SANTOS LIMITED — Major Shareholding Notification 2017

Jun 26, 2017

Form 603 Corporations Act 2001

Section 671B

Notice of initial substantial holder

To Company Name/Scheme	Santos Limited
ACN/ARSN	007 550 923
1. Details of substantial holder (1)
Name	Santos Limited
ACN/ARSN (if applicable)	007 550 923
The holder became a substantial holder on	26 June 2017

2. Details of voting power

The total number of votes attached to all the voting shares in the company or voting interests in the scheme that the substantial holder or an associate (2) had a relevant interest (3) in on the date the substantial holder became a substantial holder are as follows:

Class of securities (4)	Number of securities	Person's votes (5)	Voting power (6)
Fully paid ordinary shares	318, 192, 274	318.192.724	15.27% (based on2,083,221,296 total ordinaryshares on issue)

3. Details of relevant interests

The nature of the relevant interest the substantial holder or an associate had in the following voting securities on the date the substantial holder became a substantial holder are as follows:

Holder of relevant interest	Nature of relevant interest (7)	Class and number of securities
Santos Limited	Capacity to control, in certaincircumstances, the voting and disposal of (15.108% based on 2,083,221,296 totalshares under an agreement dated 26June 2017 between Santos Limited, ENNHolding Investment Limited, ENNEcological Holdings Co. Limited, UnitedFaith Ventures Limited, ENN GroupInternational Investment Limited, Xinneng(Hong Kong) Energy Investment Limited,John Zhao, Great Multitude Limited,Hony Partners Group LLP, HonyManaging Partners Ltd, Well HonourDevelopments Ltd and ExponentialFuture Group Ltd (see Annexure A) givesSantos Limited a 'relevant interest' in itsown shares under section 608(1) of theCorporations Act (Cth).	314,734,518 fully paid ordinary sharesordinary shares on issue).
Santos Limited	A subsidiary of Santos Limited (SESAPPty Ltd) acts as a trustee of the Santosemployee share schemes which givesSantos Limited a technical 'relevantlinterest' in its own shares under section608(3) of the Corporations Act (Cth).	3,458,206 fully paid ordinary shares(0.166% based on 2,083,221,296 totalordinary shares on issue).

4. Details of present registered holders

The persons registered as holders of the securities referred to in paragraph 3 above are as follows:

Holder of relevantinterest	Registered holder ofsecurities	Person entitled to beregistered as holder (8)	Class and numberof securities140,189,820 ordinaryIshares
Santos Limited	United Faith Ventures Limited	United Faith Ventures Limited
Santos Limited	Citicorp Nominees Pty Ltd	United Faith Ventures Limited	69,544,698 ordinaryIshares
Santos LimitedCiticorp Nominees Pty Ltd		ENN Group InternationalInvestment Limited	5,000,000 ordinaryIshares
Santos Limited	Citicorp Nominees Pty Limited	lGreat Multitude Limited	100,000,000 ordinaryIshares
Santos Limited	SESAP Pty Ltd	SESAP Pty Ltd	3,458,206 ordinaryshares

5. Consideration

The consideration paid for each relevant interest referred to in paragraph 3 above, and acquired in the four months prior to the day that the substantial holder became a substantial holder is as follows

Holder of relevantinterest	Date of acquisition	Consideration (9)		Class and numberof securities
		Cash	Non-cash
Santos Limited	26 June 2017	Nil	N/A	314,734,518 ordinaryIshares
Santos Limited	Various	N/A	N/A	3,458,206 ordinaryIshares

6. Associates

The reasons the persons named in paragraph 3 above are associates of the substantial holder are as follows:

Name and ACN/ARSN (if applicable)	Nature of association

7. Addresses

The addresses of persons named in this form are as follows:

