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Santos Limited has entered 2004 the year marking the Company’s 50th anniversary with six company-building projects located in South East Asia, the Timor Gap and offshore Western Australia and Victoria, Managing Director, Mr John Ellice-Flint, says in the latest Annual Report.

“Three of these have been approved and are under development. We expect approvals on the remaining three projects during 2004,” Mr Ellice-Flint says in the Report lodged today with the ASX.

“This is a dramatic change from two projects in the development pipeline in 2001 and, significantly, the new projects we now have underway will make strong contributions to our annual production profile by 2006.”

Mr Ellice-Flint says Santos is working towards approval of three significant new growth projects over the next few months, namely development of the:

  • John Brookes gas field offshore Western Australia;
  • Casino gas field offshore Victoria; and
  • Oyong/Maleo gas fields offshore East Java.

“Our focus over the past three years has been on developing and delivering on a strategy of transforming Santos into a truly international exploration and production company with world class operations,” he says.

“To deliver growth in the future, Santos plans to invest $784 million on all activities in 2004.

“An exciting exploration program and an expanded suite of new development projects will result in the Company investing $134 million in wildcat exploration, $82 million on delineation and appraisal, $490 million on development activities and $78 million on construction and fixed assets.

“We are intent on developing Santos into a growth company and we are accelerating the pace of change as we drive the Company to capture more opportunities that deliver growth and value for all our stakeholders.”


In his review, Santos Chairman, Mr Stephen Gerlach, says the Company’s strong cash flow and low gearing enabled the Board to maintain a 30 cents per share annual dividend for the past year.

“This represents a fully franked yield of almost 5%,” Mr Gerlach says in the report.

“Directors decide the level of dividends twice yearly, based on Santos performance and prospects. These decisions are not based on a single metric, such as annual pay-out ratio, and take into account all relevant factors including future capital investment requirements.

“Current indications are that Santos will be able to fund its capital program and maintain its current level of dividend payments over the foreseeable future.

“This is subject to matters outside the Company’s control, such as oil prices and exchange rates.

Further expansion beyond Australia

Mr Ellice-Flint says the successful first stage of the Santos change strategy was particularly focused on the Australian operations.

“The second stage will occur from 2004 to 2006 and will come from a suite of projects that will drive medium-term production and earnings growth,” he says.

“During 2003 two such critical projects were approved for development: the Bayu-Undan LNG development in the Timor Gap and the Mutineer-Exeter oil development off the WA coast.

“This stage will also see Santos focusing on building its position in SE Asia and North America through a combination of acreage expansion and, where appropriate, value-adding acquisitions.

“Both are regions with substantial energy demand and are core to our growth strategy.”

Mr Ellice-Flint says the third stage of Santos transformation looking five to 10 years ahead would see the Company expand into a number of regions beyond Australia.

“These included new ventures in regions such as the Middle East and North Africa; all part of the ongoing plan to build a portfolio of assets that can provide long-term growth.

“The Middle East and North Africa areas have large proven and prospective hydrocarbon potential, the annual report says.

“The selected areas have a natural fit with Santos existing skills, including operating in desert environments and the management of complex reservoir systems,” the report says