1、CHALLENGEANNUAL REPORT 2001RISING TO THESANTOS LTD ABN 80 007 550 923NOTICE OF MEETINGThe Annual General Meeting of Santos Ltd will be held inthe Auditorium at The Adelaide Town Hall Function Centre,128 King William Street,Adelaide,South Australia on Tuesday,16 April 2002 at 11.00 a.m.FINAL DIVIDEND
2、The 2001 final ordinary dividend will be paid on 2 April 2002to shareholders registered in the books of the Company atthe close of business on 8 March 2002 in respect of fullypaid shares held at record date.SHAREHOLDERS ENQUIRIESEnquiries from shareholders and other interested peopleshould be direct
3、ed to:Investor Relations,Santos Ltd,Santos House,Level 29,91 King William Street,Adelaide,South Australia 5000Telephone(08)8218 5111Email:Santos website:Share Registrar,Santos Ltd,Santos House,Level 29,91 King William Street,Adelaide,South Australia 5000Telephone(08)8218 5111Email:DIRECTORSS Gerlach
4、(Chairman),J C Ellice-Flint(Managing Director),P C Barnett,F J Conroy,G W McGregor,M A OLeary,J Sloan,I E Webber SECRETARYM G RobertsCONTENTSStrategic Vision 1 Chairmans Review 2 Managing Directors Review 4 Business Unit Operations10 Highlights and Overview 12Exploration 14 Development16 Reserves 18
5、 Gas Leader20 Production 22Production Statistics23 Safety 24Human Resources25Environment26 Community27 Board of Directors28 Corporate Governance 30 Group Interests 32 Areas of Operation3410 Year Summary 36Directors Statutory Report38Financial Report42Stock Exchange and Shareholder Information70GTo s
6、ee the AnnualReport in colour and toaccess current andhistorical financialreports click here.Santos is currentlyredeveloping thewebsite and a newversion will soon “TO BE RECOGNISED BYSTAKEHOLDERS AND PEERS AS BEING WITHIN THE TOPQUARTILE OF THE WORLDS OIL AND GAS COMPANIES”OURSTRATEGIC VISIONCREATE
7、GROWTH THROUGH NEW DOMESTIC AND INTERNATIONAL OPPORTUNITIESSTRONG CASH FLOW GROWTH AND RESERVE REPLACEMENTSTRATEGIC COST LEADER IN FIELD,INFRASTRUCTURE AND NEAR FIELD OPERATIONSDISCIPLINED PORTFOLIO MANAGEMENT DELIVERING SUPERIOR RETURNSREVIEWCHAIRMANS2Dear Shareholder,In this,my first report to sha
8、reholders,I am pleased to saythat,not only did Santos perform strongly again in 2001,but also the transformation of the Company is wellunderway.Net operating profit after tax was$446 million,the secondhighest profit in the Companys history.Santos produced 55.7 million barrels of oil equivalent(boe),
9、close to the record 2000 productionof 56 million boe.As in 2000,the result benefited fromthe high level of oil prices thatprevailed through the first ninemonths of the year but also reflectedthe close-to-record production.Importantly,2001 was also a year ofmajor change for the Company,layingthe foun
10、dations for future growth.The vision of the Board andmanagement is for Santos to beAustralias leading energy companyand within the top quartile of the worlds oil and gas companies.This is an ambitious target.Much work has to be done by our Managing Director,JohnEllice-Flint,and his management team t
11、o prepare Santos to meet this goal,which has included a number of key,newinternationally qualified management appointments.Whilstthe challenges have to be successfully met,the Board hasconfidence that John Ellice-Flint and his team will succeed in their endeavours and have laid the foundation for th
12、at success.The Company performed well in terms of the returnsprovided to shareholders during the year.The total returnto shareholders,from capital growth plus dividends was10%,outperforming the S&P Australian Energy Index.Including the dividend component of the share buy-back,the return to sharehold
13、ers was 14%.Directors have declared a final ordinary dividend for 2001of 15 cents per share fully franked.The total ordinarydividend for 2001 is 30 cents per share fully franked.The share buy-back undertaken during the year,distributed$250 million to shareholders,including$143 million(or 23cents per
14、 share)of fully franked dividends.The buy-back was undertaken in tandemwith the issue of$350 million of resetconvertible preference shares.Theseinitiatives were undertaken as part ofthe Companys capital managementstrategy.Both were substantiallyoversubscribed highlighting their valueto Santos shareh
15、olders.The Board places a high priority onworkplace safety.It is disappointing thatSantos suffered a serious accident at theMoomba plant in June and tragically anemployees life was lost.Santos Boardand management continue to strive for the highest standardof occupational health and safety and the le
16、ssons learnt fromthis incident are being applied as part of the Companyscommitment to achieving a work environment free of injury.Santos is subject to South Australian legislation thatrestricts any one Santos shareholder from having morethan a 15%shareholding.In 2000,the State Governmentannounced th
17、at it was reviewing this restriction,but in July2001 announced that it did not intend to make any change.The Government stated that the decision reflected theimportance to South Australia of gas supplied from theCooper Basin.Santos has consistently expressed the viewthat the restriction is not in th
18、e long-term interests ofSantos shareholders.The Board and Company are,andhave been acting,on the assumption that sooner or laterthe limit will be removed.During 2001,there were two important changes in Boardmembership.Mr John Uhrig retired as Chairman followingthe Annual General Meeting,after nine y
19、ears on the Boardand seven years as Chairman.During his tenure as a Boardmember,and Chairman,Santos production increased byover 60%and its market capitalisation increased by over$2 billion.I should like to pay tribute to John Uhrig for thesignificant contribution he made to the success of theCompany
20、.In July,Mr John McArdle,an Executive Director,retiredfrom the Board.Over a 35 year career with Santos and its joint venturers,John played an important role in thedevelopment of the Cooper Basin and the Australian oiland gas industry,in recognition of which he was awardedthe inaugural Reg Sprigg med
21、al by the industry in 1995.During 2001 a review of the role of the Board and itscomposition was undertaken in light of the Companysstrategic review,a process which,will in future,beundertaken on a regular basis.As a consequence of thereview the Board is currently considering the desirability of maki
22、ng further additional appointments.On behalf of the Board,I should like to thank all of Santosemployees for their dedication and commitmentthroughout the year.The Board has great confidence in the future of theCompany and I thank all shareholders for their supportthroughout the year.Finally,I acknow
23、ledge the support I have received from myfellow Directors.STEPHEN GERLACH Chairman13 February 2002A year of strong performance and significant change.Chairman Stephen Gerlach reports to shareholders.“SANTOS HAS A CLEAR STRATEGY TO DELIVER GROWTH AND TOP QUARTILERETURNS.”3REVIEWMANAGING DIRECTORS5Loo
24、king Ahead:The Opportunities For AustraliaBefore I review Santos achievements in 2001,I would liketo look at the big picture in energy terms;the substantialnatural gas resources on our doorstep and what this couldmean for Australia.Australia and its near neighbours could be in the rightplace at the
25、right time.I say this because of the wonderfulopportunity we have to become a major world supplier ofnatural gas.There are two reasons for saying this.One is the growth in global demand for gas and its attractiveness as a cleanand ready source of energy.The other is the vast gasresources which Austr
26、alia,East Timor and Papua NewGuinea possess.This is an opportunity for Santos as wellbecause of our already significant interests in the region.THE GLOBAL PICTUREAs someone back in Australia after many years in theindustry in other parts of the world,I am excited by theprospects which these resource
27、s represent.Drawing the picture in global terms is really quite simple.Australia has the potential to be a major player in the worldgas industry.We have abundant natural gas at over 100years supply and even more if we also count the gasresources in neighbouring Timor and Papua New Guinea.This is eno
28、ugh for the Secretary General of OPEC torecognise the important role that Australia has to play inthe ongoing development of the global gas market.BRIGHT OUTLOOK FOR GASGas used to be second prize when explorers were searchingfor oil,but now it is a valuable commodity in its own right.The United Sta