Name	Address
lSantos Limited	Group Floor, 60 Flinders Street, Adelaide, SA 5000

Signature

print name David Lim		capacity	Company Secretary
sign here	~	date	26/June/2017

DIRECTIONS

• $(1)$ If there are a number of substantial holders with similar or related relevant interests (eg. a corporation and its related corporations, or the manager and trustee of an equity trust), the names could be included in an annexure to the form. If the relevant interests of a group of persons are essentially similar, they may be referred to throughout the form as a specifically named group if the membership of each group, with the names and addresses of members is clearly set out in paragraph 7 of the form.
• See the definition of "associate" in section 9 of the Corporations Act 2001. $(2)$
• See the definition of "relevant interest" in sections 608 and 671B(7) of the Corporations Act 2001. $(3)$
• $(4)$ The voting shares of a company constitute one class unless divided into separate classes.
• The total number of votes attached to all the voting shares in the company or voting interests in the scheme (if any) that the person or an associate has a $(5)$ relevant interest in.
• $(6)$ The person's votes divided by the total votes in the body corporate or scheme multiplied by 100.
• $(7)$ Include details of:
  • any relevant agreement or other circumstances by which the relevant interest was acquired. If subsection 671B(4) applies, a copy of any $(a)$ document setting out the terms of any relevant agreement, and a statement by the person giving full and accurate details of any contract, scheme or arrangement, must accompany this form, together with a written statement certifying this contract, scheme or arrangement; and
  • any qualification of the power of a person to exercise, control the exercise of, or influence the exercise of, the voting powers or disposal of the $(b)$ securities to which the relevant interest relates (indicating clearly the particular securities to which the qualification applies).

See the definition of "relevant agreement" in section 9 of the Corporations Act 2001.

• $(8)$ If the substantial holder is unable to determine the identity of the person (eg. if the relevant interest arises because of an option) write "unknown."
• $(9)$ Details of the consideration must include any and all benefits, moneys and other, that any person from whom a relevant interest was acquired has, or may, become entitled to receive in relation to that acquisition. Details must be included even if the benefit is conditional on the happening or not of a contingency. Details must be included of any benefit paid on behalf of the substantial holder or its associate in relation to the acquisitions, even if they are not paid directly to the person from whom the relevant interest was acquired.

ANNEXURE 'A'

This is Annexure 'A' of 4 pages referred to in the Form 603 (Notice of Initial Substantial Holder), signed by me and dated 26 June 2017.

The copy of the agreement attached is a true copy of the subscription agreement.

. . . . . . . . . . . . . . . . . . .

Signed: David LimSigned: David LimCompany Secretary

603 GUIDE page 1/1 13 March 2000

GUIDE

This guide does not form part of the prescribed form and is included by ASIC to assist you in completing and lodging form 603.

Signature	This form must be signed by either a director or a secretary of the substantial holder.
Lodging period	Nil
Lodging Fee	Nil
Other forms to becompleted	Nil
Additional information	If additional space is required to complete a question, the information may be included on a separate piece of(a)paper annexed to the form.This notice must be given to a listed company, or the responsible entity for a listed managed investment scheme.(b)A copy of this notice must also be given to each relevant securities exchange.The person must give a copy of this notice:(c)within 2 business days after they become aware of the information; or(i)by 9.30 am on the next trading day of the relevant securities exchange after they become aware of the(ii)information if:a takeover bid is made for voting shares in the company or voting interests in the scheme; and(A)(B)the person becomes aware of the information during the bid period.
Annexures	To make any annexure conform to the regulations, you mustuse A4 size paper of white or light pastel colour with a margin of at least 10mm on all sides$\mathbf{1}$show the corporation name and ACN or ARBN$\overline{2}$3number the pages consecutivelyprint or type in BLOCK letters in dark blue or black ink so that the document is clearly legible when photocopied4identify the annexure with a mark such as A, B, C, etc.5endorse the annexure with the words:6This is annexure (mark) of (number) pages referred to in form (form number and title)$\overline{7}$sign and date the annexure.The annexure must be signed by the same person(s) who signed the form.

Information in this guide is intended as a guide only. Please consult your accountant or solicitor for further advice.

Santos Ltd ABN 80 007 550 923 Santos Centre 60 Flinders Street Adelaide South Australia 5000 GPO Box 2455 Adelaide South Australia 5001 Telephone: 61 8 8116 5000 www.santos.com

26 June 2017

Wang Yusuo ENN Holding Investment Limited ENN Ecological Holdings Co. Limited United Faith Ventures Limited ENN Group International Investment Limited Xinneng (Hong Kong) Energy Investment Limited

$("ENN")$

John Zhao Hony Partners Group LLP Hony Managing Partners Ltd Great Multitude Limited Well Honour Developments Ltd Exponential Fortune Group Ltd

("Hony")

Dear Chairman Wang and Mr Zhao,

The Santos Limited ("Santos") Board is pleased to acknowledge the strategic contribution and commitment of ENN and Hony as major shareholders of Santos. The purpose of this letter is to record our agreement as to the relationship between Santos, ENN and Hony and how ENN and Hony will manage its investment going forward.

