SANTOS LIMITED — Interim / Quarterly Report 2019

Aug 21, 2019

ASX / Media Release

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22 August 2019

Santos reports record interim underlying profit of $411 million and 71% increase in interim dividend

Half-year (US$m)	2019	2018	Change
Product sales	1,974	1,680	18%
EBITDAX1	1,260	883	43%
Underlying profit1	411	217	89%
Net profit/(loss) after tax	388	104	273%
Free cash flow1	638	367	74%
Interim dividend (UScps)	6.0	3.5	71%

Santos today announced its half-year results for 2019, reporting both record EBITDAX and underlying profit.

The Board has resolved to pay an interim dividend of US6.0 cents per share fully-franked, an increase of 71% over the previous interim dividend. The dividend is in-line with Santos’ sustainable dividend policy which targets a range of 10% to 30% payout of free cash flow.

Santos Managing Director and Chief Executive Officer Kevin Gallagher said: “Today’s announcement of half-year results demonstrates the strength of our cash-generative operating model and the successful integration of the Quadrant acquisition.”

“Santos has delivered strong interim financial results with EBITDAX[1] up 43% to a record US$1.3 billion and free cash flow[1] up 74% to US$638 million. Underlying profit[1] after tax increased by 89% to a record US$411 million.

“Consistent application of our disciplined operating model continues to deliver cost reductions and efficiencies, with normalised production costs[2] down 5% to US$7.27/boe.

“Our forecast free cash flow breakeven oil price for 2019 is now reduced to ~US$31 per barrel, in-line with 2018 notwithstanding higher capex this year. Every US$10 per barrel increment in average oil price above our free cash flow breakeven increases annual free cash flow by between US$300 million to US$350 million.

“Today’s results also demonstrate the successful integration of our Western Australian business following the acquisition of Quadrant. We are today increasing guidance on combination synergies to between US$50 and $60 million per annum.

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

Investor enquiries Andrew Nairn +61 8 8116 5314 / +61 (0) 437 166 497 andrew.nairn@santos.com

Media enquiries Daniela Ritorto +61 8 8116 5167 / +61 (0) 455 319 770 daniela.ritorto@santos.com

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“Strong free cash flows also underpin our brownfield growth strategy, including Dorado where successful appraisal during the first half has resulted in a 68% increase in gross 2C resources to 310 million barrels of oil equivalent. Santos has an 80% interest in Dorado.

“I am also pleased with the progress we are making toward FID on Barossa, including the award of major contracts and exclusive negotiations for the supply of backfill gas to Darwin LNG.

“We are in advanced discussions with a number of LNG buyers on firm offers for Barossa offtake volumes.

“In PNG, our signing of a binding letter of intent to farm-in to PRL 3 (P’nyang) marked an important milestone towards expansion of the PNG LNG plant. We look forward to working with our partners and the PNG Government to make expansion a reality.

“In the Cooper Basin, our focus on low-cost, efficient operations contributed to stronger first-half production and the highest number of wells drilled in 12 years. The Cooper Basin is now positioned to grow production and reserves.

“At GLNG, our disciplined operating model continues to support a development plan to unlock more gas over time. In the first half of 2019, we drilled a record 189 wells and progressed the Roma East and Arcadia upstream developments on schedule. GLNG remains on track to meet the six million tonne annualised LNG sales run-rate (including LNG volumes redirected to the domestic market) by the end of 2019.

“All of this growth activity is consistent with reaching our goal of more than 100 million barrels of oil equivalent production by 2025.

“This growth is enabled by our strong balance sheet and balanced asset portfolio, which provides sustainable free cash flow through the oil price cycle,” Mr Gallagher said.

Interim dividend

The Board has resolved to pay a 2019 interim dividend of US6.0 cents per share fully-franked, in line with the company’s sustainable dividend policy which targets a range of 10% to 30% payout of free cash flow.

The interim dividend will be paid on 26 September 2019 to registered shareholders as at the record date of 28 August 2019.

Santos dividends are determined and declared in US dollars and paid to shareholders in Australian dollars. Currency conversion for the interim dividend will be based on the exchange rate on the record date of 28 August 2019. The Dividend Reinvestment Plan will not be offered for the 2019 interim dividend.

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Conference call and live webcast

Santos will host a conference call and live webcast for analysts and investors today at 11:00am AEST.

Dial-in numbers for the conference call are listed below. Please quote passcode ID: 10000888 .

For locations within Australia dial toll-free 1800 558 698 or toll 02 9007 3187.

For other countries, please use one of the following toll-free numbers: Canada (1 855 336 4664); China (4001 200 641); Hong Kong (800 906 986); India (0008 0010 08069); Japan (005 3116 1306); New Zealand toll free (800 480 392); Singapore (800 852 3140); United Kingdom (0808 168 3761); United States (1 855 336 4664). For all other countries or operator assistance, please call +61 2 9007 3187.

The webcast will be available on Santos’ website from 11:00am AEST at www.santos.com.

Ends.

1 EBITDAX (earnings before interest, tax, depreciation, depletion, exploration, evaluation and impairment), underlying profit and free cash flow (operating cash flows less investing cash flows net of acquisitions and disposals) are non-IFRS measures that are presented to provide an understanding of the performance of Santos’ operations. Underlying profit excludes the impacts of asset acquisitions, disposals and impairments, commodity hedging as well as items that are subject to significant variability from one period to the next. The non-IFRS financial information is unaudited however the numbers have been extracted from the financial statements which have been subject to review by the Company’s auditor. A reconciliation between net profit after tax and underlying profit is provided in the Appendix of the 2019 Half-year results presentation released to ASX on 22 August 2019. 2 Excluding the impact of shutdowns and PNG LNG earthquake recovery costs.

