RISING TO THE
CHALLENGEANNUAL REPORT 2001
CONTENTS
Strategic Vision
Chairman’s Review
Managing Director’s Review
Business Unit Operations
Highlights and Overview
Exploration
Development
Reserves
Gas Leader
Production
Production Statistics
Safety
Human Resources
Environment
Community
Board of Directors
Corporate Governance
Group Interests
Areas of Operation
10 Year Summary
Directors’ Statutory Report
Financial Report
Stock Exchange and Shareholder Information
Glossary
1
2
4
10
12
14
16
18
20
22
23
24
25
26
27
28
30
32
34
36
38
42
70
72
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SANTOS LTD ABN 80 007 550 923
SHAREHOLDERS’ ENQUIRIES
DIRECTORS
NOTICE OF MEETING
The Annual General Meeting of Santos Ltd will be held in
the Auditorium at The Adelaide Town Hall Function Centre,
128 King William Street, Adelaide, South Australia
on Tuesday, 16 April 2002 at 11.00 a.m.
FINAL DIVIDEND
Enquiries from shareholders and other interested people
should be directed to:
Investor Relations, Santos Ltd, Santos House, Level 29,
91 King William Street, Adelaide, South Australia 5000
Telephone (08) 8218 5111
Email: investor.relations@santos.com
Santos website: www.santos.com
The 2001 final ordinary dividend will be paid on 2 April 2002
to shareholders registered in the books of the Company at
the close of business on 8 March 2002 in respect of fully
paid shares held at record date.
Share Registrar, Santos Ltd, Santos House, Level 29,
91 King William Street, Adelaide, South Australia 5000
Telephone (08) 8218 5111
Email: share.register@santos.com
S Gerlach (Chairman), J C Ellice-Flint (Managing Director),
P C Barnett, F J Conroy, G W McGregor,
M A O’Leary, J Sloan, I E Webber
SECRETARY
M G Roberts
CREATE GROWTH
THROUGH NEW DOMESTIC
AND INTERNATIONAL
OPPORTUNITIES
STRONG CASH FLOW
GROWTH AND
RESERVE REPLACEMENT
OUR
STRATEGIC VISION
“TO BE RECOGNISED BY
STAKEHOLDERS AND PEERS
AS BEING WITHIN THE TOP
QUARTILE OF THE
WORLD’S OIL AND
GAS COMPANIES”
STRATEGIC COST
LEADER IN FIELD,
INFRASTRUCTURE
AND NEAR
FIELD OPERATIONS
DISCIPLINED PORTFOLIO
MANAGEMENT DELIVERING
SUPERIOR RETURNS
www.santos.com
2
CHAIRMAN’S
REVIEW
A year of strong performance and significant change.
Chairman Stephen Gerlach reports to shareholders.
3
Dear Shareholder,
In this, my first report to shareholders, I am pleased to say
that, not only did Santos perform strongly again in 2001,
but also the transformation of the Company is well
underway.
Net operating profit after tax was $446 million, the second
highest profit in the Company’s history.
Santos produced 55.7 million barrels of oil equivalent (boe),
close to the record 2000 production
of 56 million boe.
Including the dividend component of the share buy-back,
the return to shareholders was 14%.
Directors have declared a final ordinary dividend for 2001
of 15 cents per share fully franked. The total ordinary
dividend for 2001 is 30 cents per share fully franked.
The share buy-back undertaken during the year, distributed
$250 million to shareholders, including $143 million (or 23
cents per share) of fully franked dividends.
“SANTOS HAS A
CLEAR STRATEGY
TO DELIVER GROWTH
AND TOP QUARTILE
RETURNS.”
The buy-back was undertaken in tandem
with the issue of $350 million of reset
convertible preference shares. These
initiatives were undertaken as part of
the Company’s capital management
strategy. Both were substantially
oversubscribed highlighting their value
to Santos shareholders.
The Board places a high priority on
workplace safety. It is disappointing that
Santos suffered a serious accident at the
Moomba plant in June and tragically an
employee’s life was lost. Santos’ Board
As in 2000, the result benefited from
the high level of oil prices that
prevailed through the first nine
months of the year but also reflected
the close-to-record production.
Importantly, 2001 was also a year of
major change for the Company, laying
the foundations for future growth.
The vision of the Board and
management is for Santos to be
Australia’s leading energy company
and within the top quartile of the world’s oil and
gas companies.
This is an ambitious target.
Much work has to be done by our Managing Director, John
Ellice-Flint, and his management team to prepare Santos
to meet this goal, which has included a number of key, new
internationally qualified management appointments. Whilst
the challenges have to be successfully met, the Board has
confidence that John Ellice-Flint and his team will succeed
in their endeavours and have laid the foundation for
that success.
The Company performed well in terms of the returns
provided to shareholders during the year. The total return
to shareholders, from capital growth plus dividends was
10%, outperforming the S&P Australian Energy Index.
and management continue to strive for the highest standard
of occupational health and safety and the lessons learnt from
this incident are being applied as part of the Company’s
commitment to achieving a work environment free of injury.
Santos is subject to South Australian legislation that
restricts any one Santos shareholder from having more
than a 15% shareholding. In 2000, the State Government
announced that it was reviewing this restriction, but in July
2001 announced that it did not intend to make any change.
The Government stated that the decision reflected the
importance to South Australia of gas supplied from the
Cooper Basin. Santos has consistently expressed the view
that the restriction is not in the long-term interests of
Santos shareholders. The Board and Company are, and
have been acting, on the assumption that sooner or later
the limit will be removed.
During 2001, there were two important changes in Board
membership. Mr John Uhrig retired as Chairman following
the Annual General Meeting, after nine years on the Board
and seven years as Chairman. During his tenure as a Board
member, and Chairman, Santos’ production increased by
over 60% and its market capitalisation increased by over
$2 billion. I should like to pay tribute to John Uhrig for the
significant contribution he made to the success of the
Company.
In July, Mr John McArdle, an Executive Director, retired
from the Board. Over a 35 year career with Santos and
its joint venturers, John played an important role in the
development of the Cooper Basin and the Australian oil
and gas industry, in recognition of which he was awarded
the inaugural Reg Sprigg medal by the industry in 1995.
During 2001 a review of the role of the Board and its
composition was undertaken in light of the Company’s
strategic review, a process which, will in future, be
undertaken on a regular basis. As a consequence of the
review the Board is currently considering the desirability
of making further additional appointments.
On behalf of the Board, I should like to thank all of Santos’
employees for their dedication and commitment
throughout the year.
The Board has great confidence in the future of the
Company and I thank all shareholders for their support
throughout the year.
Finally, I acknowledge the support I have received from my
fellow Directors.
STEPHEN GERLACH Chairman
13 February 2002
www.santos.com
MANAGING DIRECTOR’S
REVIEW
Looking Ahead: The Opportunities For Australia
5
Before I review Santos’ achievements in 2001, I would like
to look at the big picture in energy terms; the substantial
natural gas resources on our doorstep and what this could
mean for Australia.
Australia and its near neighbours could be in the right
place at the right time. I say this because of the wonderful
opportunity we have to become a major world supplier of
natural gas.
There are two reasons for saying this. One is the growth
in global demand for gas and its attractiveness as a clean
and ready source of energy. The other is the vast gas
resources which Australia, East Timor and Papua New
Guinea possess. This is an opportunity for Santos as well
because of our already significant interests in the region.
THE GLOBAL PICTURE
As someone back in Australia after many years in the
industry in other parts of the world, I am excited by the
prospects which these resources represent.
Drawing the picture in global terms is really quite simple.
Australia has the potential to be a major player in the world
gas industry. We have abundant natural gas at over 100
years’ supply and even more if we also count the gas
resources in neighbouring Timor and Papua New Guinea.
This is enough for the Secretary General of OPEC to
recognise the important role that Australia has to play in
the ongoing development of the global gas market.
The International Energy Agency (IEA) expects rising
demand and expanding transportation networks (through
both pipelines and shipping) to intensify market integration
at the regional and global level. International trade in gas
has been growing quickly. According to BP, around 22% of
gas used globally now crosses an international border, up
from 15% as recently as 1990. This is good news for a
country like Australia because it means gas can be
increasingly transported to end-markets.
Exploiting the world’s gas resources will require massive
investment in production facilities and infrastructure. The
IEA believes that, as costs rise, higher wellhead prices will
probably be needed to elicit the necessary investment in
supply infrastructure. However, even with higher prices, gas
will still be a cheap, efficient and attractive source of energy.
OPPORTUNITIES FOR AUSTRALIA
We have a rich endowment of gas and, according to the
Australian Gas Association, Australian natural gas prices
are among the lowest of the OECD countries (and lower
than in many non-OECD countries too).
The question for Australia and our neighbours is: How can
we get as much benefit as possible from the opportunities
that the global scenario represents?
I see the opportunities as falling into two groups:
expanding our exports of LNG and further development
of domestic markets.
BRIGHT OUTLOOK FOR GAS
NORTHERN AUSTRALIA
Gas used to be second prize when explorers were searching
for oil, but now it is a valuable commodity in its own right.
The United States Energy Information Administration
expects the use of natural gas globally to almost double
from 84 trillion cubic feet (TCF) a year in 1999 to 162 TCF
in 2020.
A significant share of Australia’s undeveloped gas lies in
the Timor Sea/Timor Gap area. This is a great location for
a second Australian LNG project. It has over 20 TCF of gas
spread across four fields. This is sufficient to underpin a
world-class LNG project, which could benefit both Australia
and East Timor, as well as promoting gas-based industrial
development in the Northern Territory. There are currently
two proposals on the table for Timor Sea LNG, one for an
offshore development and the other for a Darwin-based
LNG facility.
While Santos is not the major player in the Timor Sea, we
do have total interests of around four TCF. This is more
than twice our Proved and Probable gas reserves onshore
Australia. Our Timor Sea interests are spread across three
of the four major fields and our interest comprises about
20% of the combined total gas resource. We are committed
to all developments that add value for our shareholders
and believe the most beneficial outcome will be for all the
companies and governments concerned to bring about a
coordinated development.
PAPUA NEW GUINEA AND QUEENSLAND
On the other side of Australia, the huge quantities of gas
in Papua New Guinea provide tremendous opportunities
to add value to Queensland resources, with benefits for
both PNG and Australia. The Hides field alone has over five
TCF of gas and part of this gas, together with gas from
existing oil fields, is targeted for the proposed PNG-
Queensland gas project.
PNG gas provides a significant opportunity to further boost
Queensland development. The challenge is to use this gas
to create new value adding industries which in turn
provides employment opportunities.
Santos has already pioneered the use of gas for major
resource projects in Queensland. Since 1998 we have been
providing Cooper Basin gas to the Mt Isa region, reducing
energy costs for MIM and facilitating development of
WMC’s world-class Duchess Phosphate Project.
Santos has an interest in Hides of over one TCF.
Development of these reserves also has significant
potential to add value for shareholders.
www.santos.com
6
2001: Laying The Foundations For Future Growth
RAISING OUR SIGHTS
Development of both Timor Sea and PNG gas would be
good for the countries and customers involved, as well
as for the companies and their shareholders.
Both are big projects by world standards. They need
certainty and a reasonable regulatory and fiscal regime.
In particular, substantial infrastructure development is
necessary but this is a challenge in Australia for high risk
pipeline projects which require entrepreneurial rates of
return. The prize for successful development, however, is
substantial whether measured in terms of reward, living
standards, economic benefit or industrial progress. The
cooperative development of these resources is a great
opportunity for Australia and its neighbours and one which
can be to everyone’s advantage.
Santos supports both of these projects. We are already
Australia’s largest gas producer in terms of our equity
interests and we have substantial gas resources in
northern Australia and PNG.
Our focus and priorities today have changed. In the past,
Santos has been seen more as a vigorous defender of its
existing onshore interests rather than as a force for
developing the market as a whole. However, this is no
longer appropriate. While maximising the value of our
existing interests continues to be important, Santos gas
interests are considerably more diversified than they were
and this is apparent in the changes made to our Company
over the past year.
The global environment is good for the development
of the substantial gas resources on our doorstep and
Santos is raising its sights accordingly.
In 2001 we took the first steps towards transforming
Santos into a top quartile oil and gas company.
(cid:2) The Company’s strategy was released and is now
owned by our employees.
(cid:2) We reorganised the Company in line with the major
profit drivers.
(cid:2) A number of experienced
executives were appointed to
senior positions, both external
and internal appointments.
(cid:2) A business improvement program
was launched.
(cid:2) A portion of the Company’s
franking credits was distributed to
shareholders.
At the same time, through active
capital management we delivered a
strong profit and operating result.
Earnings were more than twice those
of any year before 2000 and
production was close to the record
level achieved in 2000.
Gas and ethane production reached a
new record of 219 PJ. In 2002, Santos
remained Australia’s largest domestic
gas producer.
Return on Average Equity (ROAE) was
17.7% and Return on Average Capital
Employed (ROACE) 14.1%. These are
key indicators for the Company and
the results in 2001 continued the
strong performance achieved in 2000.
"MEASURING AND
HAVING CONFIDENCE
IN ALL THE
COMPONENTS OF OUR
RESERVE BASE IS A
FUNDAMENTAL PART
OF THE COMPANY’S
STRATEGY AND
A CORNERSTONE
OF PERFORMANCE
MANAGEMENT."
Exploration improved during the year. We discovered 67
million boe of resource potential, twice the level achieved
in 2000. The Oyong Indonesian oil and gas discovery was
Santos’ first operated international discovery for over a
decade. This discovery was quickly followed by Henderson
in the USA. Other discoveries include
the Corowa oil discovery in the
Carnarvon Basin and the Wellington
and Crowsnest new-play stratigraphic
trap gas discoveries in the Cooper Basin.
Good progress was also made on
development opportunities. Legendre
oil production facilities were
completed, significant progress was
made on the Bayu Undan liquids
project and the focus continued on
maximising production from the
Cooper Basin.
The progress made in the United
States was also a highlight of the year.
The management team was rebuilt,
the portfolio of assets was highgraded,
there were a number of exploration
successes and daily production at year
end was three times that at the start.
RESERVES REVIEW
During 2001, Santos announced
a review of its reserves. This was a
significant task, involving over 460
fields. The review resulted in a
reduction of 169 million boe of Proved
plus Probable reserves, approximately
Notwithstanding the progress made, there is still more
to do. While the Company has substantial growth potential,
this needs to be translated into specific growth prospects.
Internally much remains to be done in increasing
productivity, reducing costs and streamlining processes.
three quarters of which were reclassified as Possible
reserves or Contingent Resources. Possible reserves
increased by 169 million boe as a result of the review. At
the end of 2001 Santos had 316 million boe of Proved (1P)
reserves, 724 million boe of Proved and Probable (2P)
reserves, 1,478 million boe of Proved, Probable and
www.santos.com
These are tough targets and the financial metrics must be
judged through the oil cycle as oil prices can significantly
affect results in any individual year. Operational targets
are also volatile from year to year and must be assessed
over time.
To achieve these targets Santos is focussing on the
following seven areas:
acquired Natural Gas Australia, through which the
Company acquired a 40% interest in the Evans Shoal gas
field in the Timor Sea. This now gives Santos interests in
three out of the four major fields in the area. Santos also
increased its interest in the Runnells gas field in the Texas
Gulf Coast in the United States. This delivered production,
earnings and exploration potential.
1. RESERVOIR AND PRODUCTION OPTIMISATION
4. GAS COMMERCIALISATION
7
Possible (3P) reserves and 1,190 million boe of Contingent
Resources.
The Company now has a rigorously defined reserve
base which, for the first time, is in general compliance
with international reporting standards. While the review
led to a reduction in 2P reserves, Santos has substantial
3P reserves that include over 3,700 PJ of Cooper Basin gas.
Commercialisation of gas reserves in fields such as Hides
or the Northern Australian gas fields would also have a
significant positive impact on reserves.
YEAR OF TRANSFORMATION
2001 was a year of transformation for Santos. This
has involved setting the strategy, defining the business
structure, selecting the people to lead the organisation
and establishing the right processes.
SETTING THE STRATEGY
In 2001 the Company undertook a strategic review which
established key operational and financial benchmarks for
top quartile performance for oil and gas companies. This is
the report card upon which the Company will be judged. To
deliver top quartile shareholder returns the Company must
achieve or better the benchmark targets.
Reservoir and production optimisation aims to increase
returns from existing producing fields. The major focus
is on maximising the value of the Cooper Basin which
is Santos’ major operated asset.
A number of production optimisation initiatives were
tested and introduced in 2001 to allow Santos to develop
gas and oil more quickly and at a lower cost. In 2001,
in the Cooper Basin, 25 TJ per day of gross gas capacity
was added for 30-50% of the cost of conventional gas
development projects. In 2002, we will continue with these
initiatives and are targeting 40 TJ per day of gross gas
capacity additions with similar cost savings.
2. EXPLORATION
Santos aims to lift exploration performance through a
balanced portfolio approach. Our 2002 portfolio includes
material prospects appropriate for a company producing
around 56 million boe per annum.
FINANCIAL BENCHMARKS
(Through the oil price cycle)
Total Shareholder Returns
Cash Flow Growth
Earnings per Share
OPERATIONAL BENCHMARKS
Production Growth
Finding Costs
Finding and Development
Reserve Replacement
>14%
>10%
>10%
This requires a shift from low risk to moderate and higher
risk/reward prospects. We have already seen some success
in 2001 with encouraging Santos-operated oil and gas
discoveries.
3. ACQUISITIONS
5%-8%
150%
Santos will maintain an active program of acquisitions to
supplement reserve additions from exploration, reservoir
optimisation and gas commercialisation. Acquisitions must
provide volume-adding barrels to reserves, production
and/or make strategic sense. During the year Santos made
two acquisitions that met these requirements. Santos
Gas commercialisation is a key component of Santos’
strategy. Santos achieved another record level of gas
production in 2001. Santos has over 1,750 PJ of Proved and
Probable gas (net to Santos) available for new contracts
over and above gas dedicated to covering existing
contracts. It also has approximately six TCF (or one billion
boe) of gas classified as Contingent Resources, much of
which is capable of being contracted, located in Northern
Australia, Papua New Guinea and Southern Australia.
Commercialisation of any of the major fields currently
classified as Contingent Resources would have a material
positive impact on Santos reserves.
Discussions are also continuing with a number of potential
customers for Cooper Basin gas.
There are also developments in gas commercialisation in
Eastern Queensland. Gas production from the Scotia field
in Eastern Queensland is due to commence in April 2002.
This is two months ahead of schedule.
Progress was achieved during the year on possible
development of gas in the Bayu Undan field in the Timor
Gap and on the PNG Gas Project.
5. OPERATIONAL EXCELLENCE
Operational excellence focuses on costs, people,
information technology, safety and environment.
Santos aims to achieve capital and operating cost
reductions of at least $50 million per annum on a like-
for-like basis by the end of 2003. The new management
structure is geared to achieve this and key executives
have been appointed to drive the focus on productivity.
www.santos.com
8
www.santos.com
MEASURING
BUSINESS PERFORMANCE
The new Santos organisational structure has been
built around the strategic drivers of Volume, Growth
and Service Quality/Cost. Why choose these metrics
to define the Company structure?
The fundamentals of the oil and gas business are
relatively simple: returns come from optimising
volumes, maximising margins and finding new
avenues for growth.
One of the features of the commodity business is
the limited extent to which companies can control
the price of the products they sell. With oil, price
is determined by the market and fluctuates
according to many variables. With gas, companies
can influence price through negotiation with
customers, but many other supply/demand factors
come into play.
Santos does, however, have control over the
other key metrics driving margins – volume, costs,
growth – and, for this reason, the Company has
been structured to help provide a clear focus on
what is ultimately important to shareholders.
6. PEOPLE, ENVIRONMENT AND THE COMMUNITY
Santos also recognises that top quartile financial
performance is underpinned by a quality workforce and
social and environmental best practice. Employees are
Santos' most important asset and the Company considers
that providing a safe and challenging work environment
is paramount. Santos is building a culture that rewards
performance and encourages the contribution and ideas
of both individuals and teams.
Successfully managing the natural environment is a key
goal for Santos and the Company adheres to the principle
that investing in preventative rather than remedial
strategies is the best approach. The Company is also
striving to upgrade its environmental reporting.
In January 2001 Santos signed a draft Indigenous Land Use
Agreement (ILUA) with the Wangkumarra people in South-
west Queensland. The ILUA covered certain pipeline route
approvals and provides for the protection of indigenous
cultural heritage, employment, an education trust and
support for community structures.
7. TECHNOLOGY
The identification and application of appropriate
technology is also a key part of Santos’ future
growth strategy. Priorities include information systems,
data acquisition and management, drilling and other
appropriate hydrocarbon exploitation technologies. Santos
is now executing an upgrade of information systems at
a cost of $31 million to streamline the core business
processes and improve management information systems.
This will enable us to make better, faster decisions.
DEFINING THE STRUCTURE
Santos has been reorganised in line with the new strategy.
Previously, Santos was structured around a decentralised
Business Unit model, which served the Company well at
the time. Each Business Unit contained all the operational
and functional resources to enable it to operate quite
independently. In many ways, the structure resembled
a group of mini oil and gas companies under a holding
company, competing with each other for business
opportunities and for capital allocations from the
corporate office.
In light of the strategy review, a new structure has been
developed to better reflect the new strategic themes.
Santos has reorganised around three major streams
of activity – Volume, Growth and Service Quality/Cost.
The volume stream contains the business groups and
functional teams principally concerned with optimising
production from existing areas of operation. The major
production area for Santos is the Cooper and Eromanga
Basins in central Australia. Previously operated by two
Business Units, this area has now been combined into one
new Central Australia Business Unit, better reflecting the
geology and allowing greater focus on our customers.
The volume stream also contains two other new
Business Units – Western Australia, focused on increasing
production from the Company’s offshore Western
Australian oil and gas opportunities and Northern
Australia, structured for Santos to increase its production
in the fast-growing energy markets of Queensland and the
Northern Territory.
The growth stream contains those businesses and
resources principally concerned with increasing the
Company’s reserve base. This can be achieved through
successful exploration activities, acquisitions and
commercialisation of gas resources. As the growth
businesses successfully develop and produce, they become
important production or volume businesses in the future.
ESTABLISHING THE RIGHT PROCESSES
The new organisational structure also reflects the need to
simplify processes, improve service quality and increase
productivity by taking unnecessary work out of the system.
The Service Quality/Costs stream was created to drive
efficiencies in the way support activities are operated.
This stream combines all the services that are shared
across the volume and growth businesses, such as
Accounting, Human Resources and Information Systems
and will deliver those services in an efficient and low-cost
manner and, importantly, with consistent standards.
Developing a shared services approach to providing
internal business services is a particularly important
initiative. Historically, each Business Unit had its own
support services. Safety, Environment, Accounting, Human
Resources, Information Systems, Supply, Corporate and
Government Affairs and Drilling will in the future, all be
provided on a shared basis. Improved information systems
and business process re-engineering are also important
components of establishing the right processes.
SELECTING THE PEOPLE
The final but arguably most important part of transforming
Santos, has been to select leaders for the new organisation.
This process has now largely been completed, with an
appropriate mix of external and internal appointments.
The new organisation chart and senior management team
are listed on page 29.
CONCLUSION
2001 has been a year of transformation for Santos.
Operational performance has been maintained while
substantial changes have been occurring.
In last year’s Report I outlined my immediate priorities
for Santos: to review the Company’s strategy, improve
the culture and performance and create value adding
external relationships.
We now have a clear strategy, a new management team,
a new organisation and a rigorously defined reserves
base. We have increased our external focus and intend to
continue to build stronger and more effective relationships
with our partners, suppliers, customers and governments.
The challenge has been set and we are rising to meet it.
In 2002 our target is to increase production by around
3% from existing assets and to make substantial progress
in the creation and capture of a strong growth portfolio.
The financial results for 2002 will, of course, be heavily
dependent on oil prices and exchange rates.
We are planning an exploration and appraisal program
of approximately $160 million ($151 million in 2001) with
exposure to around twice the level of mean resources
discovered in 2001. If successful, this will make a
significant contribution towards reserve replacement.
Record development expenditure of around $560 million
is also planned, including spending of approximately
$160 million on the Bayu Undan liquids project, one
of the Company’s major growth projects. This is a
substantial investment in future growth.
I should like to thank all of Santos’ employees for their
enthusiasm and contributions during what has been a very
busy year. I should also like to acknowledge the support of
our joint venturers, suppliers and customers.
