28 Jan 2009 - Santos
Santos today announced an increase in its year-end proved and probable (2P) oil and gas reserves of 134 million barrels of oil equivalent (mmboe), taking the company’s total proved and probable reserves past the 1 billion barrel mark.
This significant increase in 2008 was driven by a substantial boost in Santos’ coal seam gas reserves accompanied by healthy growth in conventional oil and gas reserves.
The growth in coal seam gas reserves was achieved despite Santos monetising over 90 mmboe of 2P reserves via the selldown of a 40% stake in the Gladstone LNG (GLNGTM) project to Petronas.
The overall reserves increase was net of 2008 production of 54.4 mmboe. It represents a 2P reserves replacement ratio for 2008 of 347% and is the company’s fifth successive annual increase in its year end reserves position.
The 2P reserves replacement cost was A$5.90 per barrel in 2008.
Contingent resources increased by 254 million boe to 2.85 billion boe.
Highlights
- Proved and probable (2P) reserves exceed 1 billion barrels of oil equivalent (boe).
- 2P reserves increased by 134 million boe, or 226 million boe excluding the GLNG selldown to Petronas.
- 2P reserves replacement ratio of 347%, or 517% if GLNG selldown is excluded.
- GLNG joint venture CSG 2P reserves increased by 142% to 3,246PJ, demonstrating the reserves build for GLNG project sanction is well on track.
- Conventional (excluding CSG) 1P and 2P reserves increased in line with 2008 production.
- Major contingent resource booking in the Cooper Basin for unconventional reservoir gas and closer spaced drilling into conventional reservoirs.
On a proved (1P) basis, year-end reserves increased to 518 mmboe, after allowing for 2008 production of 54.4 mmboe. This represents a 1P reserves replacement ratio (RRR) of 160% for 2008 and 159% on a 3 year rolling-average basis.
On a proved and probable (2P) basis, year-end reserves increased to a record 1,013 mmboe. This represents a 2P RRR of 347% for 2008 and 237% on a 3 year rolling-average basis.
Contingent resources increased by 10% to 2.85 billion boe. Excluding the GLNG selldown to Petronas and transfer of resources to reserves, the annual growth in contingent resources was over 750 mmboe.
Significantly, 2008 included a substantial contingent resource booking in the Cooper Basin with unconventional reservoir gas adding 590 mmboe and closer spaced drilling into conventional reservoirs adding 273 mmboe.
Santos Chief Executive Officer David Knox said Santos again delivered strong reserves growth in 2008, positioning the Company for future production growth.
“Today’s announcement means Santos has delivered its fifth successive annual reserves increase. Proved and probable reserves are now in excess of 1 billion barrels, a record level for the Company,” Mr Knox said.
“GLNG joint venture CSG reserves more than doubled in 2008, confirming we are in a strong position as we work towards the sanction of GLNG in 2010.
“However, our reserves growth is not just a CSG story. We also delivered near 100% conventional reserves replacement, driven by exploration success at Netherby, strong reservoir performance from the Cooper Basin and John Brookes, and successful appraisal at Henry.
“The substantial resource booking for Cooper Basin unconventional reservoir gas and closer spaced drilling into conventional reservoirs highlights its potential as a future supply source for Eastern Australia, and alone is equivalent to more than 20 years of Queensland’s current annual gas demand.”
Coal Seam Gas Reserves and Resources
GLNG joint venture CSG 2P reserves increased by 142% to 3,246PJ. Importantly, 95% of these reserves are uncontracted, demonstrating that the reserves build for GLNG project sanction is well on track. The GLNG drilling programme in 2008 successfully focussed on the transfer of resources to reserves, and the conversion of possible reserves to proved and probable; consequently contingent resources reduced compared to last year.
| Coal Seam Gas Reserves & Resources | GLNG Dedicated Areas1 |
|---|
| PJ (as at 31 Dec) |
2008 2007 |
| 1P |
1,167 545 |
| 2P |
3,246 1,344 |
| 3P |
5,999 4,000 |
| Contingent Resource2 |
2,647 4,798 |
1GLNG dedicated areas as per ASX release of 29 May 2008.
2Contingent resource is defined as mid (2C) contingent resource estimate.
GLNG is a joint venture of Santos and Petronas and will involve the construction of an initial nominal 3.5 million tonne per annum LNG liquefaction plant on Curtis Island in Gladstone Harbour, with gas supply from the GLNG dedicated coal seam gas fields in the Bowen and Surat Basins. A final investment decision is expected in the first half of 2010 and first shipments of LNG in 2014. Santos’ share of the project and GLNG joint venture is 60%.
Santos’ net share of GLNG plus other net share CSG 2P reserves increased by 49% to 2,350PJ.
Year end CSG reserves and resources do not include the Gunnedah Basin in NSW where Santos has secured access to a substantial and quality acreage position of up to 21,000 km2 gross. All areas are Santos operated and a core hole drilling program commenced in 2008. The first contingent resource booking for Gunnedah is expected in 2009.
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