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~~Santos 2019 Half-year results~~

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22 August 2019

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Disclaimer and im ortant notice p

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This presentation contains forward looking statements that are subject to risk factors associated with the oil and gas industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, geotechnical factors, drilling and production 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 conditions in various countries, approvals and cost estimates.

All references to dollars, cents or $ in this document are to United States currency, unless otherwise stated.

Underlying profit, EBITDAX (earnings before interest, tax, depreciation, depletion, exploration, evaluation and impairment) and free cash flow (operating cash flows, less investing cash flows net of acquisitions and disposals and major growth capex, less lease liability payments) are non-IFRS measures that are presented to provide an understanding of the performance of Santos’ operations. The non-IFRS financial information is unaudited however the numbers have been extracted from the financial statements which have been subject to review by the Company’s auditor.

Refer to slide 42 for cautionary statement regarding Dorado contingent resources estimates contained in this presentation.

Cover image: Noble Tom Prosser rig at Dorado appraisal, Bedout Basin, offshore Western Australia

Santos 2019 Half-year results

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2019 Half- ear hi hli hts y g g

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Quadrant Energy acquisition and disciplined operating model drive record first-half earnings

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FREE CASH FLOW [1] REPORTED NPAT UNDERLYING NPAT
112%
74% 273% 89%
$638 $388 $411
million million million
SALES REVENUE EBITDAX INTERIM DIVIDEND
18% 43% 71%
$1,974 1,260 6
million million US cents per share
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1 Operating cash flows less investing cash flows (net of acquisitions and disposals and major growth capex) less lease liability payments

Santos 2019 Half-year results

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Safet and environment y

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Santos is committed to being the safest oil and gas operator in Australia and preventing harm to people and the environment

Injury frequency rates vs activity levels

Loss of containment incidents

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Rate per million hours worked No of onshore wells
1.0 500
0.8 400
0.6 300
0.4 200
0.2 100
0.0 0
2012 2013 2014 2015 2016 2017 2018 Jul 19
Lost time injury frequency rate ≥ Moderate harm frequency rate
LTIFR (LHS) (LHS)
No of onshore wells drilled (RHS) Expect to drill 455-505 onshore
wells in 2019 (RHS)
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Count of Tier 1 and Tier 2
35
30
25
20
15
10
5
0
2012 2013 2014 2015 2016 2017 2018 Jul-19
Tier 1 Tier 2
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• • As activity levels continue to rise, implementation of Santos’ Safety strategy is focused on improving capability and learning
• • Process Safety focus has delivered a decrease in loss of containment incidents in 2019

Santos 2019 Half-year results

4

2019 forecast free cash flow breakeven lowered to ~$31 per barrel

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Diversified and balanced portfolio supportive of strong, sustainable free cash flow through the oil price cycle

Free cash flow[1]

1H19 sales volumes

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mmboe $ million
+74%
638
CPI-linked Oil-linked
gas liquids
& gas 367
~35% 45.2 302
~65%
mmboe
-100
1H16 1H17 1H18 1H19
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• • Portfolio sales volumes balanced between
• • CPI-linked gas contracts – ~35% of 1H19 sales volumes
• • Oil-linked liquids and gas contracts – ~65% of 1H19 sales volumes
• • Strong free cash flow of $638 million, up 74%, following the acquisition of Quadrant Energy
• • All assets free cash flow positive at <US$40/bbl
• • 2019 forecast free cash flow breakeven lowered to ~$31 per barrel
• • In-line with 2018 notwithstanding higher capex in 2019
• • Every $10 per barrel increment in oil price above free cash flow breakeven increases free cash flow by $300-350 million per annum

1 Operating cash flows less investing cash flows (net of acquisitions and disposals and major growth capex) less lease liability payments

Santos 2019 Half-year results

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Continuin to drive lower-cost o erations g p

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Disciplined Operating Model delivering lower cash production costs across the operated assets

Queensland & NSW $/boe

Western Australia

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Western Australia Cooper Basin Queensland & NSW
$/boe $/boe $/boe
-25%
-15%
-9%
10.19
9.32
8.68
7.63 8.17 7.91
5.83 5.77
5.32
2017 2018 1H19 2017 2018 1H19 2017 2018 1H19
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Santos 2019 Half-year results

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Disci lined rowth levera in existin infrastructure p g g g g

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Significant growth milestones achieved across all five core assets in the first-half

WESTERN AUSTRALIA

PAPUA NEW GUINEA

NORTHERN AUSTRALIA

• Dorado-2 appraisal success Significant 2C upgrade

• Corvus-2 confirmed higher liquids content and bigger resource volume than expected

COOPER BASIN

• Moomba South appraisal success

• Targeting >150% RRR in 2019

• Highest number of wells drilled in 12 years

• LOI[1] signed to acquire interest in P’nyang

• Muruk-2 confirmed significant gas discovery; potential to support PNG LNG backfill or expansion

QUEENSLAND & NSW

• GLNG equity gas production >600TJ/d

• Record number of wells drilled

• Gazettal award Eastern Queensland

• Barossa project entered exclusive negotiations with Darwin LNG JV

• Barossa Subsea Production System (SPS) contract awarded

• Environmental approval received for McArthur Basin drilling program

1 Binding Letter of Intent

Santos 2019 Half-year results

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Finance & capital management Anthony Neilson CFO

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Financial disci line p

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Strong financial and operating performance driving shareholder value

