Media enquiries
Daniela Ritorto+61 8 8116 5167 / +61 (0) 455 319 770daniela.ritorto@santos.com
Third Quarter Activities Report
For period ending 30 September 2018
ASX: STO | ADR: SSLZY
Third Quarter Activities Report
For period ending 30 September 2018
ASX: STO | ADR: SSLZY
Investor enquiries
Andrew Nairn+61 8 8116 5314 / +61 (0) 437 166 497andrew.nairn@santos.com
| Investor enquiries Andrew Nairn +61 8 8116 5314 / +61 (0) 437 166 497 andrew.nairn@santos.com | | Santos Limited ABN 80 007 550 923 GPO Box 2455, Adelaide SA 5001 T +61 8 8116 5000 F +61 8 8116 5131 www.santos.com |
18 October 2018
Santos Managing Director and Chief Executive Officer Kevin Gallagher said: “Santos’ third quarter results serve tohighlight the benefits of a cash generative core asset portfolio and our low-cost, disciplined Operating Model. Duringthe quarter we paid our first dividend in two and a half years and achieved our net debt target of $2 billion more thana year ahead of plan.”“With a balance sheet now supportive of growth, we also announced the value accretive acquisition of Quadrant Energy’shigh quality portfolio of low-cost, long-life conventional natural gas assets in Western Australia that will further reduceour free cash flow breakeven oil price and importantly, significantly enhance our operating capability. The acquisitionwill also give us a leading position in the highly prospective Bedout Basin, including the recent significant Dorado-1 oildiscovery.”“Santos is now positioned for growth with a number of upstream brownfield development opportunities leveragingexisting infrastructure positions across each of our five core assets and is targeting production of more than 100 mmboeby 2025, almost doubling current levels of production.”“Strong operating performance during the third quarter saw sales, production and sales revenues all higher than theprevious quarter,” Mr Gallagher said.
Quadrant Energy acquisition is subject to customary consents and regulatory approvals and is expected to complete by the end of 2018
Comparative performance
| Santos share | Units | Q3 2018 | Q2 2018 | Change | 2018 YTD | 2017 YTD | Change |
| Production | mmboe | 15.0 | 14.2 | +6% | 43.1 | 44.5 | -3% |
| Sales volume | mmboe | 20.3 | 19.0 | +7% | 58.3 | 61.6 | -5% |
| Average realised oil price | US$/bbl | 81.1 | 78.6 | +3% | 77.1 | 54.3 | +42% |
| Sales revenue | US$million | 973 | 885 | +10% | 2,653 | 2,246 | +18% |
| Capital expenditure1 | US$million | 180 | 167 | +8% | 487 | 478 | +2% |
Capital expenditure including restoration expenditure and acquisition of exploration assets but excluding capitalised interest.
| Santos Ltd l Third Quarter Activities Report l 18 October 2018 | | Page 2 of 15 |
Sales volumes (Santos share)
| Product | Unit | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| LNG | 000 t | 738.6 | 630.9 | 743.4 | 2,011.8 | 2,227.2 |
| Domestic sales gas and ethane | PJ | 55.7 | 52.6 | 59.6 | 162.0 | 168.1 |
| Crude oil | 000 bbls | 2,296.7 | 2,863.9 | 2,589.3 | 7,594.5 | 7,360.6 |
| Condensate | 000 bbls | 1,063.3 | 811.6 | 1,202.3 | 2,952.9 | 3,240.6 |
| LPG | 000 t | 41.3 | 43.8 | 62.7 | 106.6 | 132.2 |
| Own product | mmboe | 15.0 | 13.5 | 15.2 | 42.3 | 44.3 |
| Third party | mmboe | 5.2 | 5.6 | 6.3 | 16.0 | 17.3 |
| Total sales volume | mmboe | 20.3 | 19.1 | 21.5 | 58.3 | 61.6 |
Third quarter sales volumes were higher than the prior quarter primarily due to a full quarter of production from PNGLNG following the impact of the earthquake in the first-half and the planned one-month maintenance shutdown of theBayu Undan/Darwin LNG facilities in May, partially offset by lower crude oil sales volumes due to the cessation ofproduction from the Mutineer Exeter/Fletcher Finucane asset in Western Australia in the second quarter and thecompletion of the sale of the non-core Asian assets on 6 September 2018.
Sales revenues (Santos share)
| Product | Unit | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| Domestic sales gas and ethane | US$m | 272 | 254 | 271 | 788 | 762 |
| Crude oil | US$m | 186 | 225 | 137 | 586 | 399 |
| Condensate | US$m | 84 | 61 | 64 | 216 | 170 |
| Own product | US$m | 724 | 598 | 557 | 1,881 | 1,618 |
| Third party | US$m | 249 | 288 | 236 | 772 | 628 |
| Total sales revenue | US$m | 973 | 886 | 793 | 2,653 | 2,246 |
| Third party product purchases | US$m | 197 | 209 | 189 | 605 | 467 |
Third quarter sales revenues were higher than the prior quarter primarily due to higher commodity prices, a full quarterof production from PNG LNG following the impact of the earthquake in the first-half and the planned one-monthmaintenance shutdown of the Bayu Undan/Darwin LNG facilities in May.
