chdc industry and innovation forum –july 2019
TRANSCRIPT
Santos – upstream developments
CHDC Industry and Innovation Forum – July 2019
Irrigation at Fairview
+ 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 affected by a range of variables which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, geotechnical factors, drilling and production results, gas commercialisation, development progress, operating results, engineering estimates, 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.
Disclaimer
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Santos profile (ASX: STO, US ADR: SSLZY)
Santos’ purpose is to provide sustainable returns for our shareholders by supplying reliable, affordable and cleaner energy to improve the lives of people in Australia and Asia
MARKET CAPITALISATION
US$10.5 billion1
DIVERSIFIED AND BALANCED PORTFOLIO
5 core long-life natural gas assets
DISCIPLINED OPERATING MODEL
Each core asset free cash flow positive at <$40/bbl, pre major growth spend
PRODUCTION
2018 production 58.9 mmboe
2025 production targeting >100 mmboe
SUSTAINABLE DIVIDEND POLICY
Targets a 10% to 30% payout of free cash flow
1 As at 19 March 20192 Free cash flow breakeven is the average annual oil price in 2019 at which cash flows from operating activities (including hedging) equals cash flows from investing activities. Forecast methodology uses corporate assumptions. Excludes one-off restructuring and redundancy costs, asset divestitures and acquisitions, and major growth capex.
TARGETING 2019 FREE CASH FLOW BREAKEVEN <$35/bbl2
Strong, stable cash flows
+ Australian company providing gas from Roma for more than 50 years
+ The Santos GLNG Project has completed over 1,000 wells and delivered 300 LNG cargos
+ Lowest cost onshore developer with strong safety record
+ Existing hubs at Roma, Fairview and Scotia
+ Expansion underway at Roma East and Arcadia
An Australian energy pioneer
Santos in Queensland
Upstream investments
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2019 plans
+ $900 million capital investment during 2019
New projects
+ Roma East – 3 year, $750m development sanctioned in February 2018
+ Scotia – successfully commissioned ahead of schedule in April 2018
+ Arcadia – 2 year, $400m development commissioning underway
Ongoing activity
+ Fairview
+ Roma
Scotia plant
The Challenges ahead
+ 300 wells in 2018 and 400 wells in 2019
+ Land access challenges:
+ Challenging terrain in Fairview
+ 3/7 Arcadia properties organic beef producers
+ 6/7 Arcadia properties are privately owned
+ Environmental restrictions require a reduction in footprint
+ Disciplined Operating Model
+ Each core asset free cash flow positive at <$40/bbl
Changes to our approach
+ Self managed GLNG Upstream development
+ Standardised design
+ Factory approach
+ Integrated delivery teams working to common goals
Improving project execution at Santos
Integrated Planning
+ Improves safety (Driving/LUEZ)
+ Resource locally to reduce cost
+ Optimise transport schedules that align to construction schedules
+ Deliver direct to ROW
+ Scalable to support future projects
+ Reduce the need for future in field laydowns
+ Single point of material control and handover
+ Central hub can be used to stage other materials currently stored offsite, removing cost
+ Central hub can hold inventory (min/max) for low complexity bulk materials
+ Forces better planning “Just in time”
+ Improves QA/QC
+ Preservation of Product (indoor storage)
+ Less to clean up in the field at the end of a project.
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Establish a central project hub located in Toowoomba where local resources and equipment are optimised via an integrated plan
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Just in time logistics
Arcadia shared laydown/ wash-down / refuel station
Toowoomba Logistics Centre (TLC)
Arcadia Example
+ Sanction May 2018
+ $400 million investment over 2 years
+ Project scope and progress:
+ 100 of 137 drilled
+ 90km of 140km gas and water gathering network installed
+ 1 of 2 4G communication towers completed
+ Compression station RFSU October
+ Gas fired power station for a capacity of 5MW RFSU October
+ Reverse osmosis plant for a capacity of 4ML/d RFSU November
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September 2018
March 2019
November 2018October 2018
May 2019January 2019
Faster execution = Less disruption in the community
Investing in economic and social infrastructure
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Ongoing community investment
+ Since the beginning of the project, we have made significant contributions to the communities in which we operate including:
+ $220 million to upgrade rural roads in regional Queensland
+ $2.5 million contribution in 2011 for the upgrade and expansion of Roma airport
+ $1 million improvements to Telstra 4G coverage
+ $20 million over the life of the GLNG Project to the CareFlight aeromedical service
+ In 2018 Santos supported over 50 community initiatives across our upstream footprint
Maintaining our strong local presence
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Supporting local communities
In the Arcadia Valley:
+ Sponsorship and support for school and community events
+ Telstra 4G network installations
+ AM/FM radio
+ Access to medic and training opportunities in camps
+ Meals available in camps
+ Road improvements – Lonesome jump-up and CHRC roads
$320 million+ spend year to date with Queensland based councils and business
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Supporting local business
South East & Other QLD Regions
$218.6MLocal Spend YTD
Toowoomba Region
$43.5MLocal Spend YTD
Maranoa Region
$47.3MLocal Spend YTD
Gladstone Region
$10.9MLocal Spend YTD
+ For further information:
+ Call the Santos Community Information Hotline 1800 761 113
+ Visit us at 72 Kimbler Rd, Roma (near the Ironbark Raceway/Stocklick)
+ Email: [email protected]
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Contact us
Thank you & questions