• • Underlying NPAT up 89% to $411 million

Record underlying earnings and free cash flow generation

• • Free cash flow up 74% to $638 million + Target forecast free cash flow breakeven[1] lowered to ~$31/bbl notwithstanding increased onshore drilling activity and offshore WA appraisal program

Continued cost out and efficiency gains

• • Normalised unit production costs down 5% to $7.27/boe (excludes major shutdowns and impact of PNG earthquake)
• • Operated asset unit production costs lower
• • Fastest Cooper Basin total well execution of 4.3 days rig release to rig release

Balance sheet supportive of growth strategy

• • Net debt $3,351 million, down 6% on YE18 (includes $359 million AASB 16 Lease liabilities as at 30 June 2019)
• • Gearing ratio 31% at 30 June 2019. Expected to decline to <30% by the end of 2019 + Interim dividend up 71% to US6cps

1 Free cash flow breakeven is the average annual oil price at which cash flows from operating activities (including hedging) equals cash flows from investing activities. Forecast methodology uses corporate assumptions. Excludes one-off restructuring and redundancy costs, asset divestitures and acquisitions, major growth capex and lease liability payments.

Santos 2019 Half-year results

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2019 Half- ear financial sna shot y p

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Underlying profit up 89% to a record $411 million

$ million	1H19	1H18	Change
Product sales revenue	1,974	1,680	18%
EBITDAX	1,260	883	43%
Underlying profit1	411	217	89%
Net profit (loss) after tax	388	104	273%
Operating cash flow	1,051	644	63%
Free cash flow2	638	367	74%
Interim dividend (UScps)	6	3.5	71%

• 1 For a reconciliation of 2019 Half-year net profit to underlying profit, refer to Appendix.

• 2 Operating cash flow less investing cash flows (net of acquisitions and disposals and major growth capex) less lease liability payments.

Santos 2019 Half-year results

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Stron underl in earnin s g y g g

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Underlying profit up 89% to $411 million

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Product sales revenue EBITDAX Underlying profit [1]
$ million $ million $ million
+18% +43% +89%
1,974 1,260 411
1,680
1,449 883
1,191 718 217
491 109
-31
1H16 1H17 1H18 1H19 1H16 1H17 1H18 1H19 1H16 1H17 1H18 1H19
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1 Underlying profit excludes the impacts of asset acquisitions, disposals and impairments, and the impact of hedging.

Santos 2019 Half-year results

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Stron free cash flow eneration g g

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Free cash flow up 74% to $638 million

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Operating cash flow Investing cash flow [1] Free cash flow [1]
$ million $ million $ million
+63% +49% +74%
1,051 (413) 638
(391)
(338)
(277) 367
640 644
302
291
-100
1H16 1H17 1H18 1H19 1H16 1H17 1H18 1H19 1H16 1H17 1H18 1H19
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1 Excludes acquisitions / divestments, major growth capex and lease liability payments.

Santos 2019 Half-year results

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Cash enerative O eratin Model continues to drive value g p g Diversified portfolio delivering EBITDAX growth and strong margins across all assets

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2019 First-half results summary[1]

2019 First-half results summary1	2019 First-half results summary1	2019 First-half results summary1	2019 First-half results summary1	2019 First-half results summary1	2019 First-half results summary1	2019 First-half results summary1
Cooper Basin Qld & NSW PNG Nth Aust WA Santos							+ + + + + +
Total revenue $million	568	522	328	85	437	2,043
Production cost $/boe	7.91	5.32	5.162	21.31	7.63	7.272
Capex $million	130	133	20	17	140	447
EBITDAX $million	291	321	283	50	314	1,260
EBITDAX margin	51%	61%	86%	59%	72%	62%

Total revenue up 18% on 1H18 due to higher LNG prices and volumes with the resumption of full production from PNG LNG following the earthquake in 1H18 and higher gas volumes due to the acquisition of Quadrant Energy

Normalised unit production costs down 5% to $7.27/boe

Capex 46% higher due to the 4-well WA offshore drilling program, including the successful Corvus and Dorado appraisals, and increased activity across the Cooper Basin and GLNG within the disciplined Operating Model

All assets free cash flow positive at <US$40/bbl

EBITDAX up 43% with growth in all assets

All assets have EBITDAX margins >50%

• 1 Corporate segment not shown

2 Normalised for impact of PNG earthquake

Santos 2019 Half-year results

13

Production and sales volumes

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PNG LNG resumes full production and Quadrant acquisition provides significant boost

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Production
mmboe
37.0
31.1
29.5 28.0
1H16 1H17 1H18 1H19
Major shutdown + PNG earthquake impact
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Sales volume
mmboe
45.2
40.9 40.1 38.0
1H16 1H17 1H18 1H19
Own product Third party Major shutdown + PNG earthquake impact
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• • Production volumes were 9 mmboe higher than 1H18, mainly due to the resumption of full production in PNG following the impact of the earthquake and the inclusion of Quadrant Energy. This was partly offset by the sale of the Asian assets in September 2018
• • Sales volumes were 7.2 mmboe higher than 1H18 as a result of the acquisition of Quadrant Energy and PNG LNG resuming full production following the impact of the earthquake
• • 2019 full-year sales volume guidance maintained at 90-97 mmboe
• • 2019 full-year production guidance maintained at 73-77 mmboe

Santos 2019 Half-year results

14

Production costs

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Continued cost discipline. Normalised unit production costs down 5% to $7.27/boe