Average realised prices
| Unit | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| LNG price | US$/mmBtu | 10.43 | 9.74 | 7.50 | 9.50 | 7.31 |
| Domestic sales gas price | US$/GJ | 4.89 | 4.83 | 4.56 | 4.86 | 4.54 |
| Oil price | US$/bbl | 81.09 | 78.61 | 53.28 | 77.10 | 54.26 |
| Condensate price | US$/bbl | 78.78 | 74.52 | 52.72 | 73.02 | 52.38 |
| LPG price | US$/t | 616.89 | 525.03 | 421.27 | 561.57 | 445.42 |
| Santos Ltd l Third Quarter Activities Report l 18 October 2018 | | Page 3 of 15 |
Production (Santos share)
| Product | Unit | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| Sales gas to LNG plant | PJ | 32.4 | 26.6 | 32.0 | 86.0 | 94.1 |
| Domestic sales gas and ethane | PJ | 40.2 | 40.9 | 39.7 | 119.5 | 117.7 |
| Crude oil | 000 bbls | 1,457.8 | 1,555.9 | 1,576.1 | 4,648.2 | 4,875.9 |
| Condensate | 000 bbls | 865.9 | 727.4 | 795.9 | 2,279.1 | 2,462.3 |
| LPG | 000 t | 34.5 | 37.8 | 36.8 | 106.8 | 107.4 |
| Total production | mmboe | 15.0 | 14.2 | 15.0 | 43.1 | 44.5 |
Third quarter production was higher than the prior quarter due to strong production across the core assets, includingPNG LNG producing at record rates following the earthquake-related shutdown in the first half and the planned onemonth maintenance shutdown of the Bayu Undan/Darwin facilities in May. Santos ceased recording production from thenon-core Asian assets following the completion of their sale to Ophir Energy plc effective 6 September 2018. The Asianasset sale combined with the cessation of production from the Mutineer Exeter/Fletcher Finucane asset in WesternAustralia in the second quarter resulted in lower oil production in the third quarter, notwithstanding higher Cooper Basinoil production.
2018 Guidance
Production and sales volumes guidance for 2018 has been narrowed by lifting the lower end of both ranges, reflectingstrong performance by the company’s core assets and despite the sale of the Asian assets completed in early September.
Capital expenditure guidance has been lowered to reflect current internal forecasts and timing of expenditures. Thereis no change to well guidance for the Cooper Basin and GLNG for 2018, which is maintained at 85-90 and ~300 wells,respectively.
Guidance shown in the table below excludes any potential impact from the acquisition of Quadrant Energy.
| Item | | Previous guidance | Updated guidance |
| Sales volumes | | 72-76 mmboe | 74-76 mmboe |
| Production | | 55-58 mmboe | 56-58 mmboe |
| Upstream production costs | | US$8.0-8.6/boe | No change |
| Depreciation, depletion and amortisation (DD&A) | | US$650-700 million | No change |
| Capital expenditure (incl exploration, evaluation & restoration, excl cap. int.) | | US$775-825 million | US$725-775 million |
Further detail of 2018 year-to-date capital expenditure, including exploration and evaluation expenditure, is reported inthe table on page 10 of this report.
| Santos Ltd l Third Quarter Activities Report l 18 October 2018 | | Page 4 of 15 |
Oil price hedging
3.2 million barrels of oil hedging expired in the third quarter under the zero-cost three way collar hedges.The following oil price hedging positions were in place as at 8 October 2018.
| 2018 Open oil price positions | | 2018 |
| Zero-cost three-way collars (barrels)1 | | 3,151,000 |
| Brent short call price ($/bbl) | | US$60.30 |
| Brent long put price ($/bbl) | | US$48.48 |
| Brent short put price ($/bbl) | | US$40.80 |
? When Brent price is above the weighted average short call price, Santos realises short call price. When Brent price is between the long put price and the
weighted average short call price, Santos realises Brent price. When Brent price is between the long put price and the short put price, Santos realises thelong put price. When Brent price is below the short put price, Santos realises Brent price plus the difference between the long put price and the short putprice.
| 2019 Open oil price positions | | 2019 |
| Zero-cost collars (barrels)1 | | 3,431,000 |
? When Brent price is above the weighted average ceiling price, Santos realises ceiling price. When Brent price is between the floor and ceiling price,
Santos realises Brent price. When Brent price is below the floor price, Santos realises floor price.
