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1、Annual Report 2019ABN 80 007 550 923This 2019 Annual Report is a summary of Santos operations,activities and fjnancial position as at 31 December 2019.All references to dollars,cents or$in this document are toUScurrency,unless otherwise stated.An electronic version of this report is available on San
2、tos website, Santos Corporate Governance Statement can be viewed at: CONTENTS1 About Santos2 Financial Overview4 Message from the Chairman and from the Managing Director&Chief Executive Offjcer8 Board of Directors11 Santos Leadership Team14 Reserves Statement18 Directors Report32 Remuneration Report
3、59 Financial Report135 Directors Declaration136 Independent Auditors Report142 Auditors Independence Declaration143 Securities Exchange and Shareholder Information145 Glossary146 Corporate DirectoryCover image:Darwin LNG,Wickham Point,Northern Territory About SantosAn Australian energy pioneerSantos
4、 is an Australian natural gas company.Established in 1954,the Companys purpose is to provide sustainable returns for our shareholders by supplying reliable,afgordable and cleaner energy to improve the lives of people in Australia and Asia.Five core long-life natural gas assets sit at the heart of a
5、clear and consistent strategy to Transform,Build and Grow the business:Western Australia,the Cooper Basin,Queensland and NSW,Northern Australia and Timor-Leste,and Papua New Guinea.Each core asset provides stable production,long-term revenue streams and signifjcant upside opportunities.With one of t
6、he largest exploration and production acreages in Australia,a signifjcant and growing footprint in Papua New Guinea and a strategic infrastructure position,Santos is well positioned to benefjt from the growing global demand for energy.To deliver our vision to be Australias leading natural gas compan
7、y by 2025,we will aspire to:reduce emissions and improve air quality across Asia and Australia by displacing coal with natural gas,and support the economic development of combined gas and renewable energy solutions;be the leading national supplier of domestic gas in Australia;be a leading regional L
8、NG supplier by increasing LNG sales to our Asian customers to over 4.5 million tonnes per annum;be recognised as the safest and lowest-cost onshore gas developer in Australia;become the market leader in running the safest and lowest-cost facilities and infrastructure operations;contribute positively
9、 to the communities in which we operate by providing jobs,energy supply and local partnerships;develop our people and culture to deliver our vision.Santos today is a safe,low-cost,reliable and high-performance business,proudly delivering the economic and environmental benefjts of natural gas to home
10、s and businesses throughout Australia and Asia.Santos Annual Report 2019/1Santos Annual Report 2019/12/Santos Annual Report 2019Financial OverviewSales volume mmboeSales revenue US$millionProduction mmboeFree cash fmow US$millionUnderlying net profjt after tax US$millionNet profjt after tax US$milli
11、onUnit production costs US$per boeCapital expenditure US$millionNet debt US$million64.384.183.478.394.52017201620152018 20192,4422,5943,1003,6604,03320172016201520182019 5475 318 727 719 201720162015201820191,2886256827591,0162017201620152018201957.761.659.558.975.52017201620152018 2019-1,953-1,047-
12、360 630 674 2017201620152018 20194,7493,4922,7313,5493,3252017201620152018 2019-739206 618 1,0061,138 2017201620152018 2019 10.358.45 8.078.057.242017201620152018 201920152016201720182019Sales volumemmboe 64.3 84.1 83.4 78.3 94.5 Productionmmboe 57.7 61.6 59.5 58.9 75.5 Average realised oil priceUS$
13、per barrel 53.8 46.4 57.8 75.1 72.0 Net profjt after taxUS$million-1,953-1,047-360 630 674 Underlying net profjt after taxUS$million 54 75 318 727 719 Sales revenueUS$million 2,442 2,594 3,100 3,660 4,033 Operating cash fmowUS$million 811 840 1,248 1,578 2,046Free cash fmowUS$million-739 206 618 1,0
14、06 1,138 EBITDAXUS$million 1,454 1,199 1,428 2,160 2,457 Total assetsUS$million 15,949 15,262 13,706 16,811 16,509 Earnings per shareUS cents-169.5-58.2-17.3 30.2 32.4 Dividends declared A20cps US9.7cps US11cps Number of employees 2,946 2,366 2,080 2,190 2,178 2019 ResultsOwn product 73.5Third-party
15、 product 21.0LNG 1,515Sales gas and ethane 1,172Oil 927Condensate 335LPG 84Sales gas and ethane 37.2LNG 25.3Oil 7.7Condensate 4.0LPG 1.32019 Sales volumes mmboe2019 Production mmboe2019 Sales revenue US$millionAverage realised oil price US$per barrel53.846.457.875.172.02017201620152018 2019Santos An
16、nual Report 2019/3Santos Annual Report 2019/34/Santos Annual Report 2019Message from the Chairman and from the Managing Director&Chief Executive OffjcerDear Shareholder,In 2016 Santos unveiled a new corporate strategy to Transform,Build and Grow the business to restore and drive shareholder value.Ov
17、er the past four years,the successful implementation of this strategy has resulted in a simplifjed and high-graded portfolio of fjve core long-life asset hubs.Non-core assets have been sold and value accretive acquisitions have delivered operatorship of low-cost,strategic domestic gas assets and LNG
18、 infrastructure.Our disciplined Operating Model and focus on safe,low-cost,effjcient operations has underpinned our competitive advantage and provided the framework for the continued generation of strong and stable cash fmows.Dividends have been reinstated and our strengthened balance sheet remains
19、supportive of our disciplined growth strategy.In 2019,the ongoing successful execution of the Transform,Build and Grow strategy delivered:Record free cash fmow of$1,138 million Record sales volumes of 94.5 mmboe Record production volumes 75.5 mmboe Underlying net profjt after tax of$719 million,and
20、Dividends of US11 cents per share,fully franked,which includes the fjnal 2019 dividend of US5 cents per shareOur portfolio of assets are now geographically diverse and balanced between onshore and ofgshore operations,between natural gas and liquids and our sales volumes between oil price-linked and
21、CPI-linked contracts.Not only are we a leading national supplier of domestic gas across both the east and west coast markets here in Australia,but our LNG projects are benefjting from rapid urbanisation and the switch from coal to natural gas as Asian countries seek to reduce air pollution and lower
22、 greenhouse gas emissions.Our disciplined Operating Model continues to ensure that the whole Company remains focused on continuous improvement.With each of our fjve core long-life asset hubs required to generate free cash fmow at an oil price of less than US$40 per barrel,we are constantly looking a
23、t ways to challenge the status quo to drive effjciencies and deliver greater shareholder value.In 2019,our relentless focus on safe,low-cost,effjcient operations resulted in a free cash fmow breakeven oil price of US$29 per barrel,before hedging.The successful implementation of our disciplined Opera
24、ting Model enables Santos to continue to fund the Transform,Build and Grow strategy in a lower oil price environment and importantly,benefjt from signifjcant cash generation in a higher oil price environment.Free cash fmow generation is critical to the continued success of our business as these proc
25、eeds are used to pay sustainable dividends,reduce debt,replace reserves and resources,and fund major growth projects.Our acquisition of ConocoPhillips northern Australia assets,coming just 12 months after we bought Quadrant Energy in Western Australia,is testament to the strength of the Company and
26、the hard work of our people to turn the business around and drive shareholder value.The value accretive acquisition is fully aligned with our growth strategy to build on existing infrastructure positions and delivers operatorship and control of strategic LNG infrastructure at Darwin.OPERATING PERFOR
27、MANCEOur focus on safe,low-cost,effjcient operations continued to drive strong results across each of our fjve core long-life asset hubs in 2019.Western AustraliaThe successful integration of Quadrant Energy into the Santos business over the course of 2019 transformed the scale of our operations in
28、Western Australia and also signifjcantly strengthened our ofgshore operating expertise and capabilities.As a result of the acquisition and strong operating performance,sales volumes increased 134%to 30.4 mmboe and production volumes 147%to 30.9 mmboe.A successful appraisal program in the shallow,she
29、lf-waters of the Bedout and Carnarvon Basins confjrmed larger than anticipated resource volumes and signifjcantly de-risked future development options.The Dorado appraisal program resulted in a signifjcant resource upgrade and proved the Bedout Basin,where Santos has a controlling position,to be a w
30、orld class liquids-rich petroleum system with high quality reservoirs.Development options for the Dorado discovery are currently being worked through and are expected to result in an initial oil and condensate development followed by a future gas phase development.Front End Engineering and Design(FE
31、ED)for the project is targeted to commence in the second quarter of 2020.Building on our exploration and appraisal success in the Bedout Basin,in September we were pleased to be awarded new acreage on-trend with the Dorado discovery in a joint venture with BP.We are excited at the opportunity to inc
32、rease our exposure to this highly prospective region,leveraging our shallow water ofgshore operating expertise to build on the success of our 2019 drilling campaign.In the Carnarvon Basin,the drilling of the Corvus-2 gas appraisal well confjrmed one of the largest columns ever discovered across the
33、North West Shelf.With 100%ownership of two gas plants in the region,near-term development opportunities are consistent with our brownfjeld growth strategy to build on existing infrastructure positions.Western Australia is now Santos largest asset hub where our high-margin,conventional,natural gas as
34、sets are backed by medium-to long-term CPI-linked contracts and our heavy sweet crude oil is commanding a signifjcant premium to the Brent oil price due to the high demand for viscous,low sulfur crude on the back of cleaner global ship-fuel standards.Cooper BasinIn the Cooper Basin our low-cost disc
35、iplined Operating Model continues to underpin our capital allocation decisions supporting more effjcient outcomes.In 2019,drilling activity increased 35%to 115 wells and production grew for the second consecutive year to 15.8 mmboe.Advances in drilling technology drove development costs down further
36、 and contributed to enhanced reservoir deliverability.Project cycle times were again a focus with the fastest ever total well execution recorded of 4 days,rig release to rig release.The opportunity sets within the Basin continue to grow now that we have signifjcantly reduced the cost base of the ass
37、et.The appraisal of Moomba South was the fjrst of several large-scale project appraisal programs focused on resource conversion.In 2019 our drilling activity combined with the successful appraisal program at Moomba South delivered a 183%2P reserves replacement.This is the fjrst time since 2012 that
38、the Cooper has more than replaced its annual production.With current resources of approximately 300 million barrels of oil equivalent,the Cooper Basin will remain a high-value swing producer supportive of east coast gas markets as well as the strong Asian demand for LNG for decades to come.Queenslan
39、d&NSWIn Queensland a record 393 wells were drilled across the GLNG acreage,a 29%increase on 2018.Well cost discipline was maintained despite the higher level of activity as we continued to maximise value from our regional expertise and low-cost Operating Model.Upstream gas production continued to bu
40、ild throughout the year and in October,GLNG achieved its targeted sales run-rate of 6 mtpa.With the right rigs in place,experienced crews and high volume,repeatable drilling program in motion,we are confjdent that upstream fjeld performance will continue to improve and underpin our new sales run-rat
41、e target of 6.2 mtpa from 2020.In New South Wales,we remain focused on securing approval for the Narrabri Gas Project.Manufacturers on the east coast are calling for more gas supply and more competition will put downward pressure on gas prices.We have committed 100 percent of Narrabri gas to the dom
42、estic market,enough to supply up to half of NSWs needs and help support about 300,000 jobs in NSW that rely on natural gas.Santos is awaiting a decision on its Environmental Impact Assessment submission which is expected in the fjrst-half of 2020.Northern Australia&Timor-LesteIn Northern Australia&T