• • Sustained cost improvement and operating efficiencies
• • Unit upstream production costs $7.37 per boe, down 8%, impacted by PNG LNG earthquake recovery costs in opex
• • Excluding the impact of PNG LNG, normalised unit production costs down 5% to $7.27 per boe
• • Unit upstream production costs lower than YE18 across all operated assets
• • Western Australia $7.63/boe, down 12%
• • Cooper Basin $7.91/boe, down 3%
• • Queensland & NSW $5.32/boe, down 8%
• • 2019 upstream production cost guidance of $7.25-7.75 includes all shutdown and PNG earthquake recovery costs

Upstream unit production costs

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$/boe
-8%
8.45
8.07 8.05
7.37
-5%
$7.62
normalised [1]
$7.27
normalised [1]
2016 2017 2018 1H19
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1 Normalised for impact of planned major maintenance shutdown and PNG earthquake

Santos 2019 Half-year results

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Ca ital ex enditure p p

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2019 guidance lowered to $950-1,050 million

1H19 capital expenditure $447 million[1]

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Corporate & Northern
Exploration $7m Australia $17m
PNG $20m
Western
Australia
$140m
Cooper Basin
$130m
Queensland &
NSW
$133m
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• • Cooper Basin 51 wells
• • Barossa FEED and long-leads
• • GLNG 189 wells
• • NT onshore drilling
• • WA offshore program including Dorado appraisal and Corvus wells

Onshore efficiencies. More wells for less capex per well

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$263m
$218m
240
$188m wells
151
$163m
wells
108
wells
62
wells
1H16 1H17 1H18 1H19
Onshore capex No of onshore
$million wells drilled
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1 Capital expenditure incurred includes abandonment expenditure but excludes capitalised interest

Santos 2019 Half-year results

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Debt and li uidit q y

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Net debt $3,351 million. Ample liquidity of $3,185 million

• • Strong free cash flows. Net debt reduced to $3,351 million (includes $359 million AASB 16 Lease liabilities) as at 30 June

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Cash, debt and undrawn debt facilities
$million
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• • Gearing ratio 31% (including AASB 16) as at 30 June
• • On track to achieve target of <30% gearing by end-2019
• • Ample liquidity in place
• • $1,215 million in cash
• • $1,970 million in committed undrawn debt facilities
• • Portfolio set to deliver growth opportunities and also provides flexibility to divest a minority stake in certain WA assets for value
• • S&P Global Ratings affirmed Santos’ BBB- (stable) long-term issuer credit rating on 19 August 2019, noting that the company’s strong liquidity supports growth prospects

1 Drawn debt includes $359 million AASB 16 Lease liabilities standard adopted 1 January 2019

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31 Dec 2018 30 Jun 2019 [1]
1,316 1,215
-3,391 -3,169
-1,397
-1,474
-1,970
-2,020
Cash Drawn debt
PNG LNG (non-recourse) Undrawn debt
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Santos 2019 Half-year results

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Drawn debt maturit rofile y p

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Successful refinancing occurred during the half. No material near-term maturities

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Drawn debt maturity profile [1] Breakdown of drawn
debt facilities [1]
$million
1,200 Senior unsecured
67%
$2.9 bn
989
900
815
PNG LNG project
finance (non-
600 600 recourse)
490 33%
$1.4 bn
317
300 264 244 253
209
124
+ Weighted average term to
0 - maturity ~5.4 years
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Bank term loans Reg-S Bond ¹ As at 30 June 2019. Excludes leases and derivatives.
Long-term notes ECA supported loan facilities
PNG LNG project finance
Bridge facility
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Drawn debt maturity profile excluding PNG LNG project finance[1]

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$million
1,200
900
815
770
600
600
300 277
180
60 62 68
18 - -
0
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Bank term loans Reg-S Bond
Long-term notes ECA supported loan facilities
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Santos 2019 Half-year results

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Operations review Kevin Gallagher Managing Director & CEO

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Western Australia

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Quadrant Energy acquisition has transformed the scale of our Western Australia asset. Combination synergies guidance increased to $50-60 million per annum

• • Acquisition has provided revenue diversification and increased exposure to high margin, CPI-linked contracts
• • Upstream unit production costs down 12% to $7.63/boe
• • Opportunities to create value through strategic partnering in key assets and ongoing portfolio optimisation
• • Considerable developed gas behind pipe available now if access to new markets can be realised

Corvus-2 gas appraisal well

EBITDAX higher

• $million

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314
129 114
1H17 1H18 1H19
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• • Higher liquids content and significantly bigger resource volume than expected
• • Potential to increase utilisation of Devil Creek or Varanus Island gas plants as well as provide backfill and extend plateau well into the 2030s

Combination synergies

• • Combination synergies tracking ahead of expectations
• • Guidance increased to $50-60 million per annum (pre-tax)[1]

1 Excluding integration and other one-off costs

Production costs lower

$/boe

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10.19
8.68
7.63
2017 2018 1H19
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20

Santos 2019 Half-year results

Dorado resource u rade pg

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Targeting FEED entry early 2020

Dorado gross 2C resource upgrade

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310 mmboe
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628 Bscf
184 mmboe
Gross 2C gas
328 Bscf Gross 2C liquids
158 mmbbl
102 mmbbl
YE18 Jun-19
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Dorado gross & net 2C resource upgrade

		Dec 2018	Jun 2019
Gross	mmboe	184	310	+68%
Net(STO 80%)	mmboe	147	248	+68%

• • Excellent results from Dorado-2 appraisal well
• • High quality reservoirs & fluids encountered
• • Caley formation oil-water contact confirmed
• • Connectivity to Dorado-1 established for all reservoirs
• • Significant growth in volumes since YE2018 estimate after incorporating Dorado-2 data & ongoing reservoir studies
• • 2C liquids increased from 102 to 158 mmbbl (gross)
• • 2C gas increased from 328 to 628 Bscf (gross)
• • Increase in gross P90 liquids from 46 to 107 mmbbl (gross) substantially de-risks development
• • Potential separate recovery and sales of LPG provides opportunity for significant liquids production uplift
• • Key static appraisal uncertainties largely resolved
• • Dorado-3 will provide critical dynamic & fluid data (from well tests) to underpin field development planning and final investment decision

Refer to slide 42 for cautionary statement regarding Dorado contingent resources estimates.

