Santos 2003 Full Year Results

Transcription

1 Santos 2003 Full Year Results Accelerating the pace of change John Ellice-Flint Chief Executive Officer 24 February 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 the expectations reflected in these statements are reasonable, but they may be effected by a variety of variables which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, gas commercialisation, development progress, operating results, reserve estimates, loss of market, 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 1

2 2003 At a glance NPAT ($million) $327 $322 Operating cashflow ($million) $897 $821 Dividend (cps) 30c 30c TSR (%) 1 20% 2% Gearing (%) 2 23% 29% Production (mmboe) Source: Bloomberg 2 Net debt/ (Net debt + equity) Operational Performance Gas Commercialisation (a) Year End 31 Dec PJ 340PJ 1P Reserve Replacement Production Optimisation Acquisitions & Divestments Cost Leadership ($m) (b) Finding Costs (boe) Finding & Development Costs (boe) 148% 61 TJ/d $100m $188m $US1.77 $US % 75 TJ/d ($133m) $78m US$3.82 US$6.78 (a) Santos share (b) Cumulative 4 2

3 2003 Gas Commercialisation PJ (Net Santos) Bayu LNG Casino Cooper Basin East Spar Exploration Review Disappointing drilling results Growing acreage in key areas Increased quality opportunities 6 3

4 2003 Oil Program Success Base building projects (including water floods) Bottom water drive opportunities New Technology Pelican Oil Development ,000 P11 BOL 800 Oil Production (bopd) 2,000 P11 ESP P12 BOL P8 JetPump P12 Jet Pump 400 Cumulative Oil (kbbl) 0 0 Jan Apr Jul Oct Jan Apr Jul Oct Jan P Reserves Review (mmboe) 1P 312 (54) P 338 Production (10) Divestment 1 Exploration Commercialisation Acquisitions Revisions % 1P Reserves Replacement US$5.62 Finding & Developing Cost

5 2003 2P Reserves Review (mmboe) 710 (54) (40) (29) Production Divestment Revisions Exploration Commercialisation Acquisitions Moomba Critical Path Stage 1 & 2 Storage gas 3 Jan (100 TJ/d) Storage + field gas 4 Jan (200 TJ/d) Stage 3 Gas rate 500 TJ/d Oil at 90% Stage 4 Full gas processing capacity LRP rebuild Stage 5 & 6 LRP resumes May Complete recovery July January February March April May June 10 5

6 Moomba Incident the Impact Production impact - Sales Gas and Ethane 2.7 mmboe - Natural Gas Liquids 1.0 mmboe - Oil 0.1 mmbbl Net profit impact - $25 to $30 million Cashflow impact - $35 to $40 million 11 Accelerating the pace of change 12 6

7 Development Profile 2001 The Challenge Scotia Bayu-Undan Liquids Gas Oil & Liquids 13 Development Profile 2003 Delivered The Opportunity Scotia Bayu-Undan Liquids Mutineer Exeter Bayu-Undan LNG Gas Casino Petrel/Tern Evans Shoal Hides Patricia Baleen John Brooks Maleo/Oyong Sole Kipper Gas Oil & Liquids 14 7

8 Major Projects 15 Exploration Program Resource mmboe Casino Titan & Calypso Agung Maleo Exeter 2002 Norfolk Number of Wells Legend Pre Drill Expected Discovered Exploration Program Mean Resource 2002/2003 Mean Commercial Resource Expected Mean Resource 2004 Nuri Melville Amrit Resource mmboe 16 8

9 Strategic Gas Exploration Focus East Java 160 BCF 1 Well 1 Well 150 BCF (LNG) 22 TCF 4 Wells 9 Wells 550 BCF Market Annual Demand Gas Exploration Wells Total Gas Wells Well 17 High Margin Oil Exploration Kutei 3 Deep water Wells East Java 1 Well Carnarvon 2 Wells Oil Exploration Wells Total Oil Wells - 7 Otway 1 Deep water Well 18 9

10 Sustainability Sustainability for Santos means economic progress, protecting the environment and being socially responsible. Doing the right thing Sustainability Initiatives Project Greenhouse Management Produced Formation Water Waste Management EH&S Management System Indigenous Policy Human Rights Policy Employee Engagement Measurement Energy Efficiency Supply Chain Management Ethics Policy/ Code of Conduct Disclosure Strategy for Sustainability Indicators Key Facts Policy formation & measurement Measurement system established Measurement system established 18 management, 30 hazard standards Policy formation Policy formation Survey and analysis complete Significant progress 0.5 PJ in 2003 Program established and implemented Policy formation Sustainability review available

11 SCIP - taking us to the next level Scope for Improvement Business Improvement Strategy Process Defined Centralised Services Re-organisation Shared Services Santos Continuous Improvement Program Operation Improvement Projects Starting the Journey 2001 Working on the Core Defining the future Now 21 Looking Ahead Four tools to deliver growth We have the people and systems Substantial progress to date and accelerating 22 11