43、imor-Leste,Darwin LNG continued its strong operating performance in 2019,producing 2.9 million tonnes of LNG.On 14 October,we announced the value accretive acquisition of ConocoPhillips northern Australia business,delivering shareholders operating interests in long-life,low-cost natural gas assets a
44、nd strategic LNG infrastructure.The acquisition is supportive of a Final Investment Decision(FID)on the low risk,brownfjeld Barossa project to supply backfjll gas to Darwin LNG.The Barossa project is expected to extend the operating life of Darwin LNG by more than 20 years and more than double Santo
45、s production in Northern Australia&Timor-Leste.The Bayu-Undan fjeld is expected to come to the end of its fjeld life in late 2022 with life extension works planned at Darwin LNG plant prior to backfjll production coming online in late 2024.In light of this,Santos is also working with our joint ventu
46、re partners to evaluate infjll drilling opportunities to extend the life of the Bayu-Undan reservoirs.Onshore,following the successful stimulation of the Tanumbrini-1 well in the McArthur Basin and the approval of environmental plans by the Northern Santos Annual Report 2019/5Santos Annual Report 20
47、19/56/Santos Annual Report 2019Message from the Chairman and from the Managing Director&Chief Executive OffjcercontinuedTerritory government,we now expect to drill two appraisal wells in 2020 following the wet season.The McArthur Basin has signifjcant gas resources and has the potential to provide f
48、eed gas to support future backfjll and/or expansion opportunities through Darwin LNG.PNGPNG LNG continues to be a well-run,high-performing asset in our portfolio,delivering 8.5 million tonnes of LNG in 2019,up 15%following the severe earthquake that impacted the Southern Highland and Hela Provinces
49、in 2018.Santos acreage position in PNG is supportive of our long-term commitment to the region as we look to work with our joint-venture partners and the PNG Government to continue to align interests to support and participate in opportunities through the PNG LNG project.RESILIENCE AND OPPORTUNITIES
50、 IN A LOWER CARBON FUTURENatural gas today remains a crucial part of the energy mix if we are to solve the twin challenges of reducing carbon emissions while meeting the growing demand for secure and reliable power generation.Santos is committed to a lower-carbon future and our Climate Change Policy
51、 guides the Companys activities to reduce carbon emissions as it produces the reliable,affordable and cleaner energy required to meet domestic and global demand.Through the commitments made in our Climate Change Policy,Santos is striving to contribute to the global aspiration to limit temperature ri
52、se to less than 2 degrees Celsius.We have set medium-term targets that align to these objectives and have set a pathway to achieving our long-term aspiration of net-zero emissions by 2050.The transition to a lower-carbon future also creates opportunities for Santos with natural gas expected to accou
53、nt for a quarter of total global energy demand by 2040 in all IEA(International Energy Agency)World Energy Outlook 2018 scenarios.In 2016 Santos set up an Energy Solutions business to build resilience and identify and create opportunities for a lower carbon future.Since then,more than 100,000 tonnes
54、 of annual CO2 emissions reduction have been delivered with many more opportunities identifjed.In 2019 we made signifjcant investments to deploy renewable energy and recover waste heat across our operations,as well as test for large scale commercial carbon capture and storage(CCS)in the Cooper Basin
55、,which has the potential to store 20 million tonnes of carbon dioxide per year.Australia could be a world leader in CCS and create an exciting new industry supporting hydrogen production and ensuring the sustainability of existing industries including oil and gas,steel,coal,cement and chemicals.Aust
56、ralia has a competitive advantage in CCS,built on the availability of vast,high quality storage reservoirs;the skills,technology,expertise and infrastructure of the oil and gas industry;and a strong reputation for environmental regulation and carbon measurement and accounting integrity.We think CCS
57、is an exciting opportunity for Santos and in the future,for our customers as well.To learn more about the Companys resilience as well as the opportunities in a lower carbon future,we would encourage you to read our third Climate Change Report,available on our website at LOOKING AHEADIt has been 50 y
58、ears since the very fjrst molecule of natural gas from our Moomba processing plant in the Cooper Basin arrived in suburban Blair Athol,less than 10 kilometres from the Adelaide CBD.As an Australian energy pioneer,we are proud that from these humble beginnings,our Company has now grown into a leading
59、 supplier of secure and reliable energy for homes and industry across the nation and LNG into Asia.As we look to build on our recent success,it was pleasing to see our 2020 Graduate,Apprenticeship and Traineeship programs attract exceptional talent and for Santos to increasingly be considered an emp
60、loyer of choice.Female representation was strong across all the programs accounting for 60%of our Apprenticeship intake and 50%of our Traineeship intake.Of the Graduate program,45%of the intake were female,the highest proportion since the program was launched.In order to continue to attract and reta
61、in talent within the organisation and support employees to better balance work and family life,in 2019 Santos increased its paid parental leave and introduced a child care subsidy.This initiative builds on Santos leadership in this area,having introduced paid maternity leave over a decade ago,and be
62、ing the fjrst,and still one of only a few companies in the resources sector to ofger superannuation top-ups for periods of unpaid maternity leave.In 2020 we will continue to execute our clear and consistent strategy to Transform,Build and Grow the business to deliver a safe,low-cost,reliable and hig
63、h performance business.In Northern Australia&Timor-Leste we will look to complete the ConocoPhillips acquisition and take a Final Investment Decision(FID)on the Barossa project to supply backfjll gas to Darwin LNG.In Western Australia we are targeting Front End Engineering and Design(FEED)on our Dor
64、ado oil and condensate development to bring these resources to market.In Papua New Guinea we continue to work with our joint-venture partners and the PNG Government to safely commercialise the countrys gas resources and provide support to local communities across a wide range of economic and social
65、programs.In Queensland&New South Wales we are targeting sales of 6.2 mtpa at GLNG and expect a determination for the Narrabri Gas Project from the NSW Department of Planning ahead of a decision by the Independent Planning Commission.In the Cooper Basin,in addition to our focus on improved capital ef
66、fjciency to unlock additional resources,we are seeking to advance our carbon capture and storage project to ofgset emissions and generate new sources of revenue.In summary,our clear and consistent strategy to focus on low-cost,long life assets utilising our existing infrastructure positions to gener
67、ate sustainable free cash fmow through the oil price cycle continues to deliver strong shareholder returns.Our balance sheet is positioned to deliver these growth opportunities in our portfolio.Record fjnancial performance,good cost control,resource growth and the successful integration of Quadrant
68、Energy highlight a business that has transformed and is positioned for further success.Santos remains committed to our stated purpose which is to provide sustainable returns for our shareholders by supplying reliable,afgordable and cleaner energy to improve the lives of people in Australia and Asia.
69、On behalf of the Board,we would like to thank you,our shareholders,for your continued support.We remain committed to driving shareholder value as we target production of 120 mmboe by 2025.Yours sincerely,KEITH SPENCE ChairmanKEVIN GALLAGHER Managing Director and Chief Executive OffjcerSantos Annual
70、Report 2019/7Santos Annual Report 2019/78/Santos Annual Report 2019Board of DirectorsKEITH SPENCEChairmanBSc(First Class Honours in Geophysics),FAIMMr Spence is an independent non-executive Director.He joined the Board on 1 January 2018 and became Chairman on 19 February 2018.He is Chairman of Santo
71、s Finance Ltd and Chair of the Nomination Committee.Mr Spence has over 40 years experience in managing and governing oil and gas operations in Australia,Papua New Guinea,the Netherlands and Africa.A geologist and geophysicist by training,Mr Spence commenced his career as an exploration geologist wit
72、h Woodside Petroleum Limited in 1977.He subsequently joined Shell(Development)Australia,where he worked for 18 years.In 1994,he was seconded to Woodside to lead the North West Shelf Exploration team.In 1998,he left Shell to join Woodside.He retired from Woodside in 2008 after a 14-year tenure in top
73、 Executive positions in the company.He has expertise in exploration and appraisal,development,project construction,operations and marketing.Upon his retirement he took up several board positions,working in oil and gas,energy,mining,engineering and construction services and renewable energy.This incl
74、uded Clough Limited,where he served as Chairman from 2010 to 2013,Geodynamics Limited,where he served as a non-executive Director from 2008 to 2016(including as Chairman from 2010 to 2016)and Oil Search Limited,where he served as a non-executive Director from 2012 to 2017.Mr Spence is also a past Ch
75、air of the National Ofgshore Petroleum Safety and Environmental Management Authority Board and led the Commonwealth Governments Carbon Storage Taskforce.Other Current Directorships:Chair of Base Resources Limited(since 2015),non-executive Director of Independence Group NL(since 2014)and Murray and R
76、oberts Holdings Limited(since 2015).Former Directorships in the last 3 years:Oil Search Limited(2012 to 2017).KEVIN GALLAGHERManaging Director and Chief Executive OffjcerBEng(Mechanical)Hons,FIEAustMr Gallagher joined Santos as Managing Director and Chief Executive Offjcer on 1 February 2016,bringin
77、g more than 25 years international experience in managing oil and gas operations.Mr Gallagher is a member of the Environment,Health,Safety and Sustainability Committee and is also a Director of Santos Finance Limited.Mr Gallagher commenced his career as a drilling engineer with Mobil North Sea,befor
78、e joining Woodside in Australia in 1998.At Woodside,Mr Gallagher led the drilling organisation through rapid growth,delivering several Australian and international development projects and exploration campaigns,before leading the Australian oil business.Then,as CEO of the North West Shelf Venture,he
79、 was responsible for production from Australias fjrst ever LNG project,which underpinned a new domestic gas market,fuelling the mining sector and other industries in Western Australia.In 2011,Mr Gallagher joined Clough Limited as CEO and Managing Director where,over four years,he transformed the bus
80、iness and delivered record fjnancial results.He oversaw the development of innovative programs to improve safety and drive productivity and executed an international expansion strategy.Since joining Santos,Mr Gallagher has delivered a Transform,Build,Grow strategy that has instituted a disciplined l
81、ow-cost operating model,strengthened the balance sheet and improved production.Under Mr Gallaghers leadership,Santos is now focused on a long-life portfolio of natural gas assets with some exciting oil and liquids opportunities and is well positioned to deliver signifjcant growth and sustainable ret
82、urns to shareholders throughout the oil price cycle.Other Current Directorships:Chair of APPEA(since 2019).Former Directorships in the last 3 years:Nil.YASMIN ALLENBCom,FAICDMs Allen is an independent non-executive Director.She joined the Board on 22 October 2014 and is the Chair of the People and R
83、emuneration Committee and a member of the Audit and Risk Committee and Nomination Committee.Ms Allen has extensive experience in fjnance and investment banking,including senior roles at Deutsche Bank AG,ANZ and HSBC Group Plc,as former Chairman of Macquarie Global Infrastructure Funds,and a former D