21

Santos 2019 Half-year results

Bedout sub-basin ex loration otential p p

Under-explored basin with substantial running room

• • Dorado discovery proves a world class liquids-rich petroleum system with high quality reservoirs
• • Excellent economics for shallow-water tie-backs to a future Dorado hub
• • Sparsely explored with multiple play types, some of which remain untested
• • Subtle traps require high quality 3D seismic data with stateof-the-art processing
• • Keraudren 3D seismic survey completed during July using world-first acquisition technology
• • Provides high quality data for field development planning & coverage over key exploration prospects
• • Additional 3D seismic planned as early as 2020 to identify more drilling targets

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Frontier Bedout sub-basin. High equity position. Extensive exploration inventory

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Dorado
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Santos 2019 Half-year results

Coo er Basin p

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Embedded and sustainable cost reductions. Further facilities optimisation and efficiencies identified. Activity levels increasing

• • EBITDAX up 27% to $291 million
• • Sustainable cost reductions and greater efficiencies delivered as activity levels continue to increase
• • Upstream unit production costs down 3% to $7.91/boe
• • Well cost discipline maintained; average well cost $2.35m[1]
• • Fastest ever total well execution of 4.2 days, rig release to rig release
• • Expect to drill ~105 wells in 2019

Well cost discipline maintained[1]

$ million

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4.20
2.59
2.37 2.35
2016 2017 2018 1H19
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• • 51 well drilled in 1H19; highest number of wells drilled in 12 years
• • Horizontal drilling of wells set to increase

1 Vertical and deviated gas development wells (drill, stimulate, complete)

Production costs lower

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$/boe
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----- Start of picture text -----

10.71
9.32
8.17 7.91
2016 2017 2018 1H19
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Santos 2019 Half-year results

23

Coo er Basin tar etin >150% reserve re lacement in 2019 p g g p

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Targeting ~17-19 mmboe production by 2025

Production Targeting ~17-19 mmboe by 2025

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Wells drilled 2P reserves replacement ratio Production
Targeting ~105 wells in 2019 Targeting >150% RRR in 2019 Targeting ~17-19 mmboe by 2025
No of wells per year %
Production (LHS)
Prospective resource
Targeting mmboe
2C contingent resource ~105 >150% RRR
2P undeveloped reserves 150 in 2019 20
85
15.5 15.1 15.5
15 14.4
100
60
72%
10
40
50
32% 5
5%
0 0
2016 2017 2018 2019F 2015 2016 2017 2018 2019F 2025F
2016 2017 2018 2019F
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Santos 2019 Half-year results

24

Coo er Basin o ortunit ho er p pp y pp

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Significant hopper of opportunities to increase production and drive value

Moomba South Phase 2

Energy Solutions

• • Field development planning is ongoing, target FID by year-end
• • Carbon capture utilisation and storage (CCUS) project
• • Reserve upgrade expected at year-end
• • Pre-Front End Engineering and Design (FEED) commenced
• • Further opportunities remain in flank areas and the recently discovered Granite Wash play
• • 2 appraisal wells drilled; pressurised cores acquired; analysis ongoing

Barrolka-Durham Downs Phase 1

• • Sanctioned Feb 2019; 17 wells; on budget and schedule
• • First well on-line July 2019
• • Cooper oil beam pump conversion to solar; 22 conversions this year with 34 planned in 2020
• • Port Bonython 2MW solar project online June 2019

Improving equipment uptime

• • Significant potential to grow production by increasing uptime
• • Satellite/compressor/equipment rationalisation
• • Evaluating compression electrification with renewables

Cooper Deep Coal Play

• • Significant prospective resource

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Santos 2019 Half-year results

25

Queensland and NSW

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Cost discipline and efficiency focus maintained GLNG Roma East and Arcadia development projects on-track

Lower average well and production costs

• • Upstream unit production costs down 8% to $5.32/boe
• • Well cost discipline maintained; Roma East average well cost $0.83m[1]
• • Record 189 wells drilled in the first-half
• • Roma East 480-well development on-track; 181 wells online
• • Arcadia field development on-track; 95 of 136 wells drilled; 23 wells online and dewatering

Eastern Queensland

• • ATP 2045 (gazettal PLR2018-1-5) awarded to Santos (50% Operator) / (Shell 50%) Joint Venture

Narrabri Gas Project

• • Moved to the Assessment Phase by the NSW Department of Planning and Environment
• • 100% of Narrabri gas earmarked for the domestic market
• • Gas supply MOUs signed with Perdaman, Brickworks and Weston Energy

Well cost discipline maintained[1]

$ million

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----- Start of picture text -----

3.20
1.60
0.90 0.85 0.83
Roma 2A Roma-2B Roma-3A Roma East Roma East
(2015) (2016) (2017) (2018) (Jul 2019)
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1 Drill, complete, connect

Production costs lower

$/boe

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----- Start of picture text -----

5.83 5.77
5.32
2017 2018 1H19
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1 Drill, complete, connect