During the year we lost a valued employee and friend,
Mr Colin Sutton, as a result of an accident at Moomba.
On behalf of the Board and all employees I would like to
record our condolences to his wife Christine and children
Christopher, Emma and Lisa.
I am confident that through a continued focus on the
execution of our strategic plan and the ability of our people
we will achieve continued growth and deliver increased
value to our shareholders.
JOHN C ELLICE-FLINT Managing Director
13 February 2002
9
www.santos.com
10
T
I
N
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S
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N
I
S
U
B
S
N
O
T
A
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E
P
O
CENTRAL AUSTRALIA
CBU
NORTHERN AUSTRALIA
NBU
WESTERN AUSTRALIA
WBU
SOUTHERN AUSTRALIA
SBU
SOUTH EAST ASIA
SEABU
USA
SUSAC
GENERAL MANAGER
BUSINESS UNIT DESCRIPTION
Jon Young
Rod Rayner
Central Australia Business Unit
manages Santos’ interests and Joint
Ventures in the Cooper/Eromanga
Basins in Central Australia. CBU
also operates Port Bonython which
processes crude, condensate and LPG
for domestic and export sales.
Northern Australia Business Unit
manages Santos’ exploration and
production interests in Queensland
(other than Cooper/Eromanga Basin),
Northern Territory and Timor Gap.
Paul Moore
Western Australia Business Unit
manages Santos’ interests in the
Perth, Carnarvon, Browse and Timor
Sea Basins.
Rick Wilkinson
Southern Australia Business Unit
manages Santos’ interests in Victoria
and Tasmania.
Bob Hall
South East Asia Business Unit is
responsible for managing Santos’
interests in Papua New Guinea and
Indonesia.
Kathy Hogenson
Santos USA Corp manages Santos’
interests in Northern America.
RESPONSIBLE EXECUTIVES
Jon Young joined Santos in 2000 as General
Manager South Australia Business Unit,
after approximately 20 years of experience with
Mobil Corporation.
2002 STRATEGIES & PRIORITIES
(cid:2) Optimise exploitation of Cooper Basin
gas reserves
(cid:2) Pursue gas marketing opportunities for
uncontracted gas reserves
(cid:2) Reduce costs
(cid:2) Accelerate oil exploitation
(cid:2) Complete cased and suspended well
review program
(cid:2) Upgrade infrastructure to optimise
operational effectiveness
2001 PERFORMANCE
(cid:2) Production (mmboe)
(cid:2) Sales volumes (mmboe)
(cid:2) Sales revenue ($m)
(cid:2) 2P reserves (mmboe)
35.9
35.5
824
371
11
Rod Rayner originally joined Santos in 1983 to
develop the Jackson oil fields and pipeline. He
rejoined Santos in 1993 as Manager Commercial
in the former Queensland Northern Territory
Business Unit.
(cid:2) Manage Santos’ interests in the
(cid:2) Commence production from the Scotia
Bayu/Undan Liquids Recovery Project
gas project
(cid:2) Progress Bayu/Undan gas
commercialisation
(cid:2) Progress long-term commercialisation of
offshore Northern Territory gas fields
(cid:2) Optimise Eastern Queensland and
Amadeus Basin production operations
(cid:2) Production (mmboe)
(cid:2) Sales volumes (mmboe)
(cid:2) Sales revenue ($m)
(cid:2) 2P reserves (mmboe)
5.0
4.9
123
175
Paul Moore joined Santos in August 2001.
Before joining Santos he worked for Fletcher
Challenge Energy for 11 years and prior to this
for Shell International for nine years.
(cid:2) Maximise economic production (and
(cid:2) Drill key exploration prospects including
recovery) from existing producing oil fields
(cid:2) Pursue commercialisation of gas resources
(cid:2) Undertake appraisal of discovered fields
two in Mutineer discovery area
(cid:2) Mature drilling candidates for 2003+
(cid:2) Increase acreage exposure for future
(cid:2) Production (mmboe)
(cid:2) Sales volumes (mmboe)
(cid:2) Sales revenue ($m)
(cid:2) 2P reserves (mmboe)
12.0
11.9
429
112
exploration
Rick Wilkinson joined Santos in 1997 and was
previously Manager Commercial South Australia
Business Unit. Before joining Santos, he was
Group Manager Energy Retail for the Victorian
Gas and Fuel Corporation.
(cid:2) Grow production in the Otway Basin using
(cid:2) Add reserves through exploration and
existing infrastructure
commercial arrangements
(cid:2) Develop existing Victorian offshore assets
(cid:2) Develop business opportunities which meet
the Company’s growth criteria
(cid:2) Production (mmboe)
(cid:2) Sales volumes (mmboe)
(cid:2) Sales revenue ($m)
(cid:2) 2P reserves (mmboe)
Bob Hall joined Santos in 1997 as General
Manager South East Asia Business Unit
following Santos’ acquisition of MIM’s
petroleum interests. He joined Santos after
27 years experience with MIM.
Kathy Hogenson joined Santos USA Corp in
2001 as President, based in Houston, Texas
following a 19 year career with international
experience at Aminoil/Phillips, Maxus
Energy/YPF and Unocal Corporation.
(cid:2) Maximise production from producing
oil fields
(cid:2) Undertake engineering studies to develop
the 2001 Oyong oil discovery in Indonesia
(cid:2) Progress commercialisation of Hides and
(cid:2) Mature drilling candidates for 2003+
Bentu gas resources
(cid:2) Production (mmboe)
(cid:2) Sales volumes (mmboe)
(cid:2) Sales revenue ($m)
(cid:2) 2P reserves (mmboe)
(cid:2) Grow a talented, experienced staff, with
seamless integration between the SUSAC
Houston office and Adelaide-based virtual
team
(cid:2) Acquire producing properties with
significant acreage and 3D seismic data
providing access to high impact exploration
opportunities
(cid:2) Internally generate exploration activities
(cid:2) Participate with joint venturers with proven
exploration expertise engaged in SUSAC’s
core area
(cid:2) Optimise exploitation reserves and
production
(cid:2) Rationalise assets through divestment of
non-core or low impact assets
(cid:2) Production (mmboe)
(cid:2) Sales volumes (mmboe)
(cid:2) Sales revenue ($m)
(cid:2) 2P reserves (mmboe)
1.0
1.0
40
13
1.3
1.3
22
26
0.5
0.5
22
27
12
HIGHLIGHTS & OVERVIEW
MEASURING PERFORMANCE
628
2001
1,460
Sales ($ million)
Operating Profit before Tax ($ million)
Operating Profit after Tax ($ million)
446
Cash Flow from Operations ($ million) 692
Earnings per Share
73 cents
Ordinary Dividends per Share
Cash Flow per Share
Total Shareholders’ Funds ($ million)
Return on Avg. Equity
Return on Avg. Capital Employed
Gearing (net debt/equity)
Net Interest Cover
2000
1,497
726
487
1,023
80 cents
30 cents
30 cents
113 cents 168 cents
2,311
22.3%
16.7%
38%
9.1
17.7%
14.1%
2,727
39%
9.7
2001 A ROBUST RESULT
Strong Earnings and Return on Equity
" Second highest sales revenue of $1,460 million.
" Net profit of $446 million, second highest on record.
" Total dividends of 30 cents per share fully franked.
" $250 million distributed to shareholders through a
share buy-back.
" 17.7% Return on Average Equity.
" 72.8 cents Earnings per Share.
Achieving Operating Success
" Strong production of 55.7 million boe.
" Two Santos operated offshore exploration discoveries
contributing towards the discovery of
67 million boe mean resource potential.
" Record sales gas and ethane production of 219 PJ.
Financial Performance Provides Opportunity to Grow
" Low gearing of 39%.
" Operating cash flow of $692 million.
STRONG SHAREHOLDER
RETURNS
STRONG 2001 PRODUCTION
PERFORMANCE
During 2001 Santos delivered
total shareholder returns of 10%
comprising capital growth and
dividends. Including the benefit of
the share buy-back, total shareholder
returns were 14%. The Company
achieved earnings per share of 72.8
cents and declared total ordinary
dividends of 30 cents per share. ROAE
was 17.7% and ROACE was 14.1%.
Both were strong results, close to the
2000 record.
In 2001 production was 55.7 million
boe. The Company achieved record
sales gas and ethane production of
219 PJ. Oil production declined
slightly due to ongoing remedial
development activity in several fields
and field maturity but the decline was
mitigated by the commencement of
production from the Legendre oil field
in May 2001.
DIVIDENDS PER SHARE
PRODUCTION BY PRODUCT
56.0
55.7
49.2
100
80
60
40
20
0
s
t
n
e
c
80
73
51
10
30
27
23
30
60
50
40
30
20
10
0
e
o
b
m
m
www.santos.com
1999
2000
2001
1999
2000
2001
Earnings per share
Ordinary dividend
Special dividend/share buy-back
1999
2000
2001
Sales Gas & Ethane
LPG
Condensate
Crude Oil
13
OPERATING CASH FLOW
While underlying cash flow was
strong, total operating cash flow was
affected by the timing of the 2000
income tax liability paid in 2001 and
the timing of collection of receivables
and settlement of oil hedges in
respect of 2000. If the 2001 cash flow
is adjusted for these timing differences,
2001 operating cash flow would have
been approximately $840 million.
SALES REVENUES
CLOSE TO RECORD
Sales revenues remained steady at
$1,460 million, down by 2.5% when
compared with the 2000 record. The
decline in sales revenue was largely
driven by the fall in realised oil prices
in the last quarter of 2001. The fall
in sales volumes to 55.1 million boe
from 55.7 million boe was also
a contributing factor.
SANTOS DELIVERS A STRONG
PROFIT RESULT
Santos reported an net profit after tax
of $446 million in 2001. This is
Santos’ second highest profit ever and
is twice that of any year before 2000.
Net profit fell by 8.4% due to higher
depletion charges as a result of the
reserve revision and the impact in the
last quarter of lower oil prices. In the
last quarter of 2001 the realised price
of oil averaged US$19.33 per boe, a fall
of 25% from the previous quarter.
STRONG BALANCE SHEET
Gearing (net debt to equity) has
remained stable, rising slightly to
39% from 38%. Santos’ low gearing
continues to provide the Company
with options to grow. The increase in
net debt to $1,061 million in 2001
reflects the lower operating cash
flow in 2001, acquisitions completed
during 2001 and the payment of 10
cents per share 2000 special dividend.
EXPLORATION AND
DEVELOPMENT EXPENDITURE
Santos’ exploration and development
expenditure increased by 50% to $660
million in 2001. Exploration activity
increased and a mean resource of
67 million boe was discovered.
Development activity grew as a result
of increased expenditure on the Bayu
Undan Liquids Project, the Legendre
oil field and Cooper Basin gas
deliverability work.
OPERATING CASH FLOW
SALES REVENUE
NET PROFIT AFTER TAX
FINANCIAL STRENGTH
1023
692
530
1500
1000
500
0
n
o
i
l
l
i
m
$
1497
1460
945
1600
1400
1200
1000
800
600
400
200
0
n
o
i
l
l
i
m
$
600
500
400
300
200
100
0
n
o
i
l
l
i
m
$
487
446
309
1301
63%
1061
39%
867
38%
1500
1125
700
n
o
i
l
l
i
m
$
375
0
80
60
40
20
t
n
e
c
r
e
p
0
n
o
i
l
l
i
m
$
700
600
500
400
300
200
100
0
EXPLORATION AND
DEVELOPMENT EXPENDITURE
660
441
297
1999
2000
2001
1999
2000
2001
Sales Gas & Ethane
LPG
Condensate
Crude Oil
1999
2000
2001
1999
2000
2001
Gearing
Net debt
1999
2000
2001
Exploration
Development
www.santos.com
14
DELIVERING GROWTH THROUGH SMARTER EXPLORATION
EXPLORATION
EXPLORATION 2001
EXPLORATION INITIATIVES
2002 EXPLORATION PROGRAM
Material results from the 2001 program included:
(cid:2) Successful offshore wildcat discovery Oyong-1 in the
East Java Basin, Indonesia and Corowa-1 in the
Carnarvon Basin.
Santos has taken steps to improve its exploration portfolio
and exploration processes in line with the objectives
outlined in the strategy.
(cid:2) An Exploration Forum has been established comprising
(cid:2) Successful testing of stratigraphic traps in the Cooper
Basin resulting in the Wellington and Crowsnest gas
discoveries.
(cid:2) A significant discovery, Henderson-1 in the Frio Trend
of South Texas to follow on from the Runnells discovery
in 2000.
(cid:2) Successful 3D seismic based, back-to-back campaign-
drilling programs onshore in the Otway Basin and in
the Quasar area of South-west Queensland.
Fifty wells were drilled with 26 successes, achieving a 52%
success rate.
The exploration program realised a resource potential of
67 million boe.
all exploration managers to overview the total
exploration program.
(cid:2) The Exploration Portfolio is ranked by value, materiality
and follow-up potential across the Company and the
best opportunities selected.
(cid:2) New Venture strategy and teams are in place.
(cid:2) A ‘Virtual’ USA Exploration Team has been formed in
Adelaide and is evaluating opportunities in the South
Texas Frio trend. This enables significant cost savings
through the use of the latest web-based technology.
(cid:2) The exploration program is now focussed on wildcat
opportunities.
Santos’ aim is to lift its exploration performance through a
shift to higher risk but higher reward prospects. To achieve
this objective Santos will spend approximately $160 million
on the exploration and appraisal program in 2002. In 2002,
the program provides exposure to more than double the
level of mean resources discovered during 2001.
During 2002, Santos intends to drill 17 wildcat wells
for a total expenditure of approximately $120 million.
Key wildcat exploration wells include the Maleo-1 prospect
in Indonesia, Norfolk-1 in the Carnarvon Basin, Bosavi-1
in PNG, Casino-1 in Victoria and a six-well program in
South Texas.
www.santos.com
2002 WILDCAT EXPLORATION
Australia & South East Asia
USA
Pacific Ocean
Papua
Darwin
Australia
Papuan Basin
2 wells
Papua
New Guinea
South Texas
6 wells
Eastern Queensland
3 wells
Brisbane
Indonesia
East Java Basin
1 well
Browse Basin
& Timor Sea
2 wells
Carnarvon Basin
2 wells
Indian Ocean
Perth
Adelaide
0
1000
kilometres
Offshore Otway Basin
1 well
Sydney
Canberra
Melbourne
Hobart
16
OPTIMISING THE VALUE OF OUR ASSETS
DEVELOPMENT
Santos spent $509 million on development in 2001,
with significant spending increases in the Cooper Basin,
Offshore Australia and the United States.
COOPER BASIN
In the Cooper Basin, 51 development wells were drilled and
seven compression projects and 89 fracture stimulations
executed. Development activity was largely focussed on
gas deliverability to meet strong gas demand and oil
development drilling was also increased as a result of
higher oil prices and attractive opportunities. In the South
Australian section of the Cooper Basin, activity was
focussed on the Moomba North gas field where 18 wells
were drilled, achieving cost savings of 25% to 35%. In the
Dullingari gas field, a seven-well drilling campaign was
completed adding initial gas deliverability of 24 million
cubic feet per day and the oil development program in the
Moomba/Big Lake area boosted overall oil production.
In South-west Queensland, activity centred on Challum,
Baryulah and Barrolka. In Challum five vertical and two dual
stacked lateral wells were completed, adding 50 TJ per day
to deliverability. In Baryulah four new wells and six existing
wells were connected adding 72 TJ per day. The Barrolka
development program proved unsuccessful with two
horizontal under-balanced and three vertical wells failing
to flow at commercial rates.
OTWAY BASIN
Santos spent $15 million on continued development in the
Otway Basin with the successful drilling of six new field
exploration wells, the connection of three wells and
continued facility upgrades.
EASTERN QUEENSLAND
The first Santos operated coalbed methane project was
initiated in the Scotia field. Construction of plant and
infrastructure capable of delivering 25 TJ/d gross sales gas
commenced in November. Nine wells were drilled and 36
fracture stimulations were completed.
NORTHERN TERRITORY
Development of the Mereenie oil and gas field continued
through 2001.
OFFSHORE AUSTRALIA
A total of $161 million was spent in 2001 in Offshore
Australia development. Most of this was for the continued
development of Bayu Undan ($107 million), Legendre
($22 million), continued development drilling in Barrow
Island and Thevenard Island ($19 million) and the
Roller/Skate pipeline replacement ($11 million).
Bayu Undan made good progress through 2001. By year-
end, all major contracts for topside and drilling had been let
and facility construction was 34% complete. The Legendre
field, located 100km north of Dampier, in the North-west
Shelf, began producing in May 2001. Legendre production
averaged 39,600 bopd (gross) during January 2002.
SANTOS USA
Santos USA Corp ended 2001 with a producing rate of 32
mmscf/d, due in large part to a 100% success rate in seven
development wells. This has increased from 10 mmscf/d in
January 2001.
2002 DEVELOPMENT PROGRAM
During 2002 Santos plans to spend approximately $560
million on the Group’s development program. The 2002
program includes expenditure of $158 million on the Bayu
Undan Liquids Project ($107 million in 2001), $159 million
on Cooper Basin gas field development ($191 million in
2001) and $93 million on construction and fixed assets
including a second dew point control unit at Ballera,
upgrade of the Moomba plant controls and Scotia
compression and separation facilities. The budget
also includes information technology expenditure of
$31 million.
Santos’ development activity includes a significant
component of US dollar expenditure. The fall of the
Australian dollar from a AUD/USD exchange rate of
65 cents has resulted in a $51 million increase in the
development budget.
www.santos.com
DEVELOPMENT EXPENDITURE ($million)
South Australia
Queensland/Northern Territory
Offshore Australia
South East Asia
USA
Other
Total
2002 DEVELOPMENT PROGRAM ($million)
Development
Offshore/Overseas
Bayu Undan Liquids Project
Carnarvon Basin
USA field development
Other
Onshore Australia
Cooper Basin gas
Cooper Basin oil
East Queensland gas
Otway gas
Construction and Fixed Assets
Information Technology
Total
2001
153
150
161
13
23
9
509
158
27
30
31
159
15
11
5
2000
135
109
72
9
5
11
341
246
190
93
31
560
18
DEFINING OUR ASSET BASE
RESERVES
At the end of 2001, Santos had Proved and Probable (2P)
reserves of 724 million boe. These reserves are equal to an
average reserves life of 13 years.
Possible reserves or Contingent Resources to reflect the
increased uncertainty associated with the technical
complexity of the assets.
The year 2001 saw the completion of a major review
of all Santos reserves. As a result, Santos is now able
to categorise its reserves into Proved (1P), Proved and
Probable (2P) and Proved, Probable and Possible (3P) and
able to measure Contingent Resources. These estimates
are generally in line with international reporting standards.
Measuring and having confidence in all components
of the reserve base has been a fundamental part of the
Company’s strategy and will be a cornerstone of
performance management in the future.
The reserves review has been a substantial task involving
employees from throughout the Company assessing over
460 oil and gas fields. The review process was announced
in early 2001 and continued until early 2002. The process
has been externally audited to ensure reserve estimates are
consistent across the Company and meet international
standards.
Proved and Probable reserves have been revised
downwards by 169 million boe (a decrease of 18%)
in comparison with year end 2000. Around three-quarters
of the reduction in 2P reserves has been reclassified as
www.santos.com
While 2P reserves declined from 921 million boe to 724
million boe Proved, Probable and Possible (3P) reserves
increased by 218 million boe (net of 2001 production) to
1,478 million boe. Contingent Resources increased by over
500 million boe, to 1,190 million boe at end 2001.
The Company’s Contingent Resources substantially
exceed its Proved and Probable Reserves such that
commercialisation of Contingent Resources would have
a material positive impact on reserves.
RESERVES – SANTOS SHARE (mmboe)
Reserves Category
YE 2000
Production
Revisions
Expl/Appr/
Acq Adds
YE 2001
Proved (1P)
Proved and Probable (2P)
Proved and Probable and Possible (3P)
Contingent Resources (Best Estimate)
(a)
921
1260
687
–56
–56
–56
-
(a)
–169
169
29
17
28
105
474
316
724
1478
1190
(a) not previously defined
PROVED AND PROBABLE RESERVES (SANTOS SHARE)
Area
Cooper Basin
Onshore Northern Territory
Offshore Northern Territory
Eastern Queensland
Southern Australia
Carnarvon Basin
PNG
Indonesia
Santos USA
Total
Sales Gas
and Ethane
PJ
Oil Condensate
mmbbl
mmbbl
1739
173
321
270
133
297
0
142
67
3142
26.5
3.2
1.4
1.2
0.0
52.0
2.3
0.0
1.3
87.9
24.0
1.0
26.0
0.0
2.0
9.0
0.0
0.0
0.0
62.0
LPG
’000
tonnes
2784
0
1400
43
152
0
0
0
0
4379
PROVED AND PROBABLE RESERVES (SANTOS SHARE)
Estimated reserves
year end 2000
2001 Production
2001 Revisions
2001 Exploration additions
Appraisal existing fields
Acquisitions/Divestments
Estimated reserves
year end 2001
Sales Gas Crude Oil Condensate
mmbbl
mmbbl
(incl. Ethane)
PJ
LPG
’000
tonnes
Total
mmboe
4085
-219
-859
94
29
12
3142
96
-13
4
1
0
0
88
80
-3
-17
1
1
0
62
5504
-258
-1011
52
92
0
4379
921
-56
-169
19
7
2
724
20
MAINTAINING MARKET MOMENTUM
GAS LEADER
During 2001 Santos maintained its position as Australia’s
largest net gas producer achieving record production of gas
and ethane of 219 PJ. In the Cooper Basin, production was
maintained at last year’s record levels. In the United States
gas production increased 41% to 5.2 PJ and in the Otway
Basin production increased 50% to 7.2 PJ.
In 2001 the Company invested over $230 million in Eastern
Australia gas supply, primarily in the Cooper Basin, but also
in Eastern Queensland and Victoria.
Subject to weather conditions, the outlook for gas
production and sales in 2002 is expected to remain strong.
During April 2002 Santos will commence first gas sales
from the Scotia gas field to CS Energy, the Queensland
Government owned power generator. Construction of the
Scotia gas plant, delivery system and export pipeline is
nearing completion. Gas from the Scotia field will supply CS
Energy’s gas fired turbine at the Swanbank Power Station.
The agreement is for up to 120 PJ of gas over 15 years.
In 2002 Santos expects to invest a further $280 million in
Eastern Australia gas development.
Demand for gas in Eastern Australia is expected to keep
growing and to require new sources of supply. ABARE (an
Australian Government economic research agency) expects
annual primary gas consumption in Eastern and Southern
Australia to nearly double between 2000 and 2020,
increasing from 544 PJ to 1,020 PJ.
Santos has significant gas interests in Southern and Central
Australia, Papua New Guinea and the Timor Sea and the
Company is keen to see these interests developed for
domestic sales and for LNG, as appropriate.
215.0
219.3
202.0
GAS PRODUCTION
184.9
172.2
250
200
150
100
s
e
l
u
o
j
a
t
e
p
1997
1998
1999
2000
2001
www.santos.com
22
EXPLOITING OUR RESOURCE BASE
PRODUCTION
(cid:2) Record sales gas and ethane production of 219.3 PJ.
(cid:2) Legendre oil production commenced 17 May 2001 and averaged
28,300 bopd (gross) in 2001.
(cid:2) United States production grew by 39% to over 1.0 million boe as
the Runnells discoveries were brought on line.
In the United States connection of the
Runnells 3, 5 and 7 wells during the
second half of the year led to a 41%
increase in gas production to 5.2 PJ.
United States gas production is
expected to double in 2002 when the
Runnells field and the Henderson-1
gas discovery contribute for a
full year.
Otway Basin gas production
increased by 50% to 7.2 PJ due to two
of the six onshore gas discoveries and
one development well being quickly
which produced 1.5 million barrels (net) of oil during 2001.
It is anticipated that Legendre production will remain on
plateau at approximately 40,000 bopd (gross) until the
latter part of 2002. The Elang-2 well was shut-in for an
extended period due to a partially collapsed subsea tree.
The Roller and Skate fields at Thevenard were also
shut-in for an extended period due to the repair of the
field pipeline.
Condensate production during 2001 declined by 2%
to 3.3 million boe due to lower gas production in the South
Australian Cooper Basin. In 2001 LPG production was also
affected by reduced yields due to changing field mix and
declined by 1.8% to 258,400 tonnes (2.2 million boe).
Santos’ 2001 production was 55.7 million boe, close to the
record 56.0 million boe achieved in 2000.
