Australia
Right: Field Engineer Paul Michell and Oil Team Leader Tom Thurgood near Tirrawarra in the Cooper Basin, South Australia.

Good reason to ride

Australia

Australia

Sales Revenue
Sales revenue up 14%, with higher oil and gas prices offsetting lower sales volumes.
Australia Production
Production in line with 2010, with higher oil production offset by lower gas production.
Australia Contribuion to total 2011 production

Santos is a leading gas producer in Australia, and has a strong, 50-year track record of safe and sustainable operations.

Demand for Australian gas, both domestic and for export as LNG, is expected to quadruple by 2025, with gas prices trending towards oil-linked international parity.

With assets in every major hydrocarbon province in Australia, Santos is well placed to help meet this increasing demand and support a lower-carbon future underpinned by the wider use of cleaner burning natural gas.

WESTERN AUSTRALIA

Santos is continuing to build its already significant business in Western Australia, from which oil, gas and condensate account for 24% of Santos’ total production.

The Reindeer/Devil Creek and Spar (Halyard well) projects were delivered in 2011, on schedule and on budget. These projects are important additions to the state’s domestic gas supply, with the Devil Creek gas plant also representing greater energy security for Western Australia. Four gas sale contracts for Reindeer gas have been signed with major local companies in the mining industry.

Santos has an exciting program planned in 2012, with three operated rigs scheduled to drill wells in the Carnarvon and Browse Basins, offshore Western Australia.

SANCTION OF FLETCHER FINUCANE

Santos sanctioned the Fletcher Finucane oil project in January 2012, which will be developed through a tie-back to the existing Santos operated floating production, storage and offloading facility at Mutineer-Exeter in the Carnarvon Basin.

Fletcher Finucane is scheduled to begin production in the second half of 2013, extending the economic life of Mutineer- Exeter and allowing the joint venture partners to examine other opportunities near the existing facilities.

Santos holds a 48% effective interest in the Fletcher Finucane project and is the operator.

NORTHERN TERRITORY

Offshore northern Australia, Santos completed the sale of its entire working interest in the Evans Shoal field to Eni, for up to US$350 million. The sale is consistent with Santos’ ongoing program to monetise non-core assets and actively manage its portfolio to maximise shareholders value.

COOPER CONVENTIONAL GAS GROWTH

The Cooper Basin has been the heartland of Santos’ operations for over 40 years, with its natural gas safely fuelling industry and homes in eastern Australia since 1969.

In 2011, total production from the Cooper Basin was slightly higher than 2010 and all customer deliveries were met despite adverse weather.

Through a combination of successful results from the infill drilling program and improved base performance, Santos’ share of Cooper Basin 2P reserves increased by 30% in 2011 to over 1,100 PJ.

Infill drilling involves drilling new wells at closer spacing to improve gas recovery, and will enable Santos to unlock significant further conventional gas resources.

Santos has also been applying North American technology to lower costs and improve gas recovery, and a fleet of three new state-of-the-art drilling rigs commenced operations in the Cooper Basin during the year.

COOPER BASIN SHALE AND OTHER UNCONVENTIONAL GAS

Santos has been a leader in unconventional resources exploration in the Cooper Basin since 2008, when it booked Australia’s first independently certified shale contingent resource.

Santos drilled its first dedicated vertical shale well in 2011. Well stimulation activities in March 2012 will go a long way towards improving the technical understanding of this vast resource.

As the operator of the Cooper Basin joint venture, Santos has access to the critical infrastructure, processing, gathering systems, transport and storage that will allow the region’s unconventional resources to be sold into the growing markets of eastern Australia.

NSW CSG ACQUISITION

In November 2011, Santos completed the acquisition of Eastern Star Gas Limited, along with the subsequent sale of a 20% working level interest in Eastern Star’s permits in the Gunnedah Basin, New South Wales, to TRUenergy.

This acquisition made Santos the largest holder of CSG reserves in New South Wales, and strengthened Santos’ integrated eastern Australian portfolio, which has the ability to supply into domestic and LNG export markets.

Santos is committed to continuing to work in partnership with local communities in New South Wales. We have already been working in regional NSW for over three years, employing and supporting local people and businesses.