Agenda Session 1 Topic Presenter Title 9:00 Welcome Andrew Nairn Head of Investor Relations 9:05 Strategy Kevin Gallagher Managing Director & CEO 10:00 Marketing & Trading Philip Byrne Executive Vice President Marketing & Trading…
Strategy Kevin Gallagher Managing Director & CEO
Strategy Transform, Build & Grow + Execute and bring on-line growth opportunities across the core portfolio + Focused exploration strategy to identify new high-value targets and unlock future core assets Grow + Generate new revenue…
Driving sustainable shareholder value Focus on becoming a low-cost, reliable and high performance business DISCIPLINED FIVE CORE LONG-LIFE MAXIMISE FREE OPERATING MODEL GAS ASSET PORTFOLIO CASH FLOW + Core portfolio free cash flow…
2017 Strategy report card In December 2016, we said we would Reduce debt Deliver a core portfolio that targets free cash flow breakeven in a US35-40/bbl oil price range Target Australias lowest-cost onshore operations Identify…
Transform Significant turnaround in business performance ahead of plan TRANSFORM1 FREE CASH FLOW BREAKEVEN2 UPSTREAM UNIT PRODUCTION COSTS WELL COSTS3 32 per barrel, down 32% 8.08 per boe YTD, down 22% Cooper 2.8 million, down…
Build Strategic core asset positions strengthened. Focus on maximising margins BUILD PAPUA NEW GUINEA QUEENSLAND + Western Area farm-in executed + Agreements executed to evacuate uncontracted Eastern Queensland gas + JV alignment…
Grow Execute and bring on-line growth opportunities across the core portfolio GROW NORTHERN AUSTRALIA PNG LNG GLNG + Barossa field identified + Further debottlenecking + Ramp-up to 6 mtpa by the as lead candidate for of existing…
Northern Australia Significant resource base well positioned for backfill or expansion of existing infrastructure + Darwin LNG delivered its 600th cargo in Barossa September Caldita Bayu-Undan + Excellent reliability and…
PNG PNG LNG operating well above nameplate. Joint venture alignment continues to strengthen along the Hides-Pnyang trend + PNG LNG maximum day rate of 8.9 mtpa achieved (30% above nameplate capacity) Pnyang Muruk & Karoma Juha Hides +…
WA Gas Low cost operations with capacity and reserves to meet short and long-term demand + Low cost operations well positioned against other suppliers + Uncontracted reserves to meet demand + Wesfarmers re-contracted 27 PJ for 3…
Onshore Australia Cooper Basin and Queensland Australias lowest-cost onshore operations + Sustainable structural cost reductions now embedded + Lower Cooper Basin costs and increased exploration expected to deliver reserves additions…
New operating model embedded Santos Operating Model sets a disciplined framework to drive value Asset lifecycle Portfolio & portfolio rules Priorities for cash allocation Five core long-life natural gas assets Exploration Debt…
Sustainability SAFETY & ENVIRONMENT LOST TIME INJURY FREQUENCY RATE Three year rolling average (2012 October 2017) + Aspiration: We all go home without injuries or illness rate per million hours worked 1.2 + Increased focus on…
Summary Driving sustainable shareholder value by becoming a low-cost, reliable and high performance business DISCIPLINED FIVE CORE LONG- MAXIMISE FREE OPERATING MODEL LIFE GAS ASSETS CASH FLOW + Core portfolio free cash flow…
Marketing and Trading Philip Byrne Executive Vice President Marketing & Trading
Marketing and trading 2017 highlights Domestic gas LNG and liquids Projects Executed agreements to deliver over Positive buyer response to marketing of Agreements executed to evacuate 125 PJ of gas to southern markets over…
Global oil supply and demand outlook Global oil demand growth continues to strengthen, the market is expected to remain tightly balanced Global oil supply and demand Forecast million barrels/day Supply +1.6% pa 100.2 99.9 Demand…
Global LNG supply and demand outlook Opportunities exist for new LNG supply as the market tightens in the early-to-mid-2020s Global LNG supply and demand mtpa Santos opportunities 500 Market well supplied + Barossa-Caldita Darwin LNG…
Secured value through strong contracted LNG position Underpinned by long-term high-value contracts with quality Asian buyers Santos LNG cargoes by type percent + Santos portfolio has a strong weighting to long-term, oil indexed…
Well positioned in both Eastern and Western Australia One of the largest suppliers of domestic gas and ethane, supplying 120PJ into the domestic market in 2017 Western Australia Eastern Australia + Supply deficit emerging + Santos is…
Moomba can provide strategic gas storage Santos operated Moomba strategic storage is well placed to provide security of supply to support emergencies and peak gas or power requirements Darwin + Centrally located with access to major…
