2007 Interim Results

Transcription

1 27 Interim Results John Ellice-Flint - Chief Executive Officer Peter Wasow - Chief Financial Officer 23 August Webcast Agenda John Ellice-Flint CEO & Managing Director Operational and financial highlights Financial performance Strategic value drivers and outlook Cooper Basin oil Eastern Australian gas Western Australian oil and gas LNG projects Asian growth 2.

2 Solid Operating Performance 3. mmboe Production 3.1 mmboe 5% 24 (1) A$m A$m Sales Revenue $1,215m 7% 6% pa (2) 21% pa (2) NPAT Reported $262m 29% Underlying $35m 25% 4% pa (2) 24 (1) (1) 24 data normalised to remove impact of Moomba incident (2) 3 year compound annual growth rate (CAGR) A$/ bbl Production Costs/bbl A$m % pa (2) EBITDAX $964m 4% 24 (1) 27% pa (2) $7.1/ bbl 8% Safety Performance Injury frequency has decreased 2 15 TRCFR TRCFR = Total Recordable Case Frequency Rate = Number of recordable injuries per million man hours worked

3 Delivering Value GOALS Operational delivery Shifting to higher margin Contingent resource conversion ACHIEVEMENTS Record production Consistently meeting guidance Cost Control Cooper Oil Project and acreage extension WA gas price increase, Reindeer FEED EA gas price increase, CSG expansion Gladstone LNG proposal PNG LNG pre FEED studies Timor Bonaparte LNG Appraisal PORTFOLIO AND CAPITAL MANAGEMENT 5. USA Sale Vietnam, India entries Share buy-back 15% shareholder cap review Webcast Agenda Peter Wasow Chief Financial Officer Operational and financial highlights Financial performance Strategic value drivers and outlook Cooper Basin oil Eastern Australian gas Western Australian oil and gas LNG projects Asian growth 6.

4 Reported and Underlying Profit $m st Half (18) Significant Items* Underlying 1 st Half Profit Operating Items 6 35 (43) Exploration Expensed Underlying 1 st Half 27 * Significant Items detailed in Reference Slides Significant Items* st Half Production mmboe Casino.5 Darwin LNG 1.2 Asia (1.) Field decline st Half 26 1 st Half 27 8.

5 Sales $m ,313 Market (68) Controllable 9 (39) 1, Liquids Prices Gas Prices Mix st Half 26 1 st Half Production Costs $m (15) New field/volume (11) Costs st Half 26 Production Cost $6.47/boe 1 st Half 27 Production Cost $7.1/boe 1.

6 Netback (Cash margin per boe sold) $/boe Controllable Items (2.39) (.2).41 (.36) A $ Prices Mix Gas Prices Costs Expln Dedns st Half 26 1 st Half EBITDAX ($m) ,7 (49) (9) (29) Prices Mix Other Bayu Undan st Half 26 1 st Half

7 Depreciation, Depletion & Amortisation $m Volume Impacts YE6 Impacts (9) New Fields 14 USA 5 Other (34) Reserves & FDC s (19) Asset Additions st Half 26 $9.44/boe 12 DDA $/boe 1 st Half 27 $1.42/boe H5 YE5 1H6 YE6 1H7 Operating Cash Flow $m (82) 6 5 Insurance Proceeds (43) EBITDAX (91) Tax Working Capital & Other st Half 26 1 st Half

8 Capital Expenditure 1 st Half 27 - $628m 1 st Half 26 - $497m EA Gas Cooper Oil WA Oil & Gas LNG Asia/International Corporate Full Year 27 - $1,338m Full Year 26 - $1,36m 15. Webcast Agenda John Ellice-Flint CEO & Managing Director Operational and financial highlights Financial performance Strategic value drivers and outlook Cooper Basin oil Eastern Australian gas Western Australian oil and gas LNG projects Asian growth 16.