| Santos Ltd l Third Quarter Activities Report l 18 October 2018 | | Page 5 of 15 |
Cooper Basin
| Santos share | Units | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| Own product | PJ | 18.0 | 14.2 | 17.5 | 47.7 | 52.6 |
| Third party | PJ | 1.3 | 0.6 | 0.7 | 2.8 | 2.0 |
| Total | PJ | 19.1 | 14.8 | 18.2 | 50.1 | 54.6 |
| Own product | 000 bbls | 429.3 | 314.8 | 534.5 | 1,184.8 | 1,242.2 |
| Third party | 000 bbls | 58.0 | 52.6 | 85.4 | 209.9 | 164.0 |
| Total | 000 bbls | 487.3 | 367.4 | 619.9 | 1,394.7 | 1,406.2 |
| Own product | 000 t | 33.8 | 41.6 | 42.6 | 81.7 | 94.2 |
| Third party | 000 t | 4.2 | 2.9 | 7.3 | 13.1 | 11.3 |
| Total | 000 t | 38.0 | 44.5 | 49.9 | 94.8 | 105.5 |
| Own product | 000 bbls | 558.2 | 604.1 | 583.7 | 1,634.9 | 1,663.8 |
| Third party | 000 bbls | 1,205.2 | 1,489.9 | 1,048.8 | 3,750.7 | 2,849.6 |
| Total | 000 bbls | 1,763.4 | 2,094.0 | 1,632.5 | 5,385.6 | 4,513.4 |
| Total sales volume | mmboe | 5.8 | 5.4 | 5.7 | 16.1 | 16.1 |
| Total sales revenue | US$million | 306 | 278 | 212 | 808 | 591 |
| Sales gas and ethane | PJ | 15.3 | 15.4 | 14.4 | 45.0 | 43.0 |
| Condensate | 000 bbls | 253.1 | 240.8 | 219.9 | 701.8 | 633.8 |
| LPG | 000 t | 30.2 | 35.2 | 29.1 | 93.1 | 82.5 |
| Crude oil | 000 bbls | 901.9 | 769.1 | 644.0 | 2,329.8 | 1,976.6 |
| Total production | mmboe | 4.0 | 3.9 | 3.6 | 11.5 | 10.7 |
| Capital expenditure | US$million | 57 | 48 | 54 | 165 | 138 |
Third quarter production was higher compared to the prior quarter driven predominantly by a 17% increase in oilproduction, with both August and September averaging over 10,000 bopd net to Santos, levels not seen since 2009.With four rigs now in operation including one rig dedicated to the oil program, Santos expects to drill approximately 85-90 wells in 2018. Cycle times continue to be reduced with some gas wells progressing from spud to sales in less than50 days. This efficiency and early realisation of revenue from the capital investment supports the asset’s ability togenerate free cash flow at <US$40/bbl under the disciplined Operating Model.
Year-to-date production is up 7% to 11.5 mmboe, demonstrating Santos’ success in arresting the production decline inthe Cooper Basin and returning the asset to growth.
In the third quarter, 24 wells were drilled comprising seven exploration wells, three appraisal wells and fourteendevelopment wells.
At the end of the third quarter, the drilling of Moomba 229, the first of the Moomba South appraisal wells targeting asignificant 2C contingent resource commenced.
A summary of exploration and appraisal activity is included on page 11 of this report.
| Santos Ltd l Third Quarter Activities Report l 18 October 2018 | | Page 6 of 15 |
Queensland & NSW
| Santos share | Units | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| LNG | 000 t | 343.5 | 382.6 | 384.8 | 1,074.1 | 1,153.6 |
| Domestic contracts | PJ | 7.0 | 6.0 | 9.1 | 20.0 | 18.9 |
| Eastern Queensland (non-GLNG)2 | PJ | 6.1 | 4.9 | 2.1 | 18.1 | 13.6 |
| Total sales volume3 | mmboe | 5.5 | 5.5 | 5.6 | 16.5 | 16.2 |
| Total sales revenue3 | US$million | 259 | 253 | 188 | 722 | 542 |
| Sales gas to LNG | PJ | 9.6 | 10.8 | 10.9 | 30.8 | 31.1 |
| Domestic contracts | PJ | 2.6 | 1.0 | 0.7 | 4.5 | 2.4 |
| Eastern Queensland (non-GLNG)2 | PJ | 5.8 | 5.5 | 5.7 | 16.9 | 16.6 |
| Total production3 | mmboe | 3.1 | 3.0 | 3.0 | 9.1 | 8.6 |
| Capital expenditure | US$million | 64 | 63 | 52 | 174 | 131 |
New South Wales entered the core portfolio on 1 January 2018.
Combabula, Scotia (Santos legacy domestic volumes), Spring Gully and Denison.
Total sales volume, sales revenue and production include minor condensate production from Denison and sales gas from NSW assets. Denison conventionalassets were sold in April 2018.
| GLNG operational data (gross) | Units | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| Sales gas to the domestic market | PJ | 29 | 25 | 37 | 81 | 92 |
| LNG1 | 000 t | 1,178 | 1,239 | 1,332 | 3,634 | 3,846 |
| GLNG equity gas | PJ | 37 | 37 | 36 | 107 | 95 |
| Santos portfolio gas | PJ | 15 | 14 | 16 | 45 | 47 |
| Total sales gas to LNG plant | PJ | 71 | 75 | 74 | 220 | 219 |
| LNG cargoes shipped | | 20 | 21 | 20 | 60 | 62 |
Includes LNG produced from GLNG equity gas, Santos portfolio gas and third-party quantities.
