Commentary - Santos

Reserves
and resources
Santos’ growing reserve position, combined
with existing infrastructure, leaves the company
strategically well placed to supply the growing
demand for natural gas in Australia and Asia.
2P RESERVES
1,406 mmboe
2P RESERVES RECONCILIATION
mmboe
2P RESERVES REPLACEMENT
RATIO
%
1,440
1,445
1,364
1,406
1,364 71
23 (52)
1,406
305
1,013
180
2008 2009
2010 2011
2012
Reserves
year-end
2011
Additions
Acquisitions/
divestments Production
Reserves
year-end
2012
1-year RRR
5-year RRR
In 2012, Santos continued its consistent
track record of reserves growth. Proved and
probable (2P) reserves have increased in nine
of the past ten years, while producing over
480 mmboe in the same period.
Proved and probable hydrocarbon reserves
increased to 1,406 mmboe as at the end
of 2012. Based on the 2012 production of
52 mmboe, Santos has a current 2P reserves
life of 27 years.
Approximately 88% of Santos’ 2P reserves are
sales gas, 6% crude oil, 4% condensate and
2% LPG.
On a proved (1P) reserves basis, year-end
reserves were 663 mmboe, 14 mmboe higher
than 2011.
2P additions of 71 mmboe in 2012 were
driven by strong growth in Cooper Basin
gas reserves, due to successful ongoing
results from the infill drilling program
combined with technical studies. Reserves
growth was also recorded in Cooper Basin
oil, Queensland CSG, the Carnarvon Basin
and Vietnam, more than offsetting a
reduction in Bonaparte reserves.
Santos also booked Australia’s first 2P
shale gas reserves, due to the success
of the Moomba-191 shale gas well that
was commissioned in September 2012.
Net 2P acquisitions of 23 mmboe reflect
Santos’ purchase of additional interests
in the Combabula CSG field in Queensland,
consolidation of interests in Fletcher
Finucane, and the purchase of Woodside’s
interest in Mutineer-Exeter.
Santos has a strong track record of reserves
replacement which is an important target to
drive long-term shareholder value growth.
A reserves replacement ratio (RRR) of more
than 100% indicates that reserves grew by
more than production during the period.
In 2012, Santos’ 2P RRR was 180%, as
reserves additions and net acquisitions
and divestments of 94 mmboe exceeded
production of 52 mmboe.
Over the five years to 2012, Santos’ 2P RRR
was a strong 305%. This was primarily driven
by the sanction of the PNG LNG project,
growth in CSG reserves in Queensland and
NSW, Cooper gas and the Carnarvon.
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