9 Portfolio Leveraging Core Competencies Basin Excellence Exploration Development Expertise Cooper Basin oil Skills Eastern Australian gas Western Australian oil and gas LNG projects Marketing Asian growth Operating Approach Expertise Deep Relationships 17. Cooper Basin Oil - Journey High value exploitation project Technology, innovation and delivery Proof of concept Pilot programs Consolidate position Geological/geographical diversification Start waterflood Infrastructure build Rigs contracted Optimise value extraction Tertiary recovery Cycle time optimisation Acreage additions

10 Cooper Basin Oil - Enhanced Recovery Increased recovery through secondary / tertiary techniques Primary recovery - Free flow or artificial lift Secondary recovery - Water injection - Initial results encouraging Tertiary recovery - Chemical or supplemental energy CO 2 Initial results encouraging Oil Production (bbls/d) Jan 5 Mulberry 5 Production History Primary Recovery Jul 5 Jan 6 Jul 6 Injection Start Water Secondary Recovery Jan 7 Jul Cooper Basin Oil 27 Activity 25% increase in net acreage position since 25 Initial focus in Endeavour/Mulberry - Tarbat-Jackson pipeline completed - Gas fired electric power generation and reticulation online - Waterflood operational Risk diversification with multiple fields and geographical areas Focus shifting to Tirrawarra, Naccowlah South Australia Tirrawarra Acreage Growth Ballera Moomba Queensland Tarbat Jackson/ Naccowlah Endeavour/ Mulberry Jackson 5 Kilometres Legend 25 Santos Permit Position Santos Permit Acquisition Post 25 2.

11 Cooper Basin Oil Production Outlook Some production deferred to 28 Production capacity increasing Production deferred - Rain, wax and pipeline issues - Current impact ~3,6 bopd net ~14, bopd net to Santos by end wells to be drilled in 27 Production Capacity (bopd) 2, 15, 1, 5, Jan 7 27 Production Capacity Build (Santos Net) Feb 7 Mar 7 Apr 7 May 7 Production Capacity Jun 7 Jul 7 Forecast Aug 7 Sep 7 Production Oct 7 Nov 7 Dec EA Gas Strong positioning Santos is competitively positioned in a transforming market Increasing gas demand - Clean gas as energy substitute Quality asset portfolio - Large resource base - Hub & spoke strategy - Low cost producer Leading CSG position Otway momentum growing - Henry, Kipper projects - Up to 5 exploration wells in 28 Gladstone LNG is an international market gateway Ballera Moomba Melbourne Casino Minerva Fairview Wallumbilla Brisbane Sydney Canberra Orbost Longtom Kipper Gladstone 22.

12 EA Gas - LNG Netback GLNG facilitates exposure to global LNG pricing Average Asian LNG Price (1) $US/mmBtu Domestic Australian netback range (2) 2.. Santos average realised gas price Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 (1) Source: Argus Monthly LNG (average of Japan, Taiwan & South Korea ex-ship spot and contract prices) (2) Netback determination uses Santos assumed range of costs for shipping and liquefaction 23. WA Oil & Gas - Mutineer Exeter Outlook Excellent performance following successful 26 drilling campaign 1, 8, 6, 4, 2, Phase I & II Wells Actual Phase IV Wells Risked Forecast Phase III Wells Phase IV Wells Success Current production ~3, bopd Workovers to restore ~1, bopd Mutineer field Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct-8 High resolution 3D seismic acquired - Basis for 27 (Phase IV) & 28 drilling Exeter field Existing Producers Phase IV Appraisal Target Future Appraisal Target 24.

13 WA Oil & Gas John Brookes & Reindeer Higher gas price facilitates new development project John Brookes (STO 45%) Proven, reliable supplier ~17PJ net uncontracted 2P reserve Several new contracts signed at higher gas prices Reindeer (STO 45%) PJ gross resource Maitland Spar East Spar Indian Ocean John Brookes Barrow Island Reindeer Varanus Island Stag Dampier Western Australia Plateau rate ~11 mmscf/d Schedule - FEED commenced - Sanction end Q First gas mid 21 Onslow Legend Santos Acreage Gas Pipeline Oil Pipeline Gas Field Oil Field 5 Kilometres 25. LNG Projects - Overview Well positioned with portfolio of 5 potential LNG opportunities Favourable industry dynamics Asian LNG Price Trends Late 26 LNG prices at parity with oil Focus on monetising contingent resources - Gladstone - PNG - Timor/ Bonaparte - Browse - Kutei Ex-ship LNG Price ($/MMBtu) JCC ($/Bbl) Source: Poten & Partners Oil Parity Oil Parity Mid 26 Late 25 Pre-22 Prices Mid 25 Early

