Australia offshore program including
Slide 24: Debt and liquidity
Debt and liquidity Net debt $3,325 million. Ample liquidity of $2,937 million + Strong free cash flows. Net debt reduced to Net debt Cash, debt and undrawn debt facilities $million as at 31 December 2019 $3,325 million (includes $425 million AASB $million 16 Lease liabilities) as at 31 December 2019
Slide 25: Stable cash flows underpin strong de-leveraging and liquidity
Stable cash flows underpin strong de-leveraging and liquidity Targeting medium term gearing ratio of 25-30%, with sufficient flexibility to address all future capital expenditure requirements and maintain sustainable dividend Gearing post growth funding and dividends1 Disciplined capital management
Slide 26: Drawn debt maturity profile
Drawn debt maturity profile No material near-term maturities Drawn debt maturity profile1 Breakdown of drawn Drawn debt maturity profile excluding PNG debt facilities1 LNG project finance1 $750 million acquisition debt $million expected to be refinanced via $million $750 million acquisition debt ban
Slide 27: Operations review
Operations review Kevin Gallagher Managing Director & CEO
Slide 28: Offshore conventional business with major growth
Offshore conventional business with major growth High quality portfolio of operated production and near field development and exploration assets + WA EBITDAX margin 72%, up 5% Strong cash + WA unit production cost $7.30 per boe, margin, low-cost down 16% operating business + Pyrenees and Van Gogh cr
Slide 29: Gas and oil infill and tieback opportunities
Gas and oil infill and tieback opportunities Near field tieback and infill opportunities across the gas and oil business offer low-cost, short cycle investment options Van Gogh infill Phase 2 Pyrenees infill Phase 4 + Santos Board approval for Phase + High uptime and further water 2 infill program h
Slide 30: Barossa Project
Barossa Project Completion of ConocoPhillips acquisition expected end-1Q 2020. Barossa project advancing towards FID with major contracts awarded + Completion of ConocoPhillips acquisition expected around the end of 1Q 2020, subject to third-party consents and regulatory approvals + Barossa backfill
Slide 31: Barossa Project assurance
Barossa Project assurance Integrated assurance process complete and project is FID-ready Subsurface Wells Facilities Operator Project + ConocoPhillips assurance process as + Individual discipline reviews following Santos’ SMS standards assurance process operator (pre-Santos acquisition) + External i
Slide 32: Dorado development
Dorado development Successful appraisal programme has de-risked development options for the field. Preferred concept is FPSO and wellhead platform development, targeting FEED in 2Q 2020 + Preferred development concept is an initial phase of oil and condensate development followed by future phase of
Slide 33: Integrated onshore business with market optionality
Integrated onshore business with market optionality Onshore assets connected to domestic markets and strong long-term Asian demand for LNG + Growth self-funded by low-cost disciplined Australia’s lowest cost Operating Model onshore operator + Driving capital efficiency to unlock additional resources
Slide 34: Cooper Basin reserve replacement 183% in 2019
Cooper Basin reserve replacement 183% in 2019 Successful drilling activity and appraisal programs delivered strong reserves replacement Wells drilled 2P reserves replacement ratio Production Targeting ~95 wells in 2020, % mmboe including 6 horizontal wells No of wells per year 200 20 183% Prospectiv
Slide 35: Cooper Basin
Cooper Basin Continue to focus on lowering unit development costs to unlock resources to drive future production growth Continued efficiency focus Cooper Basin well cost1 2020 drilling program $million + Well costs down 15% to + Expect to drill 95 wells including 6 $2.02 million 4.20 horizontal well
Slide 36: Queensland
Queensland GLNG target increased to 6.2 mtpa annualised sales from 2020 Continued efficiency focus Mean time between failure Strong Roma ramp-up Roma sales gas production Years (Roma) 3.2 TJ/d (gross) + Continued focus on well-reliability + Year-end gross sales gas production 137 and cost efficient
Slide 37: Narrabri gas project
Narrabri gas project Strong demand for natural gas in New South Wales 100% of Narrabri gas earmarked for the domestic market Wilga Park Power Station - expanded capacity 22MW + Gas supply MOUs signed with Perdaman, Brickworks and Weston Energy + Near-term supply to local industry + Current Narrabri
