Santos 2004 Full Year Results

Transcription

1 Santos 2004 Full Year Results Delivering on the Strategy 23 February 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 Santos 2004 Full Year Results Delivering on the Strategy 23 February

3 Delivering on the Strategy Overview 2004 a good operating performance 2004 advances strategy on multiple fronts 2004 option capture positions Santos for future Conclusion John Ellice-Flint Chief Executive Officer Performance Headlines Results improve FY Dividend 33c up by 3c Sales Revenue $1,501million up 2.5% despite Moomba incident Production 47.1 mmboe above guidance by 1-2mmboe EBITDAX $1,157million up by 9% NPAT $380million up by 16% EPS $0.59 up by 12% Gearing 24% increased just 2% Reserves 1P +57 mmboe 1P exceeds production by 21% 2P +54 mmboe 2P exceeds production by 14% 6 3

4 Delivering on the Strategy Overview 2004 a good operating performance 2004 advances strategy on multiple fronts 2004 option capture positions Santos for future Conclusion Peter Wasow Chief Financial Officer 7 Headline Profit Up 16% $m (37) One-off gains 290 Operating Items One-off gains 2003 NPAT NPAT Normalised Normalised...and underlying up 19%

5 Behind the Headline 2003 Significant Items 2004 Significant Items $m $m Gain on asset sales Tax consolidation Write downs (64) (21) Restructuring (15) Moomba 1 Total Production Exceeds Guidance mmboe (2.1) Cooper Basin (1.0) Carnarvon Basin (1.0) Otway (0.9) Other 2.5 Bayu- Undan & Acquisitions 51.7 (4.6) Moomba Incident outlook around 54 mmboe 2006 outlook >10% above

6 Production Costs $m (16) (16) Accounting Changes New Production 296 (8) (5) 17 Stock Write-off Insurance Cost Savings 292 (17) 309 Moomba Incident Production Cost $4.86/boe 2004 New Base $5.72/boe 2004 Production Cost $5.63/boe 2004 Production Cost $6.55/boe 11 EBITDAX Up 9% $m Aust gas prices Commodity prices net of Royalties & PRRT (175) Volume & Mix (12) Production Costs 116 Bayu- Undan & Acquisitions 19 Other 1173 (16) Moomba Incident EBITDAX 2004 EBITDAX 12 6

7 Depreciation, Depletion & Amortisation $m (39) (35) Heytesbury Facility Write-off (2003) Volume Future Reserve Development Costs Revisions & other Moomba Incident $9.76/boe 2004 $11.39/boe 13 Operating Cash Flow $m (21) (15) EBIT- DAX pre Moomba Restructure Costs Interest & Tax (46) Other Items (191) Working Capital 736 (131) Moomba Incident

8 Capital Expenditure $m Exploration Delineation Development Other 25 wells 16 wells, 7 Discoveries Cooper Basin, Mutineer-Exeter, USA, Other Cooper Basin, Mutineer-Exeter, USA Petru Cooper equipment replacement Moomba Incident, Systems upgrade Mutineer-Exeter, Bayu-Undan LNG, John Brookes, Casino, Oyong, Maleo Mutineer-Exeter, Bayu-Undan, John Brookes, Baleen, Legendre, Cooper, Casino, Minerva Forecast Note: $47 million spent on LRP rebuild included in Other 15 Financial Flexibility Gearing 50% 40% 30% 20% 10% Debt capacity Gearing Ceiling Gearing (debt/total capital) Debt $m

9 Proven Reserves Up mmboe 1P 338 (47) P 348 Production Additions Acquisitions Revisions Two Projects Commissioned Bayu-Undan liquids (Santos 10.6%) Commenced liquids production April 2004 Debottle necked production achieved December liquids 22% above expectation Minerva (Santos 10%) Production commenced December 2004 Field production 130 to 150 Tj/d Santos Direct 18 9

