Cover single - Santos

CHAIRMAN’S REVIEW
2
A New Era Begins for Santos
Chairman John Uhrig reports to shareholders
Dear Shareholder,
There have been many important
developments at Santos over the
past year.
Santos delivered higher levels of
production and earnings than at
any time in its history.
Gearing fell to its lowest level
in 20 years.
Santos’ share price increased
by 45%.
The Company’s long-standing
investment in coal was sold.
The South Australian Government
commenced a review of the
Company’s shareholding
restriction.
A new Managing Director, Mr
John Ellice-Flint, was appointed.
This marks the start of a new
era for the Company.
Santos was not unusual among
oil and gas companies in
achieving record earnings in
2000. However, with record
production of oil and liquids, the
Company was well positioned
to benefit from high oil prices.
Gas production also continued
to grow by a further 6.4%.
Altogether, 30% of the increase in
revenue came from higher
production.
With significantly increased
production, Santos should be
able to achieve higher earnings
than it has in the past, even
if oil prices return to more
normal levels.
Workplace safety and good
environmental management
are priorities for the Board. I
am pleased to report that, in the
context of increased production,
the Company achieved a 20%
improvement in its safety
performance during 2000.
Furthermore, there were no
significant environmental incidents.
During the year, the Board formed
the view that the Company’s
investment in QCT Resources
Limited was no longer a core
interest. This holding was
subsequently sold in October,
realising a small profit. This
investment had been held for over
a decade and its disposal marks
a major change.
In another development, the
South Australian Government
announced that it was reviewing
the legislation restricting
shareholdings in Santos to a
maximum of 15%. At the Annual
General Meeting in May 2000, the
Board stated its view that this
restriction is not in the long-term
interest of Santos shareholders.
While the Government’s review
will inevitably involve broader
considerations than those
relevant to Santos shareholders,
the Board and Company are
planning on the assumption that,
sooner or later, the restriction will
be removed. As at the time of
writing, the Government had not
yet announced the outcome of
the review.