Slide 38: Onshore Northern Territory
Onshore Northern Territory Tanumbirini-1 well test progresses new gas play in Beetaloo Sub-basin Gas discovery at Tanumbirini-1 vertical well, Beetaloo Sub- basin/McArthur Basin + Success with four-stage stimulation program in the Middle Velkerri shales + Gas flow rates of >1.2 mmscf/d exceeded init
Slide 39: Summary
Summary Low-cost, diversified portfolio generating strong cash flow. Balance sheet supportive of growth strategy and sustainable dividends Record free cash flow 2019 free cash flow breakeven $29/bbl before hedging Significant Dorado 2C resource upgrade in 2019. Material development project Con
Slide 40: Appendix
Appendix Santos
Slide 41: Financial performance
Financial performance EBITDAX up 14% to $2.5 billion. Reported NPAT up 7% to $674 million $million 2019 2018 Var + Total revenue up 11% due to higher sales volumes from the Total revenue 4,186 3,773 11% resumption of full production from PNG LNG following the earthquake in 1H18 and higher gas volume
Slide 42: Sales revenue
Sales revenue Higher sales volumes offset by lower average commodity prices Average realised crude Average realised LNG price $million 2019 2018 Var oil price Sales Revenue (incl. third party) 75.05 9.91 9.77 71.99 Gas, ethane and liquefied gas 2,687 2,518 7% Crude oil 927 757 22% US$ per mmBtu Cond
Slide 43: Significant items
Significant items Reconciliation of full-year net profit to underlying profit $million 2019 2018 Net profit after tax 674 630 Add/(deduct) significant items after tax Impairment losses 46 94 Net gains on asset sales (8) (94) Fair value adjustments on derivatives and hedges 7 48 One-off acquisition a
Slide 44: Free cash flow
Free cash flow Calculation of 2019 full-year free cash flow $million 2019 Operating cash flows 2,046 Deduct Investing cash flows (1,033) Add Net acquisitions and disposals 172 Deduct Lease liability payments (87) Add Major growth capex (Barossa FEED) 40 Free cash flow 1,138 Lease liability payments
Slide 45: Liquidity and net debt as at December 2019
Liquidity and net debt as at 31 December 2019 $2.9 billion in cash and committed undrawn debt facilities Liquidity ($million) 31 Dec 2019 31 Dec 2018 Cash 1,067 1,316 Undrawn bilateral bank debt facilities 1,870 2,020 Total liquidity 2,937 3,336 Debt ($million) Export credit agency supported loan fa
Slide 46: Net debt reconciliation
Net debt reconciliation Net debt reduced to $3.3 billion (including $425 million AASB 16 Lease liabilities) as at Dec 2019 Reconciliation of movement in net debt $million 3,549 3,325 126 + Record free cash flow of $1,138 million 1,138 365 + Dividends paid in-line with policy targeting a 172 range of
Slide 47: Reserves and resources
Reserves and resources 152% three-year 2P reserves replacement ratio. Cooper Basin 183% 2P RRR in 2019 2C contingent resources increased to >1.9 Bboe primarily due to increases in Dorado and Barossa 2P reserves 2C contingent resources mmboe mmboe 42 2,400 1,022 39 1,028 989 -75 480 1,920 1,110 North
Slide 48: 2020 Guidance
2020 Guidance 2020 guidance unchanged Base business ConocoPhillips acquisition 2020 guidance item Total (excl ConocoPhillips acquisition)1 (after expected 25% sell-down)2 Production 73-80 mmboe 6-7 mmboe 79-87 mmboe Sales volumes 93-100 mmboe 6-7 mmboe 99-107 mmboe Capex – Base ~$950 million Capex –
Slide 49: 2019 Full-year segment results summary
2019 Full-year segment results summary Northern Corporate Cooper Queensland Western US$million PNG Australia & explor’n & Total Basin & NSW Australia Timor-Leste elimins Revenue 1,164 1,055 663 165 955 184 4,186 Production costs (123) (71) (80) (67) (225) 20 (546) Other operating costs (74) (87) (51
Slide 50: 2018 Full-year segment results summary
2018 Full-year segment results summary Corporate Cooper Queensland Northern Western US$million PNG Asia explor’n & Total Basin & NSW Australia Australia elimins Revenue 1,146 1,016 630 184 422 181 194 3,773 Production costs (127) (71) (70) (74) (108) (42) 18 (474) Other operating costs (68) (80) (52
Slide 51: Oil price hedging
Oil price hedging Oil price hedging provides protection to oil price downside Open oil price positions 2020 Re-participating 3-Ways (barrels)1 6,180,000 Brent long call price ($/bbl) US$76.78 Brent short call price ($/bbl) US$69.03 Brent long put price ($/bbl) US$54.19 As at 31 December 2019 1 When