14 LNG Projects - Gladstone LNG 27. A game changing investment opportunity Access LNG pricing and volume growth for CSG resource Site secured Project State Significance status achieved A$5 to A$7bn investment First LNG target 214 Board approved expenditure of A$3m in 27/8 - CSG reserves and production expansion Hamilton Point Bridge to mainland Curtis Island LNG Projects Timor/Bonaparte Conoco concept studies for Caldita/Barossa encouraging Material acreage position Bayu-Undan interest increased to ~11.4% Appraisal ongoing - 6, km 2 3D acquired Aligned with ConocoPhillips Petrel/Tern commercialisation opportunities - Petrel 3D seismic acquisition Bayu Undan Sunrise Evans Shoal Santos (Op) 4% Shell 5% Osaka Gas 1% Petrel Santos 1% Tern Santos 95% Frigate Prospect Santos 4% ConocoPhillips (Op) 6% Petrel Tern 1 Kilometres Abadi Barossa Caldita Bayu-Undan & DLNG1 Santos 11.4% ConocoPhillips (Op) 56.7% Darwin Legend Santos Acreage Gas Pipeline Gas Field Prospect 28.

15 LNG Projects - PNG LNG Project building strong momentum Underpinned by Hides (STO 25%) Pre-FEED engineering contracts - Bechtel - KBR and JGC Preferred LNG sites identified PNG Gov negotiations underway JV weight now behind ExxonMobil Target FEED by end 27 Material for Santos - 23 mmboe of reserves - 8 mmboe annual production PRL 5 Elevala Hides PDL 1 PRL 9 Barikewa Legend Santos Acreage Oil Field Gas Field Oil Pipeline Papua New Guinea SE Gobe PDL 3 Marine Terminal Proposed LNG Facility 29. LNG Projects Browse Basin Well positioned with material acreage position Proximal to future LNG projects - Inpex & Ichthys LNG - Woodside & Browse LNG Active exploration program - Ichthys North-1 drilling in Q4 27/Q High probability extension of Ichthys Field - 3% equity, with carry by farminee (Inpex) Santos (Op) 3% Inpex Browse 2% Chevron 5% Browse Browse LNG LNG WA-274-P WA-281-P Santos (Op) 47.83% Chevron 24.83% Inpex 2.% Beach 7.34% Territory of Ashmore & Cartier Islands Ichthys North-1 Ichthys Ichthys LNG LNG Prelude-1 (Shell) Western Australia Legend Santos Acreage Oil Field Gas Field Gas Discovery Exploration Well 3.

16 Asian Growth Acreage Expansion 1 kilometres West Mailisu Arkyt Ashvaz Nanai East Mailisu Charvak Uzbekistan Naryn Naushkent SKaag West Soh Tuzluk Soh AkBura Sulukta Batken Katran Tajikistan Kazakhstan Bishkek Kyrgyzstan China Aksai 25 kilo metres Burma Laos Thailand Malaysia Vietnam Hanoi Cambodia China Song Hong Basin Block 11-1/4 Nam Con Som Basin Block 12 W India Kolkata Bangladesh Ganges-Brahmaputra Delta India Burma 25 kilometres Hiu Aman Kalimantan Kutei Basin Legend Gas discovery kilometres Legend Santos acreage Oil field Gas field Oil pipeline Gas pipeline Wortel Oyong East Java Basin Maleo East Java Asian Growth Nam Con Som Basin Two oil discoveries, with follow-on on opportunities Blackbird/Dua (STO 37.5%) - Reservoir and facilities studies underway - Project sanction in 1H 28 - Expression of interest prepared for FPSO supply - Target first oil in 21 Further exploration in 1H 28 Blackbird/Dua development concept 25km Swan Canary Peacock 12W PSC Falcon Quit Jay Dua oil discovery Blackbird oil discovery 32. Legend Santos acreage Oil Field Prospect Gas field Gas Pipeline