29、tes Energy Information Administrationexpects the use of natural gas globally to almost doublefrom 84 trillion cubic feet(TCF)a year in 1999 to 162 TCFin 2020.The International Energy Agency(IEA)expects risingdemand and expanding transportation networks(throughboth pipelines and shipping)to intensify
30、 market integrationat the regional and global level.International trade in gashas been growing quickly.According to BP,around 22%ofgas used globally now crosses an international border,upfrom 15%as recently as 1990.This is good news for acountry like Australia because it means gas can beincreasingly
31、 transported to end-markets.Exploiting the worlds gas resources will require massiveinvestment in production facilities and infrastructure.TheIEA believes that,as costs rise,higher wellhead prices willprobably be needed to elicit the necessary investment insupply infrastructure.However,even with hig
32、her prices,gaswill still be a cheap,efficient and attractive source of energy.OPPORTUNITIES FOR AUSTRALIAWe have a rich endowment of gas and,according to theAustralian Gas Association,Australian natural gas pricesare among the lowest of the OECD countries(and lowerthan in many non-OECD countries too
33、).The question for Australia and our neighbours is:How canwe get as much benefit as possible from the opportunitiesthat the global scenario represents?I see the opportunities as falling into two groups:expanding our exports of LNG and further development of domestic markets.NORTHERN AUSTRALIAA signi
34、ficant share of Australias undeveloped gas lies inthe Timor Sea/Timor Gap area.This is a great location fora second Australian LNG project.It has over 20 TCF of gasspread across four fields.This is sufficient to underpin aworld-class LNG project,which could benefit both Australiaand East Timor,as we
35、ll as promoting gas-based industrialdevelopment in the Northern Territory.There are currentlytwo proposals on the table for Timor Sea LNG,one for anoffshore development and the other for a Darwin-basedLNG facility.While Santos is not the major player in the Timor Sea,wedo have total interests of aro
36、und four TCF.This is morethan twice our Proved and Probable gas reserves onshoreAustralia.Our Timor Sea interests are spread across threeof the four major fields and our interest comprises about20%of the combined total gas resource.We are committedto all developments that add value for our sharehold
37、ersand believe the most beneficial outcome will be for all thecompanies and governments concerned to bring about acoordinated development.PAPUA NEW GUINEA AND QUEENSLANDOn the other side of Australia,the huge quantities of gas in Papua New Guinea provide tremendous opportunities to add value to Quee
38、nsland resources,with benefits forboth PNG and Australia.The Hides field alone has over fiveTCF of gas and part of this gas,together with gas fromexisting oil fields,is targeted for the proposed PNG-Queensland gas project.PNG gas provides a significant opportunity to further boostQueensland developm
39、ent.The challenge is to use this gasto create new value adding industries which in turnprovides employment opportunities.Santos has already pioneered the use of gas for majorresource projects in Queensland.Since 1998 we have beenproviding Cooper Basin gas to the Mt Isa region,reducingenergy costs fo
40、r MIM and facilitating development ofWMCs world-class Duchess Phosphate Project.Santos has an interest in Hides of over one TCF.Development of these reserves also has significantpotential to add value for In 2001 we took the first steps towards transformingSantos into a top quartile oil and gas comp
41、any.?The Companys strategy was released and is nowowned by our employees.?We reorganised the Company in line with the majorprofit drivers.?A number of experiencedexecutives were appointed tosenior positions,both externaland internal appointments.?A business improvement programwas launched.?A portion
42、 of the Companysfranking credits was distributed toshareholders.At the same time,through activecapital management we delivered astrong profit and operating result.Earnings were more than twice thoseof any year before 2000 andproduction was close to the recordlevel achieved in 2000.Gas and ethane pro
43、duction reached anew record of 219 PJ.In 2002,Santosremained Australias largest domesticgas producer.Return on Average Equity(ROAE)was17.7%and Return on Average CapitalEmployed(ROACE)14.1%.These arekey indicators for the Company andthe results in 2001 continued thestrong performance achieved in 2000
44、.Notwithstanding the progress made,there is still more to do.While the Company has substantial growth potential,this needs to be translated into specific growth prospects.Internally much remains to be done in increasingproductivity,reducing costs and streamlining processes.Exploration improved durin
45、g the year.We discovered 67million boe of resource potential,twice the level achievedin 2000.The Oyong Indonesian oil and gas discovery wasSantos first operated international discovery for over adecade.This discovery was quickly followed by Hendersonin the USA.Other discoveries includethe Corowa oil
46、 discovery in theCarnarvon Basin and the Wellingtonand Crowsnest new-play stratigraphictrap gas discoveries in the Cooper Basin.Good progress was also made ondevelopment opportunities.Legendreoil production facilities werecompleted,significant progress wasmade on the Bayu Undan liquidsproject and th
47、e focus continued onmaximising production from theCooper Basin.The progress made in the UnitedStates was also a highlight of the year.The management team was rebuilt,the portfolio of assets was highgraded,there were a number of explorationsuccesses and daily production at yearend was three times tha
48、t at the start.RESERVES REVIEWDuring 2001,Santos announced a review of its reserves.This was asignificant task,involving over 460fields.The review resulted in areduction of 169 million boe of Provedplus Probable reserves,approximatelythree quarters of which were reclassified as Possiblereserves or C
49、ontingent Resources.Possible reservesincreased by 169 million boe as a result of the review.Atthe end of 2001 Santos had 316 million boe of Proved(1P)reserves,724 million boe of Proved and Probable(2P)reserves,1,478 million boe of Proved,Probable andMEASURING ANDHAVING CONFIDENCEIN ALL THECOMPONENTS
50、 OF OURRESERVE BASE IS AFUNDAMENTAL PARTOF THE COMPANYSSTRATEGY AND A CORNERSTONE OF PERFORMANCEMANAGEMENT.2001:Laying The Foundations For Future GrowthRAISING OUR SIGHTSDevelopment of both Timor Sea and PNG gas would begood for the countries and customers involved,as well as for the companies and t
51、heir shareholders.Both are big projects by world standards.They needcertainty and a reasonable regulatory and fiscal regime.In particular,substantial infrastructure development isnecessary but this is a challenge in Australia for high riskpipeline projects which require entrepreneurial rates ofretur
52、n.The prize for successful development,however,issubstantial whether measured in terms of reward,livingstandards,economic benefit or industrial progress.Thecooperative development of these resources is a greatopportunity for Australia and its neighbours and one whichcan be to everyones advantage.San
53、tos supports both of these projects.We are alreadyAustralias largest gas producer in terms of our equityinterests and we have substantial gas resources innorthern Australia and PNG.Our focus and priorities today have changed.In the past,Santos has been seen more as a vigorous defender of itsexisting
54、 onshore interests rather than as a force fordeveloping the market as a whole.However,this is nolonger appropriate.While maximising the value of ourexisting interests continues to be important,Santos gasinterests are considerably more diversified than they wereand this is apparent in the changes mad
55、e to our Companyover the past year.The global environment is good for the development of the substantial gas resources on our doorstep andSantos is raising its sights 7Possible(3P)reserves and 1,190 million boe of ContingentResources.The Company now has a rigorously defined reserve base which,for th
56、e first time,is in general compliance with international reporting standards.While the review led to a reduction in 2P reserves,Santos has substantial 3P reserves that include over 3,700 PJ of Cooper Basin gas.Commercialisation of gas reserves in fields such as Hidesor the Northern Australian gas fi