10 Two Projects Sanctioned Casino (Santos 50%) Innovative gas marketing - rapid development - exploration enabling On track for 1Q 2006 start up John Brookes (Santos 45%) Increased reserves On track for mid 2005 start up Topsides complete 19 Portfolio Optimisation Acquisitions Cooper Basin Patricia-Baleen Indonesia Divestments Onshore Otway Carpentaria pipelines Other sales 20 10

11 2004 Exploration 44% Success Rate Khefren 1 RAD 1 Jeruk 2 Pandu 1 Hebe 1, Stilton 1 Hector 1,Yangtze 1 Venus 1, Corsair 1 Martha 1 Callister 1, Amrit 1 Torres 1A Deer Creek 7-6, Deer Creek Gulf of Suez East Java Kutei Basin Timor Sea United States Cooper Basin Otway Basin Ras Abu Egypt Darag S.E. July N. Zeit Bay Brantas PSC Nth Bali l PSC Donggala PSC NT/ P61 Woodbine Texas Cougar 21 Jeruk is Strategically Significant Metres 1 Constrained flow of 7500 barrels of oil per day from DST 1 at the top of the reservoir

12 Organisation Efficiency Enhanced Santos Continuous Improvement Project May 2004 Restructure Implemented Business Improvement Initiatives Commenced Benefit Dec 2004 Costs $22m Savings Opex $9m Capex $29m Net $16m 2005 Costs $4m Targets Opex $23m Capex $57m Net $76m A Good Operating Performance Headline and underlying profits up Dividend up Reserve replacement strong Development conveyor belt Portfolio management focused Exploration success 24 12

13 Delivering on the Strategy Overview 2004 a good operating performance 2004 advances strategy on multiple fronts 2004 option capture positions Santos for future Conclusion John Ellice-Flint Chief Executive Officer 25 Exploration Program Delivering Exploration Program Resource MMBOE Jeruk (Pre-drill Estimate) Wells Pre Drill Expected Mean Resource Discovered Mean Resource 26 13

14 Active 2005 Exploration Drilling Gulf of Suez RAD 1, NZB A, NZB B, NZB C, Khufu, Pawnee Gulf of Mexico Cougar, Thunder Kutei Basin Hiu Aman, Raksasa, Orca, Pangkal Bonaparte Basin Caldita, Phoenix WA Basins Hurricane, Little Joe, Brick Landing East Java Agung, Herbras, Banjar Panji Denison Trough Greenmount, Yamala Otway Basin Pecten East Gas Oil 27 Indonesia Core Area Established Production acquired Brantas and Kakap gas and oil Developments close to sanction Maleo GSA close to final Oyong revised POD First oil end 2005 Exploration success Jeruk Kutei acreage 28 14

15 Santos Development Conveyor Progress Measured progress as at end December 2004 Percent Entry Bayu-Undan LNG 67% Mutineer-Exeter 89% Casino 25% John Brookes 44% Minerva 100% Bayu-Undan LNG pipeline 82% Oyong, Maleo, Jeruk, Sole, Kipper, Golden Beach Exit 29 Record Development Continues Mutineer oil field (Santos 33.4%) Production to start 3 months early Costs 10% below budget FPSO conversion carried out with no LTIs Appraisal results disappointing 30 15

16 What Happened at Mutineer-Exeter? (m) Top of reservoir variation to prognosis High Aug 04 Post Sanction Feb 05 Low Pre Sanction 30 Nor 1 Nor 2 Ex 1 Mut 2 Ex 2 Mut 3 Ex 3 Bty-2 Ex-5 Ex-6 Mut-7 Mut-5 Mut-8 Mut-9 NN 1 Mut-10 Ply-1 Market advised of reserve concerns 31 Record Development Continues Bayu-Undan LNG (Santos 10.6%) Pipeline to shore 82% complete LNG project 67% complete Favourable drilling results Commences 2006, ramps up to 3 mt/y by