The Company achieved record sales gas and ethane
production of 219 PJ, up by 2.0%, due to increased
contributions from the South-west Queensland section of
the Cooper Basin, the Otway Basin, the United States and
East Spar in the Carnarvon Basin.
In South-west Queensland, gas production rose by 10.5%
to 72.6 PJ as new fields were brought into production to
meet demand in Eastern Australia.
www.santos.com
brought on to production. Otway Basin production is
expected to double when the remaining three discoveries
are connected to the Victorian gas system.
Oil production was 6.4% lower in 2001 as a result of
natural field decline in South-west Queensland, Timor Sea,
Timor Gap and Barrow Island as well as water
breakthrough at Stag and remedial maintenance work
at Elang/Kakatua and Thevenard fields. The decline in oil
production was mitigated by the earlier than expected
commencement of production from the Legendre oil facility
PRODUCTION
STATISTICS
23
Total 2001
Total 2000
Field Units
mmboe
Field Units
mmboe
Total 2001
Total 2000
Field Units
mmboe
Field Units
mmboe
Sales Gas and Ethane (PJ)
Cooper Basin
Surat/Denison
Amadeus
Otway
Carnarvon
USA
Total Production
Total Sales Volume
Total Sales Revenue ($million)
Crude Oil (‘000 bbl)
Cooper Basin
Surat/Denison
Amadeus
Elang/Kakatua
Legendre
Thevenard
Barrow
Jabiru/Challis
Stag
SE Gobe
USA
Other
Total Production
Total Sales Volume
Total Sales Revenue ($million)
165.7
10.6
10.9
7.2
19.7
5.2
219.3
217.8
617.9
3079.1
115.8
306.0
870.5
1461.3
1046.7
1097.6
288.8
3736.2
510.7
83.5
12.8
12609.0
12322.4
561.0
28.5
1.8
1.9
1.2
3.4
0.9
37.7
37.4
3.1
0.1
0.3
0.9
1.5
1.0
1.1
0.3
3.7
0.5
0.1
0.0
12.6
12.3
165.7
11.2
10.6
4.8
19.0
3.7
215.0
213.7
588.1
3242.8
107.9
343.1
1397.7
-
1696.8
1201.6
333.2
4630.6
425.2
75.2
17.7
13471.8
13475.0
627.1
Condensate (‘000 bbl)
Cooper Basin
Surat/Denison
Otway
East Spar
USA
Total Production
Total Sales Volume
Total Sales Revenue ($million)
LPG (‘000 t)
Cooper Basin
Surat/Denison
Total Production
Total Sales Volume
Total Sales Revenue ($million)
TOTAL
Production (mmboe)
Sales Volume (mmboe)
Sales Revenue ($million)
28.6
1.9
1.8
0.8
3.3
0.6
37.0
36.7
3.3
0.1
0.4
1.4
-
1.7
1.2
0.3
4.6
0.4
0.1
0.0
13.5
13.5
2.2
0.0
0.0
1.1
0.0
3.3
3.3
2.2
-
2.2
2.1
2291.9
22.3
70.3
1066.3
39.4
3490.2
3633.9
165.5
255.1
3.3
258.4
232.9
115.3
55.7
55.1
1459.7
2.1
0.0
0.1
1.0
0.0
3.2
3.4
2.2
0.0
2.2
2.0
2387.9
21.8
53.2
1079.9
19.3
3562.1
3602.8
157.5
263.1
-
263.1
252.9
124.4
56.0
55.7
1497.1
www.santos.com
24
MANAGING THE WORK ENVIRONMENT
SAFETY
In June 2001, a serious incident occurred at Moomba which
tragically resulted in the loss of one of Santos’ employees.
The incident involved an unintended release of volatile
product that subsequently ignited. Santos has thoroughly
investigated the incident and the findings have been
presented to Santos employees.
A number of initiatives have been undertaken since the
investigation of the incident.
Santos strives for the highest standard of occupational
health and safety (OH&S) and is fully committed to a work
environment free of injury and illness. While this has not
yet been achieved, the trend since 1997 indicates significant
progress towards this goal.
The key measure of safety performance used is the
Total Recordable Case Frequency Rate (TRCFR) which
is defined as the number of Recordable Cases (Medical
Treatment and Lost Time Injuries) per million hours
worked. Santos investigates and reports all accidents, near
misses and hazards for employees and contractors.
Focussing on near misses and hazards and eliminating
or controlling their underlying causes are key factors in
achieving sustained improvement in safety performance.
Safety is the responsibility of all employees and individuals
are provided with comprehensive safety training and use of
the Incident Management Reporting System. This is a PC-
based tool that provides for a single point of data capture
on all injuries, near misses, and observed hazards. It is an
open database and educational mechanism that can be
widely accessed by employees.
SAFETY PERFORMANCE
The TRCFR for Santos and contractors combined for 2001
was 8.8 (8.0 in 2000) and the other key measure, Lost
Time Injury Frequency Rate (LTIFR), was 3.2.
Santos is committed to achieving contractor safety
performance that is comparable to Santos employees.
While not yet achieved in all areas, many contractors now
achieve a safety performance matching and, in some cases,
better than that of Santos employees. The improvement in
contractor performance has continued with a further 22%
reduction in TRCFR from 2000 to 2001.
2002 PLANS – THE WAY FORWARD
During 2002, further initiatives will be implemented to
provide for continuous improvement in safety.
The reorganisation of Santos provides the opportunity to
progress towards a more integrated approach to safety
management across the organisation and this will be
coordinated as a corporate group function.
One of the initiatives for 2002 is a Safety Leadership
program that will be presented to supervisory personnel
and others with a specific responsibility for safety in the
workplace.
There is commitment to, and plans are being progressed
for a comprehensive risk-based assessment program for
the Company’s assets. Santos will conduct further
structured risk assessments of facilities and use these to
identify specific areas that may require further analysis or
special safety management practices.
www.santos.com
FOCUS ON PEOPLE
HUMAN RESOURCES
25
HUMAN CAPITAL
Developing Santos’ human capital is an important part of
transforming Santos.
The Company has a talented workforce of over 1,700
people, including highly skilled geoscientists, engineers,
commercial managers and field staff whose initiative and
creativity are essential to maximising the value of the
Company’s physical capital and implementing the growth
strategy.
Santos is committed to assembling and supporting globally
competitive management, technical and operational teams.
This will be achieved by encouraging talent already within
the Company and recruiting top quartile professionals
externally.
There is a substantial effort under way to create a more
productive Company culture that is more transparent and
open, and where people are energised and share
knowledge. Some of the elements of the change include:
ENCOURAGING PARTICIPATION
Employee contributions and suggestions are now
encouraged at all levels. Barriers between employees, such
as those based on status and hierarchy, are being broken
down generally, and employees are being encouraged to
take on individual responsibility on the principle that a
large part of the knowledge and experience needed for any
specific issue already exists within the Company.
Santos’ Corporate Strategy has been widely disseminated
throughout the Company and is now owned by employees
generally. Employees have a clear focus on the Company’s
strategic direction and all functions are aligned.
PROVIDING INFORMATION
Employees are being provided with the information and
tools they need to be able to do their jobs as well as
possible and to create commitment to the organisation.
A key project has been the upgrading of Santos’ intranet
which has been transformed into a key information
sharing tool.
TEAMWORK
Teamwork is being actively encouraged, both in the field
and across functional areas. Important examples include
the integrated management of the Cooper Basin, and
forums such as the Exploration Forum and the Gas Forum.
A virtual team comprising explorationists and utilising
leading technology operates between Australia and the
United States.
REMUNERATION
A modernised remuneration and reward policy has
been developed which standardises conditions across
the Company. One example of standardisation is in creating
a uniform superannuation scheme.
PERFORMANCE
A performance management system has been developed
where performance is linked to strategic objectives and
employees will be rewarded in line with the outcomes they
achieve. In this way, individual responsibility is encouraged
and recognised. This system will be progressively rolled out
to employees throughout the coming year.
These changes take time, but the overall aim is to lift
Santos’ performance by making it the employer of choice
for those seeking careers in the oil and gas sector. Santos is
committed to empowering individuals and helping them to
develop the skills they need to best perform. In this regard,
career and succession management, professional
development and training are ongoing priorities.
www.santos.com
26
WORKING WITH NATURE
ENVIRONMENT
In 2001, Santos revised its Environmental Policy. This
policy was originally developed in 1990 and updated in
1997. The new version is titled ‘Santos’ Environmental
Vision, Commitment & Policy’.
The cornerstone of the new policy is the statement that
addresses the role of individuals in managing the
environment, which is far more explicit than past policies.
As with safety, environmental stewardship is the
responsibility of all Santos employees and contractors.
This includes all Santos employees and contractors from
the Boardroom to the wellsite. Everyone is obliged to report
any environmental hazard, near miss or incident, so that it
may be investigated, rectified and recurrence prevented.
The policy emphasises partnership with stakeholders and
focuses on the concept of ethical behaviour and safe
operations. It clearly reaffirms that the term Environment is
to be considered in a broad context and encompasses not
only nature and the physical environment, but includes
people, their work and the things they value.
This last aspect of the Company’s ongoing environmental
management program can be illustrated by the views of
W H (Harry) Butler, who has been conducting (external
specialist) environmental audits of Santos’ field operations
since 1982. In an address to the Santos Board in November
2001, he indicated that, ‘The latest seismic dune and road
crossings are among the best I have ever seen in this
industry, whilst Santos’ procedures for identifying, avoiding
and recording cultural heritage sites are, in my view, at a
standard of world’s best practice.’
The new policy also states, ‘We intend to shrink and
lighten the environmental footprint of our operations’ and
‘New ideas and new ways of avoiding or minimising our
environmental impacts will be encouraged and rewarded.’
A good example of responding to this challenge is the
restoration of the Baryulah pipeline in Queensland.
During 2001, Santos constructed a pipeline from Baryulah
to the Ballera Gas Plant. The crossing of the Cooper Creek
had to be undertaken while there was water in it. Minimal
disturbance was achieved by reducing the width of the
easement, the installation of ‘silt curtains’ and re-routing
the pipeline to avoid a tree with a nest. The channel was
reprofiled to its former profile and clay compacted to its
previous density to ensure that there would be no change
to the water flow and also to prevent erosion.
During construction, the topsoil (containing seeds and
nutrients) was kept separate from the subsoil so that the
topsoil could be respread in order to ensure maximum
revegetation of the easement.
Six months after construction, the easement is already
starting to revegetate with small shrubs. Monitoring will be
ongoing to ensure its continued success.
This example indicates the enthusiasm with which Santos’
environmental team and personnel in the field have
embraced the Company’s strategy.
While Santos has historically focussed attention on
addressing environmental issues in the field, the Company
recognises increasing community expectations relating to
sustainability and public reporting on environmental
matters. Collection of data aimed at the future publication
of a sustainability report has commenced. Santos’ goal of
top quartile performance includes environmental
achievements and the Company is working towards
qualifying for inclusion in sustainability indices.
The future priorities for Santos also include successfully
addressing increased policy and compliance requirements
and continuing the development of an appropriate
greenhouse strategy. A dedicated Greenhouse Manager
has been appointed for this purpose.
www.santos.com
EMBRACING CORPORATE CITIZENSHIP
COMMUNITY
27
Santos’ community program in the Western District
of Victoria included contributions to a range of local
organisations including the Port Campbell Surf Life Saving
Club, the Nirrandra Recreation Reserve and a Year of the
Volunteer Project organised by the Moyne Shire Council.
During 2001 Santos continued its sponsorship of the
Darwin Festival maintaining the Company’s close
relationship with the Northern Territory community.
Santos recognises and embraces the obligation of
corporate citizenship and values the relationships the
Company has with communities across Australia.
In 2002 and beyond, Santos’ community support program
will increase its focus on youth and education while
continuing to support organisations, activities and events
that share Santos’ values.
In this regard, Santos supports a range of cultural,
educational and not-for-profit organisations that are
important to these communities.
Santos’ principal sponsorship of the Adelaide Symphony
Orchestra and the key support provided to the School of
Petroleum Engineering and Management at Adelaide
University exemplifies this commitment.
One of Santos’ most significant sponsorships in 2001 was
the support of the exhibition ‘A Gap in Nature, Discovering
the World’s Extinct Animals’, at the South Australian
Museum.
This is an exhibition of 103 life size paintings of extinct
species by the artist Peter Schouten, complemented by the
research of Dr Tim Flannery. It highlights the reasons why
resources need to be managed responsibly. The exhibition
will tour to other capital cities in 2002 and 2003.
Also in South Australia, Santos made a contribution to
Foodbank, a not-for-profit organisation that organises and
manages the distribution of food to a variety of agencies
that provide support to people in need.
In Whyalla, Santos supported the inaugural Outback
Games and the Air Sea Rescue Squadron, an organisation
that plays an important search and rescue role in the local
community.
Santos continued its support of the Queensland Art Gallery,
sponsoring an exhibition of work by the colonial artist,
Conrad Martens, the only major colonial artist to work in
that state. This Centenary of Federation exhibition
comprises 60 works from his journey through South-east
Queensland in the 1850s. Over 60,000 people have visited
this exhibition in Brisbane, Toowoomba and Warwick.
In Cunnamulla, Santos donated equipment and materials
to a youth project called ‘The Shed’. ‘The Shed’ is a place
where young people can learn practical skills such as
welding and metal fabrication and at the same time
develop important life skills.
www.santos.com
28
BOARD OF
DIRECTORS
STEPHEN GERLACH
LLB
JOHN CHARLES ELLICE-FLINT
BSc (Hons)
PETER CHARLES BARNETT
FCPA
FRANK JOHN CONROY
BCom, MBA, FAIM, FAICD, FAIBF
GRAEME WILLIAM McGREGOR
AO, BEc, FCPA, FCA, FAIM, FAICD
Age 56. Director since 5 September
1989 and Chairman since 4 May 2001.
Chairman of the Environmental
Committee and member of the
Remuneration Committee of the
Board and Chairman of Santos
Finance Ltd. Chairman of Amdel Ltd,
Equatorial Mining Ltd, Elders Australia
Ltd and Beston Pacific Vineyard
Management Ltd. Director of
Southcorp Holdings Ltd, Futuris
Corporation Ltd, Challenger Beston
Limited and Elders Rural Services Ltd.
Former Managing Partner of the
Adelaide legal firm, Finlaysons.
Age 51. Managing Director since
19 December 2000, member of the
Environmental Committee of the
Board, Director of Santos Finance Ltd
and also Chairman of other Santos Ltd
subsidiary companies. Twenty-six
years’ experience in the international
oil and gas industry with Unocal,
including as Senior Vice President:
Global Exploration and Technology
and Vice President: Corporate
Planning and Economics.
www.santos.com
Age 61. Director since 31 October 1995
and member of the Environmental
Committee of the Board. Director of
Mayne Group Ltd, AMCIL Ltd and
Opis Capital Ltd. Former Managing
Director and Chief Executive Officer of
Pasminco Ltd and Chief Executive
Officer of EZ Industries Ltd.
Age 59. Director since 19 October
1999 and Director of Santos Finance
Ltd. Chairman of St George Bank Ltd,
Australian Pharmaceutical Industries
Limited and ORIX Australia
Corporation Ltd. Director of Futuris
Corporation Ltd. Former Managing
Director of Westpac Banking
Corporation.
Age 63. Director since 3 September
1999. Chairman of the Audit
Committee of the Board and Director
of Santos Finance Ltd. Director of
Foster’s Brewing Group Ltd, Nufarm
Ltd, Were Securities Ltd and
Community Foundation Network Ltd.
Member of the Financial Reporting
Council. Former Executive Director
Finance of The Broken Hill Proprietary
Company Limited.
29
‘ONE SANTOS’ – The Senior Management Team
CORPORATE
Chief Executive Officer and Managing Director
-
John Ellice-Flint
Executive General Manager – Corporate
Chief Information Officer
General Manager – Drilling
General Manager – Human Resources
-
John Reynolds
- Einar Vikingur
- Frank Jones
- Kevin Coates
Group General Counsel and Company Secretary
- Michael Roberts
General Manager – Finance and Investor Relations - Graeme Bethune
General Manager – Accounting
- Don Priestley
Manager – Strategic Planning and Performance
- Geoff Brown
VOLUME STREAM
General Manager – Central Australia
General Manager – Northern Australia
General Manager – Western Australia
General Manager – Engineering and Facilities
Manager – Reservoir and Production Engineering - Wilf Lammerink
Jon Young
-
- Rod Rayner
- Paul Moore
- Denis Dare
GROWTH STREAM
General Manager – Southern Australia
General Manager – South East Asia
President – Santos USA Corp
General Manager – Exploration
General Manager – Gas Commercialisation
and Marketing
Manager – Corporate Development
- Rick Wilkinson
- Bob Hall
- Kathy Hogenson
-
Jacques Gouadain
- Bruce Wood
Janet Cronin
-
www.santos.com
MICHAEL ANTHONY O’LEARY
DipMinE, BSc, FAusIMM, FAIM
PROFESSOR JUDITH SLOAN
BA (Hons), MA, MSc
IAN ERNEST WEBBER
AO, BE, ATS, FCIT, FAIM
Age 66. Director since 15 October
1996 and member of the
Environmental Committee of the
Board. Deputy Chairman of Bank
of Western Australia Ltd. Former
Chairman of Hamersley Iron, Argyle
Diamonds, Dampier Salt and former
Director of Rio Tinto Ltd and Rio
Tinto plc.
Age 47. Director since 5 September
1994. Chairperson of the
Remuneration Committee and
member of the Audit Committee
of the Board. Chairperson of SGIC
Holdings Ltd and Director of Mayne
Group Ltd and a Board member of the
Australian Broadcasting Corporation.
Former Professor of Labour Studies
at the Flinders University of South
Australia and Director of the National
Institute of Labour Studies.
Age 66. Director since 16 February
1993 and member of the Audit
Committee and Remuneration
Committee of the Board. Director
of Pacific Dunlop Ltd and WMC Ltd.
Former Managing Director and
Deputy Chairman of Chrysler Australia
Ltd and Managing Director of
Mitsubishi Motors Australia Ltd.
Former Chairman of Mayne Nickless
Ltd Group.
30
CORPORATE
GOVERNANCE
CORPORATE GOVERNANCE
STATEMENT
The purpose of this statement is to
provide details of the main corporate
governance practices the Company had
in place during the past financial year.
The Board of Santos Ltd is committed
to good corporate governance and to
this end has had in place for a number
of years formal guidelines recording
the Board’s policy on: Board
composition and appointment of
chairman; Board membership and
attendance; the appointment and
retirement of Directors; independent
professional advice; compensation
arrangements; external auditors; risk
management; and ethical standards.
Except where otherwise indicated,
references in this statement to the
“Board guidelines” are to the formal
guidelines in force during the past
financial year. The Board guidelines are
reviewed by the Board on an annual
basis and as required.
BOARD OF DIRECTORS AND ITS
COMMITTEES
The Board is responsible for the overall
corporate governance of the Company
including its strategic direction and
financial objectives, establishing goals
for management and monitoring the
attainment of these goals.
To assist in the effective execution
of its responsibilities, the Board
has established a number of Board
Committees including a Nomination
and Remuneration Committee (which
during the year was reconstituted into
separate Nomination and
Remuneration Committees), an Audit
Committee and an Environmental
Committee. All Committees are chaired
by, and comprised only of, non-
executive Directors, except for the
Environmental Committee, which
includes the Managing Director
as a member. The Board guidelines
prescribe that the Board is to meet
at least 10 times a year.
All current non-executive Directors,
including the Chairman, are considered
to be ‘independent’ Directors, as
defined in the 1999 guidelines of the
Australian Investment and Financial
Services Association.
COMPOSITION OF THE BOARD
The names and details of the
experience, qualifications, age, special
responsibilities and shareholdings
of each Director of the Company are
set out on pages 28 and 29 of this
Annual Report.
The composition of the Board is
determined in accordance with the
Company’s Constitution and the Board
guidelines including: the Board is to
comprise a minimum of five and a
maximum of 10 Directors (exclusive
of the Managing Director); the Board
should comprise a substantial majority
of non-executive Directors (currently
the Board comprises seven non-
executive and one executive Director);
there should be a separation of the
roles of Chairman and Chief Executive
Officer of the Company; and the
Chairman of the Board should be
a non-executive Director.
Under the Board guidelines, it is the
responsibility of the Nomination
Committee to devise the criteria for,
and review membership of, and
nominations to, the Board. The primary
criteria adopted in selection of suitable
Board candidates are their capacity to
contribute to the ongoing development
of the Company having regard to the
location and nature of the Company’s
significant business interests and to
the candidates’ age and experience by
reference to the age and diversity of
experience of existing Board members.
When a Board vacancy exists or where
it is considered that the Board would
benefit from the services of a new
Director with particular skills, the
Nomination Committee has
responsibility for proposing candidates
for consideration by the Board and,
where appropriate, engages the
services of external consultants.
Prior to appointment, each Director is
provided with a letter of appointment
which, inter alia, encloses a copy of
the Board guidelines. The expectations
of the Board in respect to a proposed
appointee to the Board and the
workings of the Board and its
committees are conveyed in interviews
with the Chairman and access provided
to appropriate executives in relation to
details of the business of the Company.
Under the Company’s Constitution
approximately one-third of Directors
retire by rotation each year and
Directors appointed during the year
are required to submit themselves
for election by shareholders at the
Company’s next Annual General
Meeting.
The Board guidelines prescribe
that, under normal circumstances,
Directors should retire at the first
Annual General Meeting after reaching
the age of 72 years and not seek
re-appointment.
The current members of the
Nomination Committee, all of whom
are non-executive Directors, are
Mr S Gerlach (Chairman),
Mr P C Barnett, Mr F J Conroy,
Mr G W McGregor, Mr M A O’Leary,
Professor J Sloan and Mr I E Webber.
INDEPENDENT PROFESSIONAL
ADVICE
The Board guidelines set out the
circumstances and procedures
pursuant to which a Director, in
furtherance of his or her duties, may
seek independent professional advice
at the Company’s expense. Those
procedures require prior consultation
with, and approval by, the Chairman
and assurances as to the qualifications
and reasonableness of the fees of the
relevant expert and, under normal
circumstances, the provision of the
expert’s advice to the Board.
REMUNERATION
The Remuneration Committee
is responsible for reviewing the
remuneration policies and practices
of the Company including: the
compensation arrangements for
executive Directors and senior
management; the Company’s
superannuation arrangements;
www.santos.com
31
employee share and option plans; and,
within the aggregate amount approved
by shareholders, the fees for non-
executive members of the Board.
Further information on these matters
is included at pages 40 and 41 of this
Annual Report and details of the
Company’s employee share and option
plans are provided in Note 19 of the
Financial Report. No non-executive
Director may participate in any of the
Company’s share or option plans.
Information in respect to indemnity
and insurance arrangements for
Directors and senior executives appears
at page 41 of this Annual Report.
The current members of the
Remuneration Committee, all of whom
are non-executive Directors, are:
Professor J Sloan (Chairperson),
Mr S Gerlach and Mr I E Webber.
AUDIT COMMITTEE
The Board guidelines require the
Board to continue in existence an
Audit Committee of the Board.
The role of the Audit Committee is
documented in a Charter, approved
by the Board. The Charter was revised
during the year.
The Committee is required to meet
at least three times per year and
members may raise any matters
considered desirable.
The role of the Audit Committee
includes: examining the accounting
policies of the Company to determine
whether they are appropriate and in
accordance with generally accepted
practices; ensuring that truth and
fairness is reflected in the preparation
and publication of the Company’s
financial reports; meeting regularly
with the auditors to reinforce the
independence of the auditors, to
determine the appropriateness of
internal and external audit procedures,
to review the performance of the
auditors and to provide the auditors
with confidential access to the Board;
and referring matters of concern to the
Board as appropriate, and considering
issues which may impact on the
financial accounts of the Company.
Minutes and recommendations of the
Audit Committee are distributed at the
next Board Meeting.
The current members of the Audit
Committee are: Mr G W McGregor
(Chairman), Professor J Sloan and
Mr I E Webber.
RISK MANAGEMENT
The Board has in place a number of
arrangements and internal controls
intended to identify and manage areas
of significant business risk. These
include the maintenance of: Board
Committees; detailed and regular
budgetary, financial and management
reporting; established organisational
structures, procedures, manuals and
policies; audits (including internal and
external financial, environmental and
safety audits); comprehensive
insurance programs; and the retention
of specialised staff and external
advisors.