Third quarter LNG production of 1.2 million tonnes was in line with the previous quarter and 20 cargoes were loaded.Higher GLNG equity gas production contributed to higher volumes delivered to the domestic market, while GLNG equity
gas delivered to the LNG plant was in line with the prior quarter at 37PJ.Gross GLNG-operated upstream sales gas production was 562 TJ/d at the end of the quarter, supported by a strong
ramp in Scotia production and continued steady incline in Roma.Gross daily production from Fairview was 423 TJ/day at the end of the quarter. Focus continues to be on improving well
availability.Gross daily production from Roma increased to 74 TJ/day at the end of the quarter. Field production is expected to
continue building as new development areas come online. Drilling continues in the Roma East project with 95 wellsdrilled to date. 15 wells are now on flare with early dewatering commenced.
Gross daily production from the Scotia field grew to 57 TJ/d at the end of the quarter. Production from the field continuesto grow as the reservoir de-pressures.
| Santos Ltd l Third Quarter Activities Report l 18 October 2018 | | Page 7 of 15 |
Production from the Arcadia field remained steady. The next phase of development for Arcadia Valley was sanctionedduring the quarter with first production expected in late 2019.
Santos’ share of production from the non-operated Combabula and Spring Gully fields was 41 TJ/day.91 wells were drilled across the GLNG acreage in the third quarter and activity remains on schedule to drill about 300
wells in 2018. 47 development wells were drilled across Santos’ non-operated Eastern Queensland acreage in thequarter.
PNG
| Santos share | Units | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| LNG1 | 000 t | 303.5 | 203.4 | 285.7 | 687.8 | 818.6 |
| Condensate | 000 bbls | 327.3 | 252.1 | 503.3 | 829.4 | 1,230.3 |
| Crude oil | 000 bbls | 2.7 | 1.9 | 1.4 | 8.0 | 11.9 |
| Total sales volume | mmboe | 3.2 | 2.1 | 3.2 | 7.3 | 9.0 |
| Total sales revenue | US$million | 191 | 115 | 139 | 406 | 387 |
| Sales gas to LNG1 | PJ | 17.8 | 13.3 | 17.1 | 41.5 | 48.9 |
| Condensate | 000 bbls | 378.9 | 286.8 | 384.9 | 887.0 | 1,119.8 |
| Crude oil | 000 bbls | 3.7 | 2.2 | 4.6 | 8.7 | 15.0 |
| Total production | mmboe | 3.4 | 2.6 | 3.3 | 8.0 | 9.5 |
| Capital expenditure | US$million | 16 | 9 | 6 | 31 | 22 |
Includes SE Gobe
| PNG LNG operational data (gross) | Units | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| Sales gas to LNG plant | PJ | 133 | 99 | 128 | 310 | 368 |
| Condensate1 | 000 bbls | 2,818 | 2,125 | 2,832 | 6,579 | 8,276 |
| Sales gas (SE Gobe)2 | PJ | 2 | 1 | 5 | 5 | 13 |
| LNG cargoes shipped | | 31 | 18 | 29 | 69 | 82 |
Measured at the Kutubu entry point.
Purchased by PNG LNG.
PNG LNG sales volumes and production were higher than the prior quarter following the impact of a severeearthquake in the first-half. Full production resumed in April and during the third quarter, PNG LNG achieved recorddaily rates equivalent to annualised rates of approximately 9.2 mtpa, primarily through compressor optimisation.
PNG LNG expansion opportunities continue to be progressed with a farm-in proposal to PRL 3 (P’nyang) undernegotiation.
Santos along with the other PNG LNG parties and the Papua LNG Joint Venture are also continuing discussions to buildalignment for the proposed construction of three additional LNG trains at the PNG LNG site, with two trains to process
gas from the Papua LNG project and one train for the planned PNG LNG expansion.
| Santos Ltd l Third Quarter Activities Report l 18 October 2018 | | Page 8 of 15 |
Northern Australia
| Santos share | Units | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| LNG | 000 t | 91.6 | 44.8 | 72.9 | 249.9 | 255.0 |
| Condensate | 000 bbls | 54.3 | 44.5 | 59.8 | 207.2 | 380.9 |
| LPG | 000 t | 3.6 | (0.8) | 12.8 | 12.0 | 26.7 |
| Total sales volume | mmboe | 1.0 | 0.4 | 0.8 | 2.7 | 3.0 |
| Total sales revenue | US$million | 51 | 28 | 34 | 127 | 112 |
| Sales gas to LNG | PJ | 5.1 | 2.5 | 4.0 | 13.8 | 14.1 |
| Condensate | 000 bbls | 66.3 | 34.0 | 69.4 | 210.0 | 355.7 |
| LPG | 000 t | 4.4 | 2.5 | 7.7 | 13.7 | 24.9 |
| Total production | mmboe | 1.0 | 0.5 | 0.8 | 2.7 | 2.9 |
| Capital expenditure | US$million | 24 | 20 | 12 | 53 | 56 |
| Darwin LNG / Bayu-Undan operational data (gross) | Units | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| LNG | 000 t | 934 | 540 | 715 | 2,422 | 2,413 |
| Sales gas to LNG plant | PJ | 57 | 34 | 43 | 148 | 146 |
| Condensate | 000 bbls | 808 | 535 | 1,345 | 2,347 | 4,307 |
| LNG cargoes shipped | | 14 | 9 | 11 | 38 | 37 |
Darwin LNG sales volumes and production were higher than the prior quarter following a scheduled one-month BayuUndan/Darwin LNG shutdown in May.
The Bayu Undan Infill Well project is advancing ahead of schedule and under budget. The first well (W12-ST1) wasdelivered ahead of schedule with better condensate yield and reservoir quality than expected and is currently producingat a rate of about 150 mmscf/d. The second well, DS05, was completed ahead of schedule and cleaned up at 150mmscf/d with first gas expected in early November once subsea tie-in activities are completed. The third well, D10, iscurrently being drilled.
Following FEED entry in April 2018, a final investment decision on the Barossa project to backfill Darwin LNG is targetedtowards the end of 2019. The FPSO design competition between Modec and the TechnipFMC/Samsung consortium isprogressing well. The successful development of Barossa would extend the operating life of Darwin LNG for more than20 years and deliver ~9mmboe average annual net production to Santos.
| Santos Ltd l Third Quarter Activities Report l 18 October 2018 | | Page 9 of 15 |
Western Australia
| Santos share | Units | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| Sales gas | PJ | 13.5 | 14.9 | 14.6 | 42.3 | 40.0 |
| Condensate | 000 bbls | 193.8 | 146.4 | 16.8 | 517.6 | 219.2 |
| Crude oil | 000 bbls | 110.0 | 139.5 | 314.4 | 549.8 | 985.0 |
| Total sales volume | mmboe | 2.6 | 2.9 | 2.9 | 8.3 | 8.1 |
| Total sales revenue | US$million | 82 | 81 | 75 | 250 | 228 |
| Sales gas | PJ | 12.9 | 14.6 | 13.7 | 40.9 | 37.6 |
| Condensate | 000 bbls | 165.8 | 163.3 | 119.6 | 473.4 | 344.7 |
| Crude oil | 000 bbls | 118.3 | 151.9 | 342.3 | 594.0 | 1,031.0 |
| Total production | mmboe | 2.5 | 2.8 | 2.8 | 8.1 | 7.8 |
| Capital expenditure | US$million | 11 | 15 | 18 | 29 | 53 |
Includes Western Australia oil assets. The comparative periods have been restated accordingly.
Sales gas production volumes were lower than the prior quarter due to the timing of customer demand.Condensate sales volumes were higher than the prior quarter due to the timing of liftings.Crude oil sales volumes and production were lower than the prior quarter due to the Mutineer-Exeter/Fletcher Finucanefields ceasing production during the second quarter as planned.
Asia
| Santos share | Units | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| Sales gas | PJ | 3.0 | 4.2 | 5.0 | 11.5 | 17.3 |
| Condensate | 000 bbls | 0.9 | 2.4 | 2.5 | 5.7 | 3.8 |
| Crude oil | 000 bbls | 420.6 | 628.6 | 650.0 | 1,651.2 | 1,883.1 |
| Total sales volume | mmboe | 0.9 | 1.4 | 1.6 | 3.6 | 4.9 |
| Total sales revenue | US$million | 47 | 70 | 64 | 181 | 194 |
| Sales gas | PJ | 3.3 | 4.2 | 5.1 | 11.7 | 17.6 |
| Condensate | 000 bbls | 1.8 | 2.5 | 2.3 | 6.7 | 8.2 |
| Crude oil | 000 bbls | 433.9 | 632.6 | 585.2 | 1,715.7 | 1,853.3 |
| Total production | mmboe | 1.0 | 1.4 | 1.5 | 3.8 | 5.0 |
| Capital expenditure | US$million | 3 | 3 | 8 | 7 | 17 |
As at 1 January 2018, the ‘Other’ reporting segment was restructured to comprise Santos’ Asian assets only. New South Wales entered the core portfolio andis now reported under the segment ‘Queensland and NSW’ and WA Oil is now reported under the segment ‘Western Australia’. The comparative periods havebeen restated accordingly.
Santos announced in May 2018 the sale of its non-core Asian portfolio to Ophir Energy plc.The completion of the sale of the producing assets occurred on 6 September 2018. Santos received cash proceeds of
US$144 million at completion, which represented the sale price of US$221 million after standard adjustments includingnet free cash flows generated by the assets and received by Santos from the transaction effective date of 1 January2018 through to completion.
| Santos Ltd l Third Quarter Activities Report l 18 October 2018 | | Page 10 of 15 |
Corporate, exploration and eliminations
| Santos share | Units | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| Total sales volume | mmboe | 1.2 | 1.3 | 1.7 | 3.7 | 4.3 |
| Total sales revenue | US$million | 37 | 62 | 81 | 160 | 192 |
| Capital expenditure | US$million | 6 | 9 | 39 | 29 | 56 |
Sales volumes and revenues in the corporate segment primarily represents gas trading activities. Capital expenditureprimarily represents exploration and evaluation activities not recorded against assets.