Notwithstanding anything in this letter, the parties agree that the arrangements set out in this agreement will remain in effect for so long as ENN and Hony have an aggregate relevant interest of 15% or more of Santos. Santos, ENN or Hony may also terminate this agreement at any time from the date that is 12 months after any director nominated by ENN ceases to be a member of the Santos board with no replacement having been appointed or elected.

1. Strategic relationship

ENN and Hony are associated shareholders of Santos with the aggregated interest of 15.11% (ENN is 10.31%, Hony is 4.80%). ENN Holding Investment Limited ("ENN Holdings") owns and controls 48% of ENN Ecological Holdings Co. Ltd ("ENN Ecological") either directly or through its controlled entities. Santos, ENN and Hony wish to establish a long-term strategic relationship involving mutual cooperation and assistance. ENN and Hony have confidence in Santos and will continue to support its growth and the decisions made by the Board in the best interests of all shareholders.

It is the mutual intention of ENN and Hony that Santos will be the primary investment vehicle for any material investment in upstream gas reserves and LNG production in Australia and PNG that are introduced by them in accordance with the process set out below.

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Before making any direct material investment in any upstream investment in gas reserves or LNG production in Australia and PNG, each of ENN and Hony will notify the Santos Board of all details of which they are aware at the relevant time of each such investment opportunity, for the Board's consideration of whether Santos wishes to pursue the investment opportunity. If the Santos Board determines that Santos will pursue a relevent investment opportunity, the parties agree to pursue that investment opportunity together (whether through Santos or with co-investment from ENN and/or Hony). If the Santos Board notifies ENN and/or Hony (as applicable) that it does not wish to pursue an opportunity, does not give notice to ENN and/or Hony within a reasonable timeframe following notice that it wishes to pursue the opportunity or subsequently withdraws from an investment opportunity, then ENN and Hony will be free to pursue the relevant opportunity without any further obligation to Santos in respect of the opportunity.

In consideration of the parties agreeing to the matters set out in this document and for the development of the long-term strategic relationship with ENN and Hony:

Santos will use reasonable endeavours to provide ENN with the following opportunities: $(1)$

(a) including ENN and Hony in commercial opportunities for investment in all aspects of LNG production including treatment, transportation, port facilities, onshore storage and the purchase of LNG, where such participation is reasonably considered to be in the best interest of Santos shareholders as a whole;

(b) providing ENN with the opportunity to invest in these opportunities either directly via JV type arrangements or via equity placements in Santos Ltd; and

(c) Santos will accept a secondment of 1 or 2 ENN employees a year into the upstream part of LNG production as part of the Santos technical training program on terms to be agreed in good faith.

ENN and Hony will support Santos by: $(2)$

(a) giving due consideration and support in respect of future capital raising proposals;

(b) duly considering and investigating all opportunities for co-investment with Santos in upstream asset acquisitions and expansion opportunities presented by Santos from time-totime: and

(c) proposing opportunities to Santos to increase its access to gas opportunities in China that align with its strategic business objectives.

2. Board representation

As part of the strategic relationship, the Board will invite ENN to nominate one person (Nominee) as a director of Santos, as an addition to the Board.

Where Santos receives a notice of nomination as an addition to the Board, the nomination committee of the Board will consider whether the person so nominated has the requisite skill, knowledge and experience to properly perform his or her duties as a director of Santos.

For the avoidance of doubt, the lack of independence of the Nominee or employment of the Nominee by ENN (or any of its affiliates) does not of itself establish reasonable grounds for not approving the Nominee.

If the nomination committee approves the Nominee, the directors may appoint the Nominee as a director. If the Nominee retires or is removed from office as a director, ENN will be entitled to nominate a replacment nominee to be considered and appointed as a director in accordance with this Agreement. Unless otherwise agreed. ENN will procure the resignation or removal of the Nominee as a director if this agreement is terminated or ceases to have effect.

It is acknowledged by ENN and Hony that all proceedings of the Board will be conducted in English. Where a Nominee requires english language support for Board meetings, this support will be provided by an approriately skilled interpreter to be provided by ENN and approved by the Board.

Prior to the appointment becoming effective, the Nominee being appointed must enter into a deed of access, insurance and indemnity and other agreements with Santos in substantially the same form as those currently in place with other directors or otherwise required to give effect to this agreement.

Further to this, it is important that Santos is not perceived to be encouraging ENN and Hony to use its shareholding as a blocking stake in the company. Accordingly, ENN and Hony agree that at all times after a Nominee is appointed as a Director of Santos, it will procure the exercise of voting and disposal rights attached to Santos shares in which they hold a relevant interest in accordance with a majority recommendation of the Board made to all shareholders of Santos in relation to a third party offer for Santos shares proposed under a scheme of arrangement or an off-market takeover bid (in the absence of a superior proposal) ("Third Party Offer").