84、irector of EFIC(Export,Finance and Insurance Corporation).Ms Allen was appointed a member of the Australian Government Takeovers Panel in March 2017 and is presently the Acting President,is a member(and former Council member)of Chief Executive Women and a former non-executive Director of Insurance A
85、ustralia Group(2004 to 2015).Other Current Directorships:Director of Cochlear Limited(since 2010),National Portrait Gallery(since 2013),The George Institute for Global Health(since 2014),ASX Limited and ASX Clearing and Settlement boards(since 2015),Chair of Advance(since 2018),member of the Austral
86、ian Government Takeovers Panel(since 2017),and Chair of the Digital Technology Skills Organisation Pilot(since 2020).Former Directorships in the last 3 years:Nil.GUY COWANBSc(Hons),Engineering,FCA(UK),MAICDMr Cowan is an independent non-executive Director.He joined the Board on 10 May 2016 and is th
87、e Chair of the Audit and Risk Committee and a Director of Santos Finance Limited.Mr Cowan had a 23-year career with Shell International in various senior commercial and fjnancial roles.His last two roles were as CFO and Director of Shell Oil US and CFO of Shell Nigeria.He was CFO of Fonterra Co-oper
88、ative Ltd between 2005 and 2009.Mr Cowan was a Director of Ludowici Limited(2009 to 2012)where he chaired the Audit and Risk Committee and was also a Shell-appointed alternate Director of Woodside between 1992 and 1995.Other Current Directorships:Chair of Queensland Sugar Limited(since 2015)and Bude
89、rim Ginger Ltd(since 2018),Director of Winson Group Pty Ltd(since 2014).Former Directorships in the last 3 years:Director of UGL Limited(2008 to 2017).HOCK GOHBEng(Hons)Mech EngMr Goh is an independent non-executive Director.He joined the Board on 22 October 2012 and is a member of the Environment,H
90、ealth,Safety and Sustainability Committee,Audit and Risk Committee and Nomination Committee.Mr Goh has more than 35 years experience in the global oil and gas industry,having spent 25 years with Schlumberger Limited,including as President of Network and Infrastructure Solutions division in London,Pr
91、esident of Asia,and Vice President and General Manager of China.He previously held managerial and stafg positions in Asia,the Middle East and Europe.Mr Goh commenced his career as a fjeld engineer on the rigs in Indonesia and subsequently in Roma and Sale in Australia.Mr Goh is a former Operating Pa
92、rtner of Baird Capital Partners Asia,based in China,(2007 to 2012)and non-executive Director of Xaloy Holding Inc in the US(2006 to 2008)and BPH Energy Ltd(2007 to 2015).Other Current Directorships:Non-executive Director of Stora Enso Oyj(Finland)(since 2012),AB SKF(Sweden)(since 2014)and Vesuvius P
93、LC(UK)(since 2015).Former Directorships in the last 3 years:Chair of MEC Resources(2005 to 2018)and Director of Harbour Energy(2015 to 2018).YU GUANMSc,E&E EMBAMr Guan is a non-executive Director.He joined the Board on 3 May 2019 as a nominee of a substantial shareholder and is a member of the Peopl
94、e and Remuneration Committee.Mr Guan has more than 22 years of professional experience,including fjve years in Chinas Ministry of Power and State Power Cooperation,and 18 years in management roles in multi-national companies.His industry experience covers power and energy in China and the US.His spe
95、cialties include corporate management,business management,corporate M&A,and investment and construction management for large-scale power and energy infrastructures.Other Current Directorships:President and Board member of ENN Ecological(since 2018).Former Directorships in the last 3 years:Nil.Santos
96、 Annual Report 2019/9Santos Annual Report 2019/9COMMITTEES OF THE BOARDAudit and Risk Committee Mr G Cowan(Chair)Ms Y Allen Mr H Goh Ms J McArdleNomination Committee Mr K Spence(Chair)Ms Y Allen Mr H Goh Mr P HearlPeople and Remuneration Committee Ms Y Allen(Chair)Dr V Guthrie Mr P Hearl Mr Y GuanEn
97、vironment,Health,Safety and Sustainability CommitteeMr P Hearl(Chair)Mr K Gallagher Mr H Goh Dr V Guthrie10/Santos Annual Report 2019VANESSA GUTHRIEHon DSc,PhD,BSc(Hons)Dr Guthrie is an independent non-executive Director.She joined the Board on 1 July 2017 and is a member of the People and Remunerat
98、ion Committee and Environment,Health,Safety and Sustainability Committee.Dr Guthrie has more than 30 years experience in the resources sector in diverse roles such as operations,environment,community and indigenous afgairs,corporate development and sustainability.She has qualifjcations in geology,en
99、vironment,law and business management including a PhD in geology.She was awarded an Honorary Doctor of Science from Curtin University in 2017 for her contribution to sustainability,innovation and policy leadership in the resources industry.She is an active member of the Australian Institute of Compa
100、ny Directors and Chief Executive Women,and a Fellow of the Australian Academy of Technological Sciences and Engineering.Other Current Directorships:Director of Australian Broadcasting Corporation(since 2017),Adelaide Brighton Limited(since 2018)and Tronox Holding PLC(since 2019),member of the Associ
101、ation of Mining and Exploration Companies,Deputy Chair of Western Australian Cricket Association,Council member of Curtin University,member of the AustraliaIndia Council and member of the Vocational Education and Training Expert Skills Panel.Former Directorships in the last 3 years:Director of Vimy
102、Resources Limited(2017 to 2018).PETER HEARLBCom.(UNSW With Merit),FAICD,MAIM,MAMAMr Hearl is an independent non-executive Director.He joined the Board on 10 May 2016 and is Chair of the Environment,Health,Safety and Sustainability Committee,a member of the People and Remuneration Committee and the N
103、omination Committee.He previously served on the Companys Audit and Risk Committee.During an 18-year career in the oil industry with Exxon in Australia and the USA,he held a variety of senior marketing,operations,logistics and strategic planning positions.Mr Hearl joined YUM Brands(formerly PepsiCo R
104、estaurants)as KFC Australias Director of Operations in 1991.He subsequently had several senior international leadership roles,as well as being President of Pizza Hut USA,before assuming the global role of YUM Brands Chief Operations and Development Offjcer in 2006,based in Dallas,Texas and Louisvill
105、e,Kentucky,and from where he retired in 2008.Other Current Directorships:Director of Telstra Ltd(since 2014),Chairman-Elect of Endeavour Group Ltd(since 2019),Member of Investment Committee of the Stepping Stone Foundation,a Sydney based NFP(since 2018).Former Directorships in the last 3 years:Chair
106、 of Woolworths Petrol Pty Ltd(2018),Director of Treasury Wine Estates(2012 to 2017).JANINE MCARDLEBS(Chemical Engineering),MBAMs McArdle is an independent non-executive Director.She joined the Board on 23 October 2019 and is a member of the Audit and Risk Committee.Ms McArdle has more than 30 years
107、experience in the global oil and gas industry.She most recently spent 13 years with Apache Corporation in the United States,where she held roles including Executive Offjcer,Senior Vice President of Global Gas Monetization,President of Kitimat LNG Co,and Vice President,Worldwide Oil and Gas Marketing
108、.Prior to joining Apache,she worked with Acquila Energy for nine years in the United States and United Kingdom,in a senior leadership position with responsibilities across trading,mergers and acquisition and e-commerce.Ms McArdle is also the Founder,CEO and President of Apex Strategies,a global cons
109、ultancy business providing advisory services to companies engaged in midstream and downstream operations within the energy industry.Other Current Directorships:Member of University of Nebraskas College of Engineering Advisory Board(since 2017).Former Directorships in the last 3 years:Director of Hal
110、con Resources(2018 to 2019)and Palmer Drug Abuse Program in Houston,Texas(2003 to 2018).Board of DirectorscontinuedKEVIN GALLAGHERManaging Director and Chief Executive OffjcerBEng(Mechanical)Hons,FEIAustMr Gallaghers biography can be read on page 8.DAVID BANKSExecutive Vice President Onshore Oil and
111、 GasBE(Hons),MBA,GAICDDavid joined Santos in 2018 and is responsible for Santos onshore upstream business.David has over 25 years international and domestic experience in the upstream oil and gas industry.He started his career with Schlumberger in Southeast Asia before joining BHP in Australia in 19
112、94.Whilst at BHP,Davids roles included operational,technical and functional leadership roles including General Manager Shale Oil,Vice President HSE,Vice President Shale Drilling and Completion and Bass Strait Asset Manager.Beyond business and function leadership,David led BHPs Petroleum Transformati
113、on and was Integration Manager for US shale assets.BRETT DARLEYExecutive Vice President Ofgshore Oil and GasBEng(Civil),SPEBrett joined Santos in 2018.He has more than 30 years experience in the upstream oil and gas industry,both in Australia and overseas,with technical,operational,commercial and ma
114、nagement experience across varied assets,onshore and ofgshore.Before moving to Santos,Brett held senior leadership roles including Chief Executive Offjcer of Quadrant Energy,Managing Director and Region Vice President for Apache Energy Limited,Vice President of Drilling and Completions at Woodside E
115、nergy and Drilling Manager at Santos.Brett holds a Bachelor of Civil Engineering degree from the University of Queensland and is a Chartered Engineer.He is a current member of the Curtin Business School Advisory Council,an elected member of the General Council of the Chamber of Commerce and Industry
116、 of WA,and a member of the Society of Petroleum Engineers.JODIE HATHERLYGeneral Counsel and Vice President Legal,Risk and GovernanceBA,LLBJodie joined Santos in 2019.She is the General Counsel and Company Secretary of the Santos Group and is responsible for legal,company secretariat,risk,governance
117、and corporate environment,health and safety across the business.Jodie joined Santos from INPEX Australia,where she was General Counsel and General Manager Legal for the Ichthys LNG project and INPEXs Australia business.Jodie brings to the table a demonstrated history of delivering some of the bigges
118、t projects in the oil and gas industry.Jodie commenced her career in the legal private sector before taking on senior in-house roles in the oil and gas industry.Jodie also serves on the advisory board of the Curtin University Law School as well as Muscular Dystrophy WA.Jodie was recognised on The Le
119、gal 500 GC Powerlist Australia in 2018.Santos Leadership TeamSantos Annual Report 2019/11Santos Annual Report 2019/1112/Santos Annual Report 2019ANGUS JAFFRAYExecutive Vice President People and SustainabilityBA(Hons)Geography,MBAAngus joined Santos in 2016 and was appointed Executive Vice President
120、People and Sustainability in February 2019,with responsibility for human resources,remuneration and performance,organisational and learning development,public afgairs,sustainability,and organisational integration.He previously held the roles of Executive Vice President Strategy,Business Development
121、and Technology and Executive Vice President Organisational Integration.Angus has over 20 years of leadership and consulting experience as a Director of Azure Consulting,a Partner at The Boston Consulting Group and a Supply Chain Manager with the global packaging group Crown Cork and Seal.At Azure Co
122、nsulting,Angus supported companies in developing strategy and driving organisational change.At BCG,Angus set up the Perth offjce,led the Australian Operations practice and was a core member of both the Mining and Metals practice and the Energy Practice.He served clients in Australia,New Zealand,Asia
123、,Europe and North America building strong capabilities in strategy,operational effjciency and running transformation programs.As a Supply Chain Manager,Angus was accountable for procurement,planning,logistics and product delivery.NAOMI JAMESExecutive Vice President Midstream Infrastructure and Energ
124、y SolutionsLLB(Hons),MLMNaomi joined Santos in 2016 and is responsible for Santos oil,gas and LNG processing facilities at Moomba,Port Bonython and Darwin and for Santos Energy Solutions team established to pursue new low-carbon revenue and growth opportunities.Previously Naomi was Executive Vice Pr
125、esident EHS and Governance,with responsibility for Santos risk and audit,legal,company secretary,sustainability,safety,environment and access functions.Prior to joining Santos,Naomi held a range of functional and line leadership roles with Arrium including Chief Executive of the Groups non-integrate