26

Santos 2019 Half-year results

GLNG ram -u on track p p

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GLNG on track to meet ~6 Mtpa annualised sales run-rate including LNG volumes redirected to the domestic market by the end of 2019

Building equity gas supply

• • Increasing drilling activity consistent with the Santos disciplined operating model; expect to drill 350-400 wells per annum in 2019
• • Equity gas production growing year-onyear

• On track to ramp-up GLNG sales to ~6 Mtpa run-rate by the end of 2019

• • Including LNG volumes redirected to the domestic market for 2018-19

GLNG ullage to 8.4 Mtpa capacity provides opportunity for organic and inorganic growth

GLNG equity gas production continues to ramp-up

More wells drilled for less capex

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TJ/d gross
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350-400
$212m wells ~630
587
554
305
wells ~$200m
$159m
172
wells
2017 2018 2019F YE 2017 YE 2018 YE 2019F
GLNG capex No of wells drilled
$million
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Santos 2019 Half-year results

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Northern Australia

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Open to growth via significant discovered resource base and existing infrastructure

Barossa backfill to Darwin LNG

• • Barossa project entered exclusive negotiations with the Darwin LNG JV for the supply of backfill gas
• • Subsea production system contract awarded
• • Tender evaluation ongoing for FPSO, gas export pipeline, SURF and drilling rig packages
• • Production Licence application and Field Development Plan well progressed
• • Final investment decision (FID) expected early 2020

Onshore exploration and appraisal

• • Dukas-1 exploration well suspended prior to reaching the primary sub-salt objective due to higher than expected formation pressures
• • The extended drilling time at Dukas-1, combined with the impending commencement of the 2019 wet season in the NT, has led to the deferment of the McArthur Basin drilling program until 2020
• • Plans to conduct a test of the original Tanumbirini-1 well in 2H19 remain on-track

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Santos 2019 Half-year results

28

PNG LNG continued stron roduction g p

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Aligned acreage position in highly prospective region

PNG LNG

• • Continuous optimisation of the facilities has resulted in record daily rates >9 Mtpa annualised

Expansion

• • Binding letter of intent signed to acquire 14.3% interest (pregovernment back-in) in P’nyang (PRL 3)[1]
• • Working with JV partners and PNG Government to finalise farm-in and gas agreement

Muruk-2 appraisal

• • Significant gas resource confirmed 21 kilometres northwest of the Hides production facilities

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• 1 P’nyang (PRL 3) farm-in subject to the execution of a sale and purchase agreement and government approval

Santos 2019 Half-year results

29

Lon -term LNG market d namics remain favourable g y

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Santos’ LNG portfolio well positioned with strong long-term contracts and brownfield backfill and expansion opportunities at DLNG and PNG LNG

Strong contracted LNG position

• • 95% of current LNG volumes sold on long and mid-term contracts

• • Minimal exposure to spot market
• • Price review negotiations limited by contract terms

Santos’ portfolio well-positioned to support LNG demand

• • Low-risk brownfield backfill and expansion opportunities; globally competitive cost of supply
• • Material undeveloped gas resources in close proximity to existing infrastructure
• • Shipping advantage due to proximity to key Asian markets
• • Source of diversification for LNG buyers
• • Renewed interest from buyers for long-term contracts
• • Advanced discussions with a number of LNG buyers for Barossa volumes

Global LNG supply / demand[1]

Mtpa

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600
500
400
300
200
100
0
2015 2020 2025 2030
Operational Under Construction LNG Demand
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1 Source: Wood Mackenzie LNG Tool Q2 2019 data

Santos 2019 Half-year results

30

Supporting east coast gas supply

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Australia’s lowest cost onshore operations focused on increasing production and reserves

• • On track to supply more than 70 PJ of gas into the east coast market in 2019; approximately 14% of demand
• • AEMO has forecast that the east coast domestic market will remain well supplied until 2023
• • Santos’ low-cost onshore operations are well-placed to support the east coast domestic gas market
• • Cooper Basin activity levels increasing; production and reserves replacement forecast to grow
• • Increasingly meeting export commitments with Queensland gas to free up Cooper Basin gas for southern markets
• • GLNG committed to HOA signed with Federal Government to ensure the domestic market remains supplied
• • Santos is supportive of a prospective gas reservation scheme that is complementary to a robust LNG export framework
• • 100% of Narrabri gas earmarked for the domestic market (subject to project approval)
• • Santos participated in recent Queensland domestic gas acreage releases

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Santos 2019 Half-year results

31



    

Summar y

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Low-cost, diversified portfolio generating strong cash flow. Balance sheet supportive of growth strategy and sustainable dividends

Record first-half free cash flow and earnings

2019 forecast free cash flow breakeven reduced to ~$31/bbl Significant Dorado 2C resource upgrade. Material development project

Barossa tracking to early 2020 FID

Binding Letter of Intent signed to farm-in to P’nyang Quadrant Energy integration synergies increased Balance sheet supportive of growth strategy

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
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Santos 2019 Half-year results

32

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Appendix

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Financial erformance p

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EBITDAX up 43% to $1.3 billion. Underlying NPAT up 89% to $411 million

$million	1H19 1H18 Var
Total revenue Production costs Other operating costs Third party product purchases Other1 Foreign exchange gains Fair value (losses) on commodity hedges EBITDAX	2,043 1,727 18% (273) (243) 12% (145) (160) (9%) (403) (426) (5%) 39 4 875% (1) 90 nm - (109) nm
	1,260 883 43%
Exploration and evaluation expense	(28) (45) (38%)
Depreciation and depletion	(460) (328) 40%
Impairment losses	(38) (76) (50%)
Change in future restoration	2 9 (78%)
EBIT	736 443 66%
Net finance costs	(146) (108) 35%
Profit before tax	590 335 76%
Tax (expense)	(202) (231) (13%)
Profit after tax	388 104 273%
Underlying profit	411 217 89%