The parties agree that the obligations in the preceding paragraph do not apply to ENN or Hony in circumstances where:

• $\Delta \mathbf{r}$ the offer price for Santos shares under the Third Party Offer is less than the weighted average purchase price of the Santos shares in which ENN and Hony have a relevant interest prior to the offer being made; or
• the disposal of Santos shares in which ENN Ecological holds a relevant interest requires $\bullet$ the approval of ENN Ecological shareholders in general meeting (pursuant to the applicable rules of the Shanghai Stock Exchange or applicable law) and such approval is not obtained from the shareholders.

Where ENN Ecological requires shareholder approval to dispose of Santos shares under a Third Party Offer, ENN will use all reasonable endeavours to ensure that such approval is obtained within 21 days of a request to do so including, without limitation, ENN Holdings procuring that all shares in ENN Ecological which are owned or controlled by ENN Holdings or its controlled entities are voted in favour of such approval.

For the avoidance of doubt, where the Santos Board receives and recommends a Third Party Offer, nothing in this document prevents ENN or Hony from making a counter-offer for Santos shares under its own scheme of arrangement or an off-market takeover bid proposal (the terms of which are superior to the Third Party Offer).

3. Confidentiality

ENN and Hony acknowledge and agree that all information received by the ENN nominee director in connection with his/her position as a director is confidential board information ("Board Information"). The Board Information may contain confidential information and material non-public price sensitive information, which is subject to the provisions of Division 1 of Part 2D.1 and Division 3 of Part 7.10 of the Corporations Act 2001. Accordingly:

• $\bullet$ ENN, Hony and the Nominee must not, whilst the Nominee is in possession of any Board Information in relation to Santos do anything which would constitute a breach of section 183 or sub-sections 1043A(1) or (2) of the Corporations Act;

• the Nominee must not deal in Santos securities outside of approved director trading windows;

• Hony and ENN must not deal in Santos securities during the following periods: $\mathbf{d}$

  • o 14 days prior to the Santos AGM and the issue of any quarterly results;

• o 45 days prior to the release of Santos' full year results;

• o 30 days prior to the release of Santos' half year results; and

• o at any time when the Nominee has been notified by the Chairman of Santos that the Board is in possession of material non-public price sensitive information. The Nominee will promptly notify ENN and Hony of any such periods; and

• each of ENN and Hony must direct its officers and employees who may possess or be given any information in relation to Santos not to do anything which would constitute a breach of section 183 or sub-sections 1043A(1) or (2) of the Corporations Act.

ENN and Hony will procure that all Board Information is kept confidential and is not disclosed by the nominee director to any person without the prior written consent of Santos. ENN and Hony will indemnify Santos on demand for any loss or damage incurred as a result of a breach of this provision and will ensure that all Board Information is returned or destroyed if requested by Santos.

Terms used in this letter that are not otherwise defined have the same meaning as those terms are defined under the Corporations Act 2001.

Yours sincerely

Peter Coates AO Chairman

Accepted and agreed on behalf of each entity comprising ENN:

Wang Yusuo - Chairman ENN

Accepted and agreed on behalf of each entity comprising Hony:

John Zhao - CEO

• o 45 days prior to the release of Santos' full year results:
• o 30 days prior to the release of Santos' half year results: and
• o at any time when the Nominee has been notified by the Chairman of Santos that the Board is in possession of material non-public price sensitive information. The Nominee will promptly notify ENN and Hony of any such periods; and
• each of ENN and Hony must direct its officers and employees who may possess or be given any information in relation to Santos not to do anything which would constitute a breach of section 183 or sub-sections 1043A(1) or (2) of the Corporations Act.

ENN and Hony will procure that all Board Information is kept confidential and is not disclosed by the nominee director to any person without the prior written consent of Santos. ENN and Hony will indemnify Santos on demand for any loss or damage incurred as a result of a breach of this provision and will ensure that all Board Information is returned or destroyed if requested by Santos.

Terms used in this letter that are not otherwise defined have the same meaning as those terms are defined under the Corporations Act 2001.

Yours sincerely

Peter Coates AO Chairman

Accepted and agreed on behalf of each entity comprising ENN:

Wang Yusuo - Chairman ENN

Accepted and agreed on behalf of each entity comprising Hony:

. . . . . . . . . . . . . . . . . . . John Zhao - CEO

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