Santos Ltd (STO) 2017年年度報告「ASX」.pdf

1、TransformBuildGrowAnnual Report 2017Santos Limited ABN 80 007 550 923This 2017 Annual Report is a summary of Santos operations,activities and financial position as at 31 December 2017.All references to dollars,cents or$in this document are to US currency,unless otherwise stated.An electronic version

2、 of this report is available on Santos website,Santos Corporate Governance Statement can be viewed at: About Santos2 Financial Overview4 Message from the Chairman and from the Managing Director and Chief Executive Officer6 Board of Directors8 Santos Executive Committee10 Reserves Statement16 Directo

3、rs Report31 2017 Remuneration in Brief34 Remuneration Report55 Financial Report123 Directors Declaration124 Independent Auditors Report129 Auditors Independence Declaration130 Securities Exchange and Shareholder Information132 Glossary133 Corporate DirectorySantos Annual Report 2017/1Santos is an Au

4、stralian natural gas company.Established in 1954,the companys purpose is to provide sustainable returns for our shareholders by supplying reliable,affordable 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 three pha

5、se strategy to Transform,Build and Grow the business:Northern Australia,Papua New Guinea,Western Australia Gas,Queensland and the Cooper Basin.Each of our core assets provide stable production,long-term revenue streams and significant upside opportunities.With one of the largest exploration and prod

6、uction acreages in Australia,a significant and growing footprint in Papua New Guinea,and a strategic infrastructure position,Santos is well positioned to benefit from the growing global demand for energy.To deliver our vision to be Australias leading energy company by 2025,we will aspire to:Reduce e

7、missions 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 LNG supplier by increasing LNG sales

8、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 to the communities in which we oper

9、ate by providing jobs,energy supply and local partnerships Develop our people and culture to deliver our visionSantos is now a stronger,more resilient organisation with the capacity to execute and bring on-line growth opportunities across the core asset portfolio.As a low-cost,reliable and high perf

10、ormance business,we are proud to deliver the economic and environmental benefits of natural gas to homes and businesses throughout Australia and Asia.An Australian Energy Pioneer2/Santos Annual Report 2017Financial Overview51.054.157.761.659.5201720132014201520163,4833,6412,4422,5943,107201720132014

11、20152016STRONG OPERATING PERFORMANCESales volume mmboeProduction mmboeSales revenue US$million58.563.764.384.183.4201720132014201520161,5741,6338118401,2482017201320142015201620152016487523496333620172013201420172013201420152016-2,545-1,591-739206618CASH FLOW TRANSFORMED AND UNDERLYING PROFIT INCREA

12、SINGOperating cash flow US$millionFree cash flow US$millionUnderlying net profit after tax US$million13.1514.1410.358.458.07201720132014201520164,0043,3001,288625682201720132014201520164,3816,1284,7493,4922,731Net debt201720172013201420152016COSTS REDUCED AND BALANCE SHEET STRENGTHENEDUnit productio

13、n costs US$per boeCapital expenditure US$millionNet debt US$millionSantos Annual Report 2017/32017 RESULTS20132014201520162017Sales volumemmboe 58.5 63.7 64.3 84.1 83.4 Productionmmboe 51.0 54.1 57.7 61.6 59.5 Average realised oil priceUS$/bbl 116.4 103.4 53.8 46.4 57.8 Net profit after taxUS$millio

14、n 499(630)(1,953)(1,047)(360)Underlying net profit after taxUS$million 487 523 49 63 336 Sales revenueUS$million 3,483 3,641 2,442 2,594 3,107 Operating cash flowUS$million 1,574 1,633 811 840 1,248 EBITDAX1US$million 1,926 2,076 1,454 1,199 1,428 Total assetsUS$million 18,407 18,281 15,949 15,262 1

15、3,706 Earnings per shareUS cents 51.6(64.4)(169.5)(58.2)(17.3)Dividends declared AUD cents 30 35 20 -Number of employees 3,502 3,636 2,946 2,366 2,080 2017 Sales volumes mmboe2017 Sales revenue US$million2017 Production mmboeOwn product 58.4Sales gas and ethane 26.7Sales gas,ethane and LNG 2,205Thir

16、d-party product 25.0LNG 22.1Oil 579Condensate 235LPG 88LPG 1.2Condensate 3.1Oil 6.4116.4103.453.846.457.820172013201420152016Average realised oil price US$per barrel1 EBITDAX(earnings before interest,tax,depreciation,depletion,exploration,evaluation and impairment),EBIT(earnings before interest and

17、tax)and underlying profit are non-IFRS measures that are presented to provide an understanding of the performance of Santos operations.Underlying profit excludes the impacts of asset acquisitions,disposals and impairments,as well as items that are subject to significant variability from one period t

18、o the next including the effects of fair value adjustments and fluctuations in exchange rates.The non-IFRS financial information is unaudited,however,the numbers have been extracted from the audited financial statements.4/Santos Annual Report 2017Message from the Chairman and from the Managing Direc

19、tor and Chief Executive OfficerDear Shareholder,In 2017 our strategy to Transform,Build and Grow delivered ahead of expectations.Whilst there is still more to be done,the business has been re-set.Santos is now a stronger,more resilient company with the capacity to execute and bring on-line growth op

20、portunities across our core assetportfolio.Over the course of 2017 we:Reduced our free cash flow breakeven toUS$32 per barrel oil price Generated$618 million in free cash flow,before asset sales Reduced net debt by$761 million to$2.7billion,and Reported an underlying net profit aftertax of$336 milli

21、onA strong operating performance across our core assets resulted in sales volumes of 83.4 million barrels of oil equivalent(mmboe)exceeding thetop end of guidance,and production of 59.5mmboe.LNG sales volumes were up 10%to a record 3.1 million tonnes following continued strong performance from PNG L

22、NG and the ramp-up of GLNG.LNG sales revenues were up 33%to a record US$1.2 billion.At our half-year results we announced a change in the asset and macro assumptions that determine the carrying value of our assets.This triggered a non-cash net impairment charge of$689 million after tax.The impairmen

23、t reflected a write-down of our GLNG asset and the undeveloped Ande Ande Lumut oil field in Indonesia,predominantly due to lower oil price assumptions.This was offset by a positivenet write-back on our Cooper Basin asset due to higher assumed development activity and production supported by signific

24、ant improvements in costs,particularly across our drilling operations.Additional impairment charges of$14 million after tax were recorded against other assets in the second half,resulting in a full-year net loss after tax of$360 million.CAPITAL MANAGEMENTIn 2017 we made strong progress to strengthen

25、 the balance sheet.By year end net debt was$2.7 billion,down from$3.5billion twelve months prior.Debt repayment continues to bea key priority forthe company as we target$2billion innet debt by the end of 2019.Given the current focus on debt reduction,the Board did not declare a final dividend.While

26、this decision will be disappointing for some shareholders,we are confident that prioritising debt repayment is the right course of action at this time and will position the company to fund growth opportunities from a position of strength and generate sustainable shareholder returns.In light of the s

27、ubstantial turnaround in the underlying business,should market conditions remain supportive and the company achieves itsdebt reduction targetahead of plan,the Board will consider capital management strategies toreturn value to shareholders.TRANSFORMING OUR OPERATIONSCore to the transformation of San

28、tos has been the turnaround in our onshore“drillcompleteconnect”operations across the Cooper Basin and GLNG acreage.Running our onshore upstream operations as a separate business hasprovided the focus and discipline required to adopt innovative,lean principles and drive quick-cycle learnings.As a re

29、sult of these efforts,Santos is now Australias lowest-cost onshore operator,a significant point of differentiation that is not easy to replicate.To leverage these capabilities,we are working hard to be the“go-to”upstreamoperator of choice as we seektoenternew plays and capture incrementalvalue forsh

30、areholders.In addition to the significant cost-out and efficiency gains across our onshore operations,our high-margin conventional assets continued to perform strongly in2017.PNG LNG operated 20%above nameplate capacity to produce 8.3 million tonnes(gross)of LNG in 2017,shipping a total of 110 cargo

31、es.Our core asset position was strengthened with the Muruk exploration well drilling program in the Southern Highlands confirming the discovery of a potentially significant new gas field.Muruk is situated only 21 kilometres from the existing PNG LNG Hides gas conditioning plant and an appraisal well

32、 is due to be drilled in the first half of 2018.We also announced two new farm-in agreements.We are excited about our growth prospects in PNG,and will continue to explore and develop opportunities that further align partner interests over the coming year.In Northern Australia,Darwin LNG consistently

33、 demonstrated excellent reliability and availability,delivering its 600thcargo since start-up in 2006.Atwo-well appraisal campaign in the Barossa field resulted in a significant increase in 2C resources and positioned thefield as the lead candidate for backfill toDarwin LNG.Good progress is being ma

34、de on the proposed development and we expect to approve Front End Engineering and Design(“FEED”)in the second quarter of 2018 with a Final Investment Decision(“FID”)currently scheduled for the third quarter of 2019.In Western Australia we signed two new domestic supply agreements.Our low-cost operat

35、ions are well positioned with the capacity and reserves to meet short-andlong-term demand in the region.DISCIPLINED OPERATING MODELIn 2017 we continued to evolve and implement our operating model to ensure Santos remains focused on maximising free cash flow through the oil price cycle.Portfolio rule

36、s have now been ingrained in our day-to-day operations.Atthe heart of this model is the requirement for each of our core assets to generate positive free cash flow at US$40 per barrel oil price,pre major-growth spend.Budgets across our Exploration,Development,Production and Marketing activities will

37、 Santos Annual Report 2017/5only be approved if this criteria is met.This approach ensures we remain disciplined in a rising oil price environment and positioned to benefit from higher margins to pay down debt,fund exploration,grow the business and deliver shareholder returns.RELIABLE,AFFORDABLE AND

38、 SUSTAINABLE ENERGY SUPPLYIn 2017 Santos delivered on its commitment to meet domestic gas demand while also honouring our long-term LNG contractual obligations.We worked closely with our joint-venture partners and industry to support the Federal Government in bringing more supply into the domestic m

39、arket to help mitigate gas supply concerns.Over the course of the year we signed agreements to facilitate the delivery of more than 140PJ of gasinto the east coastdomesticmarket.In Eastern Queensland we signed transport agreements to unlock significant gas reserves that sit outside the GLNG project.

40、This allows Santos to meet contractual obligations to supply gas to GLNG while freeing up Cooper Basin gas for domestic east coast markets.We are also using our Moomba infrastructure and pipeline capacity positions to assist in the delivery of gasto the east coast.Santos will continue to proactively

41、 pursue transactions that capture value for our shareholders and extend our long and proud history of delivering competitive wholesale gas supply to east coast domestic gas market endusers.In February 2017 we lodged the Environmental Impact Statement(“EIS”)for the Narrabri Gas Project and in Novembe

42、r announced that the project would re-enter the core portfolio.Theproject will be managed under our onshore upstream business,where we will apply our low cost“drillcompleteconnect”model to improve the commercial outlook for the project.We believe that the east coast of Australia requires more gas an

43、d that Narrabri could play asignificant role in meeting this demand outlook.Any significant capital expenditure will only occur when the project has the necessary approvals in place to facilitate development.Our natural gas portfolio strategically aligns with the global transition to a low-carbon ec

44、onomy.Offering both reliability and lower emissions,gas is a natural complement to renewables that can be quickly turned up and down to deal with the intermittency of solar and wind.When used for power generation,natural gas is also 50%less emissions intensive than coal.Global greenhouse gas emissio

45、ns are around 50 billion tonnes per year,about half of which come from Asia.A large portion of this is from coal-fired power generation.This makes natural gas a clear choice for the Asian region.Gas demand in Asia is forecast to double by 2040,and Santos is well positioned to take advantage of this

46、growth.In 2017 Santos set up an Energy Solutions team to actively assess opportunities to reduceSantos footprint and prepare for a lower-carbon future and in early 2018 we released our inaugural Climate Change Report.This report is aligned with the recommendations of the G20s Task Force on Climate-R

47、elated Financial Disclosures(“TCFD”)and is available on our website RENEWALProgressive renewal of the Board continued in 2017 as we acknowledged the services of Roy Franklin OBE,Greg Martin and Scott Sheffield following their retirements and welcomed Eugene Shi and Dr Vanessa Guthrie.In February 201

48、8,Peter Coates stepped down as Chairman and also retired from the Board.We would like to thank Peter and the retiring Board members for their valuable counsel and guidance.Their support for our new senior executive team and three phase strategy to Transform,Build and Grow the business has setthe str

49、ong foundations required to create long-term shareholdervalue.LOOKING AHEADIn 2017 we re-structured the business to focus on five,core long-life natural gas assets,and embedded our lean,disciplined operating model.Through operational efficiency we dramatically decreased costs,improved free cash flow

50、 and reduced debt.We also invested in improving our systems and governance processes with a focus on safety and operational integrity.2018 will be an exciting year for Santos.Weare at an inflection point,poised to startour journey to growth.We will increase our capital investment across our core Aus

51、tralian assets and increase exploration and appraisal activities in Queensland and the Cooper Basin as wellas drill more production wells.We will continue to work through the approvals process on our Narrabri Gas Project in NewSouth Wales,with a view to leveraging our low-cost operating model to mak

52、e this project a reality.We also expect to start Front End Engineering and Design on the Barossa offshore gas project which is the lead candidate for backfilling the Darwin LNG Project.In PNG we will be drilling the Muruk 2 appraisal well and potentially the Karoma exploration prospect.And we will l

53、ook to the future with our new Energy Solutions business for ways to develop integrated gas,solar and energy storageprojects.We enter 2018 from a position of strength and would like to thank you,our shareholders,for your continued support.Yours sincerelyKeith Spence ChairmanKevin Gallagher Managing

54、Director and Chief Executive Officer6/Santos Annual Report 2017Board 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 Santos Fi

55、nance 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 with Wo

56、odside 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 exe

57、cutive positions in the company.Upon his retirement he took up several board positions,including 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 Limit

58、ed,where he served as a non-executive Director from 2012 to 2017.Mr Spence is also a past Chair of the National Offshore Petroleum Safety and Environmental Management Authority Board and led the Commonwealth Governments Carbon Storage Taskforce.Mr Spence is currently Chairman of Base Resources Limit

59、ed(since 2015)and a non-executive Director of Independence Group NL(since 2014)and Murray and Roberts Holdings Limited(since 2015).KEVIN GALLAGHERManaging Director&Chief Executive OfficerBEng(Mechanical)Hons,FIEAustKevin joined Santos as Managing Director and Chief Executive Officer on 1 February 20

60、16,bringing more than 25 years experience in managing oil and gas operations in Australia,the USA and North and West Africa.A turnaround specialist with a track record in transforming underperforming operations,Kevin commenced his career as a drilling engineer with Mobil North Sea,before joining Woo

61、dside in 1998.During his 13-year tenure with Woodside,Kevin led the drilling organisation through rapid growth,delivering several Australian and international development projects and exploration campaigns.He also led the Australian Oil Business and was the CEO of the North West Shelf Venture at Woo

62、dside,where he was responsible for production on Australias largest resource project.Kevin joined Clough Limited as CEO and Managing Director in 2011,and during his 4-year tenure he implemented strategies that transformed the business and delivered record financial results.He oversaw the development

63、 of innovative programs to improve safety and drive productivity and also executed an M&A and international expansion strategy which saw Clough enter five new regions including the US,UK,Canada,Africa and Asia.Since joining Santos,Kevin has restructured the business,removed substantial costs and sig

64、nificantly improved production and financial performance.He has implemented a growth strategy to focus the business on five,core long-life gas assets and has strengthened the balance sheet to provide a sustainable business in a low oil price environment.YASMIN ALLENBCom FAICDMs Allen is an independe

65、nt non-executive Director.She joined the Board on 22 October 2014 and is the Chair of the People and Remuneration Committee and a member of the Audit and Risk Committee and Nomination Committee.Ms Allen has extensive experience in finance and investment banking,including senior roles at Deutsche Ban

66、k AG,ANZ and HSBC Group Plc,as former Chairman of Macquarie Global Infrastructure Funds,and a former Director of EFIC(Export,Finance and Insurance Corporation).She is a Director of Cochlear Limited(since 2010),chairs its Audit Committee and is a member of the Nomination and Remuneration Committee.Ms

67、 Allen is also Director of ASX Limited(since 2015),a Director of the ASX Clearing and Settlement boards and a member of its Audit Committee.Ms Allen is also a Director of the National Portrait Gallery and is a member of the George Institute for Global Health Board.She is Chair of Advance,was appoint

68、ed a member of the Australian Government Takeovers Panel in March 2017 and is a member(and former Council member)of Chief Executive Women.Ms Allen is a former non-executive Director of Insurance Australia Group Limited(2004 to 2015)and a former national Director(2010 to 2016),and acting Chair(2015 t

69、o 2016),of the Australian Institute ofCompany Directors.GUY COWANBSc(Hons),Engineering,FCA(UK)MAICDMr Cowan is an independent non-executive Director.He joined the Board on 10 May 2016 and is the Chair of the Audit and Risk Committee and a Director of Santos Finance Limited.Mr Cowan had a 23-year car

70、eer with Shell International in various senior commercial and financial 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-operative Ltd between 2005 and 2009.Mr Cowan is currently Chairman of Queensland Sugar Limited(since 2015)and a

71、 past Director of UGL Limited(2008 to 2017)where he chaired the Health and Safety Committee.Mr Cowan is also a former Director of Coffey International(2012 to 2016)and Ludowici Limited(2009 to 2012)where he chaired the Audit and Risk Committees for both companies.Mr Cowan was also aShell-appointed a

72、lternative director of Woodside between 1992 and1995.Santos Annual Report 2017/7HOCK 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,Health,Safety and Sustainability Committee,Audit and Risk Committee and

73、Nomination Committee.Mr Goh has more than 30 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,President of Asia,and Vice President and General Manager of China.He prev

74、iously held managerial and staff positions in Asia,the Middle East and Europe.Mr Goh is Chairman of MEC Resources Ltd(since 2006)and of Advent Energy Ltd(since 2007).He is a non-executive Director of Stora Enso Oyj(Finland)(since 2012),AB SKF(Sweden)(since 2014),Harbour Energy(US)(since 2015)and Ves

75、uvius PLC(UK)(since 2015).He was previously a non-executive Director of BPH Energy Ltd(2007 to 2015),an Operating Partner of Baird Capital Partners Asia,based in China,(2007 to 2012),and a non-executive Director of Xaloy Holding Inc in the US(2006 to 2008).DR VANESSA GUTHRIEHon DSc,PhD,BSc(Hons)Dr G

76、uthrie is an independent non-executive Director.She joined the Board on 1 July 2017 and is a member of the 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 indigen

77、ous affairs,corporate development and sustainability.She has qualifications in geology,environment,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 leadersh

78、ip in the resources industry.Dr Guthrie is the former Managing Director and CEO of Toro Energy Limited(2013 to 2016)and VP Sustainable Development at Woodside Energy,and is currently Chair of the Minerals Council of Australia,Deputy Chair of the WACA,a non-executive Director of the Australian Broadc

79、asting Corporation,Vimy Resources Limited(since 2017),and Adelaide Brighton Limited(since 2018),and a Council member of Curtin University.She is an active member of the Australian Institute of Company Directors and Chief Executive Women,and a Fellow of the Australian Academy of Technological Science

80、s and Engineering.PETER HEARLBComm(With Merit),FAICDMr 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 and a member of the People and Remuneration Committee and the Nomination Committee.Durin

81、g 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)as KFC Australias Director of Operations in 1991 and subsequently had several senior int

82、ernational leadership roles as well as being President of Pizza Hut USA,before assuming the global role of YUM Brands Chief Operating and Development Officer in 2006,based in Dallas,Texas and Louisville,Kentucky.He is currently a non-executive Director of Australias largest telecommunications compan

83、y,Telstra Ltd(since 2014),and chairs its Remuneration Committee.Mr Hearl is a former non-executive Director of the Australian-listed global wine company,Treasury Wine Estates(2012 to 2017),where he chaired the Remuneration Committee and served on the Audit and Risk Committee.He was also a non-execut

84、ive Director of Goodman Fielder Ltd from 2010 until that company was sold to overseas interests in 2015.EUGENE SHIMBA in International BusinessMr Shi is a non-executive Director.He joined the Board on 26 June 2017 as a nominee of a substantial shareholder.Mr Shi is a member of the People and Remuner

