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Chim Sáo wellhead platform topsides installation, July 2010Chim Sáo wellhead platform topsides installation, July 2010
2010 Half-year Results
26 August 2010
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 that therisk 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 could cause actual results or trends to differ materially including but not limited to: price fluctuationstrends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, geotechnical factors, drilling and production results, gas commercialisation, development progress, operating results, engineering estimates, reserve estimates, loss of market, p g , g g , , ,industry competition, environmental risks, physical risks, legislative, 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.
2
2010 Half-year Results Da id KnoDavid Knox
Managing Director & CEO
Sound Operating Performance
Change on 2009
2010 Half-year Result
Production 24.2 mmboe (9%)
Sales Revenue $1,091 million 7%Sales Revenue $1,091 million 7%
EBITDAX $655 million 1%
Net Profit After Tax $198 million 94%
Underlying Net Profit $210 million 121%
Operating Cash Flow $537 million 8%
Inte im Di idend 22 cents pe sha e nchanged
4
Interim Dividend 22 cents per share unchanged
The Santos Strategy
Base business
Using quality assets, Santos will safely deliver:
Eastern Australia: Margin growth and resource conversion Indonesia: Established business with incremental growth WA: Growing a material domestic gas business
LNG growth GLNG: A leading CSG to LNG project, FID 2010
PNG LNG FID D 09 fi t LNG d ti id 2014 PNG LNG: FID Dec-09, first LNG production mid-2014 Darwin LNG: Mature brownfield LNG growth Bonaparte LNG: Innovative floating LNG project
Focused growth in Asia Vietnam: Deliver Chim Sáo and exploration-led growth India/Bangladesh: Bay of Bengal exploration led growth
5
India/Bangladesh: Bay of Bengal exploration-led growth
Reserves and Resources for Growth
4000
mmboeReserves & resources/
production*3,937
CAGR 14%
3 862
3000
4000 ,
2,7453,067
3,474
3,862
2000
2,497 72 years
2,086
1 971
,
2,2482,595
2,849
1000 793
12
26 years
295
1,443
360
1,971
378 394 495
0
2004 2005 2006 2007 2008 2009P d R P b bl R 2C R
647 12 years348295
414 441 485 518
6
Proved Reserves Probable Reserves 2C Resources
* Based on 2009 production of 54.4 mmboe and cumulative reserves/resources
Excludes exploration
2010 Half-year Results Pete WasoPeter Wasow
Executive Vice President & CFO
Reported & underlying profits
1st Half Reported NPAT
Underlying NPAT$
120 (5) 210
300
NPAT$m
198120 (5) 210
200
102 95100
01st Half 2009
1st Half 2009
1st Half 2010
1st Half 2010
OtherPrices & foreign
8
exchange
Production impacted by flooding
26.7 (0.2) (0.7) (2.0) (1.9) 2.3 24.2mmboe 2010 full year guidance
f 49 52 b
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3026.7 (0.2) (0.7) (2.0) (1.9) 2.3 24.2mmboeof 49 to 52 mmboe
unchanged
Wet weather and flood
15
20impact on Cooper Basin production in first half was 2 mmboe
5
10 Stronger gas
production in WA and Indonesia
0
1st Half 2009
1st Half 2010
Asset Sales
Contract Expiry
Flooding Naturaldecline
Newprod’n
9
0 0
Sales Volumes and Revenue
2 8 3 530
40
Purchased
mmboe
Higher realised prices for ll d
29.0 28.5
26.2 25.0
2.8 3.5
10
20
ProducedReserves
Purchased Gasall products
Cooper gas sales volumes met by production and gas
0
1st Half 2009 1st Half 2010
Reservesfrom storage
Higher volumes of third party gas offset lower own
1000
15001,024 327 (171) (89) 1,091$m
p y gproduct volumes
Third party gas revenue $90 million
0
500
$
10
1st Half 2010
1st Half 2009
Prices FX Volume Mix
Production Cost and Cost of Sales
Total Cost of SalesProduction Cost $m $m
650Gas
purchases
300$24.70 per boe
$23.82 per boe
$266m $276m
650 p
Cost of
200
450Cost of
