Australia: Santos Announces 2010 Fourth Quarter Activities Report

Santos today announced activities report for the quarter ended December 31, 2010.

Comparative performance at a glance

2010 production in line with guidance; sales revenue up 2%

* 2010 production of 49.9 mmboe was within the company’s guidance range of 49-52 mmboe. Sales revenue of $2,228 million was 2% higher than 2009.

* Cooper Basin gas and oil production increased compared to the third quarter, however the ongoing impact of wet weather continued to affect operations.

* Quarterly natural gas, ethane and LNG production of 58.9 PJ was in line with the previous quarter. The average realised gas price in 2010 was $4.31 per gigajoule, 5% higher than 2009.

* Quarterly crude oil production was also in line with the previous quarter. The average realised oil price in 2010 was A$87.35, 11% higher than 2009.

* Rain and flooding across the Cooper Basin during 2010 reduced Santos’ net production by about 3 mmboe for the full year. This was partially offset by stronger gas production from Indonesia and John Brookes.

* Santos expects 2011 production to be in the range of 48-52 mmboe.

Key activities during the period

* GLNG signed a binding agreement with KOGAS for 3.5 mtpa of LNG and KOGAS joined the GLNG partnership with a 15% stake. Santos sold 7.5% interests in GLNG to both Total and KOGAS. The GLNG partners announced the final investment decision on the 7.8 mtpa project on 13 January 2011.

* Successful completion of a $500 million institutional placement to fully fund the equity required for the GLNG project.

* Wortel gas project in Indonesia sanctioned.

* Successful Spar-2 appraisal well confirms Spar gas field upside offshore Western Australia.

* Acquisition of Cairn Energy’s interests in Bangladesh.

Santos Chief Executive Officer David Knox said the signing in December of the binding off-take agreement with KOGAS in addition to KOGAS also joining the GLNG partnership with a 15% stake and Santos completing the $500 million institutional placement, paved the way for the final investment decision on GLNG in early January.

“The sanction of GLNG delivers on the strategic vision to transform Santos into a significant exporter of LNG.”

“While wet weather in the Cooper Basin and Queensland continued to affect the company’s operations, sales gas customer requirements were being met by a combination of existing production and gas withdrawal from storage,” Mr Knox said.

Mr Knox said that the additional flooding which had hit much of Queensland in recent weeks had had a devastating effect on much of the state. Though that flooding had not impacted Santos’ coal seam gas production, field construction and drilling activity were suspended to ensure continuing safe operations.

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Source: Santos, January 20, 2011;