126、d steel businesses,Chief Legal Offjcer and Chief Executive,Strategy,leading major acquisitions and divestments,business restructuring and turnaround and the legal,company secretary,government afgairs and strategy functions.Naomi has previously worked in private practice at law fjrms in Australia and
127、 the UK.ANTHONY NEILSONChief Financial OffjcerB.Comm;MBA;FFin;FCAAnthony joined Santos as Chief Financial Offjcer in 2016 and is responsible for the fjnance,tax,treasury,strategy,business development,investor relations and IT functions.He brings over 25 years experience in chartered accounting,banki
128、ng and corporate fjnancial roles including over 15 years experience in the upstream and downstream oil and gas industry.Prior to joining Santos,Anthony was CEO of Roc Oil Company Ltd(ROC),which was acquired in 2014 by Hong Kong-listed investor Fosun International Limited.Previously,Anthony was Chief
129、 Financial Offjcer of ROC(ASX listed)and has held commercial,fjnance and business services roles at Caltex Australia,Credit Suisse First Boston(London)and Arthur Andersen(Sydney).Anthony holds a Masters of Business Administration from Australian Graduate School of Management and is a Fellow of the F
130、inancial Services Institute of Australasia and a Fellow of Chartered Accountants Australia and New Zealand.BILL OVENDENExecutive Vice President Exploration and New VenturesBSc(Hons)Geology and GeophysicsBill joined Santos in 2002 and is accountable for developing and executing a targeted exploration
131、 and appraisal strategy across Santos core asset hubs,while identifying new high-value exploration targets.Bill is a geologist with over 30 years of experience in the oil and gas industry.He has worked on exploration projects in Australia,Central and South East Asia,North Africa,the Middle East and
132、South America,with Sun Oil,Kufpec,ExxonMobil and Ampolex.He joined Santos after working for ExxonMobil in Indonesia.Bill is a member of the APPEA Exploration Committee.Santos Leadership TeamcontinuedVINCE SANTOSTEFANOExecutive Vice President Production OperationsBEng(Civil),SPEVince joined Santos in
133、 2016 and is responsible for the provision of technical and operational services to increase the scale and strategic value of Santos assets.Vince retired from Woodside Energy in November 2013 as Chief Operating Offjcer.As COO he was responsible for Woodsides producing Business Units;the Production F
134、unction including six LNG trains with associated ofgshore infrastructure,four FPSOs,the Marine Division and the Brownfjelds Projects Group.During 2014 and 2015,Vince was engaged in Board work as a non-executive Director and various management-consulting assignments.Vince has a deep and respected kno
135、wledge of the industry,with signifjcant experience in onshore and ofgshore operations and asset management.He has a proven capability to manage a demanding workload and to drive cultural change.PETTER UNDEMExecutive Vice President Marketing,Trading and CommercialMSc(PE),MBA(High Hons)Petter joined S
136、antos in August 2019 and has responsibility for the marketing and trading of all Santos gas,LNG and liquid hydrocarbon products as well as the commercial and procurement functions.Petter has over 32 years experience in the oil and gas industry both overseas and in Australia and joined Santos from To
137、tal,Paris,where he held the position of Deputy Vice President New Ventures E&P.Petter commenced his career as a petroleum engineer with Total and held engineering and management positions in both Exploration and Production.From 2009 to 2011,Petter was Business Development Director of Total E&P UK be
138、fore joining Total Austral in Argentina in the same position,where he was responsible for technical studies for new development projects,corporate planning and strategy,new business ventures,joint venture partners,commercial sales and commercial gas strategy.From 2015 to 2018,Petter was Managing Dir
139、ector(Country Chair)for Total E&P Australia.Petter has a Master of Science in Petroleum Engineering from the Norwegian Institute of Technology and a Master of Business Administration in General Administration and Finance from the Booth School of Business,University of Chicago,USA.TRACEY WINTERSStrat
140、egic Adviser External AfgairsBSc(Australian Environmental Studies)Tracey joined Santos in 2017 and is responsible for government engagement and strategic communications.Tracey joined Santos with 30 years of experience in the oil and gas industry,in diverse roles including government and regulatory a
141、fgairs,media and communications,environment,land access,project commercialisation,construction and asset management.Tracey held a senior role in federal resources and energy policy and politics for seven years and over more than a decade built and ran a successful consultancy serving some of Austral
142、ias biggest resources companies and delivering major project approvals for some of the nations biggest gas and pipeline projects.From 2011 to 2016,Tracey drove the environmental approvals and land access processes to deliver the QCLNG project.Prior to joining Santos,Tracey was an adviser to Caltex o
143、n public afgairs and strategic issues management,in particular wage underpayment by franchisees.BRETT WOODSExecutive Vice President DevelopmentsBSc(Hons)Geology and GeophysicsBrett joined Santos in 2013 and is accountable for development across Santos onshore and ofgshore assets,including major capi
144、tal projects,drilling and completions,and reservoir development,as well as overseeing Santos joint venture in PNG LNG.At Santos,Brett has previously held the roles of Executive Vice President Onshore Upstream,and Vice President,Eastern Australia.Brett has held other roles within Santos including res
145、ponsibilities for exploration in Western Australia and the Northern Territory,leading the Western Australian ofgshore operations including development of Fletcher Finucane,Darwin LNG and the domestic gas business.Brett has 25 years of oil and gas industry experience including senior management,techn
146、ical and business development roles at Woodside Energy and as CEO and Managing Director of Rialto Energy.He has a track record of delivering projects and effjcient exploration and production operations and has both domestic and international experience.Brett is a graduate of the Harvard Business Sch
147、ool Advanced Management Program.Santos Annual Report 2019/13Santos Annual Report 2019/1314/Santos Annual Report 2019Reserves Statementfor the year ended 31 December 2019RESERVES AND RESOURCESProved plus probable(2P)reserves increased by 42 million barrels of oil equivalent(mmboe)before production in
148、 2019.The annual 2P reserves replacement ratio(RRR)was 56%and the three-year RRR 152%.Successful appraisal and development activity in the Australian onshore assets added 36 mmboe to 2P reserves during the year.The Cooper Basin achieved 183%RRR by adding 29 mmboe 2P reserves before production(includ
149、ing 18 mmboe from the successful Moomba South project)and 7 mmboe was added in Queensland including the successful Arcadia appraisal.A net 6 mmboe was added in the Western Australia ofgshore assets.2C contingent resources increased to over 1.9 billion barrels of oil equivalent,primarily due to incre
150、ases in Dorado(+46 mmboe)and Barossa(+34 mmboe),and a maiden booking in the Northern Territory McArthur Basin shale(+22 mmboe).Santos acquisition of ConocoPhillips business in northern Australia and Timor-Leste announced in October 2019 is expected to complete in the fjrst quarter of 2020,subject to
151、 third-party consents and regulatory approvals.Had the acquisition completed on 31 December 2019,it would have increased 2019 2P reserves by 39 mmboe to 1,028 mmboe(106%2P RRR)and 2C contingent resources by 480 mmboe to 2,400 mmboe(before any sell-down of the acquired interests).RESERVES AND 2C CONT
152、INGENT RESOURCES(SANTOS SHARE AS AT 31 DECEMBER)Santos shareUnit20192018%changeProved reservesmmboe548586(7%)Proved plus probable reservesmmboe9891,022(3%)2C contingent resourcesmmboe1,9201,8007%RESERVES AND 2C CONTINGENT RESOURCES BY PRODUCT(SANTOS SHARE AS AT 31 DECEMBER 2019)Santos shareSales gas
153、 PJCrude oil mmbblCondensate mmbblLPG 000 tonnesTotal mmboeProved reserves2,9302021526548Proved plus probable reserves5,27738361,1699892C contingent resources9,5061501252,2171,920KEY METRICSAnnual proved reserves replacement ratio49%Annual proved plus probable reserves replacement ratio56%Three-year
154、 proved plus probable reserves replacement ratio152%Organic annual proved plus probable reserves replacement ratio56%Organic three-year proved plus probable reserves replacement ratio62%Developed proved plus probable reserves as a percentage of total reserves55%Reserves life113 years1 2P reserves li
155、fe as at 31 December 2019 using annual production of 75 mmboe.PROVED RESERVESSantos share as at 31 December 2019All productsSales gasCrude oilCondensateLPGmmboeAssetPJmmbblmmbbl000 tonnesDeveloped Undeveloped TotalCooper Basin27184502481462Queensland&NSW1830-0-10142143PNG77008-8653140Northern Austra
156、lia&Timor-Leste20-0244-4Western Australia1,039128-15147198Total 1P2,9302021526390157548Percentage of total proved reserves that are unconventional26%1 Queensland proved sales gas reserves include 655 PJ GLNG and 175 PJ other Santos non-operated Eastern Queensland assets.Proved reserves reconciliatio
157、nProductUnit2018ProductionRevisions and extensionsNet acquisitions and divestments2019Sales gasPJ3,123(363)171-2,930Crude oilmmbbl23(8)5-20Condensatemmbbl23(4)2-21LPG000 tonnes562(151)115-526Total 1P mmboe586(75)37-548Santos Annual Report 2019/15Santos Annual Report 2019/1516/Santos Annual Report 20
158、19PROVED PLUS PROBABLE RESERVESSantos share as at 31 December 2019Sales gasCrude oilCondensateLPGAll products mmboeAssetPJmmbblmmbbl 000 tonnesDeveloped Undeveloped TotalCooper Basin6901691,1329854153Queensland&NSW11,871-0-102220322PNG1,108013-12875203Northern Australia&Timor-Leste30-1376-6Western A
159、ustralia1,5782114-20997306Total 2P5,27738361,169543446989Percentage of total proved plus probable reserves that are unconventional33%1 Queensland proved plus probable sales gas reserves include 1,441 PJ GLNG and 430 PJ other Santos non-operated Eastern Queensland assets.Proved plus probable reserves
160、 reconciliationProductUnit2018ProductionRevisions and extensionsNet acquisitions and divestments2019Sales gasPJ5,408(363)232-5,277Crude oilmmbbl45(8)1-38Condensatemmbbl39(4)1-36LPG000 tonnes1,259(151)61-1,169Total 2P mmboe1,022(75)42-9892C CONTINGENT RESOURCESSantos share as at 31 December 2019Asset
161、Sales gas PJCrude oil mmbblCondensate mmbblLPG 000 tonnesAll products mmboeCooper Basin1,30833182,217294Queensland&NSW2,64800-455PNG405-3-72Northern Australia&Timor-Leste3,341-49-620Western Australia1,80511755-479Total 2C9,5061501252,2171,9202C Contingent resources reconciliationProduct2018Productio
162、nRevisions and extensionsDiscoveriesNet acquisitions and divestments2019Total 2C(mmboe)1,800-1729741,920 Reserves Statementfor the year ended 31 December 2019continuedNotes1 This reserves statement:a is based on,and fairly represents,information and supporting documentation prepared by,or under the
163、supervision of,the qualifjed petroleum reserves and resources evaluators listed in note 14 of this reserves statement.Details of each qualifjed petroleum reserves and resources evaluators employment and professional organisation membership are set out in note 14 of this reserves statement;and b as a
164、 whole has been approved by Barbara Pribyl,who is a qualifjed petroleum reserves and resources evaluator and whose employment and professional organisation membership details are set out in note 14 of this reserves statement;and c is issued with the prior written consent of Barbara Pribyl as to the
165、form and context in which the estimated petroleum reserves and contingent resources and the supporting information are presented.2 The estimates of petroleum reserves and contingent resources contained in this reserves statement are as at 31 December 2019.3 Santos prepares its petroleum reserves and
166、 contingent resources estimates in accordance with the 2007 Petroleum Resources Management System(PRMS)sponsored by the Society of Petroleum Engineers(SPE).4 This reserves statement is subject to risk factors associated with the oil and gas industry.It is believed that the expectations of petroleum
167、reserves and contingent resources refmected in this statement are reasonable,but they may be afgected by a range of variables that could cause actual results or trends to difger materially,including but not limited to:price fmuctuations,actual demand,currency fmuctuations,geotechnical factors,drilli