produced hydrocarbons1100
250
1st Half 2009 1st Half 20100
1st Half 2009 1st Half 2010
11
1 Includes production costs, tariffs, tolls and pipeline costs, royalties, inventory and DD&A
Segment EBITDAX Summary
Segment Half Year Half Year Change
Eastern Australia 278 303 (8)WA&NT 312 285 9
Seg e t$m 2010 2009 %
& 3 85 9GLNG 15 5 200Asia Pacific 65 54 20Gain on sale of assets (3) 22
Corporate and unallocated items (12) (22) 45
TOTAL EBITDAX 655 647 1
Eastern Australia |Higher prices offset by lower liquid sales volumes due to floodingWA&NT |Higher liquids and LNG revenue GLNG |Additional field capacity at Fairview
12
Asia Pacific |Higher prices and lower operating costs
DD&A Declines by $37 million
Rate Volume
300
350314 (24) (13) 277
$m
Lower Cooper volumes drive lower depletion rate
200
250
300
2010 full year guidance of $11.70/boe
50
100
150maintained
0
50
1st Half 2009 1st Half 2010$11.76/boe $11.45/boe
13
$ / $ /
Funding Growth
Committed to maintaining current investment grade credit rating- Maintain strong liquidity profile to provide financial flexibility- Prudent management of capital through the cycle
Strong liquidity with A$6.4 billion of cash and facilities Other funding options
- Sell down GLNG project equity- Export Credit Agency financingp g y g- Hybrid securities if appropriate- Asset leasing and 3rd party infrastructure ownership- Sell assets not adding to free cash flow, debt capacity or strategyg , p y gy
If required, new equity to support the credit rating in a manner that rewards existing shareholders
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2010 Half-year Results Da id KnoDavid Knox
Managing Director & CEO
Moomba Plant, February 2010
16
Reindeer gas plant, July 2010
17
Chim Sao, July 2010
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Chim Sáo wellhead platform topsides installation, July 2010Chim Sáo wellhead platform topsides installation, July 2010
LNG is a key component of Santos’ Growth Strategy
Strategy Bonaparte LNGStrategy Components PNG LNG
Sanctioned Dec 2009 6.6 mtpa two trains
Fi t LNG 2014Deliver the
Bonaparte LNG 2 mtpa FLNG Santos 40% with carry to FID
Darwin LNG Production since 2006 3.6 mtpa single train Santos 11 5%
First LNG 2014 Santos 13.5%
Deliver the Base Business
LNG G th Santos 11.5%
GLNG Leading CSG to LNG
LNG Growth
Focused 7.2 mtpa two trains FID 2010 Santos 60%
Focused growth in Asia
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Strategy Delivers Material LNG Growth
6mtpaGLNG T1
Santos equity LNG productionfrom existing discovered resources
5BLNG
3
4GLNG T2
1
2GLNG T1
0
1
Darwin LNG
PNG LNGExcludes PNG LNG expansion
2010 2020
20
Assumes Santos equity of 45% in GLNG
2010 2020
GLNG Milestones Achieved
Two trains, five train site
GLNG is progressing key milestones
Project fully staffed
GLNG Operations Pty Ltd, owned by the project shareholders, operates the pipeline and LNG plantpipeline and LNG plant
FEED complete for upstream, pipeline and two trains on Curtis Island
Long lead engineering orders placed
Binding off-take agreement
Queensland Government environmental Qapproval for 10mtpa capacity (3 trains)
42 signed agreements with Indigenous groups
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Water solution - 1.3 million trees planted
GLNG Path to FID
Federal environmental decision
FID in 2010 and first cargo in 2014
Federal environmental decision expected in October
Complete further binding offtakeand equity sell down to underpin a q y ptwo train project
Santos maximum equity at FID expected to be 45%
Final EPC costs 4Q 2010
FID 1st train 4Q 2010
22
GLNG Upstream Update
Wells- 59 CSG wells were drilled for GLNG in
1H10- Key successes with pad drilling and
directional drilling in coals (24 wells)11 d illi d l ti i d t d t- 11 drilling and completion rigs devoted to CSG program