17 Asian Growth Song Hong Basin Rapid progress in first year exploration underway Prospective and lightly explored area Large number of fields discovered in area to northwest (China) First Santos operated project in Vietnam Seismic commitment accelerated 1 year and completed in August 27 Prospects being generated for drilling in 28 Vietnam 5 Kilometres Petronas / Yen Tu Discovery 3D Seismic sq km 11-1/4 PSC Song Hong Basin Legend Santos acreage Gas field Oil Field China Roc / Horizon Discovery 33. Indonesia Oyong and Wortel Oyong oil development to be online in September Oil phase - Barge sail-away mid August - First oil in September Gas phase - 6km pipeline to Grati - Gas sales to Indonesia Power - FEED complete, FID YE 27 - First gas YE 28 Potential Wortel synergies - Tie back to Oyong - Seismic & appraisal well in 28 - First gas

18 Summary Leverage to strong energy environment Track record of operational delivery Transition toward higher margin businesses Focus on monetising contingent resources 35. Disclaimer & Important Notice This presentation contains forward looking statements that are subject s to risk factors associated with the oil and gas industry. It is believed that the expectations reflected in these statements are reasonable, but they t may be affected by a range of variables which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, geotechnical factors, drilling ling and production results, gas commercialisation, development progress, operating results, engineering estimates, reserve estimates, loss s of market, industry competition, environmental risks, physical risks, legislative, lative, fiscal and regulatory developments, economic and financial markets conditions in various countries, approvals and cost estimates. All references to dollars, cents or $ in this document are to Australian currency, unless otherwise stated. 36.

19 Reference slides 37. Prices & Exchange Rates 1 Half 1 Half Change % Realised Oil Prices (USD/bbl) % AUD/USD Exchange Rate (after hedging) % Realised Oil Price (AUD/bbl) % USA Gas Price (USD/mcf) % Australian Gas Prices (AUD/gj) % 38.

20 Significant Items (after tax) $m 1 Half 1 Half Impairment write-down (75) (2) Net gain on redetermination of unitised field 32 - Incremental depletion and depreciation due to impairment reversal - 2 Banjar Panji provision - (19) (43) (37) 39. Underlying Profit Operating Items Variances 1 st half 27: 1 st half 26 $m Pre-tax Post-Tax Sales (98) (78) Production costs (26) (21) Other operating costs 2 16 Gas purchases DD & A (4) (33) Selling, general and administrative (22) (17) (131) (18) 4.

21 Impairment Charge Impairment write-down $m 1 Half 1 Half Before tax (75) (26) After tax (75) (2) 26 write-down related to Patricia Baleen and US assets 27 write-down related to US assets 41. Exploration & Evaluation Expensed $m 1 Half 1 Half Incurred Expensed Incurred Expensed Seismic, G&G, studies Drilling Sidoarjo Provision Total USA - (37) Continuing Operations

22 Cost of Sales 1 Half 1 Half Change 27 $m 26 $m % Production costs Pipeline tariffs Royalties PRRT & other similar taxes Total Operating Costs Gas Purchases 6 41 Inventory Movement (19) (21) D, D & A Cost of Sales Net Free Cash Flow 1 Half 2 Half 26 $m 26 $m 1 st Half 27 $m 26 $m 27 Operating cash flow Capital expenditure (428) (78) (66) NET CASH FLOW (68) Net acquisitions - asset (7) corporate - (5) (19) NET FREE CASH FLOW (86) Gearing %

23 27 Capital Expenditure Outlook $m Exploration Exploration Evaluation Development Delineation Development Total Acquisitions , , Capital Expenditure DEV E&E 4 2 EA Gas Cooper Oil Asia LNG 1 5 WA Oil & Gas Other Exploration Delineation Evaluation Delineation Development Development

24 27 Second Half Sensitivities US$1 change in the unhedged oil price per barrel leads to change of A$9 million in profit after tax One cent movement in the exchange rate will cause a profit after tax movement of A$4 million A 1% change in interest rates will cause a profit after tax movement of A$5 million 47.