12 Finance Peter Wasow Chief Financial Officer 24 February Successful In Creating Value Production growth 5-8% -5% Production grows 9% Reserve replacement ratio 150% 148% 2003 outcome Reserves grow TSR 14% 20.3% Replacement cost shrinks Finding Cost US$1.25 Finding & Dev Cost US$5.50 Margin grows $1.77 $5.62 Cash flow growth 10% EPS growth 10% 0% 24 1

13 Gas Prices Up Sales Revenue ($ million) , (13) Gas prices Gas volumes Liquid prices (61) Liquid volumes 1, Turning The Corner On Production Costs ($ million) 410 (25) PRRT/ royalty Production cost savings (10) (5) Production Cost $4.71/boe New prod n MBP leak Saving Production Cost $4.86/boe Operating Cost 2003 Operating Cost 26 2

14 Netback Per Barrel Climbs Netback ($/boe) 23 Market Movements Management Action (2.64) US$ Oil Price FX (0.15) Gas Prices Mix/ Volumes (0.60) PRRT (0.15) Production Costs Minor Exposure To USD (USD) 100% % 80% 80% 60% 60% 40% 40% 20% 20% 0% USD Revenue Hedging USD Opex USD Interest USD Capex Remaining currency exposure 0% -20% USD Revenue Hedging USD Opex USD Interest USD Capex 28 3

15 EBITDAX Exceeds $1b For Fourth Year EBITDAX ($million) (60) Higher gas prices Lower volumes (25) 6 (23) 46 Higher PRRT Lower prodn costs Stock movement Sale of OCA (10) Lower dividends & other revenue (7) FX losses Profit After Tax Marginal Increase Net profit after tax ($million) (13) 13 (14) (39) Lower EBITDA Lower write downs Heytesbury accelerated depreciation Higher DD&A Other Tax consolidations

16 Cash Flow Growth Is Strong Half yearly operating cash flow ($ million) '94 1'95 1'96 1'97 1'98 1'99 1'00 1'01 1'02 1'03 12% CAGR 31 Business Improvement Program Significantly exceeded 2003 target of $130m savings Key Initiatives: Production Optimisation Drilling & Completions Gas Development Optimisation Supply & Contracting Compression Optimisation Fuels & Losses Shared Business Services Maintenance Improvement Operations Support Services Government Charges A$m A$m Market commitment Achievement Mar Jun Sep Dec Mar Jun Sept Dec Capex Target Opex Target Capex Actual Opex Actual 32 5

17 Drilling Continues To Improve 1800 Offshore A$/ft 200 Onshore A$/ft 250 USA US$/ft Esenjay 01 Carnarvon Otway Cooper Basin Onshore US Santos 02 Santos Capital Efficiency Improves 100% 80% 60% Other Projects 40% Cooper Oil 20% Cooper Gas 0% % of total capital spend 34 6

18 Capital & Production Outlook Capital (A$million) Production (mmboe) % growth Captured Opportunities Captured Opportunities Approved Development 20 Approved Development Affordability Of Development Debt to total capital % 40% 30% 20% 10% Debt capacity Gearing 36 7

19 Targets Production growth 6% to 8% Production grows Reserve replacement ratio >140% Reserves grow EBITDA* growth ps 10% ROCE* 10% Margin grows Netback (06) A$22* Replacement cost shrinks Reserve replacement cost US$5.50 * At an average price of A$

20 Reference Slides 38 Prices & Exchange Rates Full Year % 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)

21 Production Volumes (mmboe) Gas Liquids Gas Liquids (1.6) Australian Gas 0.2 USA Gas (1.2) Crude Oil (0.5) Naphtha & LPG Gas Liquids 40 Cost of Sales Full Year % Change Production Costs Pipeline Tariffs Royalties PRRT Total Operating Costs Gas Purchases 5 5 Inventory Movement 12 (9) D,D&A Cost of Sales

22 Profit Full Year % Change Gross Profit Profit on Sale of Non-Current Assets 60 6 Other Revenue SG&A Expenses (45) (41) Borrowing Costs (35) (47) Income Tax (106) (176) Net Profit after Tax before Write Downs Write downs (after tax) (62) (73) Net Profit after Tax Cost Definition US Peer Oil Companies* Sales Revenue Santos Group Reporting Sales Revenue Operating Costs net back cost of sales * Source: J S Herold 36 th Annual Reserve Replacement Cost Analysis ** Includes selling and corporate administration expenses *** Plus exploration expense for successful efforts companies 43 3

23 Little Dry Hole Cost Remains Capitalised Exploration & Development in non producing areas (A$ million) Dry hole cost 56 Browse, Houtman, Perth, Duntroon, Otway Basins, US Early stage commercialisation 204 Hides gas, Evans Shoal Late stage commercialisation 161 Kipper, Sole, Golden Beach, Oyong, Maleo Pre sanction 32 Casino Total Capital Expenditure Exploration Australia Overseas Delineation Australia Overseas Development (1) Australia Overseas Total Exploration, Delineation & Development Expenditure (1) Includes construction and fixed assets expenditure 45 4

24 2004 Sensitivities US$1 change in the unhedged oil price per barrel leads to change of A$15 million in profit after tax One cent movement in the exchange rate will cause a profit after tax movement of A$5 million A 1% change in interest rates will cause a profit after tax movement of A$7 million 46 5