Water1 3 million trees planted- 1.3 million trees planted
Upstream FEED- Dual competitive FEED studies completed
Fl l t d f d EPC- Fluor selected as preferred EPC contractor
- Early works and detailed design progressing
23
p g g- Final EPC costs 4Q10
Papua New Guinea LNG
FID approved Dec 2009
PNG LNG Project construction commences
pp 6.6 mtpa two trains Santos 13.5% Four Asian buyersFour Asian buyers Financial Close achieved
March 2010 Early works construction, y
facilities detailed design and procurement activities underway
First LNG 2014 First LNG 2014 Plateau production of ~9
mmboe pa net to Santos LNG plant site schematic
Summary
Continued delivery of Santos’ growth strategy
Sound operating performance despite Central Australia flooding
GLNG progressing to FID by year end
PNG LNG construction underway
Strong financial position to fund growth
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Reference slides
2010 Guidance
Item 2010G idGuidance
Production (mmboe) 49 – 52
Production costs ($m) 560 – 580Production costs ($m) 560 – 580
DD&A expense ($/boe) 11.70
Royalty related taxation expense1 ($m after tax) 70 – 90Royalty related taxation expense ($m after tax) 70 90
Capital expenditure (including exploration & evaluation)2 ($m)
2,300
1 Royalty related taxation expense guidance assumes an oil price of A$90 per barrel.
2 Capital expenditure guidance includes $150 million for conventional exploration.
27
$6.4 billion of Funding Capacity
30 June 201030 June 2010
Cash & term deposits 2 405
$m
Cash & term deposits 2,405Undrawn, committed corporate lines** 2,038Undrawn, committed project line* 1,947C h & itt d d bt li 6 390Cash & committed debt lines 6,390
* Converted at 30 June 2010 exchange rate* *Commences on 1 October 2010 the same date the existing $700m loan facility expires
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* *Commences on 1 October 2010, the same date the existing $700m loan facility expires
EBITDAX
PricesVolume and
MixOperating
CostsGas
Purchases Other
1,000647
Prices
156
Mix
(89)
Costs
(24)
Purchases
(14)
Other
(21) 655$m
600
800
200
400
01st Half 2009
1st Half 2010
29
Significant items (after tax)
1st Half 1st Half2010 2009$m
Underlying profit 210 95Significant items (12) 7
2010 2009$m
g ( )Net profit after tax 198 102
Significant items included:Significant items included:Net (losses)/gains on sales and impairment losses (27) 16Foreign currency gains/(losses) 3 (15)Fair value adjustment on embedded derivatives and hedges (9) 6Remediation costs and contract losses* 4 (10)Investment Allowance 17 10
Total (12) 7
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* Net of related insurance recoveries
Second Half 2010 Sensitivities
Sensitivity Change* NPAT Impact A$mA$m
US dollar oil price US$1/bbl 5
Gas price 10 cent/GJ 9Gas price 10 cent/GJ 9
A$/US$ exchange rate 1 cent 4
Inte est ates 1% 1Interest rates 1% 1
* Change from average YTD price/rate
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* Change from average YTD price/rate
Contact Information
Head officeAdelaideGround Floor Santos Centre
Andrew NairnGroup Executive Investor RelationsLevel 10 Santos CentreGround Floor, Santos Centre
60 Flinders StreetAdelaide, South Australia 5000GPO Box 2455Ad l id S th A t li 5001
Level 10, Santos CentreDirect: + 61 8 8116 5314Facsimile: +61 8 8116 5131Email: [email protected]
Adelaide, South Australia 5001Telephone: +61 8 8116 5000Facsimile: +61 8 8116 5050
U f l il
Brooke HannInvestor Relations AnalystLevel 10, Santos CentreDi 61 8 8116 7227Useful email contacts
Share register enquiries:[email protected]
Direct: + 61 8 8116 7227Facsimile: +61 8 8116 5131Email: [email protected]
Investor enquiries:[email protected]
Website:www.santos.com
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