Finance & Capital Management Anthony Neilson CFO
Financial priorities Significant progress in 2017 on our financial priorities REDUCING INCREASING REDUCING DEBT CAPITAL COSTS FREE CASH FLOW MANAGEMENT + EURO 1 billion Subordinated Notes redeemed + Unit upstream + Forecast free…
Production and sales volumes 2017 production and sales volumes expected to be toward the upper end of guidance. Five core assets expected to deliver higher production in 2018 and stable production for the next decade Production volume…
Capital expenditure and production cost guidance Increased activity driven by cost efficiencies Sustainable cost out now embedded in our operations Capital expenditure guidance1 Upstream unit production cost guidance1 million /boe…
Net debt reduced to 2.8 billion Target 2 billion in net debt by the end of 2019 + Net debt reduced to 2.8 billion1 through a 2017 movement in net debt to 30 September 2017 combination of free cash flow, previously announced million…
Drawn debt maturity profile Euro hybrid redeemed and replaced with more efficient long-term debt funding. 600 million of 2019 ECA supported loan facility prepaid in 2017 Drawn debt maturity profile as at 8 November 20171 Breakdown of…
Drawn debt maturity profile excluding PNG LNG Senior debt profile 2.2 billion ex PNG LNG non-recourse project finance Drawn debt maturity profile as at 8 November 20171 Breakdown of drawn debt facilities million as at 8 November…
Summary In 2018 the focus remains on reducing costs, increasing free cash flow, reducing debt and disciplined capital management REDUCING INCREASING REDUCING DEBT CAPITAL COSTS FREE CASH FLOW MANAGEMENT + Forecast 2018 group + Cost…
Morning Tea
Onshore upstream development Brett Woods Executive Vice President Onshore Upstream Developments
Overview STABILISE ONSHORE DEVELOP AND EXPLORE AND GROW OPERATED ASSETS APPRAISE FOOTPRINT Invest in high graded growth options Build inventory and + Leverage the free cash flow Set-up assets to be cash execute efficiently…
Lowest-cost onshore Australian operations Cooper & GLNG transformed to low cost, efficient drill-complete-connect-operate businesses Disciplined operating Relentless drive for Organisational focus model cost and efficiency + Engaged…
Cooper Basin drilling a structural transformation Improved cycle time performance has led to embedded and sustainable cost reductions Cooper Basin drilling cycle times + Cooper Basin drilling cycle times halved Average days (rig release…
Cooper Basin oil development Lean well design and disciplined operating model has lowered the minimum economic pool size from 100 kbbl…
Cooper gas reserves replacement and reserves life The Cooper Basin continues to generate new gas reserves. Renewed focus in exploration to target further growth + Cooper Gas Reserves Replacement Ratio (RRR) has averaged 82% since 2006…
Cooper Basin gas development Appraisal drilling in the Namur Field proved a significant gas resource in the previously un-proven Patchawarra sands + Namur field discovered 1976, originally produced from Namur sandstone. Ceased…
GLNG upstream onshore transformation Proven cost performance now allows GLNG to increase drill, complete and connect activities Roma drill, complete, connect + Now lowest cost operator in Queensland million per well 5.2 + Plan to…
GLNG drilling transformation Improved cycle time performance has led to embedded and sustainable cost reductions Roma drilling cycle times Average days (rig release to rig release) + Roma drilling cycle times reduced by more than 50%…
GLNG upstream onshore transformation Well leases before and after transformation BEFORE AFTER Santos 2017 Investor Day 43
GLNG upstream onshore transformation Surface kit before and after transformation BEFORE AFTER Santos 2017 Investor Day 44
GLNG upstream onshore transformation Drilling footprint before and after transformation BEFORE AFTER Santos 2017 Investor Day 45
Roma development Moving to the high graded Roma acreage in the next phase of development + Cost base reset ready for development (down 83% on 2014 costs) + Solids management and pump reliability issues mitigated through modified…
Fairview development Fairview continues to perform Fairview production Average monthly sales gas rate (TJ/d) + Ongoing programme of production optimisation activity to maximise production from existing wells + Programme of fill…
Eastern Queensland Eastern Queensland portfolio to capture domestic gas opportunities while maintaining gas supply to GLNG + Santos has delivered cost reductions more rapidly in operated assets than observed in non-operated assets +…
Operations Vince Santostefano COO Conventional Oil & Gas and LNG Operations