57、elds would also have asignificant positive impact on reserves.YEAR OF TRANSFORMATION2001 was a year of transformation for Santos.This has involved setting the strategy,defining the businessstructure,selecting the people to lead the organisation and establishing the right processes.SETTING THE STRATE
58、GYIn 2001 the Company undertook a strategic review whichestablished key operational and financial benchmarks fortop quartile performance for oil and gas companies.This isthe report card upon which the Company will be judged.Todeliver top quartile shareholder returns the Company mustachieve or better
59、 the benchmark targets.FINANCIAL BENCHMARKS(Through the oil price cycle)Total Shareholder Returns 14%Cash Flow Growth 10%Earnings per Share 10%OPERATIONAL BENCHMARKSProduction Growth 5%-8%Finding Costs US$1.25 boeFinding and Development 150%These are tough targets and the financial metrics must beju
60、dged through the oil cycle as oil prices can significantlyaffect results in any individual year.Operational targets are also volatile from year to year and must be assessedover time.To achieve these targets Santos is focussing on thefollowing seven areas:1.RESERVOIR AND PRODUCTION OPTIMISATIONReserv
61、oir and production optimisation aims to increasereturns from existing producing fields.The major focus is on maximising the value of the Cooper Basin which is Santos major operated asset.A number of production optimisation initiatives weretested and introduced in 2001 to allow Santos to developgas a
62、nd oil more quickly and at a lower cost.In 2001,in the Cooper Basin,25 TJ per day of gross gas capacitywas added for 30-50%of the cost of conventional gasdevelopment projects.In 2002,we will continue with theseinitiatives and are targeting 40 TJ per day of gross gascapacity additions with similar co
63、st savings.2.EXPLORATION Santos aims to lift exploration performance through abalanced portfolio approach.Our 2002 portfolio includesmaterial prospects appropriate for a company producingaround 56 million boe per annum.This requires a shift from low risk to moderate and higherrisk/reward prospects.W
64、e have already seen some successin 2001 with encouraging Santos-operated oil and gasdiscoveries.3.ACQUISITIONS Santos will maintain an active program of acquisitions tosupplement reserve additions from exploration,reservoiroptimisation and gas commercialisation.Acquisitions mustprovide volume-adding
65、 barrels to reserves,productionand/or make strategic sense.During the year Santos madetwo acquisitions that met these requirements.Santos acquired Natural Gas Australia,through which theCompany acquired a 40%interest in the Evans Shoal gasfield in the Timor Sea.This now gives Santos interests inthre
66、e out of the four major fields in the area.Santos alsoincreased its interest in the Runnells gas field in the TexasGulf Coast in the United States.This delivered production,earnings and exploration potential.4.GAS COMMERCIALISATIONGas commercialisation is a key component of Santosstrategy.Santos ach
67、ieved another record level of gasproduction in 2001.Santos has over 1,750 PJ of Proved andProbable gas(net to Santos)available for new contractsover and above gas dedicated to covering existingcontracts.It also has approximately six TCF(or one billionboe)of gas classified as Contingent Resources,muc
68、h ofwhich is capable of being contracted,located in NorthernAustralia,Papua New Guinea and Southern Australia.Commercialisation of any of the major fields currentlyclassified as Contingent Resources would have a materialpositive impact on Santos reserves.Discussions are also continuing with a number
69、 of potentialcustomers for Cooper Basin gas.There are also developments in gas commercialisation inEastern Queensland.Gas production from the Scotia fieldin Eastern Queensland is due to commence in April 2002.This is two months ahead of schedule.Progress was achieved during the year on possibledevel
70、opment of gas in the Bayu Undan field in the TimorGap and on the PNG Gas Project.5.OPERATIONAL EXCELLENCEOperational excellence focuses on costs,people,information technology,safety and environment.Santos aims to achieve capital and operating costreductions of at least$50 million per annum on a like
71、-for-like basis by the end of 2003.The new managementstructure is geared to achieve this and key executives have been appointed to drive the focus on 6.PEOPLE,ENVIRONMENT AND THE COMMUNITYSantos also recognises that top quartile financialperformance is underpinned by a quality workforce andsocial an
72、d environmental best practice.Employees areSantos most important asset and the Company considersthat providing a safe and challenging work environment is paramount.Santos is building a culture that rewardsperformance and encourages the contribution and ideas of both individuals and teams.Successfull
73、y managing the natural environment is a keygoal for Santos and the Company adheres to the principlethat investing in preventative rather than remedialstrategies is the best approach.The Company is alsostriving to upgrade its environmental reporting.In January 2001 Santos signed a draft Indigenous La
74、nd UseAgreement(ILUA)with the Wangkumarra people in South-west Queensland.The ILUA covered certain pipeline routeapprovals and provides for the protection of indigenouscultural heritage,employment,an education trust andsupport for community structures.7.TECHNOLOGYThe identification and application o
75、f appropriatetechnology is also a key part of Santos future growth strategy.Priorities include information systems,data acquisition and management,drilling and otherappropriate hydrocarbon exploitation technologies.Santosis now executing an upgrade of information systems at a cost of$31 million to s
76、treamline the core businessprocesses and improve management information systems.This will enable us to make better,faster decisions.DEFINING THE STRUCTURESantos has been reorganised in line with the new strategy.Previously,Santos was structured around a decentralisedBusiness Unit model,which served
77、the Company well atthe time.Each Business Unit contained all the operationaland functional resources to enable it to operate quiteindependently.In many ways,the structure resembled a group of mini oil and gas companies under a holdingcompany,competing with each other for businessopportunities and fo
78、r capital allocations from the corporate office.In light of the strategy review,a new structure has beendeveloped to better reflect the new strategic themes.Santos has reorganised around three major streams of activity Volume,Growth and Service Quality/Cost.The volume stream contains the business gr
79、oups andfunctional teams principally concerned with optimisingproduction from existing areas of operation.The majorproduction area for Santos is the Cooper and EromangaBasins in central Australia.Previously operated by twoBusiness Units,this area has now been combined into onenew Central Australia B
80、usiness Unit,better reflecting thegeology and allowing greater focus on our customers.The volume stream also contains two other new Business Units Western Australia,focused on increasingproduction from the Companys offshore WesternAustralian oil and gas opportunities and NorthernAustralia,structured
81、 for Santos to increase its productionin the fast-growing energy markets of Queensland and theNorthern Territory.The growth stream contains those businesses andresources principally concerned with increasing theCompanys reserve base.This can be achieved throughsuccessful exploration activities,acqui
82、sitions andcommercialisation of gas resources.As the growthbusinesses successfully develop and produce,they becomeimportant production or volume businesses in the future.ESTABLISHING THE RIGHT PROCESSESThe new organisational structure also reflects the need tosimplify processes,improve service quali
83、ty and increaseproductivity by taking unnecessary work out of the system.The Service Quality/Costs stream was created to driveefficiencies in the way support activities are operated.MEASURINGBUSINESSPERFORMANCEThe new Santos organisational structure has beenbuilt around the strategic drivers of Volu