(cid:2) Management of
environmental risk - environmental
risk is managed through:
comprehensive environmental
management systems;
Environmental Committees at
Board and management levels;
the retention of specialist
environmental staff and advisors;
regular internal and external
environmental audits; and
imposing environmental care as
a line management responsibility.
The current members of the
Committee are: Mr S Gerlach
(Chairman), Mr P C Barnett, Mr M
A O’Leary and Mr J C Ellice-Flint.
(cid:2) Management of exploration risk -
exploration risk is managed
through internal control systems
which include: formalised risk
assessment procedures at the
Business Unit level; Corporate
review in both prospect and
hindsight; Board approval of
exploration budgets; and regular
reporting on progress to the
Board. External reviews are also
undertaken as necessary.
(cid:2) Investment appraisal - the
Company has clearly defined
procedures for capital expenditure.
These include: annual budgets;
detailed appraisal and review
procedures; levels of authority; and
due diligence requirements where
assets are being acquired.
(cid:2) Financial reporting - a
comprehensive budgeting system
exists with an annual budget
approved by the Board. Monthly
actual results are reported against
budget and, where applicable,
revised forecasts for the year are
prepared and reported to the
Board. Speculative transactions are
prohibited. Further details relating
to financial instruments and
commodity price risk management
are included in Note 33 of the
Financial Report.
(cid:2) Functional speciality and business
unit reporting - all significant areas
of Company operations are subject
to regular reporting to the Board.
The Board receives regular reports
on the performance of each
Business Unit and on exploration,
development, finance, liquids
marketing, safety, government,
investor relations and
environmental matters.
Senior management attend Board
and Committee meetings, at which
they report to Directors within their
respective areas of responsibility. This
assists the Board in maintaining its
understanding of the Company’s
business and assessing the senior
management team. Where appropriate,
advisers to the Company attend
meetings of the Board and of
its Committees.
Under the Company’s Delegation of
Authority, the Board is responsible,
inter alia, for the approval of the
annual corporate budget and for
significant: acquisitions and disposals
of assets; expenditure decisions
outside of the corporate budget;
hedging of product sales; sales
contracts; and financing arrangements.
ETHICAL STANDARDS
In pursuance of the promotion of high
standards of corporate governance, the
Board has, without adopting a formal
code of ethics, established and
maintained various internal standards
which extend beyond requirements
prescribed by law.
SHARE TRADING GUIDELINES
In addition to the provisions of the
Corporations Act, which apply to all
Santos employees, the Company has
developed specific written guidelines
that prohibit Directors and executives
from acquiring, selling or otherwise
trading in the Company’s shares if
they possess material price-sensitive
information which is not in the
public domain.
The guidelines provide that Directors
and executives may, in general, only
trade in Santos securities in the 21
days commencing three days after the
announcement of the Company’s half
yearly results, annual results and
Annual General Meeting. Share
trading has also been permitted when
the Company has a current disclosure
document (prospectus) lodged with
ASIC. Under the guidelines, Directors
must inform and receive
acknowledgement from the Chairman
or his representative (and executives
from the Secretary or a person
appointed by the Board) of an
intention prior to any dealings in
securities either by themselves or
by their associates.
CONTINUOUS DISCLOSURE
The Company has developed policies
and procedures in accordance with
its commitment to fulfilling its
obligations to shareholders and the
broader market for continuous
disclosure. The policy is regularly
reviewed and updated for changes
to the law and the Listing Rules.
All material information disclosed
to the ASX is posted on the
Company’s website at
www.santos.com.
www.santos.com
32
SANTOS GROUP INTERESTS
as at 8 February 2002
Licence Area
% Interest
Licence Area
% Interest
Licence Area
% Interest
South Australia
Cooper Basin (Fixed Factor Area)
(PPLs 6-20, 22-25, 27-61, 63-75, 78-117, 119, 120,
124, 126-130, 132-140, 143-146, 148-151, 153-155,
157, 159-166, 169-181, 183-186, 188-190, 192, 193,
195, 196 & 198)
Patchawarra East Joint Operating Area
(PPLs 26, 76, 77, 118, 121-123, 125, 131, 142, 147,
152, 156, 158, 167, 182, 187, 191, 194 & 197)
SA Unit and Downstream
Queensland
South-west Queensland
ATP 259P
Naccowlah (PLs 23-26, 35, 36, 62, 76-79,
82, 87, 105, 107, 109, 133, 149, 175, 181 & 182)
Total 66 (PLs 34, 37, 63, 68, 75, 84, 88, 110,
129, 130, 134, 140, 142-144, 150, 168, 178
& Pipeline Licences No 8 & 14)
Wareena (PLs 113, 114, 141, 145, 148, 153, 157 & 158)
Innamincka (PLs 58, 80, 136, 137 & 159)
Alkina
Aquitaine A (PLs 86, 131, 146 & 177)
Aquitaine B (PLs 59-61, 81, 83, 85, 97, 106,
108, 111, 112, 132, 135, 139 & 147)
Aquitaine C (PLs 138 & 154)
50/40/10 (PL 55)
SWQ Unit (PLs 5, 9, 12-13, 16-18, 31,
34-40, 46-48, 62 & 64-72)
ATP 267P (Nockatunga) (PLs 33, 50 & 51)
ATP 299P (Tintaburra) (PLs 29, 38, 39,
52, 57, 95, 169 & 170)
59.8
69.4
59.8
55.5
70.0
61.2
70.0
72.0
52.5
55.0
47.8
60.0
60.1
59.1
89.0
Surat Basin
ATP 212P (Major) (PLs 30, 56 & 74)
ATP 336P (Kalima)
ATP 336P (Roma) (PLs 3-13, 93
& Pipeline Licence No 2)
ATP 336P (Waldegrave) (PLs 10-12, 28, 69 & 89)
ATP 378P (Scotia/Burunga) (PL 176)
ATP 470P (Redcap) (PL 71)
ATP 471P (Bainbilla) (PL 119)
ATP 471P (Myall)
ATP 552P (Grail North)
ATP 552P
ATP 685P (Cockatoo Creek)
Boxleigh
PL 1 (Moonie)
PL 1 (2) (Cabawin)
PL 1 (2) (Cabawin Farm-out)
PL 2 (Kooroon)
PL 2C (Alton)
PL 2C (Alton Farm-out)
PL 5 (Barcoo)
PL 5 (Drillsearch)
PL 5 (Mascotte)
PL 11 (Snake Creek East)
PL 12 (Trinidad)
PL 17
PL 17 (Bennett Exclusion)
PL 17 (Leichardt Exclusion)
PLs 21, 22, 27 & 64 (Balonne)
Denison Trough
ATP 337P (PLs 41-45, 54, 67, 173, 183
& Pipeline Licences No 10 & 11)
ATP 553P
15.0
85.0
85.0
46.3
100.0
10.0
16.7
51.0
35.5
22.0
100.0
100.0
100.0
100.0
50.0
52.5
100.0
63.5
85.0
21.3
42.5
25.0
92.5
70.0
100.0
70.0
12.5
50.0
50.0
Facilities
Wungoona Processing Facilities
Moonie to Brisbane Pipeline
Jackson Moonie Pipeline
Ballera to Mt Isa Pipeline
Victoria
Otway Basin
PEP 153
PEP 154
PEP 160
PLs 4, 5 & 7
PLs 6, 9 & 10
VIC P/44
VIC/RL7 (La Bella)
VIC/RL8 (Minerva)
Gippsland Basin
VIC/RL1 (Golden Beach)
VIC/RL2 (Kipper)
VIC/RL3 (Sole)
Tasmania
Bass Basin
T/RL1 (Yolla)
Northern Territory
Amadeus Basin
OL 3 (Palm Valley)
OLs 4 and 5 (Mereenie)
RL2 (Dingo)
Mereenie-Brewer Estate Pipeline
Offshore Northern Australia
Carnarvon Basin
EP 61
EP 62
50.0
100.0
82.8
18.0
100.0
90.0
60.0
100.0
90.0
50.0
10.0
10.0
66.7
20.0
70.0
5.0
48.0
65.0
65.7
65.0
28.6
28.6
www.santos.com
Licence Area
% Interest
Licence Area
% Interest
Licence Area
% Interest
33
EP 65
EP 66
EP 325
EP 357
L1H
L1O
TL/2
TL/3
TL/4
TL/7
TP/2
TP/3 (1 & 2)
TP/3 (3)
TP/7 (1-3)
TP/7 (4)
TP/13
TP/14
WA-1-P
WA-7-L
WA-8-L (Talisman)
WA-13-L (East Spar)
WA-15-L
WA-15-L (Lower Area)
WA-20-L (Legendre)
WA-149-P
WA-191-P
WA-208-P
WA-209-P
WA-214-P
WA-264-P
WA-298-P
35.7
35.7
25.0
35.7
28.6
28.6
15.0
28.6
35.7
35.7
28.6
35.7
75.0
43.7
18.7
33.3
28.6
22.6
28.6
37.4
45.0
54.2
36.0
22.6
18.7
33.4
20.0
36.0
20.0
66.7
20.0
Browse Basin
WA-239-P
WA-242-P
WA-281-P
WA-282-P
WA-283-P
Bonaparte Basin
NT/RL1 (Petrel)
WA-6-R (Petrel West)
WA-18-P (Tern)
Timor Sea
AC/L1 (Jabiru)
AC/L2 (Challis)
AC/L3 (Cassini)
AC/P15
NT/P47
NT/P48
NT/P61
Timor Gap
ZOCA 91-01
ZOCA 91-12
Bayu-Undan Gas Field
Papua New Guinea
PDL 1
PDL 3
PL 3
PPL 157
PPL 189
PPL 190
PPL 206
PPL 228
PRL 4
PRL 5
SE Gobe Unit
Indonesia
Bentu
Korinci-Baru
Madura Offshore
Sampang
Warim
United States of America
Gulf of Mexico
– EC 155
– EI 59
– EI 143
– EI 335
– VR 247
– WC 272
– WC 276
– WC 582
– WC 632
South Texas
– Aransas Bay
– Ashland Deep
– Birdie Porter Green
– Fuhrken
– Lafite/Allen Dome
– Mountainside
– Oelrich
– Queen City
– Remmers
– Suemaur JV
– Driscoll
10.0
33.3
27.5
42.5
27.5
95.0
95.0
100.0
10.3
10.3
10.3
33.3
40.0
40.0
100.0
25.0
21.4
11.8
31.0
15.9
3.6
35.3
42.6
31.3
48.0
40.0
35.3
35.3
9.4
61.1
61.1
75.0
45.0
20.0
Avg working interest
80.0
20.0
20.0
20.0
75.0
50.0
50.0
80.0
50.0
25.0
62.0
50.0
25.0
40.0
25.0
100.0
47.0
64.0
25.0
25.0
www.santos.com
34
SANTOS’
AREAS OF OPERATION
SANTOS ACREAGE - Carnarvon Basin
SANTOS ACREAGE - Bonaparte & Browse Basin
Timor Gap
Timor Sea
Browse Basin
Darwin
McArthur
River
Mt Isa
Amadeus Basin
Alice Springs
Surat Basin &
Denison Trough
Gladstone
Cooper/
Eromanga
Basins
Brisbane
Carnarvon Basin
Indian Ocean
Perth
Kalgoorlie
Pt Bonython
Adelaide
Sydney
Canberra
Otway Basin
Melbourne
0
1000
Southern Ocean
kilometres
Hobart
0
100
kilometres
WA-214-P
John Brookes
WA-1-P(1)
WA-191-P(1)
WA-8-L
WA-191-P(2)
WA-208-P
WA-298-P
WA-1-P(3)
WA-209-P
WA-20-L
WA-1-P(2)
Reindeer
Stag
WA-15-L
Timor
Territory of
Ashmore &
Cartier Islands
91-01
Jahal
AC/P15
Zone of
Co-Operation
Kakatua
Elang
Bayu-Undan
NT/P 47
91-12
NT/P 48
NT/P 61
Darwin
Jabiru
Challis
Skua
AC/L4
AC/L1
AC/L2
AC/L3
Petrel
NT/RL1
WA-6-R
Tern
WA-18-P
WA-214-P
WA-13-L
East Spar
EP 61 (1,2,3)
TP/7 (4)
WA-24-P(1)
TP/14
TP/2
WA-261-P
WA-149-P
TP/13
EP 62 (1,2,3)
Barrow Island
L 1 H
L 10
TP/7 (1)
TL/2
TP/7 (2)
South Chervil Excl
TP/7 (3)
WA-264-P
TP/3(1)
EP 357
TP/3 (2)
WA-24-P(2)
EP 325
TL/4
EP 65
TL/7
Thevenard Island
Western
Australia
Indian Ocean
WA-281-P
WA-283-P
WA-239-P
WA-282-P
WA-242-P
Western
Australia
0
Northern
Territory
200
kilometres
SANTOS ACREAGE - Cooper Basin
SANTOS ACREAGE - Otway Basin
South
Australia
Queensland
PEP 154 (B)
Warrnambool
PEP 154 (A)
PL 6
VIC/P44
VIC/RL8
Minerva
Victoria
Cobden
PEP 153
Timboon
PL 4
PL 5
North Paaratte
Gas Facility
Heytesbury
Gas Facility
Port Campbell
Ballera
Jackson
Moomba
Legend
Exploration
Production
Santos acreage
www.santos.com
Oil field
Gas field
Prospect
Oil pipeline
Gas pipeline
Ethane pipeline
0
50
kilometres
New South Wales
0
25
kilometres
VIC/RL 7
La Bella
Southern Ocean
35
SANTOS ACREAGE - Bentu PSC/Korinci Baru PSC (Sumatra)
SANTOS ACREAGE - Sampang PSC and
Madura Offshore PSC (Java)
SANTOS ACREAGE - Papua New Guinea
Sumatra
Pekanbaru
Baru
Korinci-Baru
PSC
P
e
r
a
k
-
K
o
ri
n
c
i
T
r
e
Terusan
n
d
Bentu
Terusan
Proposed Asamera
Duri pipeline
Bumi
Perak
Korinci/Perak
Pulp & Paper
Mill
Mangan
Seng
0
25
kilometres
Segat
Besi
Bentu PSC
Java Sea
Madura Offshore PSC
Madura Island
Sampang PSC
Anggur
Oyong
Dukuh
Flamboyan
Surabaya
Wunut
Enau
Madura Strait
Java
0
50
kilometres
Warim PSC
Kau 2
Papua
0
100
kilometres
SANTOS ACREAGE - South East Asia
SANTOS ACREAGE - USA
PPL 228
Papua New Guinea
Juhu
Stanley
PRL 4
PRL 5
PDL 1
Hides
Kutubu
PPL 190
PDL 3
Bosavi
SE Gobe
SE Kanau
PPL 206
Wasuma
W Anesi
Barikewa
PPL 189
Kumul
Offshore
Facility
Sumatra
Korinci-Baru
Bentu
0
1000
kilometres
Indonesia
Sampang
Madura
Java
Pacific Ocean
Warim
Papua
Papua New Guinea
SE Gobe
Texas
Houston
Lafite/Allen Dome
Louisiana
Remmers/Oelrich
BP Green/Fuhrken
Suemaur
Queen City
(Mew)
WC272
EC155
Ashland Deep
(Runnells)
WC276
VR247
EL59
EL143
Aransas Bay
WC632
WC582
EL335
Australia
Suemaur
Mexico
Suemaur
Mountainside
(Henderson)
0
200
kilometres
www.santos.com
36
10 YEAR
SUMMARY 1992-2001
As at 31 December
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
Santos average realised
oil price (A$/bbl)
Financial Performance ($million)
Product sales revenue
Total operating revenue
Foreign currency gains/(losses)
Profit from ordinary activities
before tax
Income tax relating
to ordinary activities
Net profit after income tax
attributable to the
shareholders of Santos Ltd
Financial Position ($million)
Total assets
Net debt
Total equity
28.65
27.64
23.64
24.96
27.43
27.42
20.95
27.57
46.54
45.53
689.8
741.5
(36.8)
680.2
931.6
(7.3)
640.0
727.3
66.3
671.6
740.1
(16.0)
729.2
804.0
25.0
778.5
859.5
3.6
769.4
1,000.8
2.0
944.5
995.6
0.3
1,497.1
1,556.2
2.7
1,459.7
1,561.8
0.2
217.6
279.9
306.6
241.0
331.9
322.3
267.3
339.6
725.9
627.6
104.9
60.6
116.2
130.4
136.0
116.1
91.0
30.5
239.1
181.7
112.7
219.3
190.4
110.6
195.9
206.2
176.3
309.1
486.8
445.9
2,821.8
797.4
1,231.7
2,831.2
711.2
1,380.6
2,897.2
619.9
1,532.2
2,915.5
642.0
1,519.3
3,443.4
938.6
1,586.3
4,036.2
1,114.2
1,919.0
4,236.1
1,280.0
1,939.2
4,338.7
1,301.1
2,056.7
4,659.8
866.6
2,310.9
5,048.7
1,060.8
2,726.6
Reserves and Production (mmboe)
Proved and Probable Reserves (2P)
Production
Exploration
Wells drilled (number)
Expenditure ($million)
Other Capital Expenditure ($million)
Field developments
Buildings, plant and equipment
670
34.6
41
76.7
33.2
75.6
675
36.3
66
79.6
40.0
80.6
663
37.2
63
91.9
52.2
30.5
703
36.8
66
87.9
53.9
40.1
860
39.2
91
121.1
105.8
150.3
1,009
41.1
112
190.1
179.7
205.4
966
45.6
81
180.7
158.1
165.7
941
49.2
34
78.1
116.8
102.5
921
56.0
42
100.1
187.1
153.5
724
55.7
50
150.8
250.7
258.7
Prior year amounts have, where applicable, been adjusted to place them on a comparable basis with current year amounts.
www.santos.com
As at 31 December
Share Information
Share issues
Number of issued ordinary
shares at year end (million)
Number of issued preference
shares at year end (million)
Weighted average number
of ordinary shares (million)
Dividends per ordinary share
– ordinary (¢)
– special (¢)
Dividends
– ordinary ($million)
– special ($million)
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
Dividend
Dividend
Dividend
Reinvestment Reinvestment Reinvestment
Plan/
Executive
Share Plan
Plan
Plan
–
–
1 for 8
rights issue/
Employee
Share Plan
Employee
Share Plan
Employee
Share Plan/
Executive
Share Plan
Executive
Employee
Employee
Share Plan/ Share Plans/
Executive
Share Plan/ Share Plans/
Share
Buy-back/
Exercise
of Options/
Schemes of
arrangements
Restricted
Shares/
Exercise
of Options
498.6
517.9
539.6
539.6
539.6
607.3
607.8
608.2
610.4
579.3
–
–
–
–
–
–
–
–
–
3.5
495.7
518.8
539.2
553.3
553.4
583.7
605.6
606.1
608.3
612.4
21.0
–
102.7
–
22.0
5.0
112.3
25.8
42.3
23.5
16.8
12.3
51.5
7.0
22.0
–
117.2
–
35.3
26.2
13.1
10.3
40.5
8.3
23.0
–
123.6
–
20.0
14.9
7.2
6.1
42.3
5.8
24.0
–
129.0
–
35.4
24.4
12.6
9.6
59.2
6.2
25.0
–
151.3
–
35.3
24.0
11.8
8.7
58.1
5.4
25.0
–
151.4
–
29.1
17.6
9.1
7.1
66.0
4.4
27.0
–
163.7
–
51.0
31.0
15.5
11.5
63.3
5.2
30.0
10.0
182.7
61.2
80.0
31.3
22.3
16.7
37.5
9.1
30.0
–
179.9
–
72.8
28.6
17.7
14.1
38.9
9.7
Ratios and Statistics
Earnings per share (¢)
22.7
Return on total operating revenue (%) 15.2
Return on average equity (%)
9.4
Return on average capital employed (%) 7.3
64.7
Net debt/equity (%)
5.9
Net interest cover (times)
General
Number of employees
Number of holders
of ordinary shares
Market capitalisation ($million)
1,468
1,526
1,492
1,471
1,461
1,615
1,650
1,645
1,631
1,713
35,492
1,289
42,068
1,988
50,595
1,868
55,684
2,111
55,482
2,741
65,459
3,826
81,286
2,654
81,416
2,516
76,457
3,670
86,472
3,589
FINANCIAL REPORT
CONTENTS
Directors’ Statutory Report
Financial Report
Statements of Financial Performance
Statements of Financial Position
Statements of Cash Flows
Notes to the Financial Statements
37
38
42
43
44
45
1 Statement of Accounting Policies
48
2 Revenue from Ordinary Activities
48
3 Expenses from Ordinary Activities
48
4 Depreciation, Depletion and Amortisation
49
5 Borrowing Costs
49
6 Profit from Ordinary Activities
49
7 Taxation
50
8 Dividends
50
9 Receivables
50
10 Inventories
50
11 Other Assets
51
12 Exploration and Development Expenditure
51
13 Land and Buildings, Plant and Equipment
52
14 Other Financial Assets
52
15 Intangibles
52
16 Payables
52
17 Interest-Bearing Liabilities
53
18 Provisions
54
19 Contributed Equity
57
20 Reserves
58
21 Retained Profits
58
22 Earnings per Share
58
23 Investments in Controlled Entities
61
24 Interests in Joint Ventures
62
25 Notes to Statements of Cash Flows
62
26 Related Parties
64
27 Executives’ and Directors’ Remuneration
65
28 Remuneration of Auditors
65
29 Segment Reporting
65
30 Commitments for Expenditure
66
31 Superannuation Commitments
32 Contingent Liabilities
66
33 Additional Financial Instruments Disclosure 67
68
34 Economic Dependency
Directors’ Declaration
Independent Audit Report
69
69
38 DIRECTORS’ STATUTORY REPORT
The Directors present their report together with the financial report of Santos Ltd (“the Company”)
and the consolidated financial report of the consolidated entity, being the Company and its controlled
entities, for the financial year ended 31 December 2001, and the auditor’s report thereon. Information
in this Annual Report referred to by page number in this report or contained in a Note to the financial
statements referred to in this report is to be read as part of this report.
1. Directors, Directors’ Shareholdings and Directors’ Meetings
The names of Directors of the Company in office at the date of this report and details of the relevant
interest of each of those Directors in shares in the Company at that date are as set out below:
Surname Other Names
Shareholdings in Santos Ltd
Peter Charles
Francis John
Barnett
Conroy
Ellice-Flint John Charles (Managing Director)
Gerlach
McGregor Graeme William
O’Leary Michael Anthony
Judith
Sloan
Ian Ernest
Webber
Stephen (Chairman)
Ordinary
Shares
12,394
1,900
1,000,000 *
27,305
10,000
4,725
2,500
20,771
Reset
Convertible
Preference
Shares
200
125
200
The above named Directors held office during and since the end of the financial year.
Except where otherwise indicated, all shareholdings are of fully paid ordinary shares.
* These shares are Restricted Shares issued on the terms described in Note 19 to the financial
statements.
No Director holds shares in any related body corporate, other than in trust for the Company.
At the date of this report, Mr J C Ellice-Flint holds 3,000,000 options under the Santos Executive
Share Option Plan and subject to the further terms described in Note 19 to the financial statements.
Details of the qualifications, experience and special responsibilities of each Director are set out on
pages 28 and 29 of this Annual Report.
Directors’ Meetings
The number of Directors’ Meetings and meetings of committees of Directors held during the financial
year and the number of meetings attended by each Director are as follows:
Surname Other Names
Directors’
Meetings
Audit
Committee
Nomination and
Environmental Remuneration
Committee
Committee
Remuneration
Committee
No. of No. of No. of No. of No. of No. of No. of No. of No. of No. of
Mtgs Mtgs Mtgs
Mtgs
Mtgs Mtgs
Held* Attended Held* Attended Held* Attended Held* Attended Held* Attended
Mtgs Mtgs
Mtgs
Mtgs
Uhrig1
John Allan
Peter Charles
Barnett
Conroy
Francis John
Ellice-Flint John Charles
Gerlach
McArdle2 John Walter
McGregor Graeme William
O’Leary Michael Anthony
Judith
Sloan
Ian Ernest
Webber
Stephen
4
11
11
11
11
5
11
11
11
11
4
11
9
11
11
5
10
11
11
11
2
2
2
2
2
2
2
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
3
4
4
1
3
4
3
5
5
5
5
5
5
* Reflects the number of meetings held during the time the Director held office, or was a member of
the Committee, during the year.