17 Gas Commercialisation Delivers Moomba gas swaps New contracts - Casino (exploration enabling) - John Brookes Price reviews 3rd party gas 3rd party oil Spot sales Peaking services HUB Gas swaps John Brookes Wellhead Platform (water depth ~ 47m) East Spar Gas Plant Gas Processing & Compression Varanus Island East Spar Pipeline to Mainland Advances the Strategy Entered high impact exploration drilling phase Indonesian core area established Offshore development capability Gas commercialisation success continues 34 17

18 Delivering on the Strategy Overview 2004 good operating performance 2004 advances strategy on multiple fronts 2004 option capture positions Santos for future Conclusion John Ellice-Flint Chief Executive Officer 35 New Exploration Options Egypt entry in mature exploration farm-in Cougar: new significant play concept in shallow Gulf waters Donggala block completes Kutei deepwater trend Ras Abu Darag South East July North Zeit Bay Woodbine Cougar Egypt USA Popodi PSC Donggala PSC Papalang PSC Kutei Basin 36 18

19 Appraisal & Follow Up Exploration Added Legend Oil Field Gas field Oil Pipeline Gas Pipeline 3D Seismic over Santos Acreage Kalimantan Samarinda Balikpapan Bontang Hiu Aman Pandu 1 Makassar Strait Popodi PSC Orca 1 Proposed Raksasa 1 Oti 1 Donggala PSC Papalang PSC Proposed Pangkal 1 Palu Sulawesi 0 50 kilometres 37 Infrastructure Strategy Advanced Eastern Australia: Moomba/Ballera Hub Eastern Queensland: Wallumbilla/Scotia Hub Southern Australia: Orbost Hub Northern Australia: Wickham Point LNG Hub Western Australia: Varanus/Barrow Island Hub Southern Australia: Minerva/Casino Tiebacks Varanus/Barrow Island Hub Moomba/Ballera Hub Minerva/Casino Tiebacks Wickham Point LNG Hub Wallumbilla/Scotia Hub Orbost Hub 38 19

20 Crystallising Future Growth Potential Projects Jeruk early production Casino Tiebacks Sole Golden Beach Kipper US exploration Onshore Aust oil Onshore Aust gas Petrel-Tern Evans Shoal Indonesia exploration - Hiu Aman - Follow ups Egypt exploration Otway exploration Hides Indonesia exploration Otway exploration 39 Delivering on the Strategy Overview 2004 good operating performance 2004 advances strategy on multiple fronts 2004 option capture positions Santos for future Conclusion John Ellice-Flint Chief Executive Officer 40 20

21 Key Messages Report card shows strategy is on track 2004 a good operating result 2004 advances strategy on multiple fronts 2004 option capture positions Santos for future 41 Santos 2004 Full Year Results Delivering on the Strategy 23 February

22 Back Up Slides 43 Moomba Incident Impact NPAT Operating Cash Flow $m $m Lost revenues (net of royalties) (107) (107) Higher production costs (17) (17) Depletion avoided 25 - Insurance proceeds Interest (7) (7) Write-off plant (1) - Inventory draw-downs (9) - Tax effect - - IMPACT AFTER TAX 1 (131) 44 22

23 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) Profit Full Year % Change Gross Profit Profit on Sale of Non-Current Assets Other Revenue Insurance Recovery SG&A Expenses (60) (45) Borrowing Costs (34) (35) Income Tax (161) (106) Net Profit after Tax before Write Downs Write downs (after tax) (22) (62) Net Profit after Tax

24 Capital Expenditure Exploration Australia Overseas Delineation Australia Overseas Development (1) Australia Overseas Total Exploration, Delineation & Development Expenditure (1) Includes construction and fixed assets expenditure Sensitivities US$1 change in the unhedged oil price per barrel leads to change of A$16 million in profit after tax One cent movement in the exchange rate will cause a profit after tax movement of A$8 million A 1% change in interest rates will cause a profit after tax movement of A$9 million 48 24

25 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 49 25