84、me,Growthand Service Quality/Cost.Why choose these metricsto define the Company structure?The fundamentals of the oil and gas business arerelatively simple:returns come from optimisingvolumes,maximising margins and finding newavenues for growth.One of the features of the commodity business isthe lim
85、ited extent to which companies can controlthe price of the products they sell.With oil,price is determined by the market and fluctuatesaccording to many variables.With gas,companiescan influence price through negotiation withcustomers,but many other supply/demand factorscome into play.Santos does,ho
86、wever,have control over the other key metrics driving margins volume,costs,growth and,for this reason,the Company hasbeen structured to help provide a clear focus onwhat is ultimately important to shareholders.This stream combines all the services that are sharedacross the volume and growth business
87、es,such asAccounting,Human Resources and Information Systemsand will deliver those services in an efficient and low-costmanner and,importantly,with consistent standards.Developing a shared services approach to providinginternal business services is a particularly importantinitiative.Historically,eac
88、h Business Unit had its ownsupport services.Safety,Environment,Accounting,HumanResources,Information Systems,Supply,Corporate andGovernment Affairs and Drilling will in the future,all beprovided on a shared basis.Improved information systemsand business process re-engineering are also importantcompo
89、nents of establishing the right processes.SELECTING THE PEOPLEThe final but arguably most important part of transformingSantos,has been to select leaders for the new organisation.This process has now largely been completed,with anappropriate mix of external and internal appointments.The new organisa
90、tion chart and senior management teamare listed on page 29.CONCLUSION2001 has been a year of transformation for Santos.Operational performance has been maintained whilesubstantial changes have been occurring.In last years Report I outlined my immediate priorities for Santos:to review the Companys st
91、rategy,improve the culture and performance and create value addingexternal relationships.We now have a clear strategy,a new management team,a new organisation and a rigorously defined reserves base.We have increased our external focus and intend tocontinue to build stronger and more effective relati
92、onshipswith our partners,suppliers,customers and governments.The challenge has been set and we are rising to meet it.In 2002 our target is to increase production by around 3%from existing assets and to make substantial progressin the creation and capture of a strong growth portfolio.The financial re
93、sults for 2002 will,of course,be heavilydependent on oil prices and exchange rates.We are planning an exploration and appraisal program of approximately$160 million($151 million in 2001)withexposure to around twice the level of mean resourcesdiscovered in 2001.If successful,this will make asignifica
94、nt contribution towards reserve replacement.Record development expenditure of around$560 million is also planned,including spending of approximately$160 million on the Bayu Undan liquids project,one of the Companys major growth projects.This is asubstantial investment in future growth.I should like
95、to thank all of Santos employees for theirenthusiasm and contributions during what has been a verybusy year.I should also like to acknowledge the support ofour joint venturers,suppliers and customers.During the year we lost a valued employee and friend,Mr Colin Sutton,as a result of an accident at M
96、oomba.On behalf of the Board and all employees I would like torecord our condolences to his wife Christine and childrenChristopher,Emma and Lisa.I am confident that through a continued focus on theexecution of our strategic plan and the ability of our peoplewe will achieve continued growth and deliv
97、er increasedvalue to our shareholders.JOHN C ELLICE-FLINT Managing Director13 February 9OPERATONSBUSINESS UNITGENERAL MANAGERJon YoungBUSINESS UNIT DESCRIPTIONCentral Australia Business Unitmanages Santos interests and JointVentures in the Cooper/EromangaBasins in Central Australia.CBU also operates
98、 Port Bonython whichprocesses crude,condensate and LPGfor domestic and export sales.CENTRAL AUSTRALIACBURod RaynerNorthern Australia Business Unitmanages Santos exploration andproduction interests in Queensland(other than Cooper/Eromanga Basin),Northern Territory and Timor Gap.NORTHERN AUSTRALIANBUP
99、aul MooreWestern Australia Business Unitmanages Santos interests in thePerth,Carnarvon,Browse and TimorSea Basins.WESTERN AUSTRALIAWBURick WilkinsonSouthern Australia Business Unitmanages Santos interests in Victoriaand Tasmania.SOUTHERN AUSTRALIASBUBob HallSouth East Asia Business Unit isresponsibl
100、e for managing Santosinterests in Papua New Guinea andIndonesia.SOUTH EAST ASIASEABUKathy HogensonSantos USA Corp manages Santosinterests in Northern America.USASUSAC10RESPONSIBLE EXECUTIVESJon Young joined Santos in 2000 as GeneralManager South Australia Business Unit,after approximately 20 years o
101、f experience withMobil Corporation.2002 STRATEGIES&PRIORITIES?Optimise exploitation of Cooper Basin gas reserves?Pursue gas marketing opportunities foruncontracted gas reserves?Reduce costs?Accelerate oil exploitation?Complete cased and suspended well review program?Upgrade infrastructure to optimis
102、eoperational effectiveness2001 PERFORMANCE?Production(mmboe)35.9?Sales volumes(mmboe)35.5?Sales revenue($m)824?2P reserves(mmboe)371Rod Rayner originally joined Santos in 1983 todevelop the Jackson oil fields and pipeline.Herejoined Santos in 1993 as Manager Commercialin the former Queensland Northe
103、rn TerritoryBusiness Unit.?Manage Santos interests in the Bayu/Undan Liquids Recovery Project?Progress Bayu/Undan gascommercialisation?Progress long-term commercialisation ofoffshore Northern Territory gas fields?Commence production from the Scotia gas project?Optimise Eastern Queensland andAmadeus
104、Basin production operations?Production(mmboe)5.0?Sales volumes(mmboe)4.9?Sales revenue($m)123?2P reserves(mmboe)175Paul Moore joined Santos in August 2001.Before joining Santos he worked for FletcherChallenge Energy for 11 years and prior to this for Shell International for nine years.?Maximise econ
105、omic production(andrecovery)from existing producing oil fields?Pursue commercialisation of gas resources?Undertake appraisal of discovered fields?Drill key exploration prospects includingtwo in Mutineer discovery area?Mature drilling candidates for 2003+?Increase acreage exposure for futureexplorati
106、on?Production(mmboe)12.0?Sales volumes(mmboe)11.9?Sales revenue($m)429?2P reserves(mmboe)112Rick Wilkinson joined Santos in 1997 and waspreviously Manager Commercial South AustraliaBusiness Unit.Before joining Santos,he wasGroup Manager Energy Retail for the VictorianGas and Fuel Corporation.?Grow p
107、roduction in the Otway Basin usingexisting infrastructure?Develop existing Victorian offshore assets?Add reserves through exploration andcommercial arrangements?Develop business opportunities which meetthe Companys growth criteria?Production(mmboe)1.3?Sales volumes(mmboe)1.3?Sales revenue($m)22?2P r
108、eserves(mmboe)26Bob Hall joined Santos in 1997 as GeneralManager South East Asia Business Unitfollowing Santos acquisition of MIMspetroleum interests.He joined Santos after 27 years experience with MIM.?Maximise production from producing oil fields?Progress commercialisation of Hides andBentu gas re
109、sources?Undertake engineering studies to developthe 2001 Oyong oil discovery in Indonesia?Mature drilling candidates for 2003+?Production(mmboe)0.5?Sales volumes(mmboe)0.5?Sales revenue($m)22?2P reserves(mmboe)27Kathy Hogenson joined Santos USA Corp in2001 as President,based in Houston,Texasfollowin
110、g a 19 year career with internationalexperience at Aminoil/Phillips,MaxusEnergy/YPF and Unocal Corporation.?Grow a talented,experienced staff,withseamless integration between the SUSACHouston office and Adelaide-based virtualteam?Acquire producing properties withsignificant acreage and 3D seismic da
111、taproviding access to high impact explorationopportunities?Internally generate exploration activities?Participate with joint venturers with provenexploration expertise engaged in SUSACscore area?Optimise exploitation reserves andproduction?Rationalise assets through divestment ofnon-core or low impa
