Santos Limited · ASX:STO
Santos — H1 2003 Earnings Presentation
25 slides from Santos's earnings presentation, Aug 20, 2003
Slide 1: Santos 2003 First Half Results
Santos 2003 First Half Results A period of significance 20 August 2003 1 Bayu Undan CUQ Floatover 2 1
Slide 2: Mutineer Exeter East Java
Mutineer Exeter 3 East Java 4 2
Slide 3: Underlying Profit & Cash Flow Up; Oil Price Remains Strong
Underlying Profit & Cash Flow Up Half Year 30 June 2003 2002 Net Profit After Tax - Before write downs ($m) $170.0 $166.3 - After write downs ($m) $135.6 $162.6 Operating cash flow ($m) $421.7 $310.9 ROACE (%) 7.5 9.3 Dividend (cents) 15c 15c TSR (%) 0.6 6.6 5 Oil Price Remains Strong Tapis oil pric
Slide 4: Significant Operational Achievements
Significant Operational Achievements Half Year 30 June 2003 2002 Gas Commercialisation (a) 350 PJ 0 PJ Reserve Replacement √√ √ Exploration √ √√√ Production Optimisation √√ √ Acquisitions & Divestments √ √√ Cost Savings ($m) (b) $113 $44 (a) Santos share (b) Cumulative 7 Bayu Undan Project FSO Produ
Slide 5: Bayu Undan DPP Loadout Mutineer Exeter
Bayu Undan DPP Loadout 9 Mutineer Exeter 10 5
Slide 6: Contracting More Gas; Cooper Basin
Contracting More Gas PJ Delivered Current Priorities 1400 1200 1000 800 600 400 200 0 AGL Oyong Bayu LNG John Maleo Casino Brookes 11 Cooper Basin • Strong base business • Substantial value to be realised • Targeting flat unit production costs and reduced capex • Strong free cash flow going forward
Slide 7: Oil Production; Acquisitions
Oil Production Targeting quick payback Legendre infill Accelerated Cooper Basin Fast track development of small oil discoveries 13 Acquisitions • Shareholder value • Leverage competitive advantage • Core areas • Compete for capital 14 7
Slide 8: Santos
Santos • Strong base business with growing cash flow • Range of proven growth options • Strong dividend 15 8
Slide 9: Finance: Sales Grow
Finance Peter Wasow Executive General Manager Finance & Accounting 1 Sales Grow Sales revenue ($ million) 1000 46 (52) 800 40 9 716 673 600 Gas Liquid Liquid Gas volumes prices volumes prices 400 200 0 1st Half 2002 1st Half 2003 2 1
Slide 10: Production Cost Falls; Netback Climbs
Production Cost Falls ($ million) 137 9 (15) 150 131 125 Increases Savings 100 75 50 25 250 21 (6) 219 204 0 1st Half 2002 1st Half 2003 200 Production Cost Production Cost Production PRRT/ cost savings $4.93/boe $4.89/boe 150 royalty 100 50 0 1st Half 2002 1st Half 2003 Operating Cost Operating Cos
Slide 11: Improvement Program Delivers; DD&A
Improvement Program Delivers Savings ($ million pa) Aug 2003 Commitment 130 120 Feb 2003 110 Commitment 100 90 80 98 70 82 Original 60 Commitment 50 40 Capex 30 20 10 12 15 Opex 0 Mar Jun Sep Dec Mar Jun Sep Dec 2002 2003 5 DD&A Half Year 30 June $ million 2003 2002 % Change Depletion $A/boe Depreci
Slide 12: EBITDA Steady, Exploration Costs Up; Cash Flow Growth
EBITDA Steady, Exploration Costs Up EBITDA Net profit after tax 85 (43) (19) (7) 503 487 Volume 10 (30) Royalties 163 FX & Price & PRRT (6) Other (1) 136 EBITDA Variance After Tax Write DD&A Other Downs 1st Half 2002 1st Half 2003 1st Half 2002 1st Half 2003 7 Cash Flow Growth is Strong Operating ca
Slide 13: Continuing FCF Strength; Superior Capital Management
Continuing FCF Strength Net debt ($ million) Leverage 1600 + $793 million 50.0% in dividends 1400 40.0% 1200 1364 1000 1402 30.0% 800 1084 1254 20.0% 600 1014 400 10.0% 200 0 0.0% 30.6.99 30.6.00 30.6.01 30.6.02 30.6.03 9 Superior Capital Management FFO/debt 60% Gearing 25% Strong ratios Rationalise
Slide 14: Exploration: New Exploration Acreage 2003
Exploration John Ellice-Flint Managing Director 1 New Exploration Acreage 2003 Popodi PSC Bawean 1 PSC Papalang East Java PSC Kutei Basin Legend WA-274-P WA-338-P Oil PELA 114 Gas Browse Basin Cooper Basin WA-339-P T/35P Houtman Basin Sorell Basin 2 1
Slide 15: Forward Exploration Program; Kutei Basin
Forward Exploration Program Kutei Basin 1 well USA 2 wells East Java 1 well Carnarvon Eastern 1 well Queensland 1 well Cooper Basin 6 wells Legend Oil Prospects Deep Water Gas Prospects Otway 2 wells 3 Kutei Basin Pohon Kalimantan Popodi PSC Bontang West Seno Santan Attaka Makassar Strait Nilam Gehe
Slide 16: Kutei Basin; East Java
Kutei Basin Pohon prospect Santos Ltd 20% (Operator - Unocal) Pohon 1 Popodi PSC Pohon 1 LEGEND Santos Acreage Prospect 5 East Java Mangga Madura Offshore PSC Madura Island LEGEND Sampang PSC Maleo Santos Acreage Gas Field Surabaya Gas Pipeline Oyong Madura Strait Grati 0 25 Java kilometres 6 3
Slide 17: Offshore Otway & Sorell Basins
Offshore Otway & Sorell Basins PEP160 Victoria Melbourne PEP154 Geelong VIC/P44 PEP153 VIC/P51 Callister Casino Heytesbury Gas Facility VIC/L22 Minerva Hill VIC/RL7 La Bella LEGEND Geographe Santos Acreage Amrit VIC/P52 Thylacine Oil Field Otway Basin Gas Field King Island Oil Pipeline T/35P Bass St
Slide 18: Carnarvon Basin
Carnarvon Basin Mutineer/Norfolk WA-191-P(1) Exeter Hermes Angel Lambert Talisman LEGEND Cossack Ajax WA-8-L Santos Acreage Wanaea Oil Field Gas Field Prospect WA-191-P(2) Gas Pipeline Legendre WA-20-L 0 25 kilometres 9 Carnarvon Basin Ajax prospect Santos Ltd 22.56% (Operator - Apache) Ajax 1 10 5
Slide 19: Cooper Basin; Forward Exploration Program
Cooper Basin Stratigraphic gas program Gas pipeline to Mt Isa Queensland ATP 259P South Australia Gas pipeline to Brisbane LEGEND Santos Acreage Korma ATP 267P ATP 299P Ballera Oil Field Corsair Kinta Gas Field Stilton Oil Pipeline Moomba Hebe ATP 267P Gas Pipeline Oil pipeline to Brisbane Wellingto
Slide 20: Portfolio of Growth Options
Portfolio of Growth Options • Strong base business • Growing cash flow • Expanding options for growth 13 7
Slide 21: Reference slides: Prices & Exchange Rates
Reference slides 1 Prices & Exchange Rates Half Year 30 June 2003 2002 % Change Realised Oil Prices (USD/bbl) 28.63 22.55 +27.0 AUD/USD Exchange Rate (after hedging) 0.6316 0.5582 -13.1 Realised Oil Price (AUD/bbl) 45.33 40.40 +12.2 USA Gas Price (USD/mcf) 6.07 4.64 +30.8 Australian Gas Prices (AUD/
Slide 22: Cost Definition; Cost of Sales
Cost Definition US peer oil companies* Santos Group reporting Sales Revenue Sales Revenue Production Costs Production Costs Operating Transport’n/Handling Expenses Tariffs & Tolls Costs net back Taxes other than Income Royalties, Excise & RRT Gas Purchases DD&A*** cost of sales Product Stock Movemen
Slide 23: 2003 Second Half Sensitivities
Capitalised Exploration & Development at June 2003 Non producing (A$ million) Hides Gas 122 PNG Gas Project Papua Exploration 21 Includes Bilip oil discovery Evans Shoal Gas 80 Commercialisation activity Otway Basin 35 Includes Casino discovery and deepwater exploration permits USA Gulf Coast 25 Exp
Slide 24: 2003 First Half Production Volumes; Results
2003 First Half Production Volumes (mmboe) Gas Liquids 30 27.7 0.1 0.2 (0.6) (0.3) (0.3) 26.8 25 Aust Gas USA Gas Carnarvon Field E Spar/ 8.8 Oil Decline Cooper Basin 7.6 Liquids Liquids 20 Condensate 15 10 18.9 Gas 19.2 Gas 5 0 1st Half 2002 1st Half 2003 7 2003 First Half Results Half Year 30 June
Slide 25: 2003 First Half Capital Expenditure
2003 First Half Capital Expenditure (A$ million) 2003 2002 Exploration Australia 20.4 27.0 Overseas 40.5 28.3 Delineation Australia 13.0 24.5 Overseas 3.1 4.5 Development (1) Australia 234.1 233.2 Overseas 22.5 19.7 Total Exploration, Delineation & Development Expenditure 333.6 337.2 (1) Includes co