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Record first half for Santos

Santos today reported record sales revenue of $1.3 billion for the first half of 2006, an increase of 29% on the corresponding period for 2005.

First half production of 28.7 million barrels of oil equivalent (mmboe) was also a record for Santos and compared with 26.3 mmboe in the previous corresponding half-year.

The record first half reflects increased second quarter production, combined with continuing high prices received for all products.

Total production for the second quarter was 14.9 mmboe which represents an 9% increase on the corresponding quarter in 2005.

Second quarter sales revenue increased by 25% from $553.2 million in 2005 to $691.5 million in 2006.

“This is an excellent start to 2006 for Santos. The record first half output places the Company in a strong position to achieve its forecast annual production of between 60 and 61 mmboe for 2006, up from 56 mmboe in 2005,” Santos’ Managing Director, Mr John Ellice-Flint, said today.

“Significantly, the overall result reflects the growing diversity of Santos’ operations which has enabled further production and revenue growth on the back of several new projects coming on line”, he said.

Mr Ellice-Flint said the record first half follows the start-up of the Casino gas field offshore Victoria and the Bayu-Undan LNG project offshore northern Australia, together with increased production from the Fairview coal seam gas field in Queensland.

“Encouraging results were also recorded from the early phases of the Cooper Oil Project, with 25 out of 29 wells successfully encountering oil, and 13 wells brought into production during the first half. This oil exploitation initiative will continue to gain momentum through the second half with four rigs now operating across the Cooper Basin.

“The drilling of a new development well at the Mutineer-Exeter oil field offshore Western Australia increased gross production rates from approximately 35,000 barrels per day to 55,000 barrels per day at the end of the quarter. A further two development wells are currently drilling on the Exeter field which are expected to have a positive impact in the second half,” he said.

Other developments during and subsequent to the second quarter, which are described in more detail in the attached activities report, include:

  • An oil discovery at the Dua-4X exploration well in Vietnam;
  • Appraisal drilling at the Jeruk oil discovery in Indonesia which reduced the most likely contingent resource for Jeruk to less than the 170 mmbbls previously forecast;
  • A well control incident at the onshore Banjar Panji-1 well, near Surabaya in Indonesia. Santos, with an 18% non-operated interest, continues to provide support to the Operator of the well to address the social and environmental consequences, and to stop the flow of mud;
  • Agreement on the terms of a $474 million acquisition of Delhi Petroleum, which is expected to be completed in October 2006, subject to certain conditions including the approval of noteholders in the ASX-listed Floating Internet Energy LinkeD Securities (FIELDS);
  • A gas discovery at the Evans Shoal South exploration well, offshore northern Australia;
  • Further delays at the Oyong oil and gas development project offshore East Java, Indonesia, with first oil now anticipated in the second quarter of 2007 and first gas in the second half of 2008.

Santos stock symbols: STO (Australian Stock Exchange), STOSY (NASDAQ ADR), Ref #82-34 (Securities Exchange Commission)