Cooper & GLNG operations Discipline, Cost and Volume remain the strategic focus for operations DISCIPLINE COST VOLUME + Fit for purpose standards to + 52 million (21%) reduction + Excellent continued enable low cost operations in…
Curtis Island operations 153 LNG cargoes delivered as at end of October 2017 + 8.9 mtpa maximum day rate achieved cf. 7.8mtpa nameplate capacity + 99% production reliability across the plant + Train 1 and 2 shutdowns completed…
Curtis Island conversion cost reductions On track to deliver disciplined, sustainable and best in class cost performance GLNG conversion costs1 m gross (real) + Two trains fully operational in 2017 96 92 89 -7% + Lean operations…
Cooper operations Sustainable cost out being delivered whilst maintaining exemplary Process Safety performance Total production costs m gross /boe + 21% cost reduction in Cooper production costs 500 20 450 + Cooper Basin operating…
Moomba plant third party oil Increased third party throughput enabled by competitive access agreements Forecast third party oil Moomba Plant1 kbbl/month 800 + Increased third party throughput incentivised by 700 competitive access…
Moomba re-set initiative Rejuvenate and re-life the core hub of Moomba + Moomba town plan - minimise footprint and maximise efficiency + Project commenced and is a key focus for 2017/18 + 24% annual cost reduction from camp tender…
Santos operations excellence Operations Excellence is core to our operating philosophy + What it is: Operating Cost + Is built up by key results areas Model + Clarity of expectations and standards + Enables measurement against…
Process safety and reliability Improved visibility and focus on key metrics Standing alarms1 Master data change requests1 Moomba plant inherent availability Count Count 90 days Target 98.5% 99.1% 98.9% 99.0% 82% -90% Oct-16…
Exploration and Appraisal Bill Ovenden Executive Vice President Exploration & Appraisal
Exploration and Appraisal Activity themes + Deepen the exploration inventory across all assets + Consolidate and align our exploration acreage around our infrastructure ownership + Disciplined and balanced allocation of risk…
Papua New Guinea Align and pursue gas resource options that offer commercialisation optionality through existing and expansion infrastructure. Grow short cycle-time opportunities 2018 2019 2020 2021 2022 Western farm-in licenses*…
Papua New Guinea growth Building aligned PNG LNG expansion optionality Muruk appraisal + 2016-2017 discovery of 2 gas pools in greater Muruk structure + Multi-Tcf contingent resource potential + Planned activity + Delineation 2D…
Northern Australia growth Powerful discovered resource position across 3 potential future upstream production hubs Barossa: Gross 4.3 Tcf, net 1.1 Tcf 2C raw gas recoverable resource Backfill of Darwin LNG LNG ullage +…
Northern Australia growth Successful de-risking of DLNG backfill candidate Barossa and systematic exploration inventory build around all discovered resource hubs Browse (Santos 30%) Petrel-Tern-Frigate (Santos 35-40%) Bonaparte Barossa…
Cooper Basin exploration Resurgent exploration effort in a mature production province + Leverage deep basin knowledge and drill-complete-connect cost out + Focused on reserves replacement and value Deepened Inventory build + 100+ oil and…
McArthur Basin EP 161 exploration program Demonstrate productivity of Velkerri Shale gas resource and acquire critical data for appraisal planning + Focus on EP 161 in the Greater Beetaloo sub-basin + Multi-Tcf prospective resource +…
Amadeus Basin exploration Frontier sub-salt play Multi-TCF gas potential + 2D seismic acquisition Dec17/Jan18 to supplement multiple phases of regional reconnaissance seismic (2014 and 1H 2017 campaigns) prospect delineation +…
2018 exploration & appraisal program summary Activity focused around core asset hubs Muruk-2 Karoma-1 Barikewa-3 2D Seismic 2D Seismic 3D Seismic T-1 T-2H, T3H drill1 3D Seismic 3D Processing Coreholes (ATP1191) 2D Seismic…
Wrap-up Kevin Gallagher Managing Director & CEO
Strategy Transform, Build & Grow + Execute and bring on-line growth opportunities across the core portfolio + Focused exploration strategy to identify new high-value targets and unlock future core assets Grow + Generate new revenue…
Delivering the strategy Disciplined growth initiatives in the core assets and reducing debt further TODAYS ANNOUNCEMENTS + Farm-ins to + Barossa + Evacuation + Further + Narrabri gas five confirmed as route secured reduction in…
2018 strategic priorities Business focus aligned with the core strategy Focus on business improvement to further reduce costs and maximise operating cash flow Disciplined allocation of free cash to repay debt and build production…
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