2018 Third Quarter Activities Report

Key Highlights

Strong production and revenue growth

  • Third quarter production up 6% to 15 mmboe due to strong performance across the core assets
  • Sales revenue up 10% to $973 million, including record quarterly LNG revenues of $405 million
  • PNG LNG achieved record daily rates equivalent to ~9.2 mtpa annualised production

Cooper Basin growth

  • Cooper Basin oil production up 17%, including the highest monthly production rates since 2009
  • Fourth rig commenced operations. Expect to drill 85-90 wells in 2018
  • Moomba South Phase 1 appraisal drilling initiated

Strong balance sheet to support growth

  • Net debt reduction target achieved at quarter-end, more than a year ahead of plan
  • As at 30 September 2018, Santos had cash and cash equivalents of $1.8 billion and total debt of
    $3.8 billion, resulting in net debt of $2 billion.

Dividend reinstated

  • Dividends to shareholders reinstated with the US3.5 cent per share fully-franked interim dividend paid

Value accretive Quadrant Energy acquisition announced for $2.15 billion1

  • Low-cost, long-life gas and oil assets with stable cash flows and significant near-term development and exploration upside

Sale of non-core Asian assets completed

  • In September, Santos received $144 million in cash proceeds from the sale of its Asian assets

Santos Managing Director and Chief Executive Officer Kevin Gallagher said: “Santos’ third quarter results serve to highlight the benefits of a cash generative core asset portfolio and our low-cost, disciplined Operating Model. During the quarter we paid our first dividend in two and a half years and achieved our net debt target of $2 billion more than a year ahead of plan.”

“With a balance sheet now supportive of growth, we also announced the value accretive acquisition of Quadrant Energy’shigh quality portfolio of low-cost, long-life conventional natural gas assets in Western Australia that will further reduce our free cash flow breakeven oil price and importantly, significantly enhance our operating capability. The acquisition will also give us a leading position in the highly prospective Bedout Basin, including the recent significant Dorado-1 oil discovery.”

“Santos is now positioned for growth with a number of upstream brownfield development opportunities leveraging existing infrastructure positions across each of our five core assets and is targeting production of more than 100 mmboe by 2025, almost doubling current levels of production.”

“Strong operating performance during the third quarter saw sales, production and sales revenues all higher than the previous quarter,” Mr Gallagher said.

1 Quadrant Energy acquisition is subject to customary consents and regulatory approvals and is expected to complete by the end of 2018