Capital expenditure
Total exploration, evaluation and development expenditure is summarised in the table below.
| US$million | Q3 2018 | Q2 2018 | Q3 2017 | 2018 YTD | 2017 YTD |
| Development and other capex (including restoration) | 132 | 135 | 127 | 378 | 322 |
| Capital expenditure excl capitalised interest | 181 | 167 | 188 | 487 | 478 |
| Capitalised interest | (0) | 2 | 1 | 3 | 5 |
| Total capital expenditure1 | 181 | 169 | 188 | 490 | 483 |
| Exploration and evaluation expensed | | | | | |
| Total current year expenditure | 17 | 25 | 18 | 62 | 66 |
| Write-off of amounts capitalised in prior years | - | - | 1 | - | 5 |
Includes acquisition of exploration assets
| Santos Ltd l Third Quarter Activities Report l 18 October 2018 | | Page 11 of 15 |
Exploration and appraisal activity
CooperDuring the quarter, five near field exploration wells and three appraisal wells were drilled. The exploration programhas resulted in three new field discoveries.
An eight well appraisal drilling campaign has commenced at Moomba South to delineate a large existing contingentgas resource in the Patchawarra Formation, and to test the prospective potential of an underlying Tirrawarra resourceopportunity. The first of these appraisals, Moomba 229, is currently being cased and suspended for future productiontesting.
Eastern QueenslandThe ATP-1191-P Mahalo permit Mira pilot was shut-in after 10 months of testing. The Mira-2/6 SIS well pair reached amaximum gas rate of 1.4 mmscf/d, exceeding expectations. The Mahalo JV is working towards further appraisaldrilling and testing in 2018/19 to confirm a promising coal seam gas resource.
Northern AustraliaThe acquisition of the Beehive 3D seismic survey was completed. A decision will be made during 2019 on whether toexercise the option to farm-in to exploration permit WA-488-P and drill the Beehive-1 exploration well.
Planning to recommence exploration/appraisal activities in the McArthur Basin in the 2019 dry season is continuing.These activities are subject to regulatory approval.
PNGBarikewa-3 well intersected 25 metres of net gas pay within the Toro and Hedinia reservoir objectives. The reservoirquality exceeding pre-drill expectations. A drill-stem test was conducted across the Toro interval and the well flowedat 35 mmscf/d on a 68/64” choke. Refer ASX release 8 August 2018.
The Muruk-2 appraisal well is on schedule to spud in the fourth quarter.
| Santos Ltd l Third Quarter Activities Report l 18 October 2018 | | Page 12 of 15 |
Drilling summary
Near-field exploration (NFE) / Appraisal wells
Cooper Basin oilWell name
| Well name | Basin/area | Santos | Well status |
| Steggles 1 | QLD | 70% | C&S, successful |
Cooper Basin gasWell name
| Well name | Basin/area | Santos | Well status |
| Aztec 1 | QLD | 60.06% | C&S, successful |
| Bearcat 1 | QLD | 60.06% | C&S, successful |
| Coonaberry 4 | QLD | 60.06% | C&C, successful |
| Tillamook 1 | QLD | 60.06% | Drilling |
| Aroona 2 | SA | 66.6% | C&S, successful |
| Moomba 229 | SA | 66.6% | Drilling |
| Papua New Guinea gas |
| Well name | Basin/area | Santos | Well status |
| Barikewa 3#* | Gulf Province PNG | 40% | P&A gas discovery, successful |
#
Not operated by Santos* Spud in Q2, completed in Q3
Development wells
Cooper Basin oilWell name
| Well name | Basin/area | Santos | Well status |
| Cocinero 9 (Hz) | QLD | 55% | C&S, successful |
Hz - Horizontal
Cooper Basin gasWell name
| Well name | Basin/area | Santos | Well status |
| Bagundi 7 | SA | 66.6% | C&S, successful |
| Big Lake 144 | SA | 66.6% | C&S, successful |
| Big Lake 145 | SA | 66.6% | C&S, successful |
| Big Lake 146 | SA | 66.6% | C&S, successful |
| Big Lake 147 | SA | 66.6% | Drilling |
| Kidman 11 | SA | 66.6% | C&S, successful |
| Kidman 12 | SA | 66.6% | C&S, successful |
| Kidman North 5 | SA | 66.6% | P&A |
| Moomba 217 | SA | 66.6% | C&S, successful |
| Moomba 218 | SA | 66.6% | C&S, successful |
| Moomba 219 | SA | 66.6% | C&S, successful |
| Moomba 220 | SA | 66.6% | C&S, successful |
Northern Australia gasWell name
| Well name | Basin/area | Santos | Well status |
| Bayu Undan D10# | Bonaparte | 11.49% | Drilling |
| Bayu Undan DS05# | Bonaparte | 11.49% | C&C, successful |
| Bayu Undan W12ST1#* | Bonaparte | 11.49% | C&C, successful |
#
Not operated by Santos* Spud in Q2, completed in Q3
Queensland - GLNG gasWell name
| Well name | Basin/area | Santos | Well status |
| Sunnyholt 16 | Arcadia | 30% | C&S, successful |
| Sunnyholt 18 | Arcadia | 30% | C&S, successful |
| Sunnyholt 19 | Arcadia | 30% | C&S, successful |
| Sunnyholt 20 | Arcadia | 30% | C&S, successful |
| Sunnyholt 21 | Arcadia | 30% | C&S, successful |
| Sunnyholt 25 | Arcadia | 30% | C&S, successful |
| Tarcoola Station 6 | Arcadia | 30% | C&S, successful |
| Tarcoola Station 7 | Arcadia | 30% | C&S, successful |