168、ng and production results,gas commercialisation,development progress,operating results,engineering estimates,loss of market,industry competition,environmental risks,physical risks,legislative,fjscal and regulatory developments,economic and fjnancial markets conditions in various countries,approvals
169、and cost estimates.5 All estimates of petroleum reserves and contingent resources reported by Santos are prepared by,or under the supervision of,a qualifjed petroleum reserves and resources evaluator or evaluators.Processes are documented in the Santos Reserves Policy,which is overseen by a Reserves
170、 Committee.The frequency of reviews is dependent on the magnitude of the petroleum reserves and contingent resources and changes indicated by new data.If the changes are material,they are reviewed by the Santos internal technical leaders and externally audited.6 Santos engages independent experts Ga
171、fgney,Cline&Associates,Netherland,Sewell&Associates,Inc.and RISC Advisory Pty Ltd to audit and/or evaluate reserves and contingent resources.Each auditor found,based on the outcomes of its respective audit and evaluation,and its understanding of the estimation processes employed by Santos,that Santo
172、s 31 December 2019 petroleum reserves and contingent resources quantities in aggregate compare reasonably to those estimates prepared by each auditor.Thus,in the aggregate,the total volumes summarised in the tables included in this reserves statement represent a reasonable estimate of Santos petrole
173、um reserves and contingent resources position as at 31 December 2019.7 Unless otherwise stated,all references to petroleum reserves and contingent resources quantities in this reserves statement are Santos net share.8 Reference points for Santos petroleum reserves and contingent resources and produc
174、tion are defjned points within Santos operations where normal exploration and production business ceases,and quantities of produced product are measured under defjned conditions prior to custody transfer.Fuel,fmare and vent consumed to the reference points are excluded.9 Petroleum reserves and conti
175、ngent resources are aggregated by arithmetic summation by category and as a result,proved reserves may be a very conservative estimate due to the portfolio efgects of arithmetic summation.10 Petroleum reserves and contingent resources are typically prepared by deterministic methods with support from
176、 probabilistic methods.11 Any material concentrations of undeveloped petroleum reserves that have remained undeveloped for more than 5 years:(a)are intended to be developed when required to meet contractual obligations;and(b)have not been developed to date because they have not yet been required to
177、meet contractual obligations.12 The petroleum reserves replacement ratio is the ratio of the change in petroleum reserves(excluding production)divided by production.Organic reserves replacement ratio excludes net acquisitions and divestments.13 Information on petroleum reserves and contingent resour
178、ces quoted in this reserves statement is rounded to the nearest whole number.Some totals in the tables may not add due to rounding.Items that round to zero are represented by the number 0,while items that are actually zero are represented with a dash“-“.14 Qualifjed Petroleum Reserves and Resources
179、Evaluators NameEmployerProfessional OrganisationB PribylSantos LtdSPEJ BunzSantos LtdAPEGAB CamacSantos LtdSPE,PESA C HarwoodSantos LtdPESA,AAPGS LawtonSantos LtdSPED NicolsonSantos LtdSPEN PinkSantos LtdSPED SmithNSAISPEA WhiteSantos LtdSPESPE:Society of Petroleum EngineersAPEGA:The Association of
180、Professional Engineers and Geoscientists of AlbertaPESA:Petroleum Exploration Society of AustraliaAAPG:American Association of Petroleum GeologistsAbbreviations1Pproved reserves2Pproved plus probable reservesGJgigajoulesLNGliquefjed natural gasLPGliquefjed petroleum gasmmbblmillion barrelsmmboemilli
181、on barrels of oil equivalentNGLsnatural gas liquidsPJpetajoulestcftrillion cubic feetTJterajoules Conversion factorsSales gas and ethane,1 PJ171,937 boeCrude oil,1 barrel1 boeCondensate,1 barrel0.935 boeLPG,1 tonne8.458 boeSantos Annual Report 2019/17Santos Annual Report 2019/1718/Santos Annual Repo
182、rt 2019Directors ReportDIRECTORS REPORT The Directors present their report together with the consolidated Financial Report of the consolidated entity,being Santos Limited(“Santos”or“the Company”)and its controlled entities,for the fjnancial year ended 31 December 2019,and the Auditors Report thereon
183、.Information in the Annual Report referred to in this report,including the Remuneration Report,or contained in a note to the fjnancial statements referred to in this report,forms part of,and is to be read as part of,this report.DIRECTORS,DIRECTORS SHAREHOLDINGS AND DIRECTORS MEETINGSDirectors and Di
184、rectors shareholdingsThe names of Directors of the Company in offjce 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:SurnameOther NamesShareholdings in Santos LimitedAllenYasmin Anita48,883CowanGuy
185、Michael33,600GallagherKevin Thomas713,298GohHock67,215GuanYuGuthrieVanessa Ann16,437HearlPeter Roland48,808McArdleJanine Marie5,000ShiEugeneSpenceKeith William(Chairman)65,000The above-named Directors held offjce during the fjnancial year.Mr Eugene Shi retired as a Director on 2 May 2019.Mr Yu Guan
186、was appointed as a Director on 3 May 2019.Ms Janine McArdle was appointed as a Director on 23 October 2019.There were no other persons who acted as Directors at any time during the fjnancial year and up to the date of this report.All shareholdings are of fully paid ordinary shares.No Director holds
187、a relevant interest in a related body corporate of Santos Limited.At the date of this report,Mr Gallagher holds 2,628,586 share acquisition rights(SARs)and 220,149 restricted deferred shares.No other Director holds options or SARs.Details of the qualifjcations,experience and special responsibilities
188、 of each Director are set out in the Directors biographies on pages 8,9 and 10 of this Annual Report.This information includes details of other listed company directorships held during the last three years.Directors ReportSantos Annual Report 2019/19Directors meetingsThe number of Directors meetings
189、 and meetings of committees of Directors held during the fjnancial year and the number of meetings attended by each Director are set out below:Table of Directors meetingsDirectors MeetingAudit&Risk CommitteeEnvironment Health,Safety&Sustainability CommitteePeople&Remuneration CommitteeNomination Com
190、mitteeDirectorAttended/Held1Attended/Held1Attended/Held1Attended/Held1Attended/Held1AllenYasmin A.7 of 74 of 4n/a4 of 44 of 4CowanGuy M.7 of 73 of 4n/an/an/aGallagherKevin T.7 of 7n/a4 of 4n/an/aGohHock7 of 74 of 44 of 4n/a4 of 4Guan2Yu4 of 4n/an/a2 of 2n/aGuthrieVanessa A.7 of 7n/a4 of 44 of 4n/aHe
191、arlPeter R.7 of 7n/a4 of 44 of 44 of 4McArdle3Janine M.2 of 2n/an/an/an/aShi4Eugene0 of 31 of 1n/a1 of 1n/aSpenceKeith W.7 of 7n/an/an/a4 of 41 Refmects the number of meetings held during the time the Director held offjce,or was a member of the committee,during the year.2 Mr Yu Guan was appointed as
192、 a Director on 3 May 2019 and as a member of the People and Remuneration Committee on 21 August 2019.3 Ms Janine Marie McArdle was appointed as a Director on 23 October 2019 and as a member of the Audit and Risk Committee on 28 November 2019.4 Mr Eugene Shi retired as a Director on 2 May 2019.20/San
193、tos Annual Report 2019Directors ReportDirectors ReportcontinuedOPERATING AND FINANCIAL REVIEWSantos principal activities during 2019 were the exploration for,and development,production,transportation and marketing of,hydrocarbons.There were no signifjcant changes in the nature of these activities du
194、ring the year.Revenue is derived primarily from the sale of gas and liquid hydrocarbons.A review of the operations and of the results of those operations of the consolidated entity during the year is as follows:Summary of results table2019 mmboe2018 mmboeVariance%Production volume 75.558.928Sales vo
195、lume94.578.321US$millionUS$millionProduct sales 4,0333,66010EBITDAX1 2,4572,16014Exploration and evaluation expensed(103)(105)(2)Depreciation and depletion(1,000)(667)50Net impairment loss(61)(100)(39)Change in future restoration assumptions246(96)EBIT1 1,2951,334(3)Net fjnance costs(277)(228)21Taxa
196、tion(expense)/benefjt(344)(476)(28)Net profjt/(loss)for the period and attributable to equity holders of Santos6746307Underlying profjt for the period1719727(1)Underlying earnings per share(cents)134.534.9(1)1 EBITDAX(earnings before interest,tax,impairment,depreciation(or depletion),amortisation an
197、d exploration and evaluation expense),EBIT(earnings before interest and tax)and underlying profjt are non-IFRS measures that are presented to provide an understanding of the underlying performance of Santos operations.Underlying profjt excludes the impacts of asset acquisitions,disposals and impairm
198、ents,as well as items that are subject to signifjcant variability from one period to the next,including the efgects of fair value adjustments and fmuctuations in exchange rates.Please refer to page 23 for the reconciliation from net profjt to underlying profjt for the period.Underlying earnings per
199、share represents underlying profjt for the period divided by the weighted average number of shares on issue during the year.The non-IFRS fjnancial information is unaudited,however the numbers have been extracted from the audited fjnancial statements.Sales volume mmboe64.384.183.478.394.5201720162015
200、2018 2019Sales volumes of 94.5 million barrels of oil equivalent(mmboe)were 21%higher than the previous year refmecting a full-year contribution from the acquisition of Quadrant Energy combined with higher volumes in the Cooper Basin and Queensland.PNG volumes recovered following the Highlands earth
201、quake in 2018.Product sales revenue$million2,4422,5943,1003,6604,03320172016201520182019Sales revenue increased 10%compared to the previous year to$4 billion,primarily due to higher sales volumes partially ofgset by lower realised prices.The average realised oil price decreased 4%to US$72/bbl and th
202、e average realised domestic gas price decreased 14%to US$4.31/GJ.LNG prices were stable at US$9.77/mmBtu.Production volume mmboe57.761.659.558.975.52017201620152018 2019Production was up 28%to a record 75.5 mmboe primarily due to the Quadrant acquisition,higher production in the Cooper Basin and Que
203、ensland,and recovery in PNG production following the Highlands earthquake in 2018.This was partially ofgset by the sale of Santos Asian assets in the second half of 2018.Santos Annual Report 2019/21Santos Annual Report 2019/21Review of operationsSantos operations are focused on fjve core,long-life a
204、sset hubs:Cooper Basin,Queensland and NSW,Papua New Guinea,Northern Australia and Timor-Leste,and Western Australia.Cooper BasinThe Cooper Basin produces natural gas,gas liquids and crude oil.Gas is sold primarily to domestic retailers,industry and for the production of liquefjed natural gas,while g
205、as liquids and crude oil are sold in domestic and export markets.Santos strategy in the Cooper Basin is to deliver production growth by being a low-cost business,increasing reserves,investing in new technology to lower development and exploration costs,increasing utilisation of infrastructure includ
206、ing the Moomba plant and assessing the signifjcant potential for carbon capture and storage.Cooper Basin20192018Production(mmboe)15.815.5Sales volume(mmboe)23.221.6Revenue(US$m)1,1641,146Production cost(US$/boe)7.77 8.17 EBITDAX(US$m)529518Capex(US$m)308245Cooper Basin EBITDAX of$529 million is 2%hi
207、gher than 2018,primarily due to higher volumes and lower costs.Cooper Basin production increased for the second consecutive year to 15.8 mmboe.Santos share of sales gas and ethane production of 61.5 petajoules(PJ)was 2%higher than the previous year(60.6 PJ)as new development activity more than ofgse
208、t the impact of natural fjeld decline.Santos share of crude oil production of 3.2 mmbbl was in-line with the previous year.Queensland and NSWGLNG produces liquefjed natural gas(LNG)for export to global markets from the LNG plant at Gladstone.Gas is also sold into the domestic market.Santos has a 30%
209、interest in GLNG.The LNG plant has two LNG trains with a combined capacity of 8.6 mtpa.Production from Train 1 commenced in September 2015 and Train 2 in May 2016.Feed gas is sourced from GLNGs upstream fjelds,Santos portfolio gas and third-party suppliers.The LNG plant produced 5.2 million tonnes o
210、f LNG in 2019 and shipped 87 cargoes.Annual LNG production was higher than the previous year(4.9 million tonnes)due to the ramp-up in GLNG upstream equity gas supply.Santos aims to build GLNG gas supply through upstream development,seek opportunities to extract value from existing infrastructure and
211、 drive effjciencies to operate at lowest cost.Queensland and NSW20192018Production(mmboe)13.012.2Sales volume(mmboe)22.422.0Revenue(US$m)1,055 1,016 Production cost(US$/boe)5.51 5.77 EBITDAX(US$m)624570Capex(US$m)260244Queensland and NSW EBITDAX of$624 million increased by 9%compared to 2018.This wa
212、s a result of higher volumes and lower costs.22/Santos Annual Report 2019Directors ReportDirectors ReportcontinuedPapua New GuineaSantos business in PNG is centred on the PNG LNG project.Completed in 2014,PNG LNG produces LNG for export to global markets,as well as sales gas and gas liquids.Santos h
213、as a 13.5%interest in PNG LNG.The LNG plant near Port Moresby has two LNG trains with the combined capacity to produce more than eight million tonnes per annum.Production from both trains commenced in 2014.The LNG plant produced 8.5 million tonnes of LNG in 2019 and shipped 111 cargoes.Annual LNG pr
214、oduction was higher than the previous year(7.4 million tonnes)due to recovery from the 2018 earthquake.Santos strategy in PNG is to work with its partners to align interests,and support and participate in backfjll and expansion opportunities at PNG LNG.PNG20192018Production(mmboe)12.811.2Sales volum
215、e(mmboe)12.110.8Revenue(US$m)663630Production cost(US$/boe)6.236.23EBITDAX(US$m)540506Capex(US$m)5139PNG EBITDAX of$540 million increased 7%compared to 2018,mainly due to the resumption of normal operations during 2019,not interrupted by the earthquake that occurred in 2018.Northern Australia and Ti
216、mor-LesteSantos business in northern Australia is focused on the Bayu-Undan/Darwin LNG(DLNG)project.In operation since 2006,DLNG produces LNG and gas liquids for export to global markets.Santos has an 11.5%interest in DLNG.The LNG plant near Darwin has a single LNG train with a capacity of 3.7 mtpa.
217、The plant produced 2.9 million tonnes of LNG in 2019 and shipped 46 cargoes.Annual LNG production was lower than the previous year(3.3 million tonnes),in-line with the shipping schedule.Santos strategy in northern Australia is to support plans to progress Darwin LNG backfjll,expand the Companys acre
218、age footprint and appraise the onshore McArthur Basin.In October 2019,Santos announced the acquisition of ConocoPhillips business in northern Australia and Timor-Leste,including Darwin LNG,Bayu-Undan,Barossa and Poseidon for$1.39 billion plus a$75 million contingent payment subject to FID on Barossa
219、.The acquisition provides operating interests in long-life,low-cost natural gas assets and strategic LNG infrastructure consistent with Santos core asset growth strategy.The acquisition will increase Santos interests in DLNG to 68.4%and Barossa to 62.5%,before any subsequent sell-downs.Completion is
220、 expected around the end of the fjrst quarter of 2020,subject to third-party consents and regulatory approvals.The Barossa project is planned to backfjll Darwin LNG.Successful development of Barossa would extend the operating life of Darwin LNG for more than 20 years and signifjcantly increase Santo
221、s production in northern Australia.Santos also intends to appraise the onshore gas potential of the McArthur Basin in the Northern Territory in 2020 with two horizontal wells planned.Northern Australia and Timor-Leste20192018Production(mmboe)3.13.7Sales volume(mmboe)3.13.6Revenue(US$m)165183Producti
222、on cost(US$/boe)21.75 20.17 EBITDAX(US$m)102116Capex(US$m)5066Northern Australia and Timor-Leste EBITDAX of$102 million was 12%lower than 2018 due to lower sales volumes and lower realised LNG pricing.Santos Annual Report 2019/23Santos Annual Report 2019/23Western AustraliaSantos is one of the large
223、st producers of domestic natural gas in Western Australia and is also a signifjcant producer of oil and natural gas liquids.In late 2018,Santos completed the acquisition of Quadrant Energy for$2.15 billion plus contingent payments related to the Bedout Basin.Quadrant signifjcantly strengthened Santo
224、s position in Western Australia,including 100%ownership and operatorship of the Varanus Island and Devil Creek domestic gas hubs,and a leading position in the highly prospective Bedout Basin.Santos successfully completed the appraisal of the Dorado fjeld(Santos 80%interest)in the Bedout Basin in 201
225、9.A FEED-entry decision for a potential Dorado development is targeted for the second quarter of 2020.Western Australia20192018Production(mmboe)30.912.5Sales volume(mmboe)30.413.0Revenue(US$m)955422Production cost(US$/boe)7.308.68EBITDAX(US$m)684283Capex(US$m)27093Western Australia EBITDAX of$684 mi
226、llion was 142%higher than 2018.Gas and liquids production in Western Australia was signifjcantly higher in 2019 due to the Quadrant acquisition.Santos share of gas production was up 130%to 145 PJ,while oil production increased by 370%to 4.5 mmbbl.Net profjtThe 2019 net profjt attributable to equity
227、holders of Santos Limited of$674 million is$44 million higher than the net profjt of$630 million in 2018.This increase is primarily due to lower impairment losses of$46 million after tax($94 million in 2018)and higher sales revenue as a result of higher volumes,partly ofgset by lower realised pricin
228、g.Net profjt includes items before tax of$59 million($45 million after tax),as referred to in the reconciliation of net profjt to underlying profjt below.Underlying profjt was$719 million,$8 million lower than 2018.Reconciliation of net profjt/(loss)to underlying profjt12019 US$million2018 US$millio
229、nGrossTaxNetGrossTaxNetNet profjt after tax attributable to equity holders of Santos Limited 674630Add/(deduct)the following:Net gains on sales of non-current assets(12)4(8)(112)18(94)Impairment losses61(15)46100(6)94 Fair value adjustments on embedded derivatives and hedges4(1)32-2 Fair value adjus
230、tments on commodity hedges6(2)467(21)46 Costs associated with acquisitions and disposals58(9)4959(14)45115(18)97Underlying profjt1 7197271 Underlying profjt is a non-IFRS measure that is presented to provide an understanding of the underlying performance of Santos operations.The measure excludes the
231、 impacts of asset acquisitions,disposals and impairments,as well as items that are subject to signifjcant variability from one period to the next,including the efgects of fair value adjustments and fmuctuations in exchange rates.The non-IFRS fjnancial information is unaudited,however the numbers hav
232、e been extracted from the fjnancial statements which have been subject to audit by the Companys auditor.24/Santos Annual Report 2019DirectorseportFinancial positionSummary of fjnancial position2019 US$million2018 US$millionVariance US$millionExploration and evaluation assets1,187981206Oil and gas as
233、sets and other land,buildings,plant and equipment11,61911,402217Restoration provision(2,282)(2,093)(189)Other net assets/(liabilities)1 456308148Total funds employed 10,98010,598382Net debt2(3,325)(3,549)224Net tax assets/(liabilities)321230(209)Net assets/equity7,6767,2793971 Other net assets/(liab
234、ilities)comprises trade and other receivables,prepayments,inventories,other fjnancial assets,share of investments in joint ventures,ofgset by trade and other payables,deferred income,provisions and other fjnancial liabilities.2 Net debt refmects the net borrowings position and includes interest-bear
235、ing loans,net of cash and interest rate and cross-currency swap contracts.3 Net tax assets/(liabilities)comprises deferred tax assets and tax receivable,ofgset by deferred tax liabilities and current tax payable.Impairment of assetsDuring the Companys regular review of asset carrying values,Santos u
236、ndertook an impairment review as part of the preparation of its 2019 full-year accounts.At 31 December 2019,non-cash,after-tax impairment losses of$46 million were recognised.The total after-tax impairment losses relate to the impairment of late-life producing assets and exploration and evaluation a
237、ssets.Exploration and evaluation assets Exploration and evaluation assets were$1,187 million compared to$981 million at the end of 2018,a increase of$206 million,due to the acquisition of Quadrant Energy,2019 capital expenditure,including drilling in Dorado,Roc South-1,Barossa Caldita and South Amad
238、eus,along with evaluation studies,in addition to acquisition costs comprising interests in Muruk and South Nicholson;ofgset by impairment losses before tax of$24 million and exploration and evaluation expenses of$24 million.Oil and gas assets and other land,buildings,plant and equipmentOil and gas a
239、ssets and other land and buildings,plant and equipment of$11,619 million were$217 million higher than in 2018 mainly due to the right-of-use assets raised as a result of the adoption of AASB 16 Leases accounting standard,and 2019 capital expenditure across Cooper Basin,GLNG,WA Ofgshore and PNG;ofgse
240、t by depreciation and depletion charges.Restoration provisionRestoration provision balances have increased by$189 million to$2,282 million mainly due to a change in discount rates,ofgset by revised restoration cost estimates and favourable exchange difgerences.Net debtNet debt of$3,325 million was$2
241、24 million lower than at the end of 2018 primarily as a result of the repayment of debt facilities during 2019,ofgset by the issue of a new Reg-S bond and free cash fmow before asset acquisitions and divestments of$1,138 million.Net tax assets/(liabilities)Net tax assets/(liabilities)of$21 million h
242、ave decreased by$209 million in comparison to 2018 primarily as a result of the fjnalisation of the acquisition of Quadrant Energy and associated tax bases,and the utilisation of carry-forward tax losses recognised by the group.Net assets/equityTotal equity increased by$397 million to$7,676 million
243、at year end.The increase primarily refmects the net profjt after-tax attributable to owners of Santos of$674 million,partially ofgset by payments of dividends to shareholders of$251 million.Future commitmentsDue to the nature of Santos operations,the Company has future obligations for capital expend
244、iture,for which no amounts have been provided in the fjnancial statements.Santos also has certain requirements to perform minimum exploration work and spend minimum amounts of money pursuant to the terms of the granting of petroleum exploration permits in order to maintain rights of tenure.The minim
245、um exploration commitments are less than the normal level of exploration expenditures expected to be undertaken by the Company.Directors ReportcontinuedSantos Annual Report 2019/25Santos Annual Report 2019/25Oil price hedgingThe objectives of Santos oil price hedging policy are to reduce the efgect
246、of commodity price volatility and support annual capital expenditure plans.The Company will continue to monitor commodity market conditions and will enter hedging transactions as appropriate.As at 31 December 2019,the Company has hedged 6.2 million barrels of production,using a re-participating thre
247、e-way option structure with an average fmoor price of$54.19/bbl,a temporary ceiling of$69.03/bbl and re-participation at$76.78/bbl.Business strategy and prospects for future fjnancial years Business strategySantos clear and consistent Transform,Build,Grow strategy drives shareholder value by utilisi
248、ng a disciplined,low-cost operating model to deliver strong cash fmows through the oil price cycle.Five core,long-life asset hubs sit at the heart of the Companys operations,each with signifjcant upside potential.The successful execution of the strategy since 2016 has transformed the Company into a
249、safe,reliable and low-cost producer positioned for disciplined growth and sustainable shareholder returns.Disciplined execution combined with targeted acquisitions have reduced the Companys breakeven oil price,which was approximately US$29 per barrel in 2019,and delivered operated interests in long-
250、life,low-cost assets and strategic LNG infrastructure.The Company is now positioned for disciplined growth leveraging existing infrastructure in all fjve core asset hubs and is targeting annual production of 120 mmboe by 2025,more than double the output in 2018.This disciplined growth portfolio incl
251、udes:Barossa LNG Dorado liquids PNG LNG expansion GLNG ramp-up to 6.2 mtpa sales from 2020 Cooper Basin production growthSantos is also executing a focused exploration strategy to identify new high-value targets and unlock future core assets.The Company is also focused on generating new revenue thro
252、ugh maximising utilisation of its infrastructure and implementing low-carbon energy solutions projects such as carbon capture and storage.Prospects for future fjnancial yearsSantos has a clear strategy and a solid platform for growth.The business focus is aligned with the strategy as the Company con
253、tinues to drive effjciencies through the low-cost operating model and progress growth opportunities across the fjve core asset hubs.This focus will enable Santos to remain a low-cost and high-performing business with signifjcant upside opportunities across the portfolio.Natural gas is expected to su
254、pply a quarter of the worlds total energy demand by 2040,according to forecasts from the International Energy Agency.Santos remains confjdent in the long-term underlying demand for energy and particularly natural gas due to Asian economic growth,the rising global population,rapid urbanisation in dev
255、eloping economies and growing demand for lower-emissions fuels.Through its Energy Solutions business,Santos is also investing in projects to lower emissions and assessing the signifjcant potential for carbon capture and storage in the Cooper Basin.Santos expects 2020 sales volumes to be in the range
256、 of 99107 mmboe and production to be in the range of 7987 mmboe.Capital expenditure is expected to be approximately$1.5 billion.2020 guidance assumes completion of the acquisition of ConocoPhillips business in Northern Australia and Timor-Leste and expected sell-down of 25%interests in Bayu-Undan an
257、d Darwin LNG both occur at the end of the fjrst quarter of 2020.Material business risksThe achievement of Santos purpose and vision,business strategy,production growth outlook and future fjnancial performance is subject to various risks including the material business risks summarised below.Santos u
258、ndertakes steps to identify,assess and manage these risks and operates under a Board-approved enterprise-wide Risk Management Framework.This summary is not an exhaustive list of all risks that may afgect the Company,nor have they been listed in any particular order of materiality.26/Santos Annual Re
259、port 2019Directors?eportStrategic risksVolatility in oil and gas pricesSantos business relies primarily on the production and sale of oil and gas products(including LNG)to a variety of buyers under a range of short-term and long-term contracts.The majority of oil and gas produced(or to be produced)i
260、n Santos portfolio will be sold under sales contracts where the sale price is linked to the global price of oil.Lower global oil prices will therefore reduce Santos revenues and the profjtability of its operations.Global oil prices are afgected by numerous factors beyond the Companys control and his
261、torically these have fmuctuated widely.Santos three-tiered strategy,Operating Model and Hedging Policy introduced in 2016 directly address oil price risk to build resilience to oil price fmuctuations.This includes a clear focus on cash fmow management,operational and cost effjciencies,debt reduction
262、 and production growth opportunities.Santos acquisition of Quadrant in 2018 adds conventional domestic natural gas assets backed by medium-to long-term CPI-linked ofgtake contracts to complement Santos predominantly oil-linked revenues.Oil and gas reserves developmentCalculations of recoverable oil
263、and gas reserves and resources contain signifjcant uncertainties,which are inherent in the reservoir geology,seismic and well data available and other factors such as project development and operating costs,together with commodity prices.A failure to successfully develop existing reserves may impact
264、 Santos ability to fully support LNG,gas or oil under customer contracts.Santos has adopted a reserves management process that is consistent with the Society of Petroleum Engineers Petroleum Resource Management System.The Companys reserves and resources estimations are subject to independent audits
265、and evaluations on a rolling basis.Santos applies an integrated management system across all aspects of business performance,including reserves estimation and delivery.Progress against key reserves metrics is routinely reviewed by senior management and the Board,and reserves estimates are published
266、annually(pages 14 to 17).Exploration and reserves replacementSantos long-term prospects are also directly related to the success of efgorts to replace existing oil and gas reserves as they are depleted through production,from either exploration or acquisition.Exploration activities are subject to ge
267、ological and technological uncertainties and the failure to replace utilised reserves is a risk inherent in the industry.Exploration risks are managed through an established exploration prospect evaluation methodology and risking process.In addition,business development processes identify,review and
268、 progress opportunities to build reserves through acquisition in support of the Companys strategy to Transform,Build and Grow the business.Demand and marketThe demand for oil,gas,LNG and other products Santos markets may be adversely afgected by a range of external factors including competition from
269、 alternative suppliers or other sources of energy supply,and changes in consumer behaviour or government policy.A robust business strategy development and review process considers independent oil,gas and LNG market forecasts,and other relevant macro-economic factors,to assess the Companys portfolio
270、under a range of scenarios,to enable the delivery of plans in support of the Companys purpose and vision.Project developmentInvestment is undertaken in a variety of oil and gas projects to extract,process and supply oil and gas to a variety of customers,including long-term high-volume contracts to s
271、upply feedstock gas to the GLNG project.Failure to deliver or protracted delays in delivering projects may occur for various reasons,including unanticipated economic,fjnancial,operational,engineering,technical,environmental,contractual,regulatory,community and/or political events.Delays,changes in s
272、cope,cost increases or poor performance outcomes pose risks that may impact the Companys fjnancial performance.Santos has comprehensive project management and governance,risk management and reporting practices in place.Progress and performance of material projects is regularly reviewed by senior man
273、agement and the Board.Joint venture arrangementsMuch of Santos business is carried out through joint ventures.The use of joint ventures is common in the oil and gas exploration and production industry and serves to mitigate the risk and associated cost of exploration,production and operational failu
274、re.However,failure of agreement or alignment with joint venture partners,or the failure of third-party joint venture operators,could have a material impact on Santos business.The failure of joint venture partners to meet their commitments and share costs and liabilities can result in increased costs
275、 to Santos.Directors ReportcontinuedSantos Annual Report 2019/27Santos Annual Report 2019/27Santos has defjned critical expectations and requirements for participation in and operation of joint ventures in order to optimise the Companys commercial and operational interests.The Company works closely
276、with its joint venture partners to reduce the risk of misalignment in joint venture activities.Operational risksTechnical and engineeringSantos is exposed to risks in relation to its ongoing oil and gas exploration and production activities,such as failure of drilling and completions equipment,pipel
277、ine and facilities integrity failures,major processing or transportation incidents,release of hydrocarbons or other substances,security incidents and other well control and process safety risks,which may have an adverse efgect on Santos profjtability and results of operations.An integrated managemen
278、t system is applied across all operational activities to manage and monitor operations performance and material risk controls.The management system includes all relevant technical,operational,asset reliability and integrity standards and incident management standards and competency requirements.The
279、system is designed to ensure the Company meets regulatory and industry standards in all operations.Access and licence to operate Santos has interests in areas that may be subject to claims by communities and landowners,who may have concerns over the social or environmental impacts of oil and gas ope
280、rations or the distribution of oil and gas royalties and access to mining-and petroleum-related benefjts.This has the potential to impact on land access or result in community unrest and activism and may adversely impact on the Companys reputation.A number of Santos interests are subject to one or m
281、ore claims or applications for native title determination.In Australia,compliance with the requirements of the Native Title Act 1993(Cth)can delay the grant of mineral and petroleum tenements and subsequent timing of exploration,development and production activities.Santos and its operating joint ve
282、nture partners work closely with all relevant stakeholders,including governments,communities,landowners and indigenous groups,to ensure all concerns are fairly addressed and managed,and Santos operations benefjt from their support.In addition,Santos and its operating joint venture partners develop a
283、nd employ security and risk management plans,and are committed to conducting operations in a way that protects the security of its personnel,facilities and operations.Santos has a long history of safe and sustainable operations working with communities and landholders across the country.Land access
284、agreements are in place and a team of experienced community and land access representatives work with Aboriginal stakeholders,landholders and communities to ensure that issues are understood and addressed appropriately.Cyber securityCyber security risks,including threats to information and operation
285、al systems from computer viruses,unauthorised access,cyber-attack and other similar disruptions,have evolved rapidly and can impact all sectors of the economy,including the energy sector.The increasing technological advances in operations require monitoring and protection to ensure cyber security th
286、reats are appropriately managed and prevented.Cyber security risks may lead to disruption of critical business processes,a breach of privacy and theft of commercially sensitive information.A cyber event may lead to adverse impacts on Santos profjtability and reputation.Focused cyber security risk ma
287、nagement is incorporated into Santos risk management and assurance processes and practices across the Companys business and operational information management systems.WorkforceSantos future success is signifjcantly infmuenced by the expertise and continued service of certain key executives and techn
288、ical personnel.An inability to attract or retain such personnel could adversely afgect business continuity and,as such,employment arrangements and succession plans are designed to secure and retain the services of key personnel.Key workforce metrics and succession plans are routinely reviewed by sen
289、ior management and the Board.Environmental,safety and sustainability risksHealth,safety and environment The size,nature and complexity of Santos operations pose risks in relation to the health and safety of employees and contractors,and a range of environmental risks exist when carrying out explorat
290、ion and production activities.Environmental incidents,and real or perceived threats to the environment or the amenity of local communities,could result in a loss of Santos licence to operate,leading to delays,disruption or the shut-down of exploration and production activities.Santos has a comprehen
291、sive approach to management of health,safety and environmental risks.The Companys management system integrates technical and engineering requirements with personal health and safety requirements to comprehensively manage health,safety and environmental risks within Company operations.28/Santos Annua
292、l Report 2019Directors ReportClimate changeSantos anticipates its activities will be subject to increasing regulation and costs associated with climate change and the management of carbon emissions.Strategic,regulatory and operational risks and opportunities associated with climate change are incorp
293、orated into policy,strategy and risk management processes and practices.The Company actively monitors current and emerging climate change risk and proactively takes steps to prevent and mitigate any impacts on its objectives and activities.Reduction of waste and emissions is an integral part of deli
294、very of cost effjciencies and forms part of the Companys routine operations.Financial risksThe fjnancial risk management strategy seeks to ensure that Santos is able to fund its corporate objectives and meet its obligations to stakeholders.Financial risk management is carried out by a central treasu
295、ry department that operates in line with a Board-approved policy and framework.The framework and principles for overall fjnancial risk management address specifjc fjnancial risks,such as commodity price risk,foreign exchange risk,interest rate risk and credit risk,approved derivative and non-derivat
296、ive fjnancial instruments,and liquidity management.An oil price hedging policy is in place with the objective of reducing the efgect of commodity price volatility and to support annual capital expenditure plans.Santos continues to monitor commodity market conditions and will enter hedging transactio
297、ns as appropriate.Foreign currencyForeign exchange risk arises from commercial transactions and valuations of assets and liabilities that are denominated in a currency that is not the entitys functional currency.Exposure to foreign currency risk arises principally through the sale of products denomi
298、nated in currencies other than the functional currency,and capital and operating expenditure incurred in currencies other than US$,principally A$.Santos also holds investment interests in domestic operations whose net assets are exposed to foreign currency translation risk.A foreign currency hedging
299、 policy is in place with the objective of reducing the efgect of foreign currency exchange rate volatility and to support annual capital expenditure plans.Santos continues to monitor foreign currency market conditions and will enter hedging transactions as appropriate.CreditCredit risk represents a
300、potential fjnancial loss if counterparties fail to perform as contracted,and arises from investments in cash and cash equivalents,derivative fjnancial instruments and deposits with banks and fjnancial institutions.Credit exposures exist to customers in the form of outstanding receivables and committ
301、ed transactions.Access to capital and liquidity Santos business and,in particular,the development of large-scale projects,relies on access to debt and equity fjnancing.The ability to secure fjnancing,or fjnancing on acceptable terms,may be adversely afgected by volatility in the fjnancial markets.Th
302、ese efgects may be global or afgecting a particular geographic region,industry or economic sector.Access to debt and equity funding may also be negatively afgected by a downgrade in its credit rating.Santos had$3.0 billion in liquidity(cash and undrawn bilateral bank facilities)available as at 31 De
303、cember 2019.Contract and counterparty risksAs part of its ongoing commercial activities,Santos is party to a number of material contracts including fjnance agreements,infrastructure access agreements,agreements for the sale and purchase of hydrocarbon,transportation agreements,joint venture agreemen
304、ts,and engineering,procurement and construction(EPC)contracts.Santos also enters into sale and purchase contracts with third parties for the sale and purchase of natural gas,LNG and other products.The economic efgects of these contracts over their term may be impacted by fmuctuations in commodity pr
305、ices,price reviews,operational performance and other market conditions.Failure to perform material obligations under these contracts by Santos and/or the applicable counterparties,or to secure any extensions or amendments to these contracts,may result in a material impact on Santos operations and fj
306、nancial results.Santos tracks key contractual obligations and monitors performance across its material contracts.Political and legal risksPolitical,legal and regulatorySantos business is subject to various laws and regulations in each of the jurisdictions in which it operates that relate to the deve
307、lopment,production,marketing,pricing,transportation and storage of its products.A change in the laws which apply to the Companys business,or the way in which it is regulated,could have a materially adverse efgect on Santos business,on the results of Directors ReportcontinuedSantos Annual Report 2019
308、/29Santos Annual Report 2019/29operations and the Companys fjnancial performance.For example,a change in taxation laws,environmental laws or land access laws could have a material efgect on the Company.The domestic gas business and GLNG project,including its ability to purchase gas,develop future gr
309、owth projects and meet supply commitments,may also be adversely impacted by any governmental intervention,including limitations on LNG export volumes and the redirection of gas from export to domestic markets.Any such intervention may also have broader implications for the future of the gas industry
310、 in Australia.Continuous monitoring of legislative and regulatory changes and associated risks is undertaken and regular engagement with regulators and governments supports the management of risks arising from these changes.Litigation and dispute The nature of Santos business means that it is likely
311、 to be involved in litigation or regulatory actions arising from a wide range of matters.Santos may also be involved in investigations,inquiries or disputes,debt recoveries,commercial and contractual disputes,native title claims,land tenure and access disputes,environmental claims or occupational he
312、alth and safety claims.Any of these claims or actions could result in delays,increase costs or otherwise adversely impact Santos assets and operations,and adversely impact Santos fjnancial performance and future fjnancial prospects.Santos has an experienced legal team that monitors and manages poten
313、tial and actual claims,actions and disputes.Material prejudice As permitted by sections 299(3)and 299A(3)of the Corporations Act 2001(Cth),Santos has omitted some information from the above Operating and Financial Review in relation to the Companys business strategy,future prospects and likely devel
314、opments in operations and the expected results of those operations in future fjnancial years on the basis that such information,if disclosed,would be likely to result in unreasonable prejudice(for example,because the information is premature,commercially sensitive,confjdential or could give a third
315、party a commercial advantage).The omitted information typically relates to internal budgets,forecasts and estimates,details of the business strategy,and contractual pricing.Forward-looking statementsThis report contains forward-looking statements,including statements of current intention,opinion and
316、 predictions regarding the Companys present and future operations,possible future events and future fjnancial prospects.While these statements refmect expectations at the date of this report,they are,by their nature,not certain and are susceptible to change.Santos makes no representation,assurance o
317、r guarantee as to the accuracy of or likelihood of fulfjlling any such forward-looking statements(whether express or implied)and,except as required by applicable law or the ASX Listing Rules,disclaims any obligation or undertaking to publicly update such forward-looking statements.SIGNIFICANT CHANGE
318、S IN THE STATE OF AFFAIRSThe Material Business Risks section(pages 25 to 29)refers to risks which,if materialised,may have a signifjcant efgect on the state of afgairs of the Company.DividendsOn 19 February 2020,the Directors resolved to pay a fully franked fjnal dividend of US5 cents per fully paid
319、 ordinary share on 26 March 2020 to shareholders registered in the books of the Company at the close of business on 26 February 2020(“Record Date”).This fjnal dividend amounts to approximately US$104 million.The Board also resolved that the Dividend Reinvestment Plan(DRP)will not be in operation for
320、 the 2019 fjnal dividend.In addition,a fully franked interim dividend of US6 cents per share was paid to members on 26 September 2019.The DRP was not in operation for the interim dividend.Environmental regulationThe consolidated entitys Australian operations are subject to various environmental regu
321、lations under Commonwealth,state and territory legislation.Applicable legislation and requisite environmental licences are specifjed in the consolidated entitys EHS Compliance Database,which forms part of the consolidated entitys overall management system.Environmental compliance performance is moni
322、tored on a regular basis and in various forms,including audits conducted by regulatory authorities and by the Company,either through internal or external resources.On 19 March 2019,Santos received a penalty infringement notice and$12,615 fjne from the Queensland Department of Environment and Science
323、 for a loss of pond hydraulic integrity incident.On 27 June 2019,Santos received two penalty infringement notices and two fjnes totalling$26,100 from the Queensland Department of Environment and Science for an unauthorised release of contaminants to land and failure to operate measures,plant and equ
324、ipment in a proper and efgective manner.30/Santos Annual Report 2019Directors ReportOn 20 September 2019,Santos received a penalty infringement notice and$13,055 fjne from the Queensland Department of Environment and Science for a produced water release to a watercourse.On 8 November 2019,Santos rec
325、eived a penalty infringement notice and$13,345 fjne from the Queensland Department of Environment and Science for a black smoke release causing an environmental nuisance.The consolidated entity undertook corrective measures in respect of the infringements to prevent re-occurrences.POST BALANCE DATE
326、EVENTSOn 19 February 2020,the Directors of Santos Limited resolved to pay a fjnal dividend on ordinary shares in respect of the 2019 fjnancial year.The fjnancial efgect of these dividends has not been brought to account in the full-year Financial Report for the year ended 31 December 2019.SHARES UND
327、ER OPTION AND UNVESTED SHARE ACQUISITION RIGHTS(SARS)OptionsThere are no unissued ordinary shares of Santos Limited under options at the date of this report.Unvested SARsUnissued ordinary shares of Santos Limited under unvested SARs at 31 December 2019 are as follows:Date SARs grantedNumber of share
328、s under unvested SARs14 June 20163,828,28617 March 20173,506,50719 May 2017671,64129 September 2017492,66021 March 20182,737,4551 April 2018700,4527 May 2018520,1839 July 2018407,33614 November 20187,64915 March 20192,595,42312 April 201948,23418 April 2019469,9879 May 2019637,6317 June 201949,77218
329、 July 201910,73424 July 2019567,87620 August 201926,36430 August 20191,271,5494 October 2019238,023 18,787,762Since 31 December 2019,28,923 additional SARs have been granted over unissued ordinary shares of Santos Limited.No amount is payable on the vesting of SARs.SARs do not confer an entitlement
330、to participate in a bonus or rights issue,prior to the vesting of the SAR.Further details regarding the SARs(including when they will lapse)are contained in the Remuneration Report commencing on page 32 of this report and in note 7.2 to the Financial Report.Directors ReportcontinuedSantos Annual Rep
331、ort 2019/31Santos Annual Report 2019/31SHARES ISSUED ON THE EXERCISE OF OPTIONS AND ON THE VESTING OF SARSOptionsNo options were exercised during the year ended 31 December 2019 or up to the date of this report.Vested SARsThe following ordinary shares of Santos Limited were allocated during the year
332、 ended 31 December 2019 on the vesting of SARs granted under the Santos Employee Equity Incentive Plan(SEEIP)(formerly known as the Santos Employee Share Purchase Plan(SESPP)and ShareMatch Plan(ShareMatch).No amount is payable on the vesting of SARs and accordingly no amounts are unpaid on any of th
333、e shares.Date SARs grantedNumber of shares issued31 August 2016560,56019 April 201780,57129 September 201715,3729 July 201810,53214 November 20187,65024 July 20191,636676,321Since 31 December 2019,no ordinary shares of Santos Limited have been allocated on the vesting of SARs granted under the SEEIP and ShareMatch.DIRECTORS AND SENIOR EXECUTIVES REMUNERATIONDetails of the Companys remuneration pol
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