• • Total revenue up 18% on 1H18 due to higher LNG prices and volumes with the resumption of full production from PNG LNG following the earthquake in 1H18 and higher gas volumes due to the acquisition of Quadrant Energy
• • Lower unit production costs/boe
• • Santos Ltd and majority of subsidiaries changed functional currency from AUD to USD effective 1 January 2019, reducing exposure to FX gains and losses
• • Net impairment charge of $38 million before tax primarily due to reassessment of abandonment liabilities for Barrow Island and Mutineer Exeter in Western Australia
• • Higher net finance costs mainly due to increased interest expense from higher net debt post the acquisition of Quadrant Energy
• • Effective tax rate 34% including PRRT
• • Change in PRRT laws retrospectively eliminating the ability to transfer onshore exploration costs resulted in the derecognition of $10 million in previously recognised deferred tax assets in 1H19

1 Other includes product stock movement, corporate expenses, other expenses, other income and share of profit of joint ventures nm denotes not meaningful

Santos 2019 Half-year results

34

Sales revenue

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Low cost, diversified portfolio buoyed by higher commodity prices

$million	1H19 1H18 Var
Sales Revenue (incl. third party) Gas, ethane and liquefied gas Crude oil Condensate and naphtha Liquefied petroleum gas	1,364 1,114 22% 402 400 1% 161 132 22% 47 34 38%
Total1	1,974 1,680 18%

1 Total product sales include third-party product sales of $475 million (2018: $522 million)

• • Sales revenue up 18% to $2 billion
• • Average realised LNG price up 11% to $9.97/mmBtu
• • Average realised oil price down 4% to $72.11/bbl
• • Santos’ high-quality crudes in Western Australia and the Cooper Basin achieving a strong premium to benchmarks

Average realised crude Average realised LNG price oil price

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75.37 9.97
72.11
8.96
1H18 1H19 1H18 1H19
1H19 sales revenue by asset
Northern Australia
Corporate & Trading
4%
Cooper Basin
5%
27% PNG
17%
21%
26%
Western Australia
Queensland & NSW
US$ per bbl US$ per mmBtu
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1H19 sales revenue by asset

35

Santos 2019 Half-year results

Free cash flow

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Calculation of 2019 first-half free cash flow

$million 1H19	$million 1H19
Operating cash flows	1,051
Deduct Investing cash flows	(359)
Deduct Net acquisitions and disposals	(26)
Deduct Lease liability payments	(42)
Add Major growth capex (Barossa FEED)	14
Free cash flow	638

Lease liability payments as now treated as financing cash flows under AASB 16. To ensure like-for-like comparisons with prior periods, the definition of free cash flow has been updated to operating cash flows less investing cash flows (net of acquisition and disposal payments and major growth capex) less lease liability payments.

Free cash flow is a non-IFRS measure that is presented to provide an understanding of the performance of Santos’ operations. The non-IFRS information is unaudited however the numbers have been extracted from the financial statements which have been subject to review by the Company’s auditor.

Santos 2019 Half-year results

36

Si nificant items g

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Reconciliation of half-year net profit to underlying profit

$million 1H19 1H18	$million 1H19 1H18	$million 1H19 1H18
Net profit/(loss) after tax	388	104
Add/(deduct) significant items after tax
Impairment losses	26	76
Net gains on asset sales	(7)	(39)
Fair value adjustments on derivatives and hedges	4	76
Underlying profit	411	217

Santos 2019 Half-year results

37

Li uidit and net debt as at 30 June 2019 q y

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$3.2 billion in cash and committed undrawn debt facilities

Liquidity ($million)	Liquidity ($million)	30 Jun 2019	31 Dec 2018
Cash		1,215	1,316
Undrawn bilateral bank debt facilities		1,970	2,020
Total liquidity		3,185	3,336
Debt ($million)
Export credit agency supported loan facilities	Senior, unsecured	371	998
Bank term loan facilities	Senior, unsecured	694	1,193
US Private Placement	Senior, unsecured	409	405
Reg-S bond	Senior, unsecured	1,378	786
PNG LNG project finance	Non-recourse, secured	1,397	1,474
Leases	Leases	359	621
Other	Derivatives	(42)	(53)
Total debt		4,566	4,865
Total net debt 1		3,351	3,549

1 Finance leases only as at 31 December 2018. AASB 16 adopted 1 January 2019. Santos 2019 Half-year results

38

2019 Half- ear se ment results summar y g y

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US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Corporate explor’n & elimins Total
Revenue	568	522	328	85	437	103	2,043
Production costs	(61)	(33)	(37)	(35)	(114)	7	(273)
Other operating costs	(41)	(39)	(24)	-	(3)	(38)	(145)
Third party product purchases	(194)	(119)	-	-	-	(90)	(403)
Inter-segment purchases	(1)	(36)	-	-	-	37	-
Product stock movement	22	1	8	(2)	21	-	50
Other income	8	28	12	-	-	7	55
Other expenses	(11)	(3)	(4)	(1)	(28)	(16)	(63)
FX gains and losses	1	-	-	-	1	(3)	(1)
Fair value losses on commodity hedges	-	-	-	-	-	(6)	(6)
Share of profit of joint ventures	-	-	-	3	-	-	3
EBITDAX	291	321	283	50	314	1	1,260