| Tarcoola Station 8 | Arcadia | 30% | C&S, successful |
| Tarcoola Station 9 | Arcadia | 30% | C&S, successful |
| Tarcoola Station 10 | Arcadia | 30% | C&S, successful |
| Tarcoola Station 11 | Arcadia | 30% | C&S, successful |
| Tarcoola Station 12 | Arcadia | 30% | C&S, successful |
| Santos Ltd l Third Quarter Activities Report l 18 October 2018 | | Page 13 of 15 |
| Tarcoola Station 13 | Arcadia | 30% | C&S, successful |
| Tarcoola Station 14 | Arcadia | 30% | C&S, successful |
| Tarcoola Station 15 | Arcadia | 30% | C&S, successful |
| Tarcoola Station 16 | Arcadia | 30% | C&S, successful |
| Tarcoola Station 17 | Arcadia | 30% | C&S, successful |
| FV11-49-21 | Fairview | 23.85% | C&C, successful |
| FV11-75-21* | Fairview | 23.85% | C&S, successful |
| FV11-75-22 | Fairview | 23.85% | C&C, successful |
| FV11-84-1* | Fairview | 23.85% | C&S, successful |
| FV11-85-1* | Fairview | 23.85% | C&S, successful |
| FV11-86-1* | Fairview | 23.85% | C&C, successful |
| FV11-88-1* | Fairview | 23.85% | C&S, successful |
| FV12-44-1* | Fairview | 23.85% | C&S, successful |
| FV12-48-1 | Fairview | 23.85% | C&S, successful |
| FV12-48-2 | Fairview | 23.85% | C&S, successful |
| FV12-48-3 | Fairview | 23.85% | C&S, successful |
| FV12-52-1 | Fairview | 23.85% | C&S, successful |
| FV12-54-1 | Fairview | 23.85% | C&S, successful |
| FV12-56-1 | Fairview | 23.85% | C&C, successful |
| FV13-26-1* | Fairview | 23.85% | C&S, successful |
| FV13-33-1* | Fairview | 23.85% | C&S, successful |
| FV13-67-1* | Fairview | 23.85% | C&S, successful |
| FV16-55-1 | Fairview | 23.85% | C&S, successful |
| FV16-56-1 | Fairview | 23.85% | C&S, successful |
| FV16-57-1 | Fairview | 23.85% | C&S, successful |
| FV16-58-1 | Fairview | 23.85% | C&S, successful |
| FV18-44-1 | Fairview | 23.85% | C&S, successful |
| FV18-47-1* | Fairview | 23.85% | C&S, successful |
| FV18-48-1 | Fairview | 23.85% | C&C, successful |
| FV18-55-1* | Fairview | 23.85% | C&S, successful |
| FV18-57-1* | Fairview | 23.85% | C&S, successful |
| FV18-58-1* | Fairview | 23.85% | C&S, successful |
| RM49-16-1 | Roma | 30% | C&S, successful |
| RM49-17-1 | Roma | 30% | C&S, successful |
| RM49-18-1 | Roma | 30% | C&S, successful |
| RM49-19-1 | Roma | 30% | C&S, successful |
| RM49-20-1 | Roma | 30% | C&S, successful |
| RM49-21-1 | Roma | 30% | C&S, successful |
| RM49-24-1 | Roma | 30% | C&S, successful |
| RM49-25-1 | Roma | 30% | C&S, successful |
| RM49-26-1 | Roma | 30% | C&S, successful |
| RM49-27-1 | Roma | 30% | C&S, successful |
| RM49-28-1 | Roma | 30% | C&S, successful |
| RM49-29-1 | Roma | 30% | C&C, successful |
| RM49-30-1 | Roma | 30% | C&S, successful |
| RM49-31-1 | Roma | 30% | C&S, successful |
| RM49-32-1 | Roma | 30% | C&S, successful |
| RM49-37-1 | Roma | 30% | C&S, successful |
| RM49-38-1 | Roma | 30% | C&S, successful |
| RM49-39-1 | Roma | 30% | C&S, successful |
| RM49-40-1 | Roma | 30% | C&S, successful |
| RM49-41-1 | Roma | 30% | C&S, successful |
| RM49-42-1 | Roma | 30% | C&S, successful |
| RM49-43-1 | Roma | 30% | C&S, successful |
| RM49-44-1 | Roma | 30% | C&S, successful |
| RM49-49-1 | Roma | 30% | C&S, successful |
| RM49-50-1 | Roma | 30% | C&S, successful |
| RM49-51-1 | Roma | 30% | C&S, successful |
| RM49-52-1 | Roma | 30% | C&S, successful |
| RM49-53-1 | Roma | 30% | C&S, successful |
| RM49-54-1 | Roma | 30% | C&S, successful |
| RM49-55-1 | Roma | 30% | C&S, successful |
| RM49-56-1 | Roma | 30% | C&C, successful |
| RM49-62-1 | Roma | 30% | C&S, successful |
| RM49-64-1 | Roma | 30% | C&S, successful |
| RM49-65-1 | Roma | 30% | C&S, successful |
| RM49-66-1 | Roma | 30% | C&C, successful |
| RM49-67-1 | Roma | 30% | C&C, successful |
| RM49-73-1 | Roma | 30% | C&S, successful |
| RM49-76-1 | Roma | 30% | C&C, successful |
| RM49-85-1 | Roma | 30% | C&S, successful |
| RM49-86-1 | Roma | 30% | C&S, successful |
| RM49-87-1 | Roma | 30% | C&S, successful |
| RM49-96-1 | Roma | 30% | C&S, successful |
| RM50-61-1 | Roma | 30% | C&C, successful |
| Collingwood 1 | Scotia | 30% | C&S, successful |
| Collingwood 2 | Scotia | 30% | C&S, successful |
| Collingwood 3 | Scotia | 30% | C&S, successful |
| Collingwood 5 | Scotia | 30% | C&S, successful |
| Collingwood 6 | Scotia | 30% | C&S, successful |
| Collingwood 8 | Scotia | 30% | C&S, successful |
| Collingwood 9 | Scotia | 30% | C&S, successful |
| Collingwood 10 | Scotia | 30% | C&S, successful |
| Collingwood 11 | Scotia | 30% | C&S, successful |
| Collingwood 12 | Scotia | 30% | C&S, successful |
| Collingwood 13 | Scotia | 30% | C&S, successful |
| Collingwood 14 | Scotia | 30% | C&S, successful |
| Collingwood 15 | Scotia | 30% | C&S, successful |
| Collingwood 16 | Scotia | 30% | C&S, successful |
| Collingwood 17 | Scotia | 30% | C&S, successful |
| Scotia 48 | Scotia | 30% | C&S, successful |
* Spud in Q2, completed in Q3
| Santos Ltd l Third Quarter Activities Report l 18 October 2018 | | Page 14 of 15 |
Queensland - Eastern Queensland gas (EQ)Well name
| Well name | Basin/area | Santos | Well status |
| Pine Hills 298# | Combabula | 7.28% | C&S, successful |
| Pine Hills 324# | Combabula | 7.28% | C&S, successful |
| Pine Hills 325# | Combabula | 7.28% | C&S, successful |
| Pine Hills 326# | Combabula | 7.28% | C&S, successful |
| Pine Hills 327# | Combabula | 7.28% | C&S, successful |
| Pine Hills 331# | Combabula | 7.28% | C&S, successful |
| Pine Hills 332# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 29# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 183# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 184# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 209# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 210# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 211# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 213# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 214# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 216# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 217# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 219# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 239# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 240# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 243# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 245# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 246# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 247# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 248# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 249# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 272# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 274# | Combabula | 7.28% | C&S, successful |
| Reedy Creek 275# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 4# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 9# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 10# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 11# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 12# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 13# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 14# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 15# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 22# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 23# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 24# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 29# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 30# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 31# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 32# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 49# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 50# | Combabula | 7.28% | C&S, successful |
| Reedy Creek South 51# | Combabula | 7.28% | C&S, successful |
#
Not operated by Santos
Seismic activity
The table below details seismic activity during the quarter and status.
| Permit | Basin/area | Survey | Type | km/km2 | Status |
| NTP85, NTP2 | Bonaparte | Bethany 3D Offshore | 3D | 334 km2 of 4,365 km2 | 100% complete |
| WA-488-P | Bonaparte | Beehive 3D Offshore | 3D | 697 km2 of 697 km2 | 100% complete |
| Santos Ltd l Third Quarter Activities Report l 18 October 2018 | | Page 15 of 15 |
Abbreviations and conversion factors
| Abbreviations | | Conversion factors |
| C&C | | cased and completed | | Sales gas and ethane, 1 PJ | | 171.937 boe x 10? |
| C&S | | cased and suspended | | Crude oil, 1 barrel | | 1 boe |
| gas | | coal seam gas | | Condensate, 1 barrel | | 0.935 boe |
| DES | | delivered ex ship | | LPG, 1 tonne | | 8.458 boe |
| FPSO | | floating production, storage and offloading | | LNG, 1 PJ | | 18,040 tonnes |
| GJ | | Gigajoules | | LNG, 1 tonne | | 52.54 mmBtu |
| LPG | | liquefied petroleum gas | | | | |
| mmboe | | million barrels of oil equivalent | | | | |
| mmBtu | | million British thermal units | | | | |
| mmscf | | million standard cubic feet | | | | |
| mtpa | | million tonnes per annum | | | | |
| NFE | | near-field exploration | | | | |
| PSC | | production sharing contract | | | | |
Disclaimer
This report contains forward looking statements that are subject to risk factors associated with the oil and gas industry. It is believed that theexpectations reflected in these statements are reasonable, but they may be affected by a range of variables which could cause actual results ortrends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, geotechnical factors, drilling andproduction 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 conditionsin various countries, approvals and cost estimates.
All references to dollars, cents or $ in this document are to United States currency, unless otherwise stated.