1 Retired as a Director of the Company on 4 May 2001.
2 Retired as a Director of the Company on 14 July 2001.
A Special Committee of the Board, comprising S. Gerlach, F.J. Conroy and G.W. McGregor, was
established in relation to the Share Buy-Back and issue of Reset Convertible Preference Shares. The
Committee held two meetings and these were attended by all members of that Committee.
39
As at the date of this report, the Company had an audit committee of the Board of Directors.
5. State of Affairs
Particulars of the Company’s corporate governance practices appear on pages 30 and 31 of this
Annual Report.
2. Principal Activities
The principal activities of the consolidated entity during the financial year were: petroleum
exploration; the production, treatment and marketing of natural gas, crude oil, condensate, naphtha
and liquid petroleum gas; and the transportation by pipeline of crude oil. No significant change in the
nature of these activities has occurred during the year.
3. Review and Results of Operations
A review of the operations and of the results of those operations of the consolidated entity during the
financial year are contained in pages 3, 5 to 14, 16 to 18 and 20 to 26 of this Annual Report.
4. Dividends
In respect of the financial year:
(a) the Directors on 13 February, 2002 declared a fully franked final dividend of 15 cents per fully paid
ordinary share be paid on 2 April, 2002 to members registered in the books of the Company as at
close of business on 8 March, 2002 and declared that such dividend be a Class C franked dividend
to the extent of 100%. This final dividend amounts to approximately $86.8 million;
(b) a fully franked dividend of $143.4 million ($3.54 per share) was paid to members participating in
the Company’s off market share buy-back on 4 December, 2001; and
(c) a fully franked interim dividend of $92.9 million (15 cents per share) was paid to members in
September 2001.
A fully franked final dividend of $91.7 million and a fully franked special dividend of $61.2 million on
the 2000 results (15 and 10 cents per share respectively) were paid in April 2001. Indication of these
dividend payments was disclosed in the 2000 Annual Report.
In the opinion of the Directors, there were no significant changes in the state of affairs of the
consolidated entity that occurred during the financial year other than those referred to on pages 3, 6,
7, 12, 13, 18 and 19 of this Annual Report, including those relating to: the issue of $350 million of
Reset Convertible Preference Shares (refer Note 19 to the Financial Statements); the Buy-Back of $250
million fully paid ordinary shares (refer Note 19 to the Financial Statements); the issue of 4,524,568
fully paid ordinary shares pursuant to schemes of arrangement to acquire all outstanding shares and
options in Natural Gas Australia Ltd (refer Note 19 to the Financial Statements); and the results of
the reserves review and reclassification undertaken during the year.
6. Environmental Regulation
The consolidated entity’s Australian operations are subject to various environmental regulations
under Commonwealth, State and Territory legislation, including under applicable petroleum
legislation and in respect to : its South Australian operations, some 34 State and Commonwealth Acts
and licences (nos. EPA 2569, 1259, 888 and 2164) issued under the Environmental Protection Act,
1993; its Queensland operations, some 27 State and Commonwealth Acts and licence no. 150029
issued under the Environmental Protection Act, 1994; its Northern Territory operations, some 15
Territory and Commonwealth Acts; its offshore operations, some 29 State, Territory and
Commonwealth Acts; and its Victorian operations, some 22 State and Commonwealth Acts.
Applicable legislation and requisite environmental licences are specified in the entity’s relevant
Environmental Compliance Manuals, which Manuals form part of the consolidated entity’s overall
Environmental Management System. Compliance performance is monitored on a regular basis and
in various forms, including environmental audits conducted by regulatory authorities and by the
Company, either through internal or external resources. During the financial year: no fines were
imposed; no prosecutions were instituted; and no notice of non-compliance with the above
referenced regulations was received from a regulatory body.
7. Events Subsequent to Balance Date
In the opinion of the Directors there has not arisen in the interval between the end of the financial
year and the date of this report any matter or circumstance that has significantly affected or may
significantly affect the operations of the consolidated entity, the results of those operations, or the
state of affairs of the consolidated entity in future financial years.
40
8. Likely Developments
Certain likely developments in the operations of the consolidated entity and the expected results of
those operations in future financial years are referred to at pages 5 to 9, 11, 14 to 18, 20 and 22 of this
Annual Report. Further information about likely developments in the operations of the consolidated
entity and the expected results of those operations in future financial years has not been included in
this report because disclosure of the information would be likely to result in unreasonable prejudice
to the consolidated entity.
9. Directors’ and Senior Executives’ Emoluments
The remuneration policies and practices of the Company, (including the compensation
arrangements for executive Directors and senior management), the Company’s superannuation
arrangements, the fees for non-executive members of the Board (within the aggregate amount
approved by shareholders), the Company’s employee share and option plans and executive and senior
management performance review and succession planning are matters referred to and considered by
the relevant Committee of the Board, which has access to independent advice and comparative
studies on the appropriateness of remuneration arrangements.
Non-executive Directors - As indicated above, within the aggregate amount approved by shareholders,
the fees of the Chairman and non-executive Directors are set at levels which represent the
responsibilities of and the time commitments provided by those Directors in discharging their duties.
Regard is also had to the level of fees payable to non-executive Directors of comparable companies.
Non-executive Directors are also entitled to receive a retirement payment upon ceasing to hold office
as a Director. The retirement payment (inclusive of superannuation guarantee charge entitlements) is
made pursuant to an agreement entered into with each Director in terms approved by shareholders at
the 1989 Annual General Meeting.
Senior Executives - Remuneration levels are competitively set to attract, retain and motivate
appropriately qualified and experienced senior executives capable of discharging their respective
responsibilities.
Remuneration packages of senior executives include long term performance based components in the
form of equity participation through the Santos Executive Share Option Plan. Options issued under
the Plan are linked to the longer term performance of the Company and are only exercisable following
the satisfaction of performance hurdles that are designed to maximise shareholder wealth. Short term
components of remuneration packages are being addressed in the form of a percentage of base
remuneration which is “at risk” against agreed performance criteria.
Details of the nature and amount of each element of the emoluments for the financial year of each
Director and each of the five officers of the Company and the consolidated entity receiving the highest
emoluments are:
Non-Executive Directors
Superannuation
Directors’ Committee Contributions Non-Cash
Benefits
$
Fees
$
Fees
$
(1)
$
Retirement
Payment
$
Total
$
John Allan (Former Chairman)
Stephen (Chairman)
Peter Charles
Francis John
Uhrig
Gerlach
Barnett
Conroy
McGregor Graeme William
O’Leary Michael Anthony
Judith
Sloan
Ian Ernest
Webber
72,062
174,113
70,000
70,000
70,000
70,000
70,000
70,000
–
8,000
5,500
–
8,000
5,500
5,500
5,500
–
8,610
6,040
5,600
6,240
6,040
6,040
6,040
22,667
5,251
–
–
–
–
–
–
882,185
–
–
–
–
–
–
–
976,914
195,974
81,540
75,600
84,240
81,540
81,540
81,540
Executive Directors
Position
Base
Other Retirement
Remuneration Bonuses Benefits Payments
(2)
$
$
(3)
$
(4)
$
Total Options
(7)
$
Ellice-Flint John Charles
McArdle
John Walter (5)
CEO & Managing Director 1,000,000 1,121,918 242,023
Former Executive Director
50,000 175,660
Executive General Manager
Commercial
661,962
– 2,363,941
174,577 1,062,199
Executive Officers
McArdle
Rodney Eric
Armstrong John Dennis (6) General Manager
Offshore Australia
Business Unit
Former General Manager
Queensland and
NT Business Unit
Former General Manager
Petroleum Development
and Planning
General Manager
South Australia
Business Unit
Roberts Michael George Group General
Jon Terence
Khurana
Ashok
Young
Counsel & Company
Secretary
513,021
38,750 133,291 1,429,612 2,114,674
233,261
30,833
76,988
575,733
916,815
316,447
27,452
66,310 486,172
896,381
330,000
24,750 114,177
– 468,927 250,000
262,642
21,875
114,658
–
399,175
–
–
–
–
–
–
41
(1) Contributions made in accordance with the Company’s Superannuation Guarantee Charge
10. Indemnification
obligations
(2) Base Remuneration includes base salary, packaged benefits and FBT (where applicable)
(3) Other Benefits are non base remuneration benefits including Company contributions to
superannuation and the cost to the Company of cars (including applicable FBT).
(4) Includes contractual and statutory payments made upon retirement.
(5) Retired as Executive Director on 14 July, 2001 and as Executive General Manager - Commercial on
31 December, 2001.
(6) Retired as General Manager - Offshore Australia Business Unit on 31 December, 2001.
(7) Number of shares over which options were granted by the Company during the year. Options were
granted pursuant to the Santos Executive Share Option Plan, details of which are described in
Note 19 to the financial statements. The Options were valued by independent valuers using the
Binomial option pricing model as follows:-
Grant Date
6 June 2001
Exercise Price
$6.69
Expiry Date
5 June 2006
Valuation
250,000 options
first exercisable on
6 June 2004 : $0.68 per option
These values have not been included in the emoluments disclosed above as they are only notional
values and ultimately no benefit may accrue.
Note: The officers (including former officers) disclosed above were those executive officers within the
consolidated entity responsible for strategic direction and operational management of major
business units receiving the highest emoluments.
No options have been granted since the end of the financial year. Information in relation to shares
issued as a result of the exercise of options over unissued shares is contained in Note 19 to the
financial statements.
Article 177 of the Company’s Constitution provides that the Company indemnifies each person who is
or who has been an “officer” (as defined in the Corporations Act) of the Company against any liability
to another person (other than the Company or a related body corporate) arising from their position as
such officer, unless the liability arises out of conduct involving a lack of good faith. The Company has
insured against amounts which it is liable to pay pursuant to Article 177 or which it otherwise agrees
to pay by way of indemnity. Article 177 also provides for an indemnity in favour of an officer or auditor
(KPMG) in relation to costs incurred in defending proceedings in which judgement is given in their
favour or in which they are acquitted or the Court grants relief.
In conformity with Article 177, the Company is party to Deeds of Indemnity in favour of each of the
Directors referred to in this report, who held office during the year and certain General Managers of
the consolidated entity, being indemnities to the full extent permitted by law. There is no monetary
limit to the extent of the indemnity under those Deeds and no liability has arisen thereunder during or
since the financial year other than in respect of the legal costs referred to below.
During and since the financial year up to the date of this report, legal costs of $94,561 have been paid
by the Company in defending certain proceedings in relation to termination of employment brought
by a former employee against: the Company; the former Managing Director, Mr N R Adler; another
employee of the consolidated entity, Dr J D Armstrong; and a former employee of the consolidated
entity. These costs, which insofar as they relate to the three personal defendants have been paid
pursuant to the terms of the above Deeds of Indemnity, have not been apportioned among the
Company nor the three indemnified personal defendants and therefore it is not possible to determine
the amount paid on behalf of each of them.
11. Rounding
Australian Securities and Investments Commission Class Order 98/100, dated 10 July 1998, applies to
the Company and accordingly amounts have been rounded off in accordance with that Class Order,
unless otherwise indicated.
This report is made on 13 February, 2002 in accordance with a resolution of the Directors.
Director
13 February, 2002
Director
STATEMENTS OF FINANCIAL
PERFORMANCE
for the year ended 31 December 2001
42
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
note
2
3
2
4
3
5
6
7
1,459.7
(798.1)
1,497.1
(697.2)
567.6
(300.0)
507.2
(238.1)
661.6
799.9
267.6
269.1
22.2
–
79.9
102.1
(21.8)
–
–
(3.8)
(46.2)
(64.3)
9.7
325.5
49.4
384.6
(9.8)
(295.7)
(18.7)
(9.7)
(38.9)
(85.8)
0.4
–
505.6
506.0
(0.3)
–
–
(3.8)
(39.1)
(52.0)
0.4
325.5
216.1
542.0
(0.5)
(351.7)
–
–
(40.3)
(79.8)
627.6
(181.7)
725.9
(239.1)
678.4
(77.5)
338.8
(72.1)
Product sales
Cost of sales
Gross profit
Other revenue from ordinary activities:
Proceeds from sale of non-current assets
Proceeds from sale of associated company
Other
Book value of non-current assets sold
Book value of associated company sold
Share of net loss of associated company
Write-down of exploration expenditure
Selling, general and administrative expenses
Borrowing costs
Profit from ordinary activities before
income tax expense
Income tax expense relating to ordinary activities
Net profit after income tax attributable to the
shareholders of Santos Ltd
445.9
486.8
600.9
266.7
Increase in foreign currency translation reserve
1.5
1.3
–
–
Total changes in equity from non-owner related
transactions attributable to the shareholders
of Santos Ltd
447.4
488.1
600.9
266.7
Basic earnings per share (cents)
22
72.8
80.0
The statements of financial performance are to be read in conjunction with the notes to the financial
statements.
STATEMENTS OF FINANCIAL POSITION
as at 31 December 2001
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
note
Current assets
Cash
Receivables
Inventories
Other
Total current assets
Non-current assets
Exploration and development expenditure
Land and buildings, plant and equipment
Other financial assets
Intangibles
Deferred tax assets
Other
Total non-current assets
Total assets
Current liabilities
Payables
Deferred income
Interest-bearing liabilities
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Deferred income
Interest-bearing liabilities
Deferred tax liabilities
Provisions
9
10
11
12
13
14
15
11
16
17
18
17
18
106.3
274.7
110.5
30.9
182.5
234.7
98.8
20.8
17.6
1,616.5
52.4
–
12.7
1,176.5
45.1
–
43
522.4
536.8
1,686.5
1,234.3
2,872.1
1,478.5
35.0
26.5
45.3
68.9
2,623.7
1,344.0
33.8
35.6
16.4
69.5
877.6
584.9
1,662.7
–
–
2.8
841.5
570.6
1,838.9
–
–
5.3
4,526.3
4,123.0
3,128.0
3,256.3
5,048.7
4,659.8
4,814.5
4,490.6
242.5
20.2
229.8
92.4
132.8
260.6
25.3
61.5
215.5
201.0
416.7
8.8
1,262.9
39.2
119.9
560.0
11.8
1,273.2
57.5
190.4
717.7
763.9
1,847.5
2,092.9
22.9
937.3
557.7
86.5
–
987.6
518.2
79.2
–
–
252.5
27.6
–
–
251.9
28.1
Total non-current liabilities
1,604.4
1,585.0
280.1
280.0
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits
Total equity
2,322.1
2,348.9
2,127.6
2,372.9
2,726.6
2,310.9
2,686.9
2,117.7
19
20
21
1,864.2
1.7
860.7
1,572.6
0.2
738.1
1,864.2
–
822.7
1,572.6
–
545.1
2,726.6
2,310.9
2,686.9
2,117.7
The statements of financial position are to be read in conjunction with the notes to the financial
statements.
STATEMENTS OF CASH FLOWS
for the year ended 31 December 2001
44
Cash flows from operating activities
Receipts from customers
Dividends received
Interest received
Overriding royalties received
Pipeline tariffs and other receipts
Payments to suppliers and employees
Royalty, excise and PRRT payments
Interest and other costs of finance paid
Income taxes paid
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
note
1,569.2
3.1
11.4
17.4
29.6
(438.8)
(118.3)
(87.3)
(294.2)
1,533.8
1.4
9.0
15.0
17.9
(301.3)
(94.7)
(85.9)
(72.2)
608.1
430.9
13.5
23.8
19.6
(195.1)
(43.2)
(52.8)
(89.3)
548.9
99.6
24.0
21.7
16.4
(118.7)
(32.5)
(80.8)
(60.6)
Net cash provided by operating activities
25
692.1
1,023.0
715.5
418.0
Cash flows from investing activities
Payments for:
Exploration
Development
Land and buildings, plant and equipment
Acquisitions of oil and gas assets
Acquisitions of controlled entities
Restoration
Other investments
Proceeds from:
Sale of associated company
Liquidation of controlled entity
Disposal of non-current assets
Other
(148.1)
(237.9)
(237.7)
(68.9)
(51.4)
(1.6)
(0.5)
–
–
22.2
–
(93.7)
(159.1)
(138.6)
(302.5)
–
(0.7)
(0.4)
325.5
–
11.3
0.5
(41.9)
(98.8)
(73.9)
(4.8)
(53.4)
(0.6)
(0.5)
–
–
0.4
–
(27.2)
(61.4)
(70.9)
(0.1)
(220.4)
(0.5)
(4.8)
325.5
14.1
0.5
0.5
Net cash used in investing activities
(723.9)
(357.7)
(273.5)
(44.7)
Cash flows from financing activities
Dividends paid
Proceeds from issues of ordinary shares
Proceeds from issue of reset convertible
preference shares
Off market buy-back of ordinary shares
Net drawdown/(repayment) of borrowings
Advances to controlled entities
(246.0)
28.0
(182.1)
10.0
(246.0)
28.0
19
19
342.3
(250.0)
81.1
–
–
–
(411.9)
–
342.3
(250.0)
–
(312.4)
(182.1)
10.0
–
–
–
(191.3)
Net cash used in financing activities
(44.6)
(584.0)
(438.1)
(363.4)
Net (decrease)/increase in cash
Cash at the beginning of the year
Effects of exchange rate changes on the balances
of cash held in foreign currencies
(76.4)
182.5
0.2
81.3
97.9
3.3
Cash at the end of the year
106.3
182.5
3.9
12.7
1.0
17.6
9.9
2.8
–
12.7
The statements of cash flows are to be read in conjunction with the notes to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2001
1. Statement of Accounting Policies
The significant accounting policies that have been adopted in the preparation of this financial
report are:
(a) Basis of preparation
The financial report is a general purpose financial report prepared in accordance with applicable
Accounting Standards, Urgent Issues Group Consensus Views, other authoritative pronouncements
of the Australian Accounting Standards Board and the Corporations Act 2001. It has been prepared
on the basis of historical cost principles and does not take into account changes in the purchasing
power of money or, except where specifically stated, current valuations of non-current assets. The
accounting policies are consistent with those adopted in the previous financial year.
(b) Principles of consolidation
The consolidated financial statements include the financial statements of the Company, Santos Ltd
being the parent entity, and its controlled entities (“the consolidated entity”).
The balances and effects of all transactions between controlled entities included in the
consolidated financial statements are eliminated.
Interests in unincorporated joint ventures are recognised by including in the financial statements
under the appropriate headings the consolidated entity’s proportion of the joint venture costs,
assets and liabilities.
(c) Non-current assets
With the exception of exploration expenditure carried forward pertaining to areas of interest in the
exploration stage (refer note 1(k)), the carrying amounts of non-current assets are reviewed to
determine whether they are in excess of their estimated recoverable amount at balance date. If the
carrying amount of a non-current asset exceeds the estimated recoverable amount, the asset is
written down to the lower value. In assessing recoverable amounts, the relevant cash flows have
not been discounted to their present value.
(d) Acquisition of assets
Assets acquired in arm’s length transactions are recorded at the cost of acquisition as represented
by the purchase consideration which is the fair value of assets given.
On acquisition of a controlled entity, the identifiable net assets acquired are recorded at their fair
values. To the extent that there is excess purchase consideration representing goodwill, the
goodwill is amortised using the straight line method over a period of 20 years. The unamortised
balance of goodwill is reviewed at each balance date and charged against profit to the extent that
the balance exceeds the value of expected future benefits.
45
Assets transferred between entities within the consolidated entity on restructuring may be
transferred at other than fair value. The acquiring entity deems the purchase consideration to be
the fair value of assets acquired and any difference from the fair value of assets given is brought to
account as revenue or expense on restructuring.
(e) Foreign currency
Foreign currency transactions are translated to Australian currency at the rates of exchange in
effect at the dates of the transactions. Amounts receivable and payable in foreign currencies at
balance date are translated at the rate of exchange existing on that date. Exchange differences
relating to amounts receivable or payable in foreign currencies are brought to account in the
statements of financial performance in the period in which they arise except that exchange
differences on transactions entered into in order to hedge the purchase or sale of specific goods
and services are deferred and included in the measurement of the purchase or sale.
Financial statements of integrated foreign controlled entities are translated at balance date using
the temporal method and any profit or loss on the translation of monetary assets and liabilities is
brought to account in determining profit for the year.
Financial statements of self-sustaining foreign controlled entities are translated at balance date
using the current method and exchange differences are taken directly to the foreign currency
translation reserve.
Exchange differences relating to amounts receivable or payable in foreign currencies forming part
of the net investment in a self-sustaining foreign operation are transferred on consolidation to the
foreign currency translation reserve.
(f ) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax
(“GST”), except where the amount of GST incurred is not recoverable from the Australian Tax
Office (“ATO”). In these circumstances the GST is recognised as part of the cost of acquisition
of the asset or as part of an item of the expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or
liability in the statements of financial position.
Cash flows are included in the statements of cash flows on a gross basis. The GST components
of cash flows arising from investing and financing activities which are recoverable from, or payable
to, the ATO are classified as operating cash flows.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2001
46
1. Statement of Accounting Policies (continued)
(g) Revenue
Product sales, equipment rentals and pipeline tariffs, overriding royalties and other income are
recognised when the goods and services are provided and the consolidated entity has a legally
enforceable entitlement to the proceeds. Interest revenue is recognised as it accrues. Dividend
income from controlled entities is recognised as revenue as dividends are declared and from other
parties as dividends are received.
(h) Cash
For the purposes of the statements of cash flows, cash includes cash on hand, cash at bank and
short-term deposits at call, net of outstanding bank overdrafts.
(i) Receivables
Trade debtors and other receivables are recorded at amounts due. A provision is made for any
doubtful debts based on a review of collectability of outstanding amounts at balance date. Bad
debts are written off in the period they are identified.
(j) Inventories
Inventories are valued at the lower of cost and net realisable value after provision is made for
obsolescence. Cost is determined as follows:
(i) drilling and maintenance stocks, which include plant spares, maintenance and drilling tools
used for ongoing operations, are valued at average cost;
(ii) petroleum products, which comprise extracted crude oil, LPG, condensate and naphtha stored
in tanks and pipeline systems and processed sales gas and ethane stored in subsurface
reservoirs, are valued using the absorption cost method.
(k) Exploration and development expenditure
Exploration and development expenditures in respect of each area of interest are accumulated and
carried forward if either:
(i) such expenditure is expected to be recouped through successful development and commercial
exploitation of the area of interest; or
(ii) the exploration activities in the area of interest have not yet reached a stage which permits
reasonable assessment of the existence of economically recoverable reserves.
When an area of interest is abandoned or if Directors consider the expenditure to be of reduced or
no further value, accumulated exploration expenditure is written down or off in the period in which
such a decision is made.
(l) Borrowings
Borrowings are carried on the statements of financial position at their principal amount. Interest is
accrued at the contracted rate.
(m)Leases
Finance leases, which effectively transfer to the lessee substantially all of the risks and benefits
incidental to ownership of the leased item, are capitalised at the present value of the minimum
lease payments, disclosed as capitalised leases and amortised over the period the lessee is
expected to benefit from the use of the leased assets. A corresponding liability is also established
and each lease payment is allocated between the principal component and the interest expense.
Operating lease payments, where the lessors effectively retain substantially all the risks and
benefits of ownership of the leased items, are charged against profit in equal instalments over the
lease term.
(n) Capitalisation of borrowing costs
Pre-production borrowing costs, including interest, finance charges and foreign currency exchange
gains and losses relating to major plant and equipment projects under development and
construction up to the date of commencement of commercial operations, are capitalised and
amortised over the expected useful lives of the facilities. Where funds are borrowed specifically for
qualifying projects the actual borrowing costs incurred are capitalised. Where the projects are
funded through general borrowings the borrowing costs are capitalised based on the weighted
average borrowing rate, which for the year ended 31 December 2001 was 6.21% (2000: 6.70%).
Finance costs incurred in respect of completed projects are expensed.
(o) Deferred income
A liability is recorded for obligations under sales contracts to deliver natural gas in future periods
for which payment has already been received.
(p) Depreciation and depletion
Depreciation charges are calculated to write-off the carrying value of buildings, plant and
equipment over their estimated useful lives to the entity. Depreciation of onshore buildings, plant
and equipment assets is calculated using the straight line method of depreciation. The estimated
useful lives to the entity will vary for each asset depending on projected average rate of usage,
degree of technical obsolescence, expected commercial life and the period of time during which
the right or entitlement to the asset exists. The depreciation rates are reviewed and reassessed
periodically in light of technical and economic developments.
47
1. Statement of Accounting Policies (continued)
(p) Depreciation and depletion (continued)
The useful lives for each class of onshore asset will vary depending on their individual technical
and economic characteristics but will generally fall within the following ranges:
• Plant and equipment
– Computer equipment
– Motor vehicles
– Furniture and fittings
– Pipelines
– Plant and facilities
• Buildings
3 – 5 years
4 – 7 years
10 – 20 years
10 – 30 years
10 – 50 years
20 – 50 years
Depreciation of offshore plant and equipment is calculated using a unit of production method
which will proportionately depreciate the assets over the life of the proved plus probable (“2P”)
reserves on a field by field basis.
Depletion charges are calculated using a unit of production method which will amortise, over the
life of the 2P reserves, exploration and development expenditure together with future costs
necessary to develop the reserves in the respective areas of interest.
Depletion is not charged on costs carried forward in respect of areas of interest in the
development stage until production commences.
(q) Restoration
Provisions are made for environmental restoration of areas of interest where gas and petroleum
production is undertaken. Such provisions recognise the estimated future restoration obligations
incrementally over the life of the hydrocarbon reserves on a unit of production basis. The estimated
future obligations include removing of facilities, abandoning of wells and restoring the affected
areas. Estimates for the future restoration obligations are reviewed and reassessed regularly, based
on current legal requirements and technology and are measured in current dollars on an
undiscounted basis. Adjustments to the provisions are made on a prospective basis.
(r) Employee entitlements
The provisions for employee entitlements to wages, salaries, annual leave and sick leave are measured
at undiscounted amounts based on current wage and salary rates and include related on-costs.
Long service leave is provided in respect of all employees, based on the present value of the
estimated future cash outflow to be made resulting from employees’ services up to balance date,
and having regard to the probability that employees as a group will remain in the entity’s employ
for the period of time necessary to qualify for long service leave.
Contributions to defined benefit superannuation plans sponsored by the consolidated entity
are charged against profit. Where the assets of a fund significantly exceed the liabilities and the
fund’s actuary has so recommended, contributions are suspended until such time as the surplus
is reduced.
(s) Employee share ownership plans
The Company operates a number of share ownership plans.
Shares issued under the Santos Executive Share Plan, Santos Executive Share Option Plan and the
Santos Employee Share Purchase Plan are treated as equity contributions to the extent the shares
are paid up.
The value of the shares issued to eligible employees under the Santos Employee Share Acquisition
Plan is expensed over a three year period.
(t) Income tax
Tax effect accounting is applied whereby the income tax charged in the statements of financial
performance is matched with the accounting profit after allowing for permanent differences.
Income tax on timing differences, which arise from items being brought to account in different
periods for income tax and accounting purposes, is carried forward in the statements of financial
position as a deferred tax asset or deferred tax liability. Future income tax benefits relating to
entities which incur losses are brought to account where realisation of the benefits is considered
to be virtually certain.
(u) Derivative financial instruments
Gains and losses on derivative financial instruments designated as hedges are accounted for on
the same basis as the underlying exposures they are hedging. The gains and losses on derivative
financial instruments hedging specific purchase or sale commitments are deferred and included in
the measurement of the purchase or sale.
(v) Comparatives
The consolidated entity has adopted the presentation and disclosure requirements of Accounting
Standards AASB 1018 “Statement of Financial Performance”, AASB 1034 “Financial Report
Presentation and Disclosure” and AASB 1040 “Statement of Financial Position” for the first time in
the preparation of this financial report. In accordance with the requirements of these new/revised
Standards, comparative amounts have been reclassified in order to comply with the new presentation
format. The reclassification of comparative amounts has not resulted in a change to the aggregate
amounts of current assets, non-current assets, current liabilities, non-current liabilities or equity, or the
net profit of the Company or economic entity as reported in the prior year financial report.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2001
48
2. Revenue from Ordinary Activities
Revenue from operating activities
Product sales:
Gas and ethane
Crude oil
Condensate/naphtha
Liquefied petroleum gas
Other revenue from operating activities:
Other:
Overriding royalties
Equipment rentals, pipeline tariffs and other
Interest revenue:
Controlled entities
Other entities
Dividends from:
Controlled entities
Other entities
Proceeds from insurance recovery
Net revenue on restructuring within the
consolidated entity
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
617.9
561.0
165.5
115.3
588.1
627.1
157.5
124.4
287.6
140.6
67.3
72.1
287.0
81.3
64.3
74.6
1,459.7
1,497.1
567.6
507.2
3. Expenses from Ordinary Activities
Cost of sales:
Production costs
Pipeline tariffs and tolls
Royalty, excise and PRRT
Depreciation, depletion and amortisation
Third party gas purchases
Product inventory movement
18.0
21.1
–
10.9
–
3.1
26.8
–
16.5
22.1
–
9.4
–
1.4
–
–
24.1
18.4
11.8
1.7
423.7
3.1
16.1
6.7
22.8
15.8
23.7
0.3
98.2
1.4
–
53.9
79.9
49.4
505.6
216.1
Selling, general and administrative expenses:
Operating expenses
Depreciation and amortisation
Write-down of investment in controlled entities
4. Depreciation, Depletion and Amortisation
Depletion of exploration and development expenditure
Depreciation of plant and equipment
Depreciation of buildings
Future restoration costs
Amortisation of capitalised leases
Amortisation of goodwill
Revenue from outside operating activities
Proceeds from disposal of associated company
–
325.5
–
325.5
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
250.1
31.7
102.6
413.5
13.6
(13.4)
232.5
28.9
102.2
337.1
0.5
(4.0)
85.4
15.0
41.4
152.1
12.7
(6.6)
78.8
11.8
34.6
110.0
2.0
0.9
798.1
697.2
300.0
238.1
38.4
7.8
–
46.2
277.1
119.1
3.3
12.4
0.4
9.0
421.3
30.8
8.1
–
38.9
204.4
116.3
2.0
12.7
0.8
9.0
345.2
27.3
6.3
5.5
39.1
105.2
49.4
1.8
2.0
–
–
158.4
27.6
6.4
6.3
40.3
69.4
44.7
1.3
1.0
–
–
116.4
Write-down of exploration expenditure
3.8
9.7
3.8
–
425.1
354.9
162.2
116.4
5. Borrowing Costs
Interest expense:
Controlled entities
Other entities:
On loans
On finance leases
Less interest capitalised
6. Profit from Ordinary Activities
Profit from ordinary activities before tax includes
the following items classified as part of cost
of sales and/or selling, general and
administrative expenses:
Increase in provisions:
Doubtful debts
Stock obsolescence
Employee entitlements and non-executive
Directors’ retirement benefits
Operating lease rentals
Write-down of investment in controlled entities
(Profit)/loss on disposal of other non-current assets
Transaction costs associated with the sale of
shares in associated company
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
7. Taxation
Income tax attributable to profit from ordinary activities
The prima facie income tax attributable to profit
from ordinary activities differs from income tax
expense and is calculated as follows:
Prima facie income tax at 30% (2000: 34%)
Tax effect of permanent and other differences
which increase/(decrease) income tax expense:
(Gain)/loss on sale of associated company
Rebate on dividend income
Net revenue on restructuring within the
consolidated entity
Other
Income tax comprises amounts set aside to:
Provision for current income tax
Deferred tax liability
Deferred tax asset
–
–
52.8
80.7
80.7
0.7
(17.1)
64.3
97.2
0.9
(12.3)
85.8
–
–
(0.8)
52.0
–
–
(0.9)
79.8
0.2
2.9
5.8
47.6
–
(0.4)
–
0.4
0.6
12.4
30.1
–
0.1
1.8
–
0.2
3.3
17.4
5.5
(0.1)
–
0.1
0.3
9.0
4.6
6.3
0.1
1.8
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
49
188.3
246.8
203.5
115.2
(1.6)
(9.0)
–
(128.0)
–
(0.9)
–
(5.7)
–
2.9
181.7
239.1
171.1
39.5
(28.9)
231.6
7.6
(0.1)
181.7
239.1
17.4
(42.4)
(18.3)
0.2
72.1
68.9
3.2
–
72.1
(2.0)
4.0
77.5
76.9
0.6
–
77.5
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2001
50
8. Dividends
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
10. Inventories
Dividends provided for or paid by the Company
Interim dividend of 15.0 cents per share, fully franked
(2000: 15.0 cents per share, fully franked)
Final ordinary dividend of 15.0 cents per share,
fully franked (2000: 15.0 cents per share, fully franked)
Final special dividend of nil cents per share, fully franked
(2000: 10.0 cents per share, fully franked)
93.1
86.8
–
91.0
91.7
61.2
93.1
86.8
–
91.0
91.7
61.2
Petroleum products
Drilling and maintenance stocks
Less provision for obsolescence
11. Other Assets
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
75.4
41.6
(6.5)
110.5
62.0
41.0
(4.2)
98.8
35.8
18.0
(1.4)
52.4
29.1
17.1
(1.1)
45.1
179.9
243.9
179.9
243.9
Current
Deferred foreign currency fluctuations on borrowings
30.9
20.8
–
–
Franking credits
Balance of franking account credits at 30%
(2000: 34%) available for future distribution of
franked dividends, after adjusting for franking
credits which will arise from the payment of the
current income tax provision at 31 December 2001
and after deducting franking credits to be used
in payment of the 2001 final dividend
9. Receivables
Trade debtors
Sundry debtors and prepayments
Less provision for doubtful debts
Amounts owing by controlled entities
479.6
359.6
334.4
57.4
171.7
104.8
(1.8)
–
192.4
44.1
(1.8)
–
63.5
41.8
(0.8)
1,512.0
69.5
18.5
(0.9)
1,089.4
274.7
234.7
1,616.5
1,176.5
Non-current
Security deposit
Deferred foreign currency fluctuations on borrowings
Other
4.8
63.0
1.1
68.9
9.2
60.3
–
69.5
2.8
–
–
2.8
5.3
–
–
5.3
12. Exploration and Development Expenditure
Areas in which production has commenced
Cost at the beginning of the year
Expenditure incurred during the year
Acquisitions, net of disposals and foreign
currency translation
Expenditure transferred from areas in the
exploration and development stage
Expenditure written off during the year
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
13. Land and Buildings, Plant and Equipment
4,221.2
320.4
3,717.0
254.2
1,311.3
103.4
1,214.8
96.5
Land and buildings
At cost
Less accumulated depreciation
84.4
232.6
16.2
–
22.1
(4.7)
–
–
–
–
–
–
Plant and equipment
At cost
Capitalised leases
Cost at the end of the year
4,642.2
4,221.2
1,414.7
1,311.3
Less accumulated depletion
(2,216.2)
(1,900.1)
(722.8)
(617.6)
51
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
85.7
(42.2)
78.0
(38.9)
48.0
(29.4)
44.4
(27.6)
43.5
39.1
18.6
16.8
2,920.2
16.9
2,667.7
16.9
1,430.8
–
1,369.7
–
2,937.1
2,684.6
1,430.8
1,369.7
2,426.0
2,321.1
691.9
693.7
Less accumulated depreciation
(1,502.1)
(1,379.7)
(864.5)
(815.9)
302.6
81.1
282.0
33.0
147.8
37.0
136.3
11.5
Total land and buildings, plant and equipment
1,478.5
1,344.0
584.9
570.6
1,435.0
1,304.9
566.3
553.8
Areas in the exploration and development stage
Cost at the beginning of the year
Expenditure incurred during the year
Acquisitions, net of disposals and foreign
currency translation
Expenditure transferred to areas where production
has commenced
Expenditure written off during the year
82.4
14.7
(16.2)
(3.8)
(22.1)
(5.0)
4.7
–
(3.8)
Cost at the end of the year
446.1
302.6
185.7
Total exploration and development expenditure
2,872.1
2,623.7
877.6
–
–
–
147.8
841.5
Movements during the year
Land and buildings
Balance at the beginning of the year
Additions
Depreciation expense
Balance at the end of the year
Plant and equipment
Balance at the beginning of the year
Additions
Acquisitions
Disposals
Depreciation expense
Foreign exchange
39.1
7.7
(3.3)
43.5
35.2
5.9
(2.0)
39.1
1,304.9
251.0
0.7
(2.6)
(119.5)
0.5
1,150.7
147.6
124.8
(2.0)
(117.1)
0.9
16.8
3.6
(1.8)
18.6
553.8
62.1
–
(0.2)
(49.4)
–
14.7
3.4
(1.3)
16.8
534.2
64.4
–
(0.1)
(44.7)
–
Balance at the end of the year
1,435.0
1,304.9
566.3
553.8
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2001
52
14. Other Financial Assets
Investments in controlled entities
Investments in other listed shares at cost
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
–
35.0
35.0
–
33.8
33.8
1,628.4
34.3
1,805.1
33.8
1,662.7
1,838.9
17. Interest-Bearing Liabilities
Current
Lease liabilities
Amounts owing to controlled entities
Medium-term notes
Long-term notes
Market value of investments in listed shares
63.5
46.3
61.8
46.3
15. Intangibles
Goodwill, at cost
Less accumulated amortisation
16. Payables
Trade creditors
Sundry creditors and accruals
Amounts owing to controlled entities
160.2
(133.7)
160.2
(124.6)
26.5
35.6
–
–
–
–
–
–
Non-current
Commercial paper
Medium-term notes
Long-term notes
Lease liabilities
216.1
26.4
–
183.9
76.7
–
63.2
13.1
340.4
67.1
17.9
475.0
Details of major credit facilities
(a) Bank loans
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
0.4
–
–
61.1
–
1,262.9
–
–
–
1,273.2
–
–
61.5
1,262.9
1,273.2
40.0
169.9
765.1
12.6
–
–
–
–
–
–
–
–
–
–
937.3
987.6
12.9
–
149.9
67.0
229.8
145.0
20.0
772.3
–
242.5
260.6
416.7
560.0
The consolidated entity has access to the following committed revolving facilities:
Revolving facilities at 31 December 2001
Year of maturity
Currency
2003
2004
2005
2006
2007
Australian dollars
Australian dollars
Australian dollars
Australian dollars
Australian dollars
Amount
A$million
125.0
100.0
75.0
150.0
150.0
600.0
Bank loans bear interest at the relevant interbank reference rate plus 0.15% to 0.48%. The
amount drawn at 31 December 2001 is nil (2000: nil).
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
53
86.8
41.7
3.7
0.6
152.9
47.2
–
0.9
86.8
30.5
2.0
0.6
152.9
36.6
–
0.9
132.8
201.0
119.9
190.4
85.4
1.1
86.5
78.2
1.0
79.2
26.5
1.1
27.6
27.1
1.0
28.1
17. Interest-Bearing Liabilities (continued)
18. Provisions
Current
Dividends
Employee entitlements
Future restoration costs
Non-executive Directors’ retirement benefits
Non-current
Future restoration costs
Non-executive Directors’ retirement benefits
(b) Commercial paper
The consolidated entity has commercial paper programs based in Hong Kong and Australia.
The programs which total US$200.0 million (2000: US$200.0 million) (Euro Commercial Paper)
and A$800.0 million (2000: A$800.0 million) (Promissory Notes) are supported by the revolving
facilities referred to in (a) above. At 31 December 2001, A$145.0 million (2000: A$40.0 million)
equivalent of commercial paper is on issue and the weighted average annual effective interest rate
is 4.49% (2000: 6.82%).
(c) Medium-term notes
The consolidated entity has a A$500.0 million (2000: A$500.0 million) domestic medium-term
note program. At 31 December 2001, A$149.9 million (2000: A$149.9 million) of fixed rate notes
have been issued at an annual effective interest rate of 6.55% (2000: 6.55%), maturing in 2002.
In addition, A$20.0 million (2000: A$20.0 million) of medium-term notes have been issued at
fixed rate and swapped into floating rates of interest of 5.10% (2000: 7.18%) at 31 December 2001,
maturing in 2008.
(d) Long-term notes
US$170.0 million (A$334.9 million) (2000: US$170.0 million equivalent to A$305.3 million)
of long-term notes were issued to institutional investors in 1993 at an annual effective
interest rate of 6.95% and repayable in five annual US dollar instalments which commenced
in December 2001. As at 31 December 2001 US$136.0 million (A$268.0 million) remains
outstanding (2000: US$170.0 million equivalent to A$305.3 million). In addition,
US$290.0 million (A$571.3 million) (2000: US$290.0 million equivalent to A$520.9 million)
of long-term notes were issued to institutional investors in 2000 at an annual effective interest
rate of 8.41% and are repayable at varying maturity dates between 2007 and 2015.
All facilities are unsecured and arranged through a controlled entity, Santos Finance Ltd, and are
guaranteed by Santos Ltd. In addition, Santos Ltd has guaranteed the finance lease obligations of
a controlled entity.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2001
54
19. Contributed Equity
Share capital
578,797,345 (2000: 609,605,403)
fully paid ordinary shares
489,250 (2000: 838,250)
ordinary shares paid to one cent
3,500,000 (2000: nil) reset convertible
preference shares
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
1,521.9
1,572.6
1,521.9
1,572.6
–
342.3
–
–
–
342.3
–
–
1,864.2
1,572.6
1,864.2
1,572.6
Movement in fully paid ordinary shares
note
2000
2001
Number of shares
2001
$million
2000
$million
Balance at the beginning of the year
Santos Executive Share Plan
Santos Employee Share Acquisition Plan
Santos Employee Share Purchase Plan
1,000,000 Restricted Shares
Shares issued:
On exercise of options
Pursuant to schemes of arrangement
Off market buy-back
(a)
(b)
(c)
(f)
(d)
(i)
(g)
609,605,403 606,340,553
1,007,500
237,150
170,200
1,000,000
349,000
221,832
65,100
–
1,572.6
1.0
1.4
0.4
–
4,550,000
4,524,568
(40,518,558)
850,000
–
–
25.2
27.9
(106.6)
1,562.6
3.2
1.4
0.7
–
4.7
–
–
Balance at the end of the year
578,797,345 609,605,403
1,521.9
1,572.6
Movement in reset convertible
preference shares
Balance at the beginning of the year
Shares issued
Balance at the end of the year
(h)
–
3,500,000
3,500,000
–
–
–
–
342.3
342.3
–
–
–
The market price of the Company’s ordinary shares on 31 December 2001 was $6.20 (2000: $6.02).
(a) Santos Executive Share Plan
The Santos Executive Share Plan was approved by shareholders in general meeting on
22 December 1987.
In essence, the Plan involves the Company issuing to employees selected by the Board (“the
Executives”), a number of ordinary shares in the capital of the Company determined by the Board.
There are two categories of Plan Shares which have been issued to Executives, Plan 2 Shares and
Plan 0 Shares, each initially issued as partly paid shares, paid to one cent.
The Plan allows for calls to be made at the instigation of the Company in certain specified events
or at the request of the Executive. While partly paid, the Plan Shares are not transferable, carry no
voting right and no entitlement to dividend but are entitled to participate in any bonus or rights
issue. The price payable for shares issued under the Plan varies according to the event giving rise
to a call being made. Market price at the time of the call is payable on the issued Plan 2 Shares if
the Executive resigns within two years from the date of issue or is dismissed. After a restriction
period of two years, the price payable upon a call being made on the issued Plan 2 Shares is the
lower of two-thirds of the market price on the date of allotment and the highest sale price on the
day prior to the date of the call. The price payable on the issued Plan 0 Shares is the lowest of
market price on the date of allotment, the date of the call and the date fourteen days thereafter.
Since its inception, some 101 Executives have participated in the Plan and 2,012,500 Plan 0 and
1,999,500 Plan 2 Shares have been issued, principally in years 1987 and 1989. During the financial
year, no issue of Plan Shares was made and at balance date no offer to an Executive was
outstanding. During the financial year 109,500 Plan 0 and 239,500 Plan 2 Shares were fully paid
and as at 31 December 2001 there were 20 holders of the outstanding 175,750 Plan 0 Shares and
19 holders of the outstanding 313,500 Plan 2 Shares.
In 1997 the Board determined that the Plan be discontinued and, accordingly, there has been no
further issues of shares under the Plan.
55
19. Contributed Equity (continued)
(b) Santos Employee Share Acquisition Plan
The Santos Employee Share Acquisition Plan was approved by shareholders at the Annual General
Meeting on 15 May 1997 and its continuation, with amendment, approved at the Annual General
Meeting on 5 May 2000.
Broadly, permanent employees with at least a minimum period of service determined by Directors
as at the offer date (one year of completed service for issues so far) are eligible to acquire shares
under this Plan. Executives participating in the Santos Executive Share Option Plan (see below),
casual employees and Directors of the Company are excluded from participating in this Plan.
Employees are not eligible to participate under the Plan while they are resident overseas unless
the Board decides otherwise.
The Plan provides for free grants of fully paid ordinary shares in the capital of the Company up
to a value determined by the Board, which, to date has been $1,000 per annum per eligible
employee. A trustee is funded by the Company and its subsidiaries to acquire shares direct from
the Company or on market. The shares are then allocated to eligible employees who have made
applications under the Plan. The employee’s ownership of shares allocated under the Plan, and
his or her right to deal with them, are subject to restrictions until the earlier of the expiration of
the restriction period determined by the Board and the time when he or she ceases to be an
employee. Shares are granted to eligible employees for no consideration.
On 24 August 2001, the Company issued 221,832 ordinary shares to the trustee on behalf of
1,404 eligible employees under the Plan, being 158 shares for each employee. The total market
value of those shares on the issue date was $1,428,598. At this time no offers remain outstanding
under this Plan.
At 31 December 2001, the total number of shares acquired under the Plan since its
commencement was 1,243,519.
(c) Santos Employee Share Purchase Plan
The Santos Employee Share Purchase Plan was approved by shareholders at the Annual General
Meeting on 15 May 1997 and its continuation, with amendment, approved at the Annual General
Meeting on 5 May 2000. The Plan is open to all employees (other than a casual employee or
Director of the Company) determined by the Board who are continuing employees at the date of
the offer. However, employees who are not resident in Australia at the time of an offer under the
Plan will not be eligible to participate in that offer unless the Board otherwise decides.
Under the Plan, eligible employees may be offered the opportunity to subscribe for or acquire
fully paid ordinary shares in the capital of the Company at a discount to market price, subject to
restrictions, including on disposal, determined by the Board. The subscription or acquisition price
is Market Value (as defined in the Rules of the Plan) less any discount determined by the Board.
At the discretion of the Board, financial assistance may be provided to employees to subscribe for
and acquire shares under the plan.
On 30 March 2001, the Company issued 37,800 ordinary shares to 63 eligible employees at a
subscription price of $6.55 per share under the Plan. The total market value of those shares on
the issue date was $254,016 and the total amount received from employees for those shares was
$247,590.
On 6 September 2001, the Company issued 27,300 ordinary shares to 45 eligible employees at a
subscription price of $5.99 per share under the Plan. The total market value of those shares on the
issue date was $166,530 and the total amount received from employees for those shares was
$163,527.
At 31 December 2001, the total number of shares acquired under the Plan since its
commencement was 595,800.
(d) Santos Executive Share Option Plan
The Santos Executive Share Option Plan was approved by shareholders at the Annual General
Meeting on 15 May 1997 and its continuation, with amendment, approved at the Annual General
Meeting on 5 May 2000.
The Plan provides for the grant of options to subscribe for or purchase ordinary shares in the
capital of the Company to eligible executives selected by the Board. Participation will be limited to
those executives who, in the opinion of the Board, are able to significantly influence the generation
of shareholder wealth. Directors envisage the Plan applying to up to 50 executives.
Each option is a right to acquire one share, subject to adjustment in accordance with the Rules
of the Plan. The options entitle the holder to participate in any bonus issue conducted by the
Company, upon exercise of the options. The exercise price of each option will be adjusted in the
event of a rights issue.
The exercise price of the options and other conditions, including any performance hurdles, will
be determined, and may be amended or waived, by the Board. No consideration is provided by
executives for the options. The Plan provides for options with a life of up to ten years.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2001
56
19. Contributed Equity (continued)
(d) Santos Executive Share Option Plan (continued)
During the financial year, the Company granted options over unissued shares as set out in
the following table. The ability to exercise the options is generally conditional on the Company
achieving a prescribed performance hurdle or exercise condition. To reach the performance hurdle,
the Company’s Total Shareholder Return (broadly, growth in share price plus dividends reinvested)
(“TSR Growth”) over a minimum three year period must equal or exceed 10% per annum
calculated on a compound basis. If Total Shareholder Return does not reach the performance
hurdle at the end of those respective periods, the options may nevertheless be exercisable if
the hurdle is subsequently reached within the remaining life of the options. In assessing the
performance against the hurdle, the Board may apply on a consistent basis an averaging method
over a period of three months to allow for short-term volatility.
Date of grant
Number of
ordinary shares
under option2
Exercise price
$
Date first
exercisable1
Expiry date
6 June 2001
22 November 2001
700,000
1,275,000
6.69
6.52
6 June 2004
5 June 2006
19 October 2004 18 October 2006
1. In limited circumstances described in the Plan the options may be exercised before this date.
2. These comprise options granted to Mr J T Young and fourteen other participating eligible
executives.
At 31 December 2001, the total number of options acquired under the Plan since its
commencement was 20,325,000, some of which have lapsed or have been exercised.
At the date of the Directors’ Statutory Report, unissued ordinary shares of the Company under
option are:
Expiry date of options
Issue price of shares
$
Number of ordinary shares
under option
24 July 2002
30 April 2003
15 June 2003
14 June 2004
17 April 2005
5 June 2006
18 October 2006
25 August 2010
6.32
5.59
4.84
5.12
3.92
6.69
6.52
5.83
3,750,000
550,000
625,000
2,225,000
900,000
700,000
1,275,000
3,000,000
During or since the end of the financial year, 4,850,000 fully paid ordinary shares have been issued
as a result of the exercise of options at prices per share of: $6.32; $5.59; $4.84; and $5.12.
The total market value of shares issued during the year, as a result of the exercise of options, on
the issue date was $29,671,975 and the total amount received for those shares was $25,163,500.
(e) Maximum number of shares that may be acquired under share and option schemes
The aggregate number of:
(i) shares issued under and for the time being outstanding and subject to the terms of each
employee share plan of the Company; and
(ii) unissued shares to which options are granted and for the time being outstanding under any
employee or executive share option plan of the Company;
cannot exceed 5% of the issued shares of all classes of the Company.
19. Contributed Equity (continued)
(f ) Restricted Shares
On his appointment as Chief Executive Officer on 13 December 2000, 1,000,000 Restricted Shares
were issued to Mr J C Ellice-Flint. The Restricted Shares were issued for nil consideration and are
held under a trust structure. The Restricted Shares carry rights to dividends and bonus issues and
allow Mr Ellice-Flint to instruct the trustee as to the exercise of voting rights. Legal title in the
Shares will not pass to Mr Ellice-Flint until he has completed 5 years continuous service with the
Group or his employment is earlier terminated by the Company (other than for cause).
(g) Off market buy-back
On 4 December 2001, the Company bought back 40,518,558 fully paid ordinary shares,
representing 6.54% of fully paid ordinary shares on issue at that date, at a price of $6.17 per share
comprising an amount of $106,563,807 debited against the Company’s capital account and an
amount of $143,435,695 debited against the retained earnings account.
(h) Reset convertible preference shares
On 4 December 2001, the Company issued 3,500,000 reset convertible preference shares at
$100 each (“Preference Shares”) which resulted in an amount of $342,281,955 being credited to
the Company’s capital account net of the costs of issue.
Preference shareholders receive a preferential, non-cumulative dividend of 6.57% per annum,
fixed until 30 September 2006. Preference Share dividends will be paid in priority to any dividends
declared on ordinary class shares. Preference shareholders are not entitled to vote at any general
meetings, except in the following circumstances:
Movements during the year
Balance at the beginning of the year
Transfers to/(from) foreign currency translation
reserve arising from exchange rate fluctuations on:
(a) on a proposal:
(i)
to reduce the share capital of the Company;
(ii) that affects rights attached to the Preference Shares;
(iii) to wind up the Company;
(iv) for the disposal of the whole of the property, business and undertaking of the Company;
(b) on a resolution to approve the terms of a buy-back agreement;
(c) during a period in which a dividend or part of a dividend on the Preference Shares is in arrears;
(d) during the winding up of the Company.
Overseas net assets
Foreign currency borrowings
Balance at the end of the year
57
In the event of the winding up of the Company, Preference Shares will rank for repayment of
capital behind all creditors of the Company, but ahead of the ordinary class shares.
On reset dates, the Preference Shares may, at the option of either the holders of the Preference
Shares or the Company, be converted or exchanged (at the election of the Company) into ordinary
class shares.
(i) Schemes of Arrangement
On 8 August 2001, 4,524,568 fully paid ordinary shares were issued pursuant to schemes of
arrangement to acquire all outstanding shares and options in Natural Gas Australia Ltd.
20. Reserves
Foreign currency translation
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
1.7
1.7
0.2
0.2
0.2
(1.1)
13.0
(11.5)
1.7
18.5
(17.2)
0.2
–
–
–
–
–
–
–
–
–
–
–
–
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2001
58
21. Retained Profits
Balance at the beginning of the year
Net profit after income tax attributable to the
shareholders of Santos Ltd
Off market buy-back (refer note 19(g))
Dividends provided for or paid
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
738.1
495.2
545.1
522.3
445.9
(143.4)
(179.9)
486.8
–
(243.9)
600.9
(143.4)
(179.9)
266.7
–
(243.9)
Balance at the end of the year
860.7
738.1
822.7
545.1
22. Earnings per Share
Basic earnings per share (cents)
Weighted average number of ordinary shares
on issue used in the calculation of basic
earnings per share (million)
Consolidated
2001
72.8
2000
80.0
612.4
608.3
Santos Ltd has potential ordinary shares on issue comprising 489,250 (2000: 838,250) ordinary
shares paid to one cent issued to senior executives of the Company under the Santos Executive Share
Plan, options over 13,325,000 (2000: 15,950,000) unissued ordinary shares granted to senior
executives of the Company under the Santos Executive Share Option Plan and 3,500,000 (2000: nil)
reset preference shares (refer note 19(h)), the dilutive impacts of which are not material. Diluted
earnings per share are therefore not materially different from basic earnings per share.
23. Investments in Controlled Entities
Name
Santos Ltd (Parent Entity)
Controlled entities1:
Alliance Petroleum Australia Pty Ltd
Australasian Eagle Petroleum Pty Ltd (in liquidation)
Controlled entity of Australasian Eagle Petroleum Pty Ltd
Castend Pty Limited (in liquidation)
Boston L.H.F. Pty Ltd
Bridge Oil Developments Pty Limited
Canso Resources Pty Ltd
Doce Pty Ltd
Farmout Drillers Pty Ltd
Kipper GS Pty Ltd
Controlled entity of Kipper GS Pty Ltd
Crusader (Victoria) Pty Ltd
Moonie Pipeline Company Pty Ltd
Controlled entities of Moonie Pipeline Company Pty Ltd
Candolia Pty Limited
Australian Interstate Pipeline Company Pty Limited
Controlled entity of Australian Interstate Pipeline Company Pty Limited
Bridgefield Pty Ltd
Natural Gas Australia Pty Limited2 (formerly Natural Gas Australia Ltd)
Reef Oil Pty Ltd
Santos Asia Pacific Pty Ltd
Controlled entities of Santos Asia Pacific Pty Ltd
Santos (Bentu No. 2) Pty Ltd
Santos (Korinci-Baru No. 2) Pty Ltd
Santos (Sampang) Pty Ltd
Santos (Warim) Pty Ltd
Santos Australian Hydrocarbons Pty Ltd
Santos (BOL) Pty Ltd
Place of
incorporation
SA
VIC
NSW
NSW
VIC
NSW
NSW
QLD
NSW
WA
VIC
QLD
ACT
NSW
QLD
VIC
NSW
QLD
QLD
SA
SA
SA
QLD
NSW
23. Investments in Controlled Entities (continued)
Name
Controlled entities of Santos (BOL) Pty Ltd
Bridge Gas Queensland Pty Limited (in liquidation)
Bridge Oil Exploration Pty Limited
Bridge Oil International Finance Pty Ltd (in liquidation)
Bridge Oil Investments Pty Limited (in liquidation)
Santos Facilities Pty Ltd
Santos Finance Ltd
Santos (Halph) Pty Ltd (in liquidation)
Santos (Korinci-Baru) Pty Ltd
Santos (N.T.) Pty Ltd
Controlled entity of Santos (N.T.) Pty Ltd
Bonaparte Gas & Oil Pty Limited
Santos Oil Exploration (Malaysia) Sdn Bhd (in liquidation)
Santos Offshore Pty Ltd
Santos Petroleum Pty Ltd
Santos Resources Pty Ltd
Santos International Holdings Pty Ltd
Controlled entities of Santos International Holdings Pty Ltd
Barracuda Limited
Lavana Limited
Peko Offshore Ltd
Santos Americas and Europe Corporation
Controlled entity of Santos Americas and Europe Corporation
Santos USA Corp
Santos (Bentu) Pty Ltd
Controlled entity of Santos (Bentu) Pty Ltd
Santos (Bangko) Pty Ltd (in liquidation)
Santos (Madura Offshore) Pty Ltd (formerly Santos (Varanus) Pty Ltd)
Place of
incorporation
Name
Santos Niugini Exploration Limited
Santos Petroleum (NZ) Limited
Zan Star Ltd
Santos QNT Pty Ltd
Controlled entities of Santos QNT Pty Ltd
Santos QNT (No. 1) Pty Ltd
Controlled entities of Santos QNT (No. 1) Pty Ltd
Santos Petroleum Management Pty Ltd
Santos Petroleum Marketing Pty Ltd
Santos Petroleum Operations Pty Ltd
TMOC Exploration Proprietary Limited
Santos QNT (No. 2) Pty Ltd
Controlled entities of Santos QNT (No. 2) Pty Ltd
Alliance Minerals Australia Pty Ltd
Associated Petroleum Pty Ltd
Moonie Oil Pty Ltd
Petromin Pty Ltd
Santos (299) Pty Ltd
Santos Exploration Pty Ltd
Santos Gnuco Pty Ltd
Transoil Pty Ltd
Santos (Zoca 91-01) Pty Ltd
Santos (Zoca 91-12) Pty Ltd
Vamgas Pty Ltd
QLD
ACT
ACT
NSW
SA
NSW
ACT
ACT
ACT
NSW
MAL
VIC
NSW
QLD
ACT
PNG
PNG
BER
USA
USA
NSW
WA
WA
1. Beneficial interests in all controlled entities is 100% except for Kipper GS Pty Ltd in which
two shares of the total issued capital of 9,246,353 shares are owned by a third party.
2. Company acquired during the year.
59
Place of
incorporation
PNG
NZ
PNG
QLD
QLD
QLD
QLD
QLD
QLD
QLD
VIC
QLD
QLD
QLD
QLD
VIC
QLD
QLD
ACT
ACT
VIC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2001
60
23. Investments in Controlled Entities (continued)
Notes
(a) Disposal of controlled entities
During the financial year the following controlled entities were liquidated:
Alliance Oil Development Australia Pty Ltd
Western Australian Capital Holdings Pty Ltd
(c) Acquisitions of controlled entities
During the financial year the following controlled entity was acquired and its operating results
have been included in the statement of financial performance from the date of acquisition:
Date of
acquisition
Beneficial Consideration
paid for
shares
$million
interest
acquired
%
Fair value
of net assets
at time of
acquisition
$million
During the financial year the following USA incorporated companies were merged with their
parent entities:
Name of entity
SAE Management Services Corp
Santos Colombia Exploration Inc
Santos USA Pipeline Corp
During the financial year the following controlled entities were placed into voluntary liquidation:
Australasian Eagle Petroleum Pty Ltd
Bridge Gas Queensland Pty Limited
Bridge Oil International Finance Pty Ltd
Bridge Oil Investments Pty Limited
Castend Pty Limited
Santos (Bangko) Pty Ltd
Santos (Halph) Pty Ltd
(b) Place of incorporation
ACT – Australian Capital Territory
NSW – New South Wales
QLD – Queensland
SA
VIC – Victoria
WA – Western Australia
– South Australia
NZ – New Zealand
BER – Bermuda
MAL – Malaysia
PNG – Papua New Guinea
USA – United States of America
Natural Gas Australia Ltd
17 July 2001
100
81.3
81.3
The financial impacts of the acquisition on the consolidated entity and the Company are
summarised below:
Fair value of net assets acquired
Cash
Other
Investment in controlled entities
Exploration and development
Fair value of net assets acquired
Purchase consideration
Non-cash consideration – ordinary shares
Cash consideration
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
2.0
1.6
–
77.7
81.3
27.9
53.4
81.3
–
–
–
–
–
–
–
–
–
–
81.3
–
81.3
27.9
53.4
81.3
–
–
369.4
–
369.4
–
220.4
220.4
61
24. Interests in Joint Ventures
(a) Santos Ltd and its controlled entities have combined interests in unincorporated joint ventures in
the following major areas:
Joint venture/area
Principal activities
Amadeus Basin
Mereenie
Mereenie Pipeline
Palm Valley
Bass Basin
Browse Basin
Carnarvon Basin
Cooper Basin Downstream
Cooper Basin Unit
South Australia
Queensland
Cooper/Eromanga Basins
South Australia
Queensland, ATP 259P
Other Eromanga
Ballera to Mt Isa Pipeline
Jackson Moonie Pipeline
Eastern Queensland
Denison Trough
Surat Basin
Gippsland Basin
Indonesia
Offshore Northern Australia
Bonaparte Basin
Timor Gap
Timor Sea
Otway Basin
Papua New Guinea
Oil and gas production
Oil transportation
Gas production
Oil and gas exploration
Oil and gas exploration
Oil and gas exploration and production
Liquid hydrocarbon transportation and processing
Oil and gas production
Oil and gas production
Oil and gas exploration and production
Oil and gas exploration and production
Oil and gas exploration and production
Gas transportation
Oil transportation
Gas exploration and production
Oil and gas exploration and production
Oil and gas exploration
Oil and gas exploration
Oil and gas exploration
Oil and gas exploration and production
Oil and gas exploration and production
Oil and gas exploration and production
PDL1 (Part Hides Field)
Other interests
Oil and gas exploration
Oil and gas exploration and production
USA
Onshore/Gulf Coast
Gulf of Mexico
Oil and gas exploration and production
Oil and gas exploration and production
Average
interest
%
65
65
48
5
28
33
60
60
60
60
60
40
18
83
50
48
37
52
95
19
24
52
31
32
51
49
(b) The sales revenue received from the consolidated entity’s share of petroleum products produced
by the joint ventures is $1,439.4 million (2000: $1,486.2 million) and the contribution of joint
venture business undertakings to profit from ordinary activities before interest and tax of the
consolidated entity is $696.6 million (2000: $820.9 million).
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
(c) Santos Ltd and its controlled entities’ share of
assets and liabilities employed in the joint
ventures are included in the statements of
financial position under the following
classifications:
Current assets
Cash
Receivables
Inventories
Total current assets
Non-current assets
Exploration and development expenditure
Land and buildings, plant and equipment
Other
62.2
74.9
34.6
39.5
32.5
34.4
171.7
106.4
2,686.0
1,419.2
5.9
2,407.6
1,222.5
9.2
27.2
30.8
16.1
74.1
872.5
566.7
2.8
16.1
13.1
16.0
45.2
798.7
563.2
5.3
Total non-current assets
4,111.1
3,639.3
1,442.0
1,367.2
Total assets
Current liabilities
Payables
Provisions
Total current liabilities
Non-current liabilities
Provisions
Total liabilities
4,282.8
3,745.7
1,516.1
1,412.4
162.9
3.7
166.6
127.8
–
127.8
83.2
76.3
249.8
204.1
41.1
2.0
43.1
26.5
69.6
51.9
–
51.9
27.1
79.0
Net investments in joint ventures
4,033.0
3,541.6
1,446.5
1,333.4
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2001
62
24. Interests in Joint Ventures (continued)
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
(d) The amount of capital expenditure commitments,
(b) Non-cash financing and investing activities
minimum exploration commitments and
contingent liabilities in respect of
unincorporated joint ventures are:
Capital expenditure commitments
Minimum exploration commitments
Contingent liabilities
25. Notes to Statements of Cash Flows
(a) Reconciliation of net cash provided by operating
activities to profit from ordinary activities after
income tax
Profit from ordinary activities after income tax
Add/(deduct) non-cash items:
Depreciation, depletion and amortisation
Write-down of controlled entities
Net revenue on restructuring within the
consolidated entity
(Decrease)/increase in income taxes payable
Net increase in deferred tax asset and
deferred tax liability
Capitalised interest
Foreign currency fluctuations
Share of net loss of associated company
Net (profit)/loss on sale of non-current assets
Net cash provided by operating activities before
199.8
245.5
13.6
128.7
209.0
15.7
20.0
82.1
8.7
24.1
69.5
10.1
4,524,568 ordinary shares were issued at $6.17 as part of consideration for the purchase of a
controlled entity (refer note 23(c)).
26. Related Parties
The names of each person holding the position of Director of Santos Ltd during the financial year are:
445.9
486.8
600.9
266.7
425.1
–
–
(123.1)
10.6
(17.1)
1.9
–
(0.4)
354.9
–
–
159.6
7.5
(12.3)
2.7
18.7
(29.7)
162.2
5.5
(6.7)
(18.3)
0.6
(0.8)
(1.1)
–
(0.1)
116.4
6.3
(53.9)
8.0
3.2
(0.9)
–
–
26.3
UHRIG John Allan: retired 4 May, 2001
BARNETT Peter Charles
CONROY Francis John
ELLICE-FLINT John Charles
GERLACH Stephen
McARDLE John Walter: retired 14 July, 2001
McGREGOR Graeme William
O’LEARY Michael Anthony
SLOAN Judith
WEBBER Ian Ernest
Santos Ltd and its controlled entities engage in a variety of related party transactions in the ordinary
course of business. These transactions are conducted on normal terms and conditions, the effects of
which are eliminated on consolidation.
Details of related party transactions and amounts are set out in:
Note 2 as to dividends received from controlled entities;
Note 5 as to interest paid to controlled entities;
Note 9 as to amounts owing by controlled entities;
Notes 16 and 17 as to amounts owing to controlled entities;
Note 17 as to guarantees by Santos Ltd of the financing facilities and lease obligations of
controlled entities;
Note 18 as to non-executive Directors’ retirement benefits;
Notes 14 and 23 as to investments in controlled entities;
Note 27 as to Directors’ remuneration, including amounts paid or prescribed benefits given in
respect of the retirement of Directors.
change in assets or liabilities
742.9
988.2
742.2
372.1
Add/(deduct) change in operating assets or
liabilities net of acquisitions of businesses:
(Increase) in receivables
(Increase)/decrease in inventories
Decrease in other assets
(Decrease)/increase in payables
Increase/(decrease) in provisions
(39.8)
(8.7)
4.4
(26.4)
19.7
(83.2)
(1.5)
2.4
105.4
11.7
(17.3)
(6.8)
6.7
(3.2)
(6.1)
(0.8)
1.5
2.3
34.0
8.9
Net cash provided by operating activities
692.1
1,023.0
715.5
418.0
26. Related Parties (continued)
In addition:
(i) Agreements exist with the non-executive Directors providing for the payment of a sum on
retirement from office as a Director in accordance with shareholder approval at the 1989 Annual
General Meeting. The amount provided for the year was $791,820 (2000: $340,230).
(ii) The aggregate number of shares acquired by Directors and their director related entities during the
financial year was: 2,350,000 fully paid ordinary shares acquired by former Executive Directors upon
the exercise of options previously granted pursuant to the Santos Executive Share Option Plan; and
750 reset convertible preference shares acquired as part of the general offering of those shares.
The aggregate number of shares disposed of by Directors and their director related entities during
the financial year was 9,335 fully paid ordinary shares pursuant to the Company’s off market share
buy-back.
The aggregate number of shares and options held directly, indirectly or beneficially by Directors
of Santos Ltd and their director related entities in Santos Ltd as at the balance sheet date was:
1,101,995 fully paid ordinary shares (2000: 1,491,450) including 1,000,000 Restricted Shares
referred to in Note 19; 3,000,000 options granted under the Santos Executive Share Option Plan
(2000: 4,000,000); and 750 reset convertible preference shares.
(iii) All amounts owing by or to controlled entities are for loans made
on interest free terms for an indefinite period with the exception of:
Amounts owing by controlled entities
Amounts owing to controlled entities
Santos Ltd
2001
$million
2000
$million
781.2
625.0
1,262.9
1,273.2
These loans were made in the ordinary course of business on normal market terms and conditions.
63
(iv) During the financial year, legal costs of $94,561 (2000: $214,650) have been paid by the Company
in defending certain proceedings in relation to termination of employment brought by a former
employee against: the Company; the former Managing Director, Mr N R Adler; another employee of
the consolidated entity, Dr J D Armstrong; and a former employee of the consolidated entity. These
costs, which in so far as they relate to the three personal defendants have been paid pursuant to the
terms of Deeds of Indemnity entered into between the Company and each of them, have not been
apportioned among the Company nor the three indemnified personal defendants and therefore it is
not possible to determine the amount paid on behalf of each of them.
(v) Mr J A Uhrig, who retired as a Director on 4 May 2001, purchased, and Mr J W McArdle, who
retired as a Director on 14 July 2001, agreed to purchase, a motor vehicle during the year at the
highest of independent valuations.
(vi) Mr J W McArdle, who retired as a Director on 14 July 2001, entered into a consultancy agreement
with the Company on 7 September 2001 pursuant to which he will provide consultancy services to
the consolidated entity for a period of two years following his retirement as an employee of the
Company.
(vii)The spouse of a director of a Santos Group company is an employee of that company.
The transactions referred to in paragraphs (v) to (vii) (inclusive) occurred on terms no more
favourable than would have been adopted if dealing at arm’s length, do not have the potential to
adversely affect decisions about the allocation of scarce resources and are trivial in nature.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2001
64
27. Executives’ and Directors’ Remuneration
(a) Executives
Amounts received from Santos Ltd or its
controlled entities by Executive Officers domiciled
in Australia whose income is $100,000 or greater
Number of Executive Officers whose remuneration
was within the following bands:
$000
Consolidated
Santos Ltd
2001
$000
2000
$000
2001
$000
2000
$000
10,491
10,917
10,491
10,917
Consolidated
Santos Ltd
2001
$000
2000
$000
2001
$000
2000
$000
4,454
7,319
4,203
7,018
(b) Directors
Amounts received or due from Santos Ltd or its
controlled entities by the Directors of Santos Ltd
and Directors of each of its controlled entities
Number of Directors whose remuneration was
within the following bands:
No.
No.
No.
No.
$000
No.
No.
120
110 –
130
120 –
180
170 –
210 – 220
260 –
270
270 – 280
320
310 –
330
320 –
340
330 –
350
340 –
370
360 –
370 –
380
380 – 390
390 – 400
460 – 470
480 – 490
490 – 500
650
640 –
670 – 680
890 – 900
910 – 920
1,060 – 1,070
2,110 – 2,120
2,360 – 2,370
4,990 – 5,000
70
60 –
80
70 –
90
80 –
90 –
100
190 – 200
270
260 –
330 –
340
910 – 920
1,060 – 1,070
2,360 – 2,370
4,990 – 5,000
–
1
5
1
1
–
–
–
1
1
–
1
5
–
1
–
1
1
1
–
–
1
Consolidated
Santos Ltd
2001
$000
2000
$000
2001
$000
2000
$000
(c) Retirement Benefits
Retirement benefits paid to Directors, in accordance
with Directors’ retirement arrangements previously
approved by shareholders in a general meeting
882
–
882
–
1
1
1
1
–
1
1
1
–
–
2
–
–
1
1
–
–
–
–
1
1
1
1
1
–
–
–
–
–
1
1
–
1
1
1
–
1
1
1
–
1
1
1
1
–
1
–
–
–
1
1
1
1
1
–
1
1
1
–
–
2
–
–
1
1
–
–
–
–
1
1
1
1
1
–
–
–
–
–
1
1
–
1
1
1
–
1
1
1
–
1
1
1
1
–
1
–
–
–
1
Executive Officers disclosed above are those persons within the consolidated entity who have
responsibility for the strategic direction and operational management of major business units.
28. Remuneration of Auditors
Amounts received or due and receivable by
the auditors of Santos Ltd for:
Audit of financial reports
Other audit assurance services
Other services
Amounts received or due and receivable by
auditors other than the auditors of Santos Ltd for:
Audit of financial reports
Other audit assurance services
Other services
29. Segment Reporting
Consolidated
Santos Ltd
2001
$000
2000
$000
2001
$000
2000
$000
280
535
195
269
420
322
1,010
1,011
73
106
129
308
57
–
–
57
210
525
146
881
–
–
–
–
202
420
242
864
–
–
–
–
The consolidated entity operates predominantly in one industry, namely exploration, development,
production, transportation and marketing of hydrocarbons and in one geographical segment, namely
Australia. Operations are also conducted in Indonesia, Papua New Guinea and the United States of
America but are not material to the consolidated entity results. Revenue is derived from the sale of
gas and liquid hydrocarbons and transportation of crude oil.
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
30. Commitments for Expenditure
The consolidated entity has the following
commitments for expenditure:
(a) Capital commitments
Capital expenditure contracted for at balance date
for which no amounts have been provided in
the financial report:
Due not later than one year
Due later than one year but not later than
five years
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
65
(b) Minimum exploration commitments
Minimum exploration commitments for which no
amounts have been provided in the financial
report or capital commitments:
Due not later than one year
Due later than one year but not later than
five years
75.6
63.5
169.9
145.5
245.5
209.0
19.2
62.9
82.1
13.6
55.9
69.5
The consolidated entity has certain obligations to perform minimum exploration work and expend
minimum amounts of money pursuant to the terms of the granting of petroleum exploration
permits in order to maintain rights of tenure. These commitments may be varied as a result of
renegotiations of the terms of the exploration permits, licences or contracts or alternatively upon
their relinquishment. The minimum exploration commitments are less than the normal level of
exploration expenditures expected to be undertaken by Santos Ltd and its controlled entities.
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
(c) Lease commitments
Finance leases:
Due not later than one year
Due later than one year but not later than
five years
Total commitments under finance leases
Less future finance charges
Lease liabilities
13.0
–
13.0
(0.1)
12.9
1.3
13.0
14.3
(1.3)
13.0
–
–
–
–
–
126.3
73.5
81.9
46.8
199.8
128.7
19.4
0.6
20.0
16.1
8.0
24.1
Operating leases:
Due not later than one year
Due later than one year but not later than
five years
Due later than five years
Total commitments under operating leases
46.6
43.3
121.5
3.9
172.0
118.6
13.2
175.1
25.2
76.7
3.5
105.4
–
–
–
–
–
15.5
62.2
7.6
85.3
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2001
66
31. Superannuation Commitments
Santos Ltd and certain of its controlled entities participate in a number of superannuation funds
and pension plans in Australia and the United States of America which provide benefits either on
a defined benefit or cash accumulation basis for employees or their dependants on retirement,
resignation, total or permanent disablement or death. The employers and employee members make
contributions as specified in the rules of the respective funds.
Independent actuarial valuations of the company sponsored defined benefit plan are undertaken every
three years as at 1 January.
The following is a review of the significant employee benefit plans:
Santos Petroleum Management
Superannuation Fund and
Santos Retirement Plan
Santos
Superannuation Fund
Type of benefit
Cash accumulation
Basis of contributions
Percentage of member’s
wage contributed by member
and employer.
Employer’s legal obligation
to contribute
Enforceable subject to right
to cease contributions on
written notice to the Trustee.
Defined benefits and cash
accumulation
Percentage of member’s salary
contributed by member and
employer. The employer’s
percentage reflects the amount
to provide an accumulation and
the amount recommended by
the actuary to provide the
defined benefit.
Enforceable subject to right to
cease contributions on written
notice to the Trustee.
Last actuarial assessment:
Date issued
Name of valuer and
qualifications
Not applicable
13 October 2000
Not applicable
M Wood BSc(Eng) FIA FIAA
The assets of all funds were sufficient to satisfy all benefits which would have been vested in the
event of termination of the fund, or in the event of voluntary or compulsory termination of the
employment of each employee.
The Santos Superannuation Fund has employee accrued benefits and assets as follows:
As at
30 June 2001
$million
As at
30 June 2000
$million
Net market value of assets
Less present value of employees’ accrued benefits
as determined by triennial actuarial
assessment as at 1 January 2000
Excess of assets held to meet future benefit
payments
119.6
(99.5)
20.1
109.1
(99.5)
9.6
Vested benefits at 1 January 2001 are $111.4 million (2000: $97.0 million).
32. Contingent Liabilities
Santos Ltd and its controlled entities have the
following contingent liabilities arising in respect
of other persons:
Performance guarantees
Employee service agreements
Claims under and for breach of contract and
public liability
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
7.9
–
5.7
13.6
7.3
7.6
8.4
23.3
5.6
–
3.1
8.7
5.1
7.6
5.0
17.7
Legal advice in relation to the claims lodged above indicates that on the basis of available information,
liability in respect of these claims is unlikely to exceed $1.2 million on a consolidated basis.
32. Contingent Liabilities (continued)
Guarantees provided by Santos Ltd for borrowings in respect of controlled entities are disclosed in
note 17.
A number of the Australian interests of the consolidated entity are located within areas the subject of
one or more claims or applications for native title determination. Whatever the outcome of those
claims or applications, it is not believed that they will significantly impact the consolidated entity’s
asset base. The decision of the High Court of Australia in the “Wik” case has the potential to
introduce delay in the grant of mineral and petroleum tenements and consequently to impact
generally the timing of exploration, development and production operations. An assessment of the
impact upon the timing of particular operations may require consideration and determination of
complex legal and factual issues and on final resolution of the response of the States to the
Commonwealth Native Title Amendment Act, 1998.
33. Additional Financial Instruments Disclosure
The consolidated entity uses derivative financial instruments to hedge its exposure to changes in
foreign exchange rates, commodity prices and interest rates arising in the normal course of business.
The principal derivatives used are forward foreign exchange contracts, foreign currency swaps, foreign
currency option contracts, interest rate swaps and options, and commodity crude oil price swap and
option contracts. Their use is subject to a comprehensive set of policies, procedures and limits
approved by the Board of Directors. The consolidated entity does not trade in derivative financial
instruments for speculative purposes.
(a) Foreign exchange risk exposure
The consolidated entity is exposed to foreign exchange risk principally through the sale of liquid
petroleum products denominated in US dollars, US dollar borrowings and US dollar capital
expenditure. In order to hedge this foreign exchange risk, the consolidated entity has from time
to time entered into forward foreign exchange, foreign currency swaps and foreign currency
option contracts.
At 31 December 2001 the consolidated entity has open forward foreign exchange and foreign
currency option contracts with settlement/expiry dates up to 13 months. If closed out at balance
date these contracts would have resulted in a loss of $1.8 million (2000: $2.2 million) that has
been deferred for inclusion as part of the underlying future sales transaction.
67
US dollar denominated borrowings are either swapped into Australian dollar exposure or
designated as a hedge of US dollar denominated investments in self-sustaining overseas controlled
entities or as a hedge of future US denominated sales revenues. As a result, there were no net
foreign currency gains or losses arising from translation of US denominated dollar borrowings
recognised in the statements of financial performance in 2001. Accordingly, $93.9 million of
unrealised foreign currency losses were deferred as at 31 December 2001 (2000: $81.1 million).
The ultimate foreign currency gains or losses will be included in the measurement of the specific
hedged US dollar denominated sales revenues to be realised in the years 2002 through 2005.
The Australian dollar equivalents of foreign currency monetary items included in the statements of
financial position to the extent that they are not effectively hedged are:
Consolidated
Santos Ltd
2001
$million
2000
$million
2001
$million
2000
$million
Current assets
– United States dollars
Current liabilities – United States dollars
69.1
20.7
83.0
6.9
7.5
–
5.3
–
(b) Interest rate risk exposure
The consolidated entity enters into interest rate swap contracts with maturities up to 14 years to
manage interest rate risk.
At 31 December 2001 the consolidated entity has open interest rate swap contracts which if closed
out would have resulted in a gain of $49.4 million (2000: $18.8 million).
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2001
68
33. Additional Financial Instruments Disclosure (continued)
(b) Interest rate risk exposure (continued)
(c) Commodity price risk exposure
At 31 December 2001 the consolidated entity has no open oil price swap contracts.
(d) Credit risk exposure
Credit risk represents the potential financial loss if counterparties fail to perform as contracted.
The credit risk on financial assets, excluding investments, of the consolidated entity which have
been recognised on the statements of financial position is indicated by the carrying amount.
The credit risk on off-balance sheet derivatives is the cost of replacing the contract if the
counterparty were to default and is measured by their market value at balance date. As at
31 December 2001, counterparty default of forward foreign exchange contracts, foreign currency
swaps, foreign currency option contracts and interest rate swap contracts would result in a loss
of $52.3 million (2000: $56.2 million).
The consolidated entity controls credit risk on derivative financial instruments by setting exposure
limits related to the credit worthiness of counterparties, all of which are selected banks or
institutions with a Standard and Poor’s rating of A or better.
(e) Net fair values of financial assets and liabilities
The carrying amounts of all financial assets and liabilities including hedges approximate net
fair value.
At 31 December 2001 the consolidated entity has open derivative financial instruments
relating to future profit which if closed out at their market rates would have
contracts
resulted in a gain of llllll$47.6 million (2000: $49.2 million).
34. Economic Dependency
There are in existence long-term contracts for the sale of gas, but otherwise the Directors believe
there is no economic dependency.
The consolidated entity’s exposure to interest rate risk and the effective weighted average interest
rates for classes of interest-bearing financial assets and financial liabilities is set out below:
Weighted Floating
interest
rate
average
interest
rate *
Fixed interest repriced
or maturing in
1 year
or less
Over
1 to 5
years
More
than
5 years
Total
Non
interest-
bearing
note
$million $million $million $million $million $million
31 December 2001
Financial assets
Cash
Receivables
Other financial assets
3.85% 106.3
9
14
N/A
N/A
–
–
Financial liabilities
Payables
Deferred income
Interest-bearing liabilities 17
16
N/A
N/A
5.21%
106.3
–
–
12.9
12.9
–
–
–
–
–
–
–
–
–
–
–
–
–
274.7
35.0
106.3
274.7
35.0
309.7
416.0
–
–
361.9
–
–
201.0
–
–
591.3
242.5
20.2
–
242.5
20.2
1,167.1
361.9
201.0
591.3
262.7
1,429.8
Interest rate swaps**
–
530.3
(129.1)
(401.2)
–
–
31 December 2000
Financial assets
Cash
Receivables
Other financial assets
5.78%
N/A
N/A
9
14
Financial liabilities
Payables
Deferred income
Interest-bearing liabilities 17
16
N/A
N/A
7.71%
182.5
–
–
182.5
–
–
13.0
13.0
–
–
–
–
–
–
–
–
–
–
–
–
–
234.7
33.8
182.5
234.7
33.8
268.5
451.0
–
–
101.1
–
–
394.2
–
–
540.8
260.6
25.3
–
260.6
25.3
1,049.1
101.1
394.2
540.8
285.9
1,335.0
Interest rate swaps**
–
100.1
(80.1)
(20.0)
–
–
* after incorporating the effect of interest rate swaps
** notional principal amounts
DIRECTORS’ DECLARATION
for the year ended 31 December 2001
INDEPENDENT AUDIT REPORT
to the members of Santos Ltd
69
In the opinion of the Directors of Santos Ltd:
Scope
(a) the financial statements and notes, set out on pages 42 to 68, are in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the financial position of the Company and consolidated entity as
at 31 December 2001 and of their performance, as represented by the results of their
operations and their cash flows, for the year ended on that date; and
(ii) complying with Accounting Standards; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and
We have audited the financial report of Santos Ltd for the financial year ended 31 December 2001,
consisting of the statements of financial performance, statements of financial position, statements of
cash flows, accompanying notes 1 to 34, and the directors’ declaration. The financial report includes
the consolidated financial statements of the consolidated entity, comprising the Company and the
entities it controlled at the end of the year or from time to time during the financial year. The
Company’s Directors are responsible for the financial report. We have conducted an independent
audit of this financial report in order to express an opinion on it to the members of the Company.
when they become due and payable.
Dated this 13th day of February 2002.
Signed in accordance with a resolution of the Directors:
Director
Director
Our audit has been conducted in accordance with Australian Auditing Standards to provide
reasonable assurance whether the financial report is free of material misstatement. Our procedures
included examination, on a test basis, of evidence supporting the amounts and other disclosures in
the financial report, and the evaluation of accounting policies and significant accounting estimates.
These procedures have been undertaken to form an opinion whether, in all material respects, the
financial report is presented fairly in accordance with Accounting Standards and other mandatory
professional reporting requirements and statutory requirements in Australia so as to present a view
which is consistent with our understanding of the Company’s and the consolidated entity’s financial
position, and performance as represented by the results of their operations and their cash flows.
The audit opinion expressed in this report has been formed on the above basis.
Audit opinion
In our opinion, the financial report of Santos Ltd is in accordance with:
(a) the Corporations Act 2001, including:
(i) giving a true and fair view of the Company’s and the consolidated entity’s financial position as
at 31 December 2001 and of their performance for the financial year ended on that date; and
(ii) complying with Accounting Standards and the Corporations Regulations 2001; and
(b) other mandatory professional reporting requirements.
KPMG
William J Stevens
Partner
Adelaide
13 February 2002
70
STOCK EXCHANGE AND SHAREHOLDER INFORMATION
Analysis of Shares - range of shares held
Listed on Australian Stock Exchange at 8 February 2002 were 579,057,245 fully paid ordinary shares
and 3,500,000 reset convertible preference shares. Unlisted were 163,250 partly paid Plan 0 shares,
301,000 partly paid Plan 2 shares and 65,100 fully paid ordinary shares issued pursuant to the Santos
Employee Share Purchase Plan (‘SESPP’). There were: 89,169 holders of all classes of issued ordinary
shares (including 19 holders of Plan 0 shares; 18 holders of Plan 2 shares; and 94 holders of SESPP
shares) compared with 76,313 a year earlier; 16,512 holders of reset convertible preference shares; and
52 holders of the 13,025,000 options granted pursuant to the Santos Executive Share Option Plan.
The listed issued ordinary shares plus the ordinary shares issued pursuant to SESPP represent
all of the voting power in Santos. The holdings of the 20 largest holders of ordinary shares represent
45.50% of the total voting power in Santos (last year 46.45%) and the holdings of the 20 largest
holders of reset convertible preference shares represent 37.19% of the issued reset convertible
preference shares.
The 20 largest shareholders of fully paid ordinary shares in Santos as shown in the Company’s
Register of Members at 8 February 2002 were:
Total
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Fully paid
ordinary
shares
(Holders)
% of
holders
% of
shares
held
Reset
convertible
preference
shares
(Holders)
% of
holders
% of
shares
held
30,889
46,074
8,006
4,037
162
34.64
51.67
8.98
4.53
0.18
3.20
19.29
9.92
14.32
53.27
16,374
98
9
17
3
99.23
0.59
0.06
0.10
0.02
54.76
6.10
1.95
15.97
21.22
89,168
100.00
100.00
16,501
100.00
100.00
Less than a marketable
parcel of $500
1,446
Nil
Name
Number of fully paid ordinary shares
%
73,276,148
National Nominees Limited
52,842,720
Chase Manhattan Nominees Limited
40,527,877
Westpac Custodian Nominees Limited
13,597,029
HSBC Custody Nominees (Australia) Limited
11,817,059
RBC Global Services Australia Nominees Pty Limited
8,254,750
Citicorp Nominees Pty Limited
8,160,116
ANZ Nominees Limited
7,949,835
Queensland Investment Corporation
7,877,119
AMP Life Limited
6,997,621
Westpac Custodian Nominees Limited (ADR Account)
6,399,857
Commonwealth Custodial Services Limited
4,689,202
MLC Limited
3,687,568
Government Superannuation Office (State Super Fund A/c)
3,538,537
Cogent Nominees Pty Limited
Merrill Lynch (Australia) Nominees Pty Ltd
3,338,351
Australian Foundation Investment Company Limited (Investment Portfolio A/c) 3,189,289
2,282,480
Belike Nominees Pty Limited (Series D Warrants 2071209)
2,206,993
Victorian Workcover Authority
1,484,836
Tyndall Life Insurance Company Limited
1,385,000
Cogent Nominees Pty Limited (SL Non Cash Collateral A/c)
12.65
9.12
7.00
2.35
2.04
1.43
1.41
1.37
1.36
1.21
1.10
0.81
0.64
0.61
0.58
0.55
0.39
0.38
0.26
0.24
Total
263,502,387
45.50
STOCK EXCHANGE AND SHAREHOLDER INFORMATION CONTINUED...
71
For Directors’ Shareholdings see Directors’ Statutory Report as set out on page 38
of this Annual Report.
Voting Rights
Every member present in person or by an attorney, a proxy or a representative shall on a show of
hands, have one vote and upon a poll, one vote for every fully paid ordinary share held. Pursuant to
the Rules of the Santos Executive Share Plan, Plan 2 and Plan 0 shares do not carry any voting rights
except on a proposal to vary the rights attached to Plan shares.
Holders of reset convertible preference (“Preference Shares”) shares do not have voting rights at any
general meeting of the Company except in the following circumstances:
(a) on a proposal:
(1) to reduce the share capital of the Company;
(2) that affects rights attached to the Preference Shares;
(3) to wind up the Company; or
(4) for the disposal of the whole of the property, business and undertaking of the Company;
(b) on a resolution to approve the terms of a buy-back agreement;
(c) during a period in which a Dividend or part of a Dividend on the Preference Shares is in arrears;
or
(d) during the winding up of the Company.
The 20 largest shareholders of reset convertible preference shares in Santos as shown in the
Company’s Register of Members at 8 February 2002 were:
Name
Number of reset
convertible preference shares
Commonwealth Custodial Services Limited
Australian Foundation Investment Company Limited
(Investment Portfolio A/c)
Westpac Custodian Nominees Limited
The National Mutual Life Association of Australasia Limited
Chase Manhattan Nominees Limited
Share Direct Nominees Pty Ltd (Structured Equities Inv A/c)
National Nominees Limited
RBC Global Services Australia Nominees Pty Limited
(Pipooled A/c)
Citicorp Nominees Pty Limited
Merrill Lynch (Australia) Nominees Pty Ltd
Djerriwarrh Investments Limited (Investment Portfolio A/c)
MLC Limited
Kaplan Equity Limited
Warbont Nominees Pty Ltd (Unpaid Entrepot A/c)
Taykids Investments Pty Ltd (Taykids Family A/c)
Questor Financial Services Limited (TPS RF A/c)
Tower Trust Limited
Besen Family Superannuation Fund Pty Ltd
UBS Warburg Private Clients Nominees Pty Ltd
Permanent Trustee Company Limited (KAP0004 A/c)
Total
450,275
175,000
117,330
90,000
58,900
56,624
41,998
40,476
40,375
35,067
35,000
30,000
20,000
20,000
19,800
18,366
15,631
14,000
12,247
10,500
1,301,589
%
12.87
5.00
3.35
2.57
1.68
1.62
1.20
1.16
1.15
1.00
1.00
0.86
0.57
0.57
0.57
0.52
0.45
0.40
0.35
0.30
37.19
Substantial Shareholders, as at 8 February 2002, as disclosed by notices received by the Company:
Name
No. of voting
shares held
Maple-Brown Abbott Limited
39,570,291
72
GLOSSARY
Appraisal well
An exploration well drilled for the
purpose of identifying extensions
to known fields or discoveries.
barrel/bbl
The standard unit of measurement for
all production and sales. One barrel
equals 159 litres or 35 imperial gallons.
boe
Barrels of oil equivalent.
bopd
Barrels of oil per day.
CBU
Central Australia Business Unit
Contingent Resources
Contingent Resources are those
quantities of hydrocarbons which
are estimated, on a given date, to be
potentially recoverable from known
accumulations, but which are not
currently considered to be
commercially recoverable.
Contingent Resources may be
of a significant size, but still have
constraints to development. These
constraints, preventing the booking
of reserves, may relate to lack of gas
marketing arrangements or to technical,
environmental or political barriers.
the Company
Santos Ltd and its subsidaries.
Development wells
Development wells are designed to
drain the hydrocarbons from a gas or
oil field within a proved productive
reservoir defined by exploration or
appraisal drilling.
Hydrocarbons
Solid, liquid or gas compounds of the
elements hydrogen and carbon.
LPG
Liquified petroleum gas.
mbbls
Thousand barrels.
mmbbls
Million barrels.
mmboe
Million barrels of oil equivalent.
mmcf/d
million cubic feet per day
NBU
Northern Australia Business Unit
Near-field exploration wells
Near-field exploration wells are wells
located near existing fields/discoveries
and have a higher expectation of
success than wildcat exploration wells.
These wells are still testing
independent structure or traps and
have a higher risk of failure than
appraisal or development wells.
CRUDE OIL
1 barrel = 1 boe
SALES GAS
1 petajoule = 171.937 boe x 103
CONDENSATE/NAPHTHA
1 barrel = 0.935 boe
LPG
1 tonne = 8.458 boe
PJ
Petajoules. Joules are the metric
measurement unit for energy. A
petajoule is equal to 1 kilajoule x 1012.
The equivalent imperial measure to
joules is British Thermal Units (BTU).
One kilajoule = .9478 BTU.
Proved Reserves (1P)
Proved Reserves (1P) are those
Reserves that, to a high degree of
certainty (90% confidence), are
recoverable. There is relatively little
risk associated with these Reserves.
Probable Reserves (2P)
Probable Reserves (2P) are those
Reserves which analysis of geological
and engineering data suggests are
more likely than not to be recoverable.
There is at least a 50% probability that
reserves recovered will exceed
Probable Reserves. Probable Reserves
are generally reported inclusive of
Proved Reserves as ‘Proved and
Probable Reserves’ (2P).
Possible Reserves (3P)
Possible Reserves (3P) are those
Reserves that, to a low degree of
certainty (10% confidence), are
recoverable. There is relatively high
risk associated with these Reserves.
PSC
Production sharing contract.
Resource potential
Resource potential refers to those
quantities of petroleum yet to be
discovered. It may refer to single
opportunities or a group of
opportunities.
Reserves/Contingent Resources
Santos has in place an evaluation and
reporting process that is in line with
international industry practice and is
in general conformity with reserves
definitions and resource classification
systems published by the Society of
Petroleum Engineers (SPE), World
Petroleum Congresses (WPC) and the
American Association of Petroleum
Geologists (AAPG). The definitions
used are consistent with the
requirements of the Australian
Stock Exchange Ltd (ASX).
Reserves are defined as those
quantities of petroleum which are
anticipated to be commercially
recovered from known accumulations
from a given date forward. Santos
reports reserves net of the gas
required for processing and
transportation to the customer.
Reserves reported are based on, and
accurately reflect, information
compiled by full-time employees
of the Company who have the
requisite qualifications and experience
prescribed by the ASX Listing Rules.
ROAE
Return on average equity
ROACE
Return on average capital employed
SEABU
South East Asia Business Unit.
Santos
Santos Ltd and its subsidaries
SBU
Southern Australia Business Unit
SUSAC
Santos USA Corp.
TCF
Trillion cubic feet
TJ
Terajoules. Joules are the metric
measurement unit for energy. A
terajoule is equal to 1 joule x 1012.
TRCFR
Total recordable case frequency rate
WBU
Western Australia Business Unit
Wildcat exploration
Wildcat exploration wells are wells
testing new play concepts or structures
distanced from current fields.
www.santos.com
REGISTERED AND HEAD OFFICE
SUBSIDIARY COMPANIES
Level 29
Santos House
91 King William Street
Adelaide, South Australia 5000
Telephone (08) 8218 5111
Facsimile (08) 8218 5274
Telex AA82716
SHARE REGISTER
Level 29
Santos House
91 King William Street
Adelaide, South Australia 5000
Telephone (08) 8218 5111
Facsimile (08) 8218 5950
Email: share.register@santos.com
OFFICES
Port Bonython
PO Box 344
Whyalla, South Australia 5600
Telephone (08) 8640 3100
Facsimile (08) 8640 3200
Brisbane
Santos House
14th Floor, 60 Edward Street
Brisbane, Queensland 4000
Telephone (07) 3228 6666
Facsimile (07) 3228 6920
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Brisbane
Santos Asia Pacific Pty Ltd
Level 2, Muruk Haus
230 Lutwyche Road
Windsor, Queensland 4030
Telephone (07) 3630 3400
Facsimile (07) 3630 3444
Representative office of Santos
Asia Pacific Pty Ltd in Jakarta
Ratu Plaza Office Tower
10th floor
Jalan Jendral Sudirman Kav 9
Jakarta 10270 Indonesia
(PO Box 6621, JKS GN, Jakarta 12060)
Telephone (62-21) 270 0410
Facsimile (62-21) 720 4503
United States of America
Santos USA Corporation
10111 Richmond Avenue, Suite 500
Houston Texas 77042 USA
Telephone (1-713) 986 1700
Facsimile (1-713) 986 4200
Papua New Guinea
Barracuda Limited
Level 11, Pacific Place
Cnr Champion Parade
and Musgrave Street
Port Moresby, PNG
Telephone (675) 321 2633
Facsimile (675) 321 2847
www.santos.com
www.santos.com