85、ation Committee and the Audit and Risk Committee.Mr Shi has more than 20 years of professional experience,including five years in management consultancy and 15 years in senior management roles.His industry experience covers energy,health care,retail and finance in Europe and Asia-Pacific.His special

86、ties include capital operation,M&A and restructuring,strategy,value management,and cost optimisation.Mr Shi is currently the Vice President of ENN Ecological(since February 2017),and General Manager of Investment Management Dept ENN Group(since 2013).His previous roles include Department Head of Bus

87、iness Performance Service with KPMG China and Transformation Service with KPMG Europe.COMMITTEES OF THE BOARDAudit and Risk Committee Mr G Cowan(Chair)Ms Y Allen Mr H Goh Mr E ShiNomination Committee Mr K Spence(Chair)Ms Y Allen Mr H Goh Mr P HearlPeople and Remuneration Committee Ms Y Allen(Chair)M

88、r P Hearl Mr E ShiEnvironment,Health,Safety and Sustainability CommitteeMr P Hearl(Chair)Mr K Gallagher Mr H Goh Dr V Guthrie8/Santos Annual Report 2017KEVIN GALLAGHERManaging Director&Chief Executive OfficerMr Gallaghers biography can be read on page 6.PHILIP BYRNEExecutive Vice President,Marketing

89、,Trading&CommercialMA(Natural Science),MSc,DIC(Petroleum Geology)Philip joined Santos in 2017 and is responsibile for the marketing and trading of all of Santos gas,LNG and liquid hydrocarbon products as well as the commercial function.Philip has over 35 years experience in the international oil and

90、 gas industry,starting his career as a Petroleum Geologist in the North Sea with Hamilton Brothers Oil&Gas.He subsequently spent 14 years with the BG Group in senior commercial and exploration leadership roles in the UK,Europe,Tunisia and India.He spent a further seven years with BHP Petroleum inclu

91、ding General Manager Pakistan,President Gas Marketing Asia/Australia,and Country Manager Petroleum Australia.Philip was then seconded as President of the North West Shelf Australia LNG organisation,which is the marketing arm of the North West Shelf LNG project.Most recently,Philip was Managing Direc

92、tor and Chief Executive Officer of Nido Petroleum an ASX listed company with oil production and exploration acreage in the Philippines.BRUCE CLEMENTExecutive Vice President,Conventional Oil&GasBSc(Maths and Computer Science),BEng(Civil)Hons,MBABruce joined Santos in 2016 and is responsible for build

93、ing and growing Santos conventional assets across Papua New Guinea,Northern Australia,Western Australia and Asia.Bruce previously held the role of Vice President responsible for Santos Narrabri Gas Project,Asian assets in Indonesia,Vietnam and Malaysia,and the companys Western Australian oil assets.

94、Bruce has more than 35 years experience in the energy sector,having held managerial,financial,project management and senior technical roles in a number of companies,including Esso Australia,Ampolex and AIDC.Prior to joining Santos,Bruce was Managing Director of Roc Oil Company from 2008 to 2010 and

95、Managing Director of AWE Limited from 2011 to 2016.ANGUS JAFFRAYExecutive Vice President,Strategy&Corporate ServicesBA(Hons)Geography,MBAAngus joined Santos in 2016,and is responsible for the delivery of the organisations long-term strategic plan while maintaining quality corporate support services

96、including human resources and information systems.Angus has over 20 years of leadership and consulting experience as a Director of Azure Consulting,a Partner at The Boston Consulting Group(BCG)and a Supply Chain Manager with the global packaging group Crown Cork and Seal.At Azure Consulting Angus su

97、pported companies in developing strategy and driving organisational change.At BCG Angus set up the Perth office,led the Australian Operations practice and was a core member of both the Mining&Metals practice and the Energy Practice.He served clients in Australia,New Zealand,Asia,Europe and North Ame

98、rica building strong capabilities in strategy,operational efficiency and running transformation programs.As a Supply Chain Manager,Angus was accountable for procurement,planning,logistics and product delivery.NAOMI JAMESExecutive Vice President,Environment,Health,Safety&GovernanceLLB(Hons),MLMNaomi

99、joined Santos in 2016 and is responsible for Santos risk and audit,legal,company secretary,environment and access and safety functions,and chairs the GLNG Project Operating Committee.Prior to joining Santos,Naomi held a range of functional and line leadership roles with Arrium including as Chief Exe

100、cutive of the Groups non-integrated steel businesses,Chief Legal Officer and Chief Executive,Strategy.Naomis roles with Arrium included leading major acquisitions and divestments,business restructuring and turnaround and the legal,company secretary,government affairs and strategy functions.Naomi has

101、 previously worked in private practice at law firms in Australia and the UK.Santos Executive CommitteeSantos Annual Report 2017/9ANTHONY NEILSONChief Financial OfficerB.Com,MBA,FFin,ACAAnthony joined Santos as Chief Financial Officer in 2016,and is responsible for the finance,tax,treasury and invest

102、or relations functions.He brings over 20 years experience in chartered accounting,banking and corporate financial roles including 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

103、Hong Kong-listed investor Fosun International Limited.Previously,Anthony was Chief Financial Officer of ROC(ASX listed)and has held commercial,finance and business services roles at Caltex Australia,Credit Suisse First Boston(London)and Arthur Andersen(Sydney).Anthony holds a Masters of Business Adm

104、inistration from AGSM and is a Fellow of the Financial Services Institute of Australasia and a Member of Chartered Accountants Australia and New Zealand.BILL OVENDENExecutive Vice President,Exploration&New VenturesBSc(Hons)Geology and GeophysicsBill joined Santos in 2002,and is responsible for devel

105、oping and executing a targeted exploration 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-E

106、ast Asia,North Africa,the Middle East and South America,with Sun Oil,Kufpec,ExxonMobil and Ampolex.He joined Santos after working for ExxonMobil in Indonesia.VINCE SANTOSTEFANOChief Operations Officer,Operations ServicesBEng(Civil),SPEVince joined Santos in March of 2016 and is responsible for the p

107、rovision 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 Officer.As COO he was responsible for Woodsides producing Business Units;the Production Function including 6 LNG trains wit

108、h associated offshore infrastructure,four FPSOs;the Marine Division and the Brownfields 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 knowledge of the industry,with signific

109、ant experience in onshore and offshore operations and asset management.He has a proven capability to manage a demanding workload and to drive cultural change.BRETT WOODSExecutive Vice President,Onshore Upstream DivisionBSc(Hons)Geology andGeophysicsBrett joined Santos in February 2013 and is respons

110、ible for Santos onshore upstream assets,including Cooper Basin,GLNG and Narrabri.Brett previously held the role as Vice President,Eastern Australia which included leading the turnaround of the production,development and commercialisation of the companys oil and gas resources in Central Australia.Pri

111、or to that he led the companys Perth-based Western Australia and Northern Territory business unit,which participates in Darwin LNG,and extensive domestic gas and oil operations in Western Australia.Brett is a geophysicist and geologist,and has over 20 years of oil and gas industry experience operati

112、ng assets throughout West Africa,Europe,Australia and Asia.Previously,Brett was Managing Director and Chief Executive Officer of Rialto Energy and has held executive management,technical leadership and business development roles with Woodside Energy and Sterling Energy PLC.He is also a member of the

113、 APPEABoard.10/Santos Annual Report 2017Reserves StatementFor the year ended 31 December 2017Proved(“1P”)petroleum reserves were 470 million barrels of oil equivalent(“mmboe”)at the end of 2017.1P reserves increased by 44 mmboe before production and the organic 1P reserves replacement ratio was 90%.

114、Proved plus probable(“2P”)petroleum reserves were 848 mmboe.2P reserves increased by 19 mmboe before production and the organic 2P reserves replacement ratio was 62%.The key movements in 2P reserves before production in 2017 were:17 mmboe increase in Papua New Guinea due to a PNG LNG reserves upgrad

115、e.7 mmboe increase due to reserves upgrades in Vietnam and Indonesia.5 mmboe increase in the Cooper Basin primarily due to positive field development results.3 mmboe increase in WA Gas primarily due to a reserves upgrade in the John Brookes field.13 mmboe net reduction in other assets primarily due

116、to the sale of Victoria and Mereenie.After deducting 2017 production of 60 mmboe,1P and 2P reserves declined by 3%and 5%,respectively.Developed 2P reserves as a proportion of total 2P reserves increased to 57%(2016:51%).RESERVES(SANTOS SHARE)Santos shareUnit20172016%changeProved reservesmmboe470485(

117、3)Proved plus probable reservesmmboe848889(5)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 liquefied natural gas(“LNG”),while gas liquids and crude oil are sold in domestic and export markets

118、.Cooper Basin proved plus probable reserves by product(Santos share)Santos shareUnit20172016%changeSales gasPJ621672(8)Crude oilmmbbl1818(0)Condensatemmbbl910(4)LPG000 tonnes1,2071,288(6)Totalmmboe144154(6)Proved plus probable reserves increased by 5 mmboe before 2017 production primarily due to pos

119、itive field results and new oil and gas development opportunities.The significant efficiencies and cost reductions already realised in onshore drill,complete and connect activities,combined with a renewed commitment to exploration and appraisal,are expected to result in reserve additions over time.S

120、antos Annual Report 2017/11QUEENSLANDIn Queensland,Santos has a 30%interest in the GLNG project and various interests in other non-operated fields.GLNG produces LNG for export to global markets from the LNG plant at Gladstone.Gas is also sold into domestic markets.Queensland proved plus probable res

121、erves by product(Santos share)Santos shareUnit20172016%changeSales gas GLNG JVPJ1,5361,577(3)Sales gas other non-operatedPJ387403(4)Totalmmboe331341(3)Proved plus probable reserves increased by 2 mmboe before 2017 production.Santos share Queensland reserves include Santos share of the non-operated C

122、ombabula,Ramyard and Spring Gully fields.GLNG reserves(GLNG 100%share)GLNG 100%shareUnit20172016%changeProved reservesPJ2,3902,486(4)Proved plus probable reservesPJ5,1195,256(3)GLNG share proved plus probable reserves were maintained before 2017 production.In addition to the reserves in the table ab

123、ove,GLNG has Santos portfolio and third party gas supply agreements in place for periods of up to 20 years.Santos is committed to ongoing appraisal and operational efficiencies to potentially mature resources to reserves and develop for additional gas supply to the project.PAPUA NEW GUINEASantos bus

124、iness in Papua New Guinea(“PNG”)is centred on the PNG LNG Project.Completed in 2014,PNG LNG produces LNG for export to global markets,as well as gas and gas liquids.Santos has a 13.5%interest in PNG LNG.Papua New Guinea proved plus probable reserves by product(Santos share)Santos shareUnit20172016%c

125、hangeSales gasPJ1,2341,2152Condensatemmbbl151411Totalmmboe2272222Proved plus probable reserves increased by 17 mmboe before 2017 production.Continued strong Hides field performance,including a revised condensate forecast,and improved LNG plant performance contributed to the increase.PNG LNG underpin

126、s the majority of Santos reserves and resources in Papua New Guinea.As a foundation partner of the PNG LNG project,Santos equity provides a strong position off which to leverage growth opportunities,including LNG backfill and expansion.Santos also has an extensive exploration position throughout Pap

127、ua New Guinea and holds interests in several licences across the Papua New Guinea Fold Belt,Gulf of Papua and Papua New Guinea Forelands,which contain large-scale discoveries and propectivity that could provide future backfill,expansion or standalone development opportunities.PPL-402(Santos 20%,subj

128、ect to future government back-in)contains the recent Muruk gas discovery.The Muruk gas field is located in close proximity to the Hides gas field and PNG LNG network infrastructure,potentially providing a simplified development pathway and access to export LNG markets via backfill or expansion of th

129、e PNG LNG project.A seismic acquisition program to assist in delineating the Muruk gas discovery and the adjacent Karoma prospect is planned for the first half of 2018,with an appraisal well on Muruk expected to be spudded in the second quarter.PRL-38(Santos 10%,subject to future government back-in)

130、is located offshore in the Gulf of Papua and contains the Pandora A and B gas fields.The Joint Venture intends to drill a well in PRL-38 in 201819 to test near-field exploration opportunities or appraise discovered resources.The Joint Venture is continuing to assess the technical and commercial viab

131、ility of various potential development options.PRL-9(Santos 40%,subject to future government back-in)contains the Barikewa gas discovery.The Joint Venture intends to drill an appraisal well during 2018 to appraise the discovered resources.The Barikewa gas field is located in close proximity to the P

132、NG LNG network infrastructure and the Joint Venture is continuing to assess the technical and commercial viability of various development options.12/Santos Annual Report 2017Reserves StatementcontinuedNORTHERN AUSTRALIAIn Northern Australia,Santos has an 11.5%interest in the Bayu-Undan/Darwin LNG Pr

133、oject,which produces LNG and gas liquids for export to global markets.Northern Australia proved plus probable reserves by product(Santos share)Santos shareUnit20172016%changeSales gasPJ6572(9)Condensatemmbbl22(21)LPG000 tonnes94141(33)Totalmmboe1415(12)Proved plus probable reserves increased by 2 mm

134、boe before 2017 production primarily due to the sanction of the next phase of Bayu-Undan infill well development.Santos has a strong infrastructure and discovered resource position across Northern Australia,with multi-tcf scale discoveries across the Browse and Bonaparte Basins,in close proximity to

135、 Darwin LNG and other LNG projects under construction in the region.Bayu-Undan(Santos 11.5%)is the current gas supply source to Darwin LNG(“DLNG”).Reserves are being extended through the drilling of infill wells,with first gas targeted for late 2018.Barossa Caldita(Santos 25%)is a multi-tcf discover

136、y being positioned to backfill DLNG.Successful appraisal drilling in 2017 resulted in a significant resource upgrade.A FEED-entry decision is targeted for the first half of 2018.Petrel-Tern and Frigate(Santos 35%and 40%respectively)are well appraised assets located approximately 300 kilometres from

137、Darwin.Potential commercialisation options are being evaluated with opportunity to target LNG,NT domestic and east coast markets.Crown and Lasseter(Santos 30%)have material resources with further prospectivity and are located near large LNG projects under construction.Concept evaluation to support s

138、tandalone and joint development options are being considered.WA GASSantos is one of the largest producers of domestic natural gas in Western Australia and is also a significant producer of gas liquids.WA Gas proved plus probable reserves by product(Santos share)Santos shareUnit20172016%changeSales g

139、asPJ608641(5)Condensatemmbbl67(5)Totalmmboe111117(5)Proved plus probable reserves increased by 3 mmboe before 2017 production,primarily due to a reserves upgrade at John Brookes.Santos has an established position in the Carnarvon Basin which underpins the Western Australia domestic gas business.The

140、Varanus Island and Devil Creek domestic gas infrastructure is supplied by John Brookes,Spar,Halyard and Reindeer,and a discovered and prospective resource base that supports backfill of these facilities in the longer term.Santos Annual Report 2017/13PROVED RESERVESYear-end 2017(Santos share)AssetSal

141、es gas PJCrude oil mmbblCondensate mmbblLPG 000 tonnesAll products mmboeDevelopedUndevelopedTotalCooper Basin29184519471966Queensland1859-11038148PNG891011-11053163Northern Australia53-1589211WA Gas369-4-61667Other Assets228100-14115Total 1P2,4911820577349120470Proportion of total proved reserves th

142、at are unconventional32%1 Queensland proved sales gas reserves include 717 PJ GLNG and 142 PJ other Santos non-operated Eastern Queensland assets.2 Indonesia,Vietnam and Western Australia oil.PROVED RESERVES RECONCILIATIONProductUnitReserves Year-end 2016ProductionRevisions and extensionsDiscoveries

143、Net acquisitions and divestmentsReserves Year-end 2017Sales gasPJ2,590(284)2372(54)2,491Crude oilmmbbl17(6)8-(0)18Condensatemmbbl19(3)40(0)20LPG000 tonnes638(145)813-577Total 1P mmboe485(60)530(10)470 14/Santos Annual Report 2017Reserves StatementcontinuedPROVED PLUS PROBABLE RESERVESYear-end 2017(S

144、antos share)AssetSales gas PJCrude oil mmbblCondensate mmbblLPG 000 tonnesAll products mmboeDeveloped Undeveloped TotalCooper Basin6211891,20710044144Queensland11,922-110221331PNG1,234015-15275227Northern Australia65-29410314WA Gas608-6-8921111Other Assets245150-21223Total 2P4,49633331,301483366848P

145、roportion of total proved plus probable reserves that are unconventional39%1 Queensland proved plus probable sales gas reserves include 1,536 PJ GLNG and 387 PJ other Santos non-operated Eastern Queensland assets.2 Indonesia,Vietnam and Western Australia oil.PROVED PLUS PROBABLE RESERVES RECONCILIAT

146、IONProductUnitReserves Year-end 2016ProductionRevisions and extensionsDiscoveriesNet acquisitions and divestmentsReserves Year-end 2017Sales gasPJ4,730(284)147 4(101)4,496Crude oilmmbbl33(6)7-(1)33Condensatemmbbl33(3)40(0)33LPG000 tonnes1,429(145)98-1,301Total 2P mmboe889(60)361(18)848 Santos Annual

147、 Report 2017/15Notes1.This reserves statement:a.is based on,and fairly represents,information and supporting documentation prepared by,or under the supervision of,the qualified petroleum reserves and resources evaluators listed in note 14 of this reserves statement.Details of each qualified petroleu

148、m reserves and resources evaluators employment and professional organisation membership are set out in note 14 of this reserves statement;and b.as a whole has been approved by Barbara Pribyl,who is a qualified petroleum reserves and resources evaluator and whose employment and professional organisat

149、ion 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 form and context in which the estimated petroleum reserves and contingent resources and the supporting information are presented.2.The estimates of petr

150、oleum reserves and contingent resources contained in this reserves statement are as at 31 December 2017.3.Santos prepares its petroleum reserves and contingent resources estimates in accordance with the Petroleum Resources Management System(“PRMS”)sponsored by the Society of Petroleum Engineers(“SPE

151、”).4.This reserves statement is subject to risk factors associated with the oil and gas industry.It is believed that the expectations of petroleum reserves and contingent resources reflected in this statement are reasonable,but they may be affected by a range of variables which could cause actual re

152、sults or trends to differ materially,including but not limited to:price fluctuations,actual demand,currency fluctuations,geotechnical factors,drilling and production results,gas commercialisation,development progress,operating results,engineering estimates,loss of market,industry competition,environ

153、mental risks,physical risks,legislative,fiscal and regulatory developments,economic and financial markets conditions in various countries,approvals and cost estimates.5.All estimates of petroleum reserves and contingent resources reported by Santos are prepared by,or under the supervision of,a quali

154、fied petroleum reserves and resources evaluator or evaluators.Processes are documented in the Santos Reserves Guidelines which are overseen by a Reserves Committee.The frequency of reviews is dependent on the magnitude of the petroleum reserves and contingent resources and changes indicated by new d

155、ata.If the changes are material,they are reviewed by the Santos internal technical leaders,prior to overall approval by management and the Reserves Committee.6.Santos engages independent experts Gaffney,Cline&Associates,Netherland,Sewell&Associates,Inc.and DeGolyer and MacNaughton to audit and/or ev

156、aluate 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 Santos 31 December 2017 petroleum reserves and contingent resources quantities in aggregate compare reaso

157、nably 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 petroleum reserves and contingent resources position as at 31 December 2017.7.Unless otherwise stated,all r

158、eferences 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 production are defined points within Santos operations where normal exploration and production business ce

159、ases,and quantities of produced product are measured under defined conditions prior to custody transfer.Fuel,flare and vent consumed to the reference points are excluded.9.Petroleum reserves and contingent resources are aggregated by arithmetic summation by category and as a result,proved reserves m

160、ay be a very conservative estimate due to the portfolio effects of arithmetic summation.10.Petroleum reserves and contingent resources are typically prepared by deterministic methods with support from probabilistic methods.11.Any material concentrations of undeveloped petroleum reserves that have re

161、mained 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 meet contractual obligations.12.Petroleum reserves replacement ratio is the ratio of the change in p

162、etroleum reserves(excluding production)divided by production.Organic reserves replacement ratio excludes net acquisitions and divestments.13.Information on petroleum reserves and contingent resources quoted in this reserves statement is rounded to the nearest whole number.Some totals in the tables m

163、ay 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.Qualified Petroleum Reserves and Resources Evaluators NameEmployerProfessional organisationB PribylSantos LtdSPES ChipperfieldSantos LtdSPEB CamacS

164、antos LtdSPE,PESA E KlettkeSantos LtdSPE,APEGAN PinkSantos LtdSPES LawtonSantos LtdSPEJ TelfordSantos LtdSPEA WisnugrohoSantos LtdSPEC HarwoodSantos LtdPESA,AAPGI PedlerSantos LtdSPED SmithNSAISPESPE:Society of Petroleum EngineersAPEGA:The Association of Professional Engineers and Geoscientists of A

165、lbertaPESA:Petroleum Exploration Society of AustraliaAAPG:American Association of Petroleum GeologistsAbbreviations and conversion factorsAbbreviations1Pproved reserves2Pproved plus probable reservesGJgigajoulesLNGliquefied natural gasLPGliquefied petroleum gasmmbblmillion barrelsmmboemillion barrel

166、s of oil equivalentNGLsnatural gas liquidsPJpetajoulestcftrillion cubic feetTJterajoulesConversion factorsSales gas and ethane,1 PJ171,937 boeCrude oil,1 barrel1 boeCondensate,1 barrel0.935 boeLPG,1 tonne8.458 boe16/Santos Annual Report 2017Directors ReportDirectors ReportDirectors ReportDIRECTORS R

167、EPORTThe 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 financial year ended 31 December 2017,and the Auditors Report thereon.Information in the Annual Report r

168、eferred to in this report,including the Remuneration Report,or contained in a note to the financial 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 Directors ShareholdingsThe names of D

169、irectors of the Company in office at the date of this report and details of the relevant interest of each of those Directors in shares in the Company at that date are as set out below:SurnameOther NamesShareholdings in Santos LimitedAllenYasmin Anita15,883CowanGuy Michael15,000GallagherKevin Thomas3

170、41,614GohHock37,215GuthrieVanessa Ann0HearlPeter Roland48,808ShiEugene0SpenceKeith William(Chairman)65,000The above-named Directors held office during and/or since the end of the financial year.Mr Scott Sheffield was a Director until his retirement at the Annual General Meeting on 4 May 2017.Mr Greg

171、ory Martin retired as a Director on 25 August 2017.Mr Roy Franklin retired as a Director on 30 September 2017.Mr Eugene Shi was appointed as a Director on 26 June 2017.Dr Vanessa Guthrie was appointed as a Director on 1 July 2017.Mr Keith Spence was appointed as a Director on 1 January 2018,and as C

172、hairman on 19 February 2018.Mr Peter Coates was a Director and Chairman until his retirement on 19 February 2018.There were no other persons who acted as Directors at any time during the financial year and up to the date of this report.All shareholdings are of fully paid ordinary shares.No Director

173、holds a relevant interest in a related body corporate of Santos Limited.At the date of this report,Mr Gallagher holds 1,739,872 share acquisition rights(SARs)and 111,038 Restricted Deferred Shares.No other Director holds options or SARs.Details of the qualifications,experience and special responsibi

174、lities of each Director are set out in the Directors biographies on pages 6 and 7 of this Annual Report.This information includes details of other listed company directorships held during the last three years.Santos Annual Report 2017/17Directors MeetingsThe number of Directors meetings and meetings

175、 of committees of Directors held during the financial year and the number of meetings attended by each Director are set out below:Table of Directors MeetingsDirectorDirectors MeetingAudit&Risk CommitteeEnvironment Health,Safety&Sustainability CommitteePeople&Remuneration CommitteeNomination Committe

176、eAttended/Held1Attended/Held1Attended/Held1Attended/Held1Attended/Held1Allen2Yasmin A.14 of 151 of 13 of 34 of 41 of 1CoatesPeter R.15 of 15n/an/an/a3 of 3CowanGuy M.14 of 154 of 4n/an/an/aFranklin3Roy A.10 of 11n/a3 of 32 of 22 of 2GallagherKevin T.15 of 15n/a4 of 4n/an/aGoh4Hock11 of 153 of 43 of

177、4n/an/a5Guthrie6Vanessa A.9 of 9n/a1 of 1n/an/aHearl7Peter R.13 of 153 of 31 of 12 of 21 of 1Martin8Gregory J.W.10 of 103 of 3n/a2 of 22 of 2Sheffield9Scott D.4 of 5 n/an/an/an/aShi10Eugene9 of 10 1 of 1n/a2 of 2n/a1 Reflects the number of meetings held during the time the Director held office,or wa

178、s a member of the Committee,during the year.2 Ms YA Allen was appointed as the Chair of the People and Remuneration Committee and a member of the Nomination Committee on 21 September 2017.Ms YA Allen retired as a member of the Environment,Health,Safety and Sustainability Committee and was appointed

179、as a member of the Audit and Risk Committee on 25 October 2017.3 Mr RA Franklin retired as a Director on 30 September 2017.4 In November 2017,Mr H Goh commenced a leave of absence due to a conflict of interest arising from his position as a Director of Harbour Energy.5 Mr H Goh was appointed as a me

180、mber of the Nomination Committee on 25 October 2017.6 Dr VA Guthrie was appointed as a Director on 1 July 2017 and as a member of the Environment,Health,Safety and Sustainability Committee on 25 October 2017.7 Mr PR Hearl was appointed as a member of the Nomination Committee on 21 September 2017 and

181、 as Chairman of the Environment,Health,Safety and Sustainability Committee on 25 October 2017.Mr PA Hearl retired as a member of the Audit and Risk Committee on 25 October 2017.8 Mr GJW Martin retired as a Director on 25 August 2017.9 Mr SD Sheffield retired as a Director on 4 May 2017.10 Mr E Shi w

182、as appointed as a Director on 26 June 2017,was appointed as a member of the People and Remuneration Committee on 21 September 2017 and as a member of the Audit and Risk Committee on 25 October 2017.18/Santos Annual Report 2017Directors ReportDirectors ReportDirectors ReportcontinuedOPERATING AND FIN

183、ANCIAL REVIEWSantos principal activities during 2017 were the exploration for,and development,production,transportation and marketing of,hydrocarbons.There were no significant changes in the nature of these activities during the year.Revenue is derived primarily from the sale of gas and liquid hydro

184、carbons.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 table2017 mmboe2016 mmboeVariance%Production volume 59.561.6(3)Sales volume83.484.1(1)US$millionUS$million Product sales 3,1072,59420 EBITDAX1 1,4281,

185、19919 Exploration and evaluation expensed(94)(138)32 Depreciation and depletion(742)(741)Net impairment loss(938)(1,561)40 Change in future restoration assumptions3137(16)EBIT1(315)(1,204)74 Net finance costs(270)(281)4 Taxation benefit225438(49)Net loss for the period and attributable to equity hol

186、ders of Santos(360)(1,047)66 Underlying profit for the period133663433 Underlying earnings per share(cents)116.23.53631 EBITDAX(earnings before interest,tax,depreciation,depletion,exploration and evaluation and impairment),EBIT(earnings before interest and tax)and underlying profit are non-IFRS meas

187、ures that are presented to provide an understanding of the underlying performance of Santos operations.Underlying profit excludes the impacts of asset acquisitions,disposals and impairments,as well as items that are subject to significant variability from one period to the next,including the effects

188、 of fair value adjustments and fluctuations in exchange rates.Please refer to page 22 for the reconciliation from net loss to underlying profit for the period.Underlying earnings per share represents underlying profit for the period divided by the weighted average number of shares on issue during th

189、e year.The non-IFRS financial information is unaudited however the numbers have been extracted from the audited financial statements.Sales volume mmboe2017201320142015201658.563.764.384.183.4Sales volumes of 83.4 million barrels of oil equivalent(mmboe)were 1%lower than the previous year.Higher LNG

190、sales volumes due to the ramp-up of GLNG,ongoing strong production from PNG LNG,and higher domestic gas sales in WA,were offset by asset sales and lower Cooper Basin sales volumes,slightly reducing sales volumes compared to the prior year.Product sales revenue US$million201720132014201520163,4833,64

191、12,4422,5943,107Sales revenue increased 20%compared to the previous year to$3.1 billion,primarily due to higher oil and LNG prices,and higher LNG sales volumes.The average realised oil price increased 25%to US$57.85/bbl and the average realised LNG price increased 21%to US$7.31/mmBtu.Production volu

192、me mmboe201720132014201520165154.157.761.659.5Production was 3%lower than the previous year primarily due to the sale of the Victorian,Mereenie and Stag assets,partially offset by the ramp-up of GLNG and higher PNG LNG production.Santos Annual Report 2017/19Review of operationsSantos operations are

193、focused on five core,long-life natural gas assets:Cooper Basin,Queensland,Papua New Guinea,Northern Australia and Western Australia Gas.Other assets are run separately for value as a standalone business.Cooper BasinThe Cooper Basin produces natural gas,gas liquids and crude oil.Gas is sold primarily

194、 to domestic retailers,industry and for the production of liquefied natural gas,while gas liquids and crude oil are sold in domestic and export markets.Santos strategy in the Cooper Basin is to deliver a low-cost,cash flow positive business by building production,investing in new technology to lower

195、 development and exploration costs,and increasing utilisation of infrastructure including the Moomba plant.Cooper Basin20172016Production(mmboe)14.415.1Sales volume(mmboe)21.023.5Revenue(US$m)833768Production cost(US$/boe)9.3210.71EBITDAX(US$m)328258Capex(US$m)199173Cooper Basin EBITDAX was$328 mill

196、ion,27%higher than 2016 primarily due to higher sales revenue impacted by higher oil prices,in addition to lower production costs resulting from cost-saving initiatives.Santos share of Cooper Basin sales gas and ethane production of 58.4 petajoules(PJ)was 5%lower than the corresponding period(61.2 P

197、J)as new development activity predominantly offset the impact of natural field decline.At June 2017,Santos recognised an impairment write-back of$336 million after tax.The impacts of lower US$oil price assumptions were more than offset by a continuation of the cost efficiencies and performance impro

198、vement achieved during 2016,allowing increased drilling activity and production.QueenslandGLNG produces liquefied 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%interest in GLNG.The LNG plant has two LNG trains w

199、ith a combined nameplate capacity of 7.8 mtpa.Production from Train 1 commenced in September 2015 and Train 2 in May 2016.Feed gas is sourced from GLNGs upstream fields,Santos portfolio gas and third-party suppliers.The LNG plant produced 5.2 million tonnes of LNG in 2017 and shipped 89 cargoes.Sant

200、os aims to build GLNG gas supply through upstream development,seek opportunities to extract value from existing infrastructure and drive efficiencies to operate at lowest cost.Queensland20172016Production(mmboe)11.59.5Sales volume(mmboe)22.719.2Revenue(US$m)764540Production cost(US$/boe)5.926.44EBIT

201、DAX(US$m)329191Capex(US$m)178228GLNG EBITDAX of$329 million increased 72%compared to 2016.This was a result of higher sales revenue reflecting the ramp-up of upstream production and higher LNG prices and lower costs.At June 2017,Santos recognised an impairment charge against the carrying value for G

202、LNG of$867 million after tax.The impairment was primarily due to lower forecast US$oil prices.20/Santos Annual Report 2017Directors ReportDirectors ReportDirectors ReportcontinuedPapua New GuineaSantos business in Papua New Guinea is centred on the PNG LNG project.Completed in 2014,PNG LNG produces

203、LNG for export to global markets,as well as sales gas and gas liquids.Santos has 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 and operated at

204、record rates in 2017,producing 8.3 million tonnes of LNG and shipping 110 cargoes.Condensate production was 10.9 million barrels.Santos strategy in Papua New Guinea is to work with its partners to align interests,and support and participate in backfill and expansion opportunities at PNG LNG.During 2

205、017,Santos and its partners announced a potentially significant new gas discovery at Muruk,located 21 kilometres from the existing PNG LNG production facilities at Hides.Data from the Muruk drilling program is being evaluated to inform forward appraisal options.Well site preparations are underway ah

206、ead of a planned Muruk appraisal program in 2018.PNG20172016Production(mmboe)12.612.2Sales volume(mmboe)12.011.8Revenue(US$m)532444Production cost(US$/boe)4.374.59EBITDAX(US$m)430350Capex(US$m)188Papua New Guinea EBITDAX of$430 million increased 23%compared to 2016,mainly due to higher LNG prices.No

207、rthern AustraliaSantos 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 nameplate capa

208、city of 3.7 mtpa.The plant produced 3.3 million tonnes of LNG in 2017 and shipped 51 cargoes.Condensate production was three million barrels.Santos strategy in Northern Australia is to support plans to progress Darwin LNG backfill,expand the companys acreage footprint and appraise the onshore McArth

209、ur Basin.During 2017,a two-well appraisal drilling campaign in the Barossa field(Santos 25%)was successfully completed.Positive results from the campaign,including a successful production test of Barossa-6,strengthened the fields position as lead candidate to supply backfill gas to Darwin LNG.Northe

210、rn Australia20172016Production(mmboe)4.04.2Sales volume(mmboe)4.04.2Revenue(US$m)153145Production cost(US$/boe)18.9517.58EBITDAX(US$m)8786Capex(US$m)5514Northern Australia EBITDAX of$87 million was 1%higher than 2016.Santos Annual Report 2017/21Western Australia GasSantos is one of the largest produ

211、cers of domestic natural gas in Western Australia and is also a significant producer of gas liquids.Santos position in two WA domestic gas hubs(Varanus Island and Devil Creek)provides opportunities to meet short-term and long-term domestic gas demand in the state.Santos focus in WA is to grow produc

212、tion and market share in the WA domestic gas market.WA Gas20172016Production(mmboe)9.28.9Sales volume(mmboe)9.48.8Revenue(US$m)262184Production cost(US$/boe)5.825.11EBITDAX(US$m)201206Capex(US$m)3724WA Gas EBITDAX of$201 million was 2%lower than 2016.Santos share of Western Australia gas and condens

213、ate production was 51.2PJ and 0.5 mmbbl respectively.Other assets Asia,NSW and WA OilSantos other assets have been packaged and run separately as a standalone business.These assets include Santos interests in Indonesia,Vietnam,New South Wales and Western Australia oil.The portfolio will be continual

214、ly optimised to drive efficiency and shareholder value.Effective 1 January 2018,the Narrabri asset in New South Wales will be managed as part of the core asset portfolio.Consistent with optimising the portfolio to maximise value,Santos sold its Victorian assets and Mereenie(Northern Territory)effect

215、ive 1January 2017.Other assets20172016Production(mmboe)7.711.8Sales volume(mmboe)7.711.7Revenue(US$m)346411Production cost(US$/boe)15.9114.06EBITDAX(US$m)223246Capex(US$m)8184Other assets EBITDAX of$223 million was 9%lower than 2016.Total production and sales volumes from Other assets were lower tha

216、n the previous year primarily due to the sale of the Victorian,Mereenie and Stag assets.During 2017,Santos recognised an impairment charge of$149 million after tax on the non-core Ande Ande Lumut asset in Indonesia,following an assessment of the impact of lower oil prices.22/Santos Annual Report 201

217、7Directors ReportNet lossThe 2017 net loss attributable to equity holders of Santos Limited of$360 million is$687 million lower than the net loss of$1,047 million in 2016.This decrease is primarily due to lower impairment losses of$703 million after tax($1,101 million in 2016)and higher sales revenu

218、e as a result of favourable product prices and LNG volumes.Net loss includes items before tax of$1,048 million($696 million after tax),as referred to in the reconciliation of net loss to underlying profit below.Underlying profit was$336 million,$273 million higher than 2016.Reconciliation of net los

219、s to underlying profit12017 US$million2016 US$millionGrossTaxNetGrossTaxNetNet loss after tax attributable to equity holders of Santos Limited(360)(1,047)Add/(deduct)the following:Net gains on sales of non-current assets(79)20(59)(25)8(17)Impairment losses938(235)7031,561(460)1,101 Change in future

220、restoration assumptions(31)9(22)(37)10(27)Foreign exchange(gains)/losses153(16)137(34)6(28)Fair value adjustments on embedded derivatives and hedges(14)4(10)39(11)28 Remediation(income)/costs for incidents net of related insurance recoveries(10)(10)Fair value adjustments on commodity hedges63(19)441

221、5(5)10 Other expense items218(3)1563(18)45 Tax impact of foreign exchange on deferred tax assets(100)(100)1515 Other one-off tax adjustments(12)(12)(7)(7)1,048(352)6961,572(462)1,110Underlying profit1 336631 Underlying profit is a non-IFRS measure that is presented to provide an understanding of the

222、 underlying performance of Santos operations.The measure excludes the impacts of asset acquisitions,disposals and impairments,as well as items that are subject to significant variability from one period to the next,including the effects of fair value adjustments and fluctuations in exchange rates.Th

223、e non-IFRS financial information is unaudited,however the numbers have been extracted from the financial statements which have been subject to audit by the Companys auditor.2 Other expense items in 2017 relate to a dispute settlement payment,restructure costs including redundancy payments and a prov

224、ision for a doubtful debtor;offset by onerous contract provision movement for unutilised transport capacity.Financial positionSummary of financial position2017 US$million2016 US$millionVariance US$millionExploration and evaluation assets459495(36)Oil and gas assets and other land,buildings,plant and

225、 equipment9,66210,533(871)Restoration provision(1,528)(1,468)(60)Other net assets/(liabilities)1 120167(47)Total funds employed 8,7139,727(1,014)Net debt2(2,731)(3,492)761Net tax assets/(liabilities)31,169845324Net assets/equity7,1517,080711 Other net assets/(liabilities)comprises trade and other re

226、ceivables,prepayments,inventories,other financial assets,share of investments in joint ventures,offset by trade and other payables,deferred income,provisions and other financial liabilities.2 Net debt reflects the net borrowings position and includes interest bearing loans,net of cash and interest r

227、ate and cross-currency swap contracts.3 Net tax assets/(liabilities)comprises deferred tax assets and tax receivable,offset by deferred tax liabilities and current tax payable.Directors ReportcontinuedSantos Annual Report 2017/23Impairment of assetsDuring the Companys regular review of asset carryin

228、g values,Santos undertook an impairment review as part of the preparation of its 2017 full-year accounts.At 31 December 2017,non-cash after-tax impairment losses of$14 million were recognised in addition to the non-cash after-tax impairment of$689 million recognised at 30 June 2017.The total after-t

229、ax impairment losses of$703 million for the year primarily relate to the 30 June 2017 impairment of GLNG.Exploration and evaluation assets Exploration and evaluation assets were$459 million compared to$495 million at the end of 2016,a decrease of$36 million,mainly due to impairment losses before tax

230、 of$163 million,exploration and evaluation expenses of$17 million;offset by 2017 capital expenditure,including drilling in Papua New Guinea,Cooper Basin and Barossa Caldita,along with evaluation studies,in addition to acquisition costs comprising interests in Muruk and Western Farm-in.Oil and gas as

231、sets and other land,buildings,plant and equipmentOil and gas assets and other land and buildings,plant and equipment of$9,662 million were$871 million lower than in 2016 mainly due to impairment losses before tax of$770 million and depreciation and depletion charges,offset by 2017 capital expenditur

232、e,including GLNG,WA Gas and the Cooper Basin.Restoration provisionRestoration provision balances have increased by$60 million to$1,528 million mainly due to revised restoration cost estimates and unfavorable exchange differences.Net debtNet debt of$2,731 million was$761 million lower than at the end

233、 of 2016 primarily as a result of free cash flow before asset acquisitions and divestments of$618 million and proceeds from asset sales of$145 million.Net tax assets/(liabilities)Net tax assets of$1,169 million have increased by$324 million primarily as a result of higher carry-forward tax losses re

234、cognised by the group.Net assets/equityTotal equity increased by$71 million to$7,151 million at year end.The increase primarily reflects the increase in issued capital of$151 million and movements in the translation reserve of$301 million,partially offset by the net loss after tax attributable to ow

235、ners of Santos of$360 million.Future commitmentsDue to the nature of Santos operations,the Company has future obligations for capital expenditure,for which no amounts have been provided in the financial statements.Santos also has certain requirements to perform minimum exploration work and spend min

236、imum amounts of money pursuant to the terms of the granting of petroleum exploration permits in order to maintain rights of tenure.The minimum exploration commitments are less than the normal level of exploration expenditures expected to be undertaken by the Company.Santos leases LNG carriers and tu

237、g facilities under finance leases.The leases have terms of between 10 and 20 years with varying renewal options.At the reporting date,finance lease liabilities for a purpose-built LNG carrier and tug boats were recorded on the balance sheet.Santos also leases floating production,storage and offtake

238、facilities,floating storage offloading facilities,LNG carriers and mobile offshore production units under operating leases.These leases typically run for a period of four to six years and may have an option to renew after that time.The group also leases building office space and a warehouse under op

239、erating leases.These leases are generally for a period of 10 years,with an option to renew the lease after that date.Oil price hedgingThe objectives of Santos oil price hedging policy are to reduce the effect of commodity price volatility and support annual capital expenditure plans.The Company will

240、 continue to monitor commodity market conditions and will enter hedging transactions as appropriate.As at 31 December 2017,the Company had hedged 12.5 million barrels of oil in 2018 using zero-cost three-way collars.Under the collars,where the Brent oil price is above$60.30,Santos receives$60.30.Whe

241、re the Brent oil price is between$48.48 and$60.30,Santos receives the actual Brent price.Where the Brent oil price is between$40.80 and$48.48,Santos receives$48.48,and where the Brent oil price is below$40.80,Santos receives the actual Brent price plus$7.68.24/Santos Annual Report 2017Directors Repo

242、rtDirectors ReportcontinuedBusiness strategy and prospects for future financial years Business strategyIn December 2016,the Company announced a new strategy to transform Santos into a low-cost,reliable and high-performance business.It is a disciplined,focused strategy to drive shareholder value whic

243、h sees five core,long-life natural gas assets at the heart of the Companys operations,each with significant upside potential.The remaining non-core assets have been packaged and run separately to maximise value.This will ensure a simplified,focused organisation.The Companys strategy has three phases

244、:Transform Focus on five core,long-life natural gas assets:Cooper Basin,Queensland,Papua New Guinea,Northern Australia and WA Gas;Implement disciplined,low-cost operating model to maximise cash flows.The core asset portfolio must be free cash flow positive at oil prices less than$40 per barrel and e

245、ach core asset must be free cash flow positive at less than$40 per barrel,pre-major growth spend;Maximise production,drive down costs and increase gas supply;and Implement effective governance and risk management framework to enable new operating model.Build Identify and develop growth opportunities

246、 across the five core long-life natural gas assets;Develop the lowest cost onshore drillcompleteconnect business;Establish facilities and infrastructure operations strategic capability;and Maximise margins through Marketing and Trading business.Grow Execute and bring on-line growth opportunities acr

247、oss the core portfolio;Focused exploration strategy to identify new high-value targets and unlock future core assets;and Generate new revenue through low-carbon Energy Solutions projects.Significant progress was made in 2017 in the Transform and Build phases of the strategy,including:Free cash flow

248、breakeven point reduced to$32 per barrel.The Company generated$618 million in free cash flow before asset sales in 2017;Net debt reduced by 22%to$2.7 billion with gearing of 27%;Upstream unit production costs reduced by 4%to$8.07 per barrel of oil equivalent;Significant reductions in Cooper Basin an

249、d GLNG average well costs;Barossa two-well appraisal campaign supports a significant increase in the resource base and strengthens Barossa as the lead candidate for Darwin LNG backfill;Strengthened Papua New Guinea partner alignment through Santos farm-ins to prospective acreage;Executed agreements

250、to evacuate uncontracted Eastern Queensland gas volumes;and The announcment that the Narrabri Gas Project in NSW would re-enter the Companys core asset portfolio.Santos Annual Report 2017/25Prospects for future financial yearsSantos enters 2018 with a clear strategy and a solid platform for growth.T

251、he business turnaround will continue as the Company focuses the organisation to support the five core assets.This singular focus will enable Santos to become a leaner,lower cost and higher performing business with significant upside opportunities across the portfolio.The Company will also begin to i

252、ncrease focus on the Build and Grow phases of its new strategy.The Company is well placed to withstand any extended period of low oil prices,with$1.2 billion in cash as at 31 December 2017 and no material debt maturities until 2019.Santos will continue to focus on reducing costs and building on the

253、significant improvements made in 2017 to operating efficiency.Santos expects 2018 sales volumes to be in the range of 7278 mmboe and production to be in the range of 5560 mmboe.Capital expenditure is expected to be in the range of$825 to$875 million.Santos remains confident in the long-term underlyi

254、ng demand for energy on the back of Asian economic growth,the rising global population and rapid urbanisation in developing economies.Large cuts in capital expenditure by oil and gas companies are expected to lead to falling production and a recalibration of oil prices to higher levels.However,the C

255、ompany will continue to focus on resetting the cost base in order to operate profitably and sustainably in periods of low oil prices,and is confident that the measures taken will drive returns for shareholders.Material business risksThe achievement of Santos purpose and vision,business strategy,prod

256、uction growth outlook and future financial performance is subject to various risks including the material business risks summarised below.Santos undertakes steps to identify,assess and manage these risks and operates under a Board-approved enterprise-wide Risk Management Policy.This summary refers t

257、o significant risks identified at a whole of entity level relevant to Santos.It is not an exhaustive list of all risks that may affect the Company,nor have they been listed in any particular order of importance.Strategic risksVolatility in oil and gas pricesSantos business relies primarily on the pr

258、oduction 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)in Santos portfolio has been sold under sales contracts where the sale price is linked to the global price of oil.

259、Lower global oil prices will therefore reduce Santos revenues and the profitability of its operations.Global oil prices are affected by numerous factors beyond the Companys control and have fluctuated widely historically.Santos three-tiered strategy,operating model and Hedging Policy introduced in 2

260、016 directly address oil price risk with a clear focus on cash flow management,operational and cost efficiencies,production growth opportunities and debt reduction,to build resilience to oil price fluctuations.Oil and gas reserves developmentCalculations of recoverable oil and gas reserves and resou

261、rces contain significant 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 Santos ability to fully s

262、upply 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 and evaluations on a rollin

263、g 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 annually.Exploration and re

264、serves replacementSantos future long-term prospects are also directly related to the success of efforts to replace existing oil and gas reserves as they are depleted through production,from either exploration or acquisition.Exploration is a high-risk endeavour subject to geological and technological

265、 uncertainties and the failure to replace utilised reserves is a risk inherent in the oil and gas exploration and production industry.Santos employs an established exploration prospect evaluation methodology and risking process,consistent with industry standards,to manage the risks associated with e

266、xploration.Business Development processes identify,review and progress opportunities to build reserves through acquisition in support of the Companys strategy and objectives.26/Santos Annual Report 2017Directors ReportDirectors ReportDemand and marketThe demand for oil,gas,LNG and other products San

267、tos markets may be adversely affected by a range of external factors including competition from alternative sources of oil,gas and LNG,competition from other sources of energy supply or changes in consumer behaviour or government policy.Santos business strategy development and review processes consi

268、der independent oil,gas and LNG market forecasts,and other relevant macro-economic factors,to assess the Santos portfolio under a range of scenarios,to deliver robust plans in support of the Companys purpose and vision.Project developmentSantos undertakes investment in a variety of oil and gas proje

269、cts to extract,process and supply oil and gas to a variety of customers,including long-term high-volume contracts to supply feedstock gas to the GLNG project.Such projects may be delayed or be unsuccessful for many reasons,including unanticipated economic,financial,operational,engineering,technical,

270、environmental,contractual,regulatory,community or political events.Delays,changes in scope,cost increases or poor performance outcomes pose risks that may impact the Companys financial performance.Santos has comprehensive project and risk management and reporting systems in place.Progress and perfor

271、mance of material projects is regularly reviewed by senior management 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 a

272、ssociated cost of exploration,production and operational failure.However,failure of agreement or alignment with joint venture partners,or the failure of third-party joint venture operators,could have a material effect on Santos business.The failure of joint venture partners to meet their commitments

273、 and share costs and liabilities can result in increased costs to Santos.Santos has clear standards and requirements related to the establishment and management of joint venture arrangements and activities.The Company works closely with its joint venture partners to reduce the risk of misalignment i

274、n 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,pipeline and facilities integrity failures,major processing or transporta

275、tion incidents,release of hydrocarbons or other substances,security incidents and other well control and process safety risks,which may have an adverse effect on Santos profitability and results of operations.Santos applies an integrated management system across all operational activities to manage

276、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 designed to ensure the Company meets regulatory and industry standar

277、ds in all operations.Access and licence to operate Santos has interests in areas which may be subject to claims by communities and landowners,who may have concerns over the social or environmental impacts of oil and gas operations or the distribution of oil and gas royalties and access to mining and

278、 petroleum related benefits.This has the potential to impact on land access or result in community unrest and activism targeted towards project infrastructure impacting Santos reputation.A number of Santos interests are also located within areas which are the subject of one or more claims or applica

279、tions 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 consequently impact generally the timing of exploration,development and production operations.Santos and its operating joint

280、venture partners work closely with relevant governments,communities,landowners and indigenous groups to ensure all concerns are fairly addressed and managed,and Santos operations benefit from their support.In addition,Santos and its operating joint venture partners develop and employ security and ri

281、sk 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 undertaken working with communities and landholders across the country.The Company has hundreds o

282、f land access agreements in place and a team of experienced community and land access representatives who work with Aboriginal stakeholders,landholders and communities to ensure that issues are understood and addressed appropriately.Santos Annual Report 2017/27Cyber securityCyber security risks,incl

283、uding threats to Santos information and operational 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 industry.The increasing technological advances in operations require mo

284、nitoring and protection to ensure cyber security threats are appropriately prevented and managed.Cyber security risks may lead to a breach of privacy,fraud,disruption of critical business processes or theft of commercially sensitive information.Such events could lead to operational disruptions and h

285、ave an adverse impact on Santos profitability and financial position.Focused cyber security risk management is incorporated into Santos risk management and assurance processes and practices across the Companys business and operational information management systems.WorkforceSantos future success is

286、significantly influenced by the expertise and continued service of certain key executives and technical personnel.An inability to attract or retain such personnel could adversely affect the results of Santos operations and financial condition.Santos has a suite of employment arrangements designed to

287、 secure and retain the services of such personnel.Key workforce metrics and succession plans are routinely reviewed by senior management and the Board.Environmental,safety and sustainability risksHealth,safety and environmental The size,nature and complexity of Santos operations pose risks in relati

288、on to the health and safety of the employees and contractors involved,including risks associated with travel to and from operations.A range of environmental risks exist within oil and gas exploration and production activities.Accidents,environmental incidents and real or perceived threats to the env

289、ironment 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 comprehensive approach to management of health,safety and environmental risks.The Companys management s

290、ystem integrates technical and engineering requirements with personal health and safety requirements to comprehensively manage safety risks within company operations.Climate changeSantos is likely to be subject to increasing regulations and costs associated with climate change and management of carb

291、on emissions.Strategic,regulatory and operational risks and opportunities associated with climate change are incorporated into Company policy,strategy and risk management processes and practices.The Company actively monitors current and potential areas of climate change risk and takes actions to pre

292、vent and/or mitigate any impacts on its objectives and activities.Reduction of waste and emissions is an integral part of delivery of cost efficiencies and forms part of the Companys routine operations.Financial risksSantos overall financial risk management strategy seeks to ensure that Santos is ab

293、le to fund its corporate objectives and meet its obligations to stakeholders.Financial risk management is carried out by a central treasury department which operates under a Board-approved framework and policies.The framework and principles for overall financial risk management address specific fina

294、ncial risks,such as foreign exchange risk,interest rate risk and credit risk,approved derivative and non-derivative financial instruments,and liquidity management.Santos has an oil price hedging policy with the objective of reducing the effect of commodity price volatility and support annual capital

295、 expenditure plans.Santos continues to monitor commodity market conditions and will enter hedging transactions as appropriate.Foreign currencySantos foreign exchange risk arises from commercial transactions and valuations of assets and liabilities that are denominated in a currency that is not the e

296、ntitys functional currency.Santos is exposed to foreign currency risk principally through the sale of products denominated in currencies other than the functional currency,borrowings denominated in currencies other than US$and capital and operating expenditure incurred in currencies other than US$,p

297、rincipally A$.Santos also has certain investments in domestic and foreign operations whose net assets are exposed to foreign currency translation risk.CreditCredit risk for Santos represents a potential financial loss if counterparties fail to perform as contracted,and arises from investments in cas

298、h and cash equivalents,derivative financial instruments and deposits with banks and financial institutions,as well as credit exposures to customers including outstanding receivables and committed transactions.28/Santos Annual Report 2017Directors ReportDirectors ReportAccess to capital and liquidity

299、 Santos business and,in particular,the development of large-scale projects,relies on access to debt and equity financing.The ability to secure financing,or financing on acceptable terms,may be adversely affected by volatility in the financial markets,globally or affecting a particular geographic reg

300、ion,industry or economic sector,or by a downgrade in its credit rating.Contract and counterparty risksAs part of its ongoing commercial activities,Santos is party to a number of material contracts including finance agreements,infrastructure access agreements,agreements for the sale and purchase of h

301、ydrocarbon,transportation agreements,joint venture agreements,and engineering,procurement and construction(EPC)contracts.Santos also enters into sale and purchase contracts with various third parties for the sale and purchase of natural gas,LNG and other products.The economic effects of these contra

302、cts over their term may be impacted by fluctuations in commodity prices,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 co

303、ntracts,may result in a material impact on Santos operations and financial 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 eac

304、h of the countries in which it operates that relate to the development,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 material adverse effect on Santos business,results

305、 of operations and financial condition.For example,a change in taxation laws,environmental laws or land access laws could have a material effect on the Company.Santos domestic gas business and GLNG project,including its ability to purchase gas,develop future growth projects and meet supply commitmen

306、ts,may also be adversely impacted by any governmental intervention,including limitations on LNG export volumes and/or the redirection of gas from export to domestic markets.Any such intervention may also have broader implications for the future of the gas industry in Australia.Santos continually mon

307、itors legislative and regulatory risk and engages appropriately with regulators and governments to manage regulatory risks.Litigation and disputeThe nature of Santos business means that it is likely to be involved in litigation or regulatory actions arising from a wide range of matters.Santos may al

308、so 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 health and safety claims.Any of these claims or actions could result in delays,increase costs or otherwi

309、se adversely impact Santos assets and operations,and adversely impact Santos financial performance and future financial prospects.Santos has an experienced legal team that monitors and manages potential and actual claims,actions and disputes.Material prejudice As permitted by sections 299(3)and 299A

310、(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 developments in operations and the expected results of those operations in future financial years on the ba

311、sis that such information,if disclosed,would be likely to result in unreasonable prejudice(for example,because the information is premature,commercially sensitive,confidential or could give a third party a commercial advantage).The omitted information typically relates to internal budgets,forecasts

312、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 predictions regarding the Companys present and future operations,possible future events and future fi

313、nancial prospects.While these statements reflect expectations at the date of this report,they are,by their nature,not certain and are susceptible to change.Santos makes no representation,assurance or guarantee as to the accuracy or likelihood of fulfilling of any such forward-looking statements(whet

314、her 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.Santos Annual Report 2017/29SIGNIFICANT CHANGES IN THE STATE OF AFFAIRSThe Material Business Risks section(pages 25 to 2

315、8)refers to risks which,if materialised,may have a significant effect on the state of affairs of the Company.DIVIDENDSOn 20 February 2018,the Directors resolved not to pay a final dividend.ENVIRONMENTAL REGULATIONThe consolidated entitys Australian operations are subject to various environmental reg

316、ulations under Commonwealth,State and Territory legislation.Applicable legislation and requisite environmental licences are specified in the consolidated entitys EHS Compliance Database,which forms part of the consolidated entitys overall Environmental Management System.Environmental compliance perf

317、ormance is monitored 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 15 February 2017,Santos received a penalty infringement notice and$12,190 fine from the Queensland Department of Envir

318、onment and Heritage Protection for non-compliance with a Soils Management Plan.The consolidated entity undertook corrective measures in respect of the infringements to prevent re-occurrences.This was the only penalty infringement notice and fine the consolidated entity received.POST BALANCE DATE EVE

319、NTSExcept as mentioned below or elsewhere in this report,in the opinion of the Directors there has not arisen,in the interval between the end of the financial year and the date of this report,any matter or circumstance that has significantly affected or may significantly affect the operations of the

320、 consolidated entity,the results of those operations,or the state of affairs of the consolidated entity in future financial years.On 20 February 2018,the Directors of Santos Limited resolved not to pay a final dividend in respect of the 2017 financial year.SHARES UNDER OPTION AND UNVESTED SHARE ACQU

321、ISITION RIGHTS(SARs)OptionsUnissued ordinary shares of Santos Limited under option at the date of this report are as follows:Date options grantedExpiry dateIssue price of shares1Number of options3 May 20082 May 2018$15.39447,5403 May 20082 May 2018$15.39227,95128 July 200827 July 2018$17.3681,9482 M

322、arch 20092 March 2019$14.8150,549807,9881 This is the exercise price payable by the option holder.Options do not confer an entitlement to participate in a bonus or rights issue,prior to the exercise of the option.30/Santos Annual Report 2017Directors ReportDirectors ReportUnvested SARsUnissued ordin

323、ary shares of Santos Limited under unvested SARs at the date of this report are as follows:Date SARs grantedNumber of shares under unvested SARs6 March 20151,913,74428 July 2015587,78710 February 2016166,9111 May 201642,58514 June 20164,154,73031 August 2016628,14121 March 20174,226,68329 September

324、2017549,024 12,269,605No amount is payable on the vesting of SARs.SARs do not confer an entitlement 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

325、34 of this report and in note 7.2 to the financial report.SHARES ISSUED ON THE EXERCISE OF OPTIONS AND ON THE VESTING OF SARSOptionsNo options were exercised during the year ended 31 December 2017 or up to the date of this report.Vested SARsThe following ordinary shares of Santos Limited were issued

326、 during the year ended 31 December 2017 on the vesting of SARs granted under the Santos Employee Equity Incentive Plan(SEEIP)(formerly known as the Santos Employee Share Purchase Plan(SESAP)and ShareMatch Plan(ShareMatch).No amount is payable on the vesting of SARs and accordingly no amounts are unp

327、aid on any of the shares.Date SARs grantedNumber of shares issued1 July 2014300,87028 July 201545,1301 February 2016166,91131 August 2016 38,0391 December 201623,77729 September 2017271 574,998Since 31 December 2017,4,197 ordinary shares of Santos Limited have been issued on the vesting of SARs gran

328、ted under the SEEIP and ShareMatch.DIRECTORS AND SENIOR EXECUTIVES REMUNERATIONDetails of the Companys remuneration policies and the nature and amount of the remuneration of the Directors and senior management(including shares,options and SARs granted during the financial year)are set out in the Rem

329、uneration Report commencing on page 34 of this report and in notes 7.2 and 7.3 to the financial report.Santos Annual Report 2017/312017 Remuneration in Brief This section is in addition to the Remuneration Report on pages 34 to 53.This section therefore does not form part of the audited Remuneration

330、 Report.It provides additional information in relation to the amount of remuneration paid to the Companys Managing Director and Chief Executive Officer(CEO),Kevin Gallagher,and Senior Executives during 2017.The Company has chosen to do this so that investors have the benefit of this information in a

331、ddition to the Remuneration Report,which has been prepared in accordance with statutory requirements and Accounting Standards.DELIVERING STRONG PERFORMANCE Since commencing its turnaround to deliver a low-cost,reliable and high-performance business,Santos has taken tough and decisive action to restr

332、ucture the business,remove substantial costs,rebuild cash flow and strengthen the balance sheet.The Transform Build Grow strategy is now delivering ahead of expectations.Focused on five core,long-life natural gas assets:Cooper Basin,Queensland(including GLNG),Papua New Guinea(PNG),Northern Australia

333、 and West Australian Gas,our simplified portfolio is now positioned to provide stable base production for the next decade and positive free cash flow at an oil price of less than or equal to US$40 per barrel(bbl),pre-major growth opportunities.The Santos share price increased by 36%in 2017 to A$5.45 as at 31 December 2017 and market capitalisation increased by 39%over the same period.In 2017,the T