Santos 2019 Half-year results

39

2018 Half- ear se ment results summar y g y

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US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Asia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Asia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Asia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Asia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Asia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Asia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Asia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Asia Corporate explor’n & elimins Total	US$million Cooper Basin Queensland & NSW PNG Northern Australia Western Australia Asia Corporate explor’n & elimins Total
Revenue	529	469	217	75	172	134	131	1,727
Production costs	(63)	(38)	(31)	(40)	(50)	(31)	10	(243)
Other operating costs	(31)	(38)	(22)	-	(8)	(8)	(53)	(160)
Third party product purchases	(200)	(120)	-	-	-	-	(106)	(426)
Inter-segment purchases	(3)	(33)	-	-	-	-	36	-
Product stock movement	-	(5)	2	1	2	(2)	(4)	(6)
Other income	3	54	-	-	10	-	1	68
Other expenses	(7)	(6)	(1)	(2)	(14)	(1)	(28)	(59)
FX gains and losses	1	2	-	-	2	-	85	90
Fair value losses on commodity hedges	-	-	-	-	-	-	(109)	(109)
Share of profit of joint ventures	-	-	-	1	-	-	-	1
EBITDAX	229	285	165	35	114	92	(37)	883

Santos 2019 Half-year results

40

Oil rice hed in p g g

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Oil price hedging provides protection to oil price downside

Open oil price positions	2019	2020
Swaps (barrels)	480,000
Brent fixed swap price ($/bbl)	US$63.23
Re-participating swaps (barrels)1	240,000
Brent fixed swap price ($/bbl)	US$67.39
Brent long call price ($/bbl)	US$76.00
Zero-cost collars (barrels)2	4,734,000
Ceiling ($/bbl)	US$79.83
Floor ($/bbl)	US$51.35
Re-participating 3-Ways (barrels)3		4,180,000
Brent long call price ($/bbl)		US$77.64
Brent short call price ($/bbl)		US$70.00
Brent long putprice($/bbl)		US$55.00

1. When Brent price is below the weighted average long call price, Santos realises fixed swap price. When Brent price is above the call strike price, Santos realises Brent price less the difference between the long call price and the fixed swap price.

2. 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.

3. When Brent price is above the weighted average long call price, Santos realises Brent price less the difference between the long call price and the short call price. When Brent price is between the short call price and long call price, Santos realises short call price. When Brent price is below the long put price, Santos realises long put price.

As at 30 June 2019

Santos 2019 Half-year results

41

Disclaimer and im ortant notice p

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Cautionary statement regarding Dorado contingent resources estimates

Dorado is located in WA-437-P in which Santos is operator and holds an 80% interest. Dorado-1 confirmed the basis of the discovery by demonstrating the existence of a significant quantity of potentially moveable hydrocarbons in the Caley, Baxter Crespin and Milne reservoirs by sampling, testing and logging procedures. Dorado-2 successfully appraised the down-dip extent of the field and reaffirmed the basis of discovery and updated estimates of moveable hydrocarbons with further sampling, testing and logging. Drilling of the Dorado-3 appraisal well was underway as of the date of this presentation and results from the well may alter the estimates contained herein.

In estimating the contingent resources, standard industry techniques combining geophysical and geological modelling and interpretation with reservoir engineering modelling have been applied. 2019 compositional simulation studies have modelled miscible flood with LPG rich gas injection. This provides a gas handling solution and has had a positive impact on the Caley oil recovery factor range and condensate recovery from secondary gas reservoirs (Baxter, Crespin and Milne). There is remaining uncertainty in some of the input parameters and these have been incorporated in the range of outcomes. The key contingencies to prevent classification of reserves are completion of the appraisal program, final development plan and investment decision. Following completion of the Dorado-3 appraisal well, all results will be analysed and expected recoverable volumes reassessed and incorporated into the year-end 2019 annual reserves and resources statement. Firm intention to progress the project will be based on the results of the appraisal program and confirmation of the development concept. Fuel, flare and vent has not been excluded.

Santos prepares its petroleum reserves and contingent resources estimates in accordance with the 2007 Petroleum Resources Management System (PRMS) sponsored by the Society of Petroleum Engineers (SPE). Unless otherwise stated, all references to petroleum reserves and contingent resources quantities in this presentation are Santos’ net share. Reference points for Santos’ petroleum reserves and production are defined points within Santos’ operations where normal exploration and production business ceases, and quantities of produced product are measured under defined conditions prior to custody transfer. Petroleum resources are typically prepared by deterministic methods with support from probabilistic methods.

Conversion factors: 1PJ of sales gas and ethane equals 171,937 boe; 1 tonne of LPG equals 8.458 boe; 1 barrel of condensate equals 0.935 boe; 1 barrel of crude oil equals 1 boe.

All estimates of petroleum reserves and contingent resources reported by Santos are prepared by, or under the supervision of, a qualified petroleum reserves and resources evaluator (QPRRE). References in this presentation to Dorado contingent resources represent an interim estimate as at 30 June 2019. Estimates will be updated as part of the Santos annual reserves process as at 31 December 2019. The estimates of petroleum contingent resources for Dorado in this presentation are based on and fairly represent information and supporting documentation prepared by, or under the supervision of Mr Ian Pedler who is a full time employee of Santos and a member of Society of Petroleum Engineers (SPE). Mr Pedler meets the requirements of QPRRE as defined in Chapter 19 and rule 5.41 of the ASX Listing Rules and consents to the inclusion of this information in the form and context in which they appear in this presentation.

Santos 2019 Half-year results

42