112、ct assets?Production(mmboe)1.0?Sales volumes(mmboe)1.0?Sales revenue($m)40?2P reserves(mmboe)MEASURING PERFORMANCEHIGHLIGHTS&OVERVIEWSTRONG SHAREHOLDERRETURNSDuring 2001 Santos delivered total shareholder returns of 10%comprising capital growth anddividends.Including the benefit of the share buy-bac
113、k,total shareholderreturns were 14%.The Companyachieved earnings per share of 72.8cents and declared total ordinarydividends of 30 cents per share.ROAEwas 17.7%and ROACE was 14.1%.Both were strong results,close to the2000 record.STRONG 2001 PRODUCTIONPERFORMANCEIn 2001 production was 55.7 millionboe
114、.The Company achieved recordsales gas and ethane production of219 PJ.Oil production declinedslightly due to ongoing remedialdevelopment activity in several fieldsand field maturity but the decline wasmitigated by the commencement ofproduction from the Legendre oil fieldin May 2001.2001 A ROBUST RESU
115、LTStrong Earnings and Return on EquitySecond highest sales revenue of$1,460 million.Net profit of$446 million,second highest on record.Total dividends of 30 cents per share fully franked.$250 million distributed to shareholders through ashare buy-back.17.7%Return on Average Equity.72.8 cents Earning
116、s per Share.Achieving Operating SuccessStrong production of 55.7 million boe.Two Santos operated offshore exploration discoveriescontributing towards the discovery of 67 million boe mean resource potential.Record sales gas and ethane production of 219 PJ.Financial Performance Provides Opportunity to
117、 GrowLow gearing of 39%.Operating cash flow of$692 million.20012000Sales($million)1,4601,497Operating Profit before Tax($million)628726Operating Profit after Tax($million)446487Cash Flow from Operations($million)6921,023Earnings per Share73 cents80 centsOrdinary Dividends per Share30 cents30 centsCa
118、sh Flow per Share113 cents168 centsTotal Shareholders Funds($million)2,7272,311Return on Avg.Equity17.7%22.3%Return on Avg.Capital Employed14.1%16.7%Gearing(net debt/equity)39%38%Net Interest Cover9.7 9.1 0406080100199920002001DIVIDENDS PER SHARE20Earnings per shareOrdinary dividendSpecial dividend/
119、share buy-backcents5127103023308073060199920002001PRODUCTION BY PRODUCTSales Gas&EthaneCrude OilCondensateLPG13OPERATING CASH FLOWWhile underlying cash flow was strong,total operating cash flow wasaffected by the timing of the 2000income tax liability paid in 2001 andthe timing of collection of rece
120、ivablesand settlement of oil hedges inrespect of 2000.If the 2001 cash flowis adjusted for these timing differences,2001 operating cash flow would havebeen approximately$840 million.SALES REVENUES CLOSE TO RECORD Sales revenues remained steady at$1,460 million,down by 2.5%whencompared with the 2000
121、record.Thedecline in sales revenue was largelydriven by the fall in realised oil pricesin the last quarter of 2001.The fall in sales volumes to 55.1 million boefrom 55.7 million boe was also a contributing factor.SANTOS DELIVERS A STRONGPROFIT RESULTSantos reported an net profit after taxof$446 mill
122、ion in 2001.This isSantos second highest profit ever andis twice that of any year before 2000.Net profit fell by 8.4%due to higherdepletion charges as a result of thereserve revision and the impact in thelast quarter of lower oil prices.In thelast quarter of 2001 the realised priceof oil averaged US
123、$19.33 per boe,a fallof 25%from the previous quarter.STRONG BALANCE SHEETGearing(net debt to equity)hasremained stable,rising slightly to 39%from 38%.Santos low gearingcontinues to provide the Companywith options to grow.The increase innet debt to$1,061 million in 2001reflects the lower operating ca
124、sh flow in 2001,acquisitions completedduring 2001 and the payment of 10cents per share 2000 special dividend.EXPLORATION ANDDEVELOPMENT EXPENDITURE Santos exploration and developmentexpenditure increased by 50%to$660million in 2001.Exploration activityincreased and a mean resource of 67 million boe
125、was discovered.Development activity grew as a resultof increased expenditure on the BayuUndan Liquids Project,the Legendreoil field and Cooper Basin gasdeliverability work.014001600199920002001SALES REVENUESales Gas&EthaneCrude OilCondensateLPG$million12001000800600400200945149714600200300400500600$
126、million199920002001NET PROFIT AFTER TAX100309487446020406080 63%38%39%037570015001125$millionpercentGearingNet debt199920002001FINANCIAL STRENGTH13018671061050010001500199920002001OPERATING CASH FLOW$million53010236920300500600700199920002001EXPLORATION ANDDEVELOPMENT EXPENDITURE200ExplorationDevelo
127、pment$DELIVERING GROWTH THROUGH SMARTER EXPLORATIONEXPLORATION 2001Material results from the 2001 program included:?Successful offshore wildcat discovery Oyong-1 in theEast Java Basin,Indonesia and Corowa-1 in theCarnarvon Basin.?Successful testing of stratigraphic traps in the CooperBasin resulting
128、 in the Wellington and Crowsnest gasdiscoveries.?A significant discovery,Henderson-1 in the Frio Trend of South Texas to follow on from the Runnells discoveryin 2000.?Successful 3D seismic based,back-to-back campaign-drilling programs onshore in the Otway Basin and inthe Quasar area of South-west Qu
129、eensland.Fifty wells were drilled with 26 successes,achieving a 52%success rate.The exploration program realised a resource potential of 67 million boe.EXPLORATION INITIATIVES Santos has taken steps to improve its exploration portfolioand exploration processes in line with the objectivesoutlined in
130、the strategy.?An Exploration Forum has been established comprisingall exploration managers to overview the totalexploration program.?The Exploration Portfolio is ranked by value,materialityand follow-up potential across the Company and thebest opportunities selected.?New Venture strategy and teams a
131、re in place.?A Virtual USA Exploration Team has been formed inAdelaide and is evaluating opportunities in the SouthTexas Frio trend.This enables significant cost savingsthrough the use of the latest web-based technology.?The exploration program is now focussed on wildcatopportunities.2002 EXPLORATIO
132、N PROGRAMSantos aim is to lift its exploration performance through ashift to higher risk but higher reward prospects.To achievethis objective Santos will spend approximately$160 millionon the exploration and appraisal program in 2002.In 2002,the program provides exposure to more than double thelevel
133、 of mean resources discovered during 2001.During 2002,Santos intends to drill 17 wildcat wells for a total expenditure of approximately$120 million.Key wildcat exploration wells include the Maleo-1 prospect in Indonesia,Norfolk-1 in the Carnarvon Basin,Bosavi-1 in PNG,Casino-1 in Victoria and a six-
134、well program inSouth Texas.EXPLORATION01000kilometresIndonesiaPacific OceanPapuaNew GuineaPapuaAustraliaMelbourneIndian OceanHobartDarwinBrisbaneSydneyCanberraPerthAdelaideAustralia&South East AsiaUSASouth Texas6 wellsEastern Queensland3 wellsOffshore Otway Basin1 wellBrowse Basin&Timor Sea2 wellsCa
135、rnarvon Basin2 wellsEast Java Basin1 wellPapuan Basin2 wells2002 WILDCAT EXPLORATIONOPTIMISING THE VALUE OF OUR ASSETSSantos spent$509 million on development in 2001,with significant spending increases in the Cooper Basin,Offshore Australia and the United States.COOPER BASINIn the Cooper Basin,51 de
136、velopment wells were drilled andseven compression projects and 89 fracture stimulationsexecuted.Development activity was largely focussed on gas deliverability to meet strong gas demand and oildevelopment drilling was also increased as a result ofhigher oil prices and attractive opportunities.In the
137、 SouthAustralian section of the Cooper Basin,activity wasfocussed on the Moomba North gas field where 18 wellswere drilled,achieving cost savings of 25%to 35%.In theDullingari gas field,a seven-well drilling campaign wascompleted adding initial gas deliverability of 24 millioncubic feet per day and
138、the oil development program in theMoomba/Big Lake area boosted overall oil production.In South-west Queensland,activity centred on Challum,Baryulah and Barrolka.In Challum five vertical and two dualstacked lateral wells were completed,adding 50 TJ per dayto deliverability.In Baryulah four new wells
139、and six existingwells were connected adding 72 TJ per day.The Barrolkadevelopment program proved unsuccessful with twohorizontal under-balanced and three vertical wells failing to flow at commercial rates.OTWAY BASINSantos spent$15 million on continued development in theOtway Basin with the successf
140、ul drilling of six new fieldexploration wells,the connection of three wells andcontinued facility upgrades.EASTERN QUEENSLANDThe first Santos operated coalbed methane project wasinitiated in the Scotia field.Construction of plant andinfrastructure capable of delivering 25 TJ/d gross sales gascommenc
141、ed in November.Nine wells were drilled and 36fracture stimulations were completed.NORTHERN TERRITORYDevelopment of the Mereenie oil and gas field continuedthrough 2001.OFFSHORE AUSTRALIAA total of$161 million was spent in 2001 in OffshoreAustralia development.Most of this was for the continueddevelo
142、pment of Bayu Undan($107 million),Legendre($22 million),continued development drilling in BarrowIsland and Thevenard Island($19 million)and theRoller/Skate pipeline replacement($11 million).Bayu Undan made good progress through 2001.By year-end,all major contracts for topside and drilling had been l
143、etand facility construction was 34%complete.The Legendrefield,located 100km north of Dampier,in the North-westShelf,began producing in May 2001.Legendre productionaveraged 39,600 bopd(gross)during January 2002.SANTOS USASantos USA Corp ended 2001 with a producing rate of 32mmscf/d,due in large part
144、to a 100%success rate in sevendevelopment wells.This has increased from 10 mmscf/d inJanuary 2001.2002 DEVELOPMENT PROGRAMDuring 2002 Santos plans to spend approximately$560million on the Groups development program.The 2002program includes expenditure of$158 million on the BayuUndan Liquids Project(
145、$107 million in 2001),$159 millionon Cooper Basin gas field development($191 million in2001)and$93 million on construction and fixed assetsincluding a second dew point control unit at Ballera,upgrade of the Moomba plant controls and Scotiacompression and separation facilities.The budget also include
146、s information technology expenditure of$31 million.Santos development activity includes a significantcomponent of US dollar expenditure.The fall of theAustralian dollar from a AUD/USD exchange rate of 65 cents has resulted in a$51 million increase in thedevelopment budget.DEVELOPMENTDEVELOPMENT EXPE
147、NDITURE($million)20012000South Australia153135Queensland/Northern Territory150109Offshore Australia16172South East Asia139USA235Other911Total5093412002 DEVELOPMENT PROGRAM($million)DevelopmentOffshore/OverseasBayu Undan Liquids Project158Carnarvon Basin27USA field development30Other31246Onshore Aust
148、raliaCooper Basin gas159Cooper Basin oil15East Queensland gas11Otway gas5190Construction and Fixed Assets93Information Technology 31TRESERVESDEFINING OUR ASSET BASEAt the end of 2001,Santos had Proved and Probable(2P)reserves of 724 million boe.These reserves are equal to anaverage reserves life of
149、13 years.The year 2001 saw the completion of a major review of all Santos reserves.As a result,Santos is now able to categorise its reserves into Proved(1P),Proved andProbable(2P)and Proved,Probable and Possible(3P)andable to measure Contingent Resources.These estimates are generally in line with in
150、ternational reporting standards.Measuring and having confidence in all components of the reserve base has been a fundamental part of theCompanys strategy and will be a cornerstone ofperformance management in the future.The reserves review has been a substantial task involvingemployees from throughou
151、t the Company assessing over460 oil and gas fields.The review process was announcedin early 2001 and continued until early 2002.The processhas been externally audited to ensure reserve estimates areconsistent across the Company and meet internationalstandards.Proved and Probable reserves have been r
152、eviseddownwards by 169 million boe(a decrease of 18%)in comparison with year end 2000.Around three-quartersof the reduction in 2P reserves has been reclassified asPossible reserves or Contingent Resources to reflect theincreased uncertainty associated with the technicalcomplexity of the assets.While
153、 2P reserves declined from 921 million boe to 724million boe Proved,Probable and Possible(3P)reservesincreased by 218 million boe(net of 2001 production)to1,478 million boe.Contingent Resources increased by over500 million boe,to 1,190 million boe at end 2001.The Companys Contingent Resources substa
154、ntially exceed its Proved and Probable Reserves such thatcommercialisation of Contingent Resources would have a material positive impact on reserves.RESERVES SANTOS SHARE(mmboe)Reserves CategoryYE 2000ProductionRevisionsExpl/Appr/YE 2001Acq AddsProved(1P)(a)56(a)17316Proved and Probable(2P)921561692
155、8724Proved and Probable and Possible(3P)1260561691051478 Contingent Resources(Best Estimate)687-294741190(a)not previously definedPROVED AND PROBABLE RESERVES(SANTOS SHARE)Sales GasCrude Oil CondensateLPGTotal(incl.Ethane)mmbblmmbbl000mmboe PJ tonnesEstimated reservesyear end 20004085968055049212001
156、 Production-219-13-3-258-562001 Revisions-8594-17-1011-1692001 Exploration additions94115219Appraisal existing fields2901927Acquisitions/Divestments120002Estimated reserves year end 2001314288624379724PROVED AND PROBABLE RESERVES(SANTOS SHARE)AreaSales GasOil CondensateLPGand Ethanemmbblmmbbl000 PJ
157、tonnesCooper Basin173926.524.02784Onshore Northern Territory1733.21.00Offshore Northern Territory3211.426.01400Eastern Queensland2701.20.043Southern Australia1330.02.0152Carnarvon Basin29752.09.00PNG02.30.00Indonesia1420.00.00 Santos USA671.30.00TGAS LEADERMAINTAINING MARKET MOMENTUMDuring 2001 Sant
158、os maintained its position as Australiaslargest net gas producer achieving record production of gasand ethane of 219 PJ.In the Cooper Basin,production wasmaintained at last years record levels.In the United Statesgas production increased 41%to 5.2 PJ and in the OtwayBasin production increased 50%to
159、7.2 PJ.In 2001 the Company invested over$230 million in EasternAustralia gas supply,primarily in the Cooper Basin,but alsoin Eastern Queensland and Victoria.Subject to weather conditions,the outlook for gasproduction and sales in 2002 is expected to remain strong.During April 2002 Santos will commen
160、ce first gas salesfrom the Scotia gas field to CS Energy,the QueenslandGovernment owned power generator.Construction of theScotia gas plant,delivery system and export pipeline isnearing completion.Gas from the Scotia field will supply CSEnergys gas fired turbine at the Swanbank Power Station.The agr
161、eement is for up to 120 PJ of gas over 15 years.In 2002 Santos expects to invest a further$280 million inEastern Australia gas development.Demand for gas in Eastern Australia is expected to keepgrowing and to require new sources of supply.ABARE(anAustralian Government economic research agency)expect
162、sannual primary gas consumption in Eastern and SouthernAustralia to nearly double between 2000 and 2020,increasing from 544 PJ to 1,020 PJ.Santos has significant gas interests in Southern and CentralAustralia,Papua New Guinea and the Timor Sea and theCompany is keen to see these interests developed
163、fordomestic sales and for LNG,as appropriate.250199720002001GAS PRODUCTIONSantos 2001 production was 55.7 million boe,close to therecord 56.0 million boe achieved in 2000.The Company achieved record sales gas and ethaneproduction of 219 PJ,up by 2.0%,due to increasedcontributions from the South-west
164、 Queensland section ofthe Cooper Basin,the Otway Basin,the United States andEast Spar in the Carnarvon Basin.In South-west Queensland,gas production rose by 10.5%to 72.6 PJ as new fields were brought into production tomeet demand in Eastern Australia.In the United States connection of theRunnells 3,
165、5 and 7 wells during thesecond half of the year led to a 41%increase in gas production to 5.2 PJ.United States gas production isexpected to double in 2002 when theRunnells field and the Henderson-1gas discovery contribute for a full year.Otway Basin gas productionincreased by 50%to 7.2 PJ due to two
166、of the six onshore gas discoveries andone development well being quicklybrought on to production.Otway Basin production isexpected to double when the remaining three discoveriesare connected to the Victorian gas system.Oil production was 6.4%lower in 2001 as a result ofnatural field decline in South
167、-west Queensland,Timor Sea,Timor Gap and Barrow Island as well as waterbreakthrough at Stag and remedial maintenance work at Elang/Kakatua and Thevenard fields.The decline in oilproduction was mitigated by the earlier than expectedcommencement of production from the Legendre oil facilitywhich produc
168、ed 1.5 million barrels(net)of oil during 2001.It is anticipated that Legendre production will remain onplateau at approximately 40,000 bopd(gross)until thelatter part of 2002.The Elang-2 well was shut-in for anextended period due to a partially collapsed subsea tree.The Roller and Skate fields at Th
169、evenard were also shut-in for an extended period due to the repair of the field pipeline.Condensate production during 2001 declined by 2%to 3.3 million boe due to lower gas production in the SouthAustralian Cooper Basin.In 2001 LPG production was alsoaffected by reduced yields due to changing field
170、mix anddeclined by 1.8%to 258,400 tonnes(2.2 million boe).EXPLOITING OUR RESOURCE BASE?Record sales gas and ethane production of 219.3 PJ.?Legendre oil production commenced 17 May 2001 and averaged 28,300 bopd(gross)in 2001.?United States production grew by 39%to over 1.0 million boe as the Runnells
171、 discoveries were brought on line.PRODUCTION23PRODUCTIONSTATISTICSTotal 2001Total 2000Field UnitsmmboeField UnitsmmboeSales Gas and Ethane(PJ)Cooper Basin165.728.5165.728.6Surat/Denison10.61.811.21.9Amadeus10.91.910.61.8Otway7.21.24.80.8Carnarvon19.73.419.03.3USA5.20.93.70.6Total Production219.337.7
172、215.037.0Total Sales Volume217.837.4213.736.7Total Sales Revenue($million)617.9588.1Crude Oil(000 bbl)Cooper Basin3079.13.13242.83.3Surat/Denison115.80.1107.90.1Amadeus306.00.3343.10.4Elang/Kakatua870.50.91397.71.4Legendre1461.31.5-Thevenard1046.71.01696.81.7Barrow1097.61.11201.61.2Jabiru/Challis288
173、.80.3333.20.3Stag3736.23.74630.64.6SE Gobe510.70.5425.20.4USA83.50.175.20.1Other12.80.017.70.0Total Production12609.012.613471.813.5Total Sales Volume12322.412.313475.013.5Total Sales Revenue($million)561.0627.1Total 2001Total 2000Field UnitsmmboeField UnitsmmboeCondensate(000 bbl)Cooper Basin2291.9
174、2.12387.92.2Surat/Denison22.30.021.80.0Otway70.30.153.20.0East Spar1066.31.01079.91.1USA39.40.019.30.0Total Production3490.23.23562.13.3Total Sales Volume3633.93.43602.83.3Total Sales Revenue($million)165.5157.5LPG(000 t)Cooper Basin255.12.2263.12.2Surat/Denison3.30.0-Total Production258.42.2263.12.
175、2Total Sales Volume232.92.0252.92.1Total Sales Revenue($million)115.3124.4TOTALProduction(mmboe)55.756.0Sales Volume(mmboe)55.155.7Sales Revenue($million)In June 2001,a serious incident occurred at Moomba whichtragically resulted in the loss of one of Santos employees.The incident involved an uninte
176、nded release of volatileproduct that subsequently ignited.Santos has thoroughlyinvestigated the incident and the findings have beenpresented to Santos employees.A number of initiatives have been undertaken since theinvestigation of the incident.Santos strives for the highest standard of occupational
177、health and safety(OH&S)and is fully committed to a workenvironment free of injury and illness.While this has notyet been achieved,the trend since 1997 indicates significantprogress towards this goal.The key measure of safety performance used is the Total Recordable Case Frequency Rate(TRCFR)whichis
178、defined as the number of Recordable Cases(MedicalTreatment and Lost Time Injuries)per million hoursworked.Santos investigates and reports all accidents,nearmisses and hazards for employees and contractors.Focussing on near misses and hazards and eliminatingor controlling their underlying causes are
179、key factors inachieving sustained improvement in safety performance.Safety is the responsibility of all employees and individualsare provided with comprehensive safety training and use ofthe Incident Management Reporting System.This is a PC-based tool that provides for a single point of data capture
180、on all injuries,near misses,and observed hazards.It is anopen database and educational mechanism that can bewidely accessed by employees.SAFETY PERFORMANCEThe TRCFR for Santos and contractors combined for 2001was 8.8(8.0 in 2000)and the other key measure,LostTime Injury Frequency Rate(LTIFR),was 3.2
181、.Santos is committed to achieving contractor safetyperformance that is comparable to Santos employees.While not yet achieved in all areas,many contractors nowachieve a safety performance matching and,in some cases,better than that of Santos employees.The improvement incontractor performance has cont
182、inued with a further 22%reduction in TRCFR from 2000 to 2001.2002 PLANS THE WAY FORWARDDuring 2002,further initiatives will be implemented toprovide for continuous improvement in safety.The reorganisation of Santos provides the opportunity toprogress towards a more integrated approach to safetymanag
183、ement across the organisation and this will becoordinated as a corporate group function.One of the initiatives for 2002 is a Safety Leadershipprogram that will be presented to supervisory personneland others with a specific responsibility for safety in theworkplace.There is commitment to,and plans a
184、re being progressedfor a comprehensive risk-based assessment program forthe Companys assets.Santos will conduct furtherstructured risk assessments of facilities and use these toidentify specific areas that may require further analysis orspecial safety management practices.SAFETYMANAGING THE WORK ENV
185、IRONMENT25HUMAN CAPITALDeveloping Santos human capital is an important part oftransforming Santos.The Company has a talented workforce of over 1,700people,including highly skilled geoscientists,engineers,commercial managers and field staff whose initiative andcreativity are essential to maximising t
186、he value of theCompanys physical capital and implementing the growthstrategy.Santos is committed to assembling and supporting globallycompetitive management,technical and operational teams.This will be achieved by encouraging talent already withinthe Company and recruiting top quartile professionals
187、externally.There is a substantial effort under way to create a moreproductive Company culture that is more transparent andopen,and where people are energised and shareknowledge.Some of the elements of the change include:ENCOURAGING PARTICIPATION Employee contributions and suggestions are nowencourag
188、ed at all levels.Barriers between employees,suchas those based on status and hierarchy,are being brokendown generally,and employees are being encouraged totake on individual responsibility on the principle that alarge part of the knowledge and experience needed for anyspecific issue already exists w
189、ithin the Company.Santos Corporate Strategy has been widely disseminatedthroughout the Company and is now owned by employeesgenerally.Employees have a clear focus on the Companysstrategic direction and all functions are aligned.PROVIDING INFORMATION Employees are being provided with the information
190、andtools they need to be able to do their jobs as well aspossible and to create commitment to the organisation.A key project has been the upgrading of Santos intranetwhich has been transformed into a key information sharing tool.TEAMWORKTeamwork is being actively encouraged,both in the fieldand acro
191、ss functional areas.Important examples includethe integrated management of the Cooper Basin,andforums such as the Exploration Forum and the Gas Forum.A virtual team comprising explorationists and utilisingleading technology operates between Australia and theUnited States.REMUNERATION A modernised re
192、muneration and reward policy has been developed which standardises conditions across the Company.One example of standardisation is in creatinga uniform superannuation scheme.PERFORMANCE A performance management system has been developedwhere performance is linked to strategic objectives andemployees
193、 will be rewarded in line with the outcomes theyachieve.In this way,individual responsibility is encouragedand recognised.This system will be progressively rolled outto employees throughout the coming year.These changes take time,but the overall aim is to liftSantos performance by making it the empl
194、oyer of choicefor those seeking careers in the oil and gas sector.Santos iscommitted to empowering individuals and helping them todevelop the skills they need to best perform.In this regard,career and succession management,professionaldevelopment and training are ongoing priorities.HUMAN RESOURCESFO
195、CUS ON PEOPLEIn 2001,Santos revised its Environmental Policy.Thispolicy was originally developed in 1990 and updated in1997.The new version is titled Santos EnvironmentalVision,Commitment&Policy.The cornerstone of the new policy is the statement thataddresses the role of individuals in managing thee
196、nvironment,which is far more explicit than past policies.As with safety,environmental stewardship is theresponsibility of all Santos employees and contractors.This includes all Santos employees and contractors fromthe Boardroom to the wellsite.Everyone is obliged to reportany environmental hazard,ne
197、ar miss or incident,so that itmay be investigated,rectified and recurrence prevented.The policy emphasises partnership with stakeholders andfocuses on the concept of ethical behaviour and safeoperations.It clearly reaffirms that the term Environment isto be considered in a broad context and encompas
198、ses notonly nature and the physical environment,but includespeople,their work and the things they value.This last aspect of the Companys ongoing environmentalmanagement program can be illustrated by the views of W H(Harry)Butler,who has been conducting(externalspecialist)environmental audits of Sant
199、os field operationssince 1982.In an address to the Santos Board in November2001,he indicated that,The latest seismic dune and roadcrossings are among the best I have ever seen in thisindustry,whilst Santos procedures for identifying,avoidingand recording cultural heritage sites are,in my view,at ast
200、andard of worlds best practice.The new policy also states,We intend to shrink and lighten the environmental footprint of our operations andNew ideas and new ways of avoiding or minimising ourenvironmental impacts will be encouraged and rewarded.A good example of responding to this challenge is there
201、storation of the Baryulah pipeline in Queensland.During 2001,Santos constructed a pipeline from Baryulahto the Ballera Gas Plant.The crossing of the Cooper Creekhad to be undertaken while there was water in it.Minimaldisturbance was achieved by reducing the width of theeasement,the installation of s
202、ilt curtains and re-routingthe pipeline to avoid a tree with a nest.The channel wasreprofiled to its former profile and clay compacted to itsprevious density to ensure that there would be no changeto the water flow and also to prevent erosion.During construction,the topsoil(containing seeds andnutri
203、ents)was kept separate from the subsoil so that thetopsoil could be respread in order to ensure maximumrevegetation of the easement.Six months after construction,the easement is alreadystarting to revegetate with small shrubs.Monitoring will beongoing to ensure its continued success.This example ind
204、icates the enthusiasm with which Santosenvironmental team and personnel in the field haveembraced the Companys strategy.While Santos has historically focussed attention onaddressing environmental issues in the field,the Companyrecognises increasing community expectations relating tosustainability an
205、d public reporting on environmentalmatters.Collection of data aimed at the future publicationof a sustainability report has commenced.Santos goal oftop quartile performance includes environmentalachievements and the Company is working towardsqualifying for inclusion in sustainability indices.The fut
206、ure priorities for Santos also include successfullyaddressing increased policy and compliance requirementsand continuing the development of an appropriategreenhouse strategy.A dedicated Greenhouse Manager has been appointed for this purpose.ENVIRONMENTWORKING WITH NATURE27Santos recognises and embra
207、ces the obligation ofcorporate citizenship and values the relationships theCompany has with communities across Australia.In 2002 and beyond,Santos community support programwill increase its focus on youth and education whilecontinuing to support organisations,activities and eventsthat share Santos v
208、alues.In this regard,Santos supports a range of cultural,educational and not-for-profit organisations that areimportant to these communities.Santos principal sponsorship of the Adelaide SymphonyOrchestra and the key support provided to the School ofPetroleum Engineering and Management at AdelaideUni
209、versity exemplifies this commitment.One of Santos most significant sponsorships in 2001 wasthe support of the exhibition A Gap in Nature,Discoveringthe Worlds Extinct Animals,at the South AustralianMuseum.This is an exhibition of 103 life size paintings of extinctspecies by the artist Peter Schouten
210、,complemented by theresearch of Dr Tim Flannery.It highlights the reasons whyresources need to be managed responsibly.The exhibitionwill tour to other capital cities in 2002 and 2003.Also in South Australia,Santos made a contribution toFoodbank,a not-for-profit organisation that organises andmanages
211、 the distribution of food to a variety of agenciesthat provide support to people in need.In Whyalla,Santos supported the inaugural OutbackGames and the Air Sea Rescue Squadron,an organisationthat plays an important search and rescue role in the localcommunity.Santos continued its support of the Quee
212、nsland Art Gallery,sponsoring an exhibition of work by the colonial artist,Conrad Martens,the only major colonial artist to work inthat state.This Centenary of Federation exhibitioncomprises 60 works from his journey through South-eastQueensland in the 1850s.Over 60,000 people have visitedthis exhib
213、ition in Brisbane,Toowoomba and Warwick.In Cunnamulla,Santos donated equipment and materialsto a youth project called The Shed.The Shed is a placewhere young people can learn practical skills such aswelding and metal fabrication and at the same timedevelop important life skills.Santos community prog
214、ram in the Western District of Victoria included contributions to a range of localorganisations including the Port Campbell Surf Life SavingClub,the Nirrandra Recreation Reserve and a Year of theVolunteer Project organised by the Moyne Shire Council.During 2001 Santos continued its sponsorship of th
215、eDarwin Festival maintaining the Companys closerelationship with the Northern Territory community.COMMUNITYEMBRACING CORPORATE CITIZENSHIPBOARD OFDIRECTORSSTEPHEN GERLACHLLBAge 56.Director since 5 September1989 and Chairman since 4 May 2001.Chairman of the EnvironmentalCommittee and member of theRem
216、uneration Committee of theBoard and Chairman of SantosFinance Ltd.Chairman of Amdel Ltd,Equatorial Mining Ltd,Elders AustraliaLtd and Beston Pacific VineyardManagement Ltd.Director ofSouthcorp Holdings Ltd,FuturisCorporation Ltd,Challenger BestonLimited and Elders Rural Services Ltd.Former Managing
217、Partner of theAdelaide legal firm,Finlaysons.JOHN CHARLES ELLICE-FLINT BSc(Hons)Age 51.Managing Director since 19 December 2000,member of theEnvironmental Committee of theBoard,Director of Santos Finance Ltdand also Chairman of other Santos Ltdsubsidiary companies.Twenty-sixyears experience in the i
218、nternationaloil and gas industry with Unocal,including as Senior Vice President:Global Exploration and Technologyand Vice President:CorporatePlanning and Economics.PETER CHARLES BARNETTFCPAAge 61.Director since 31 October 1995and member of the EnvironmentalCommittee of the Board.Director ofMayne Gro
219、up Ltd,AMCIL Ltd andOpis Capital Ltd.Former ManagingDirector and Chief Executive Officer ofPasminco Ltd and Chief ExecutiveOfficer of EZ Industries Ltd.FRANK JOHN CONROYBCom,MBA,FAIM,FAICD,FAIBFAge 59.Director since 19 October1999 and Director of Santos FinanceLtd.Chairman of St George Bank Ltd,Aust
220、ralian Pharmaceutical IndustriesLimited and ORIX AustraliaCorporation Ltd.Director of FuturisCorporation Ltd.Former ManagingDirector of Westpac BankingCorporation.GRAEME WILLIAM McGREGOR AO,BEc,FCPA,FCA,FAIM,FAICDAge 63.Director since 3 September1999.Chairman of the AuditCommittee of the Board and D
221、irectorof Santos Finance Ltd.Director ofFosters Brewing Group Ltd,NufarmLtd,Were Securities Ltd andCommunity Foundation Network Ltd.Member of the Financial ReportingCouncil.Former Executive DirectorFinance of The Broken Hill ProprietaryCompany L29MICHAEL ANTHONY OLEARY DipMinE,BSc,FAusIMM,FAIMAge 66
222、.Director since 15 October1996 and member of theEnvironmental Committee of theBoard.Deputy Chairman of Bank of Western Australia Ltd.FormerChairman of Hamersley Iron,ArgyleDiamonds,Dampier Salt and formerDirector of Rio Tinto Ltd and Rio Tinto plc.PROFESSOR JUDITH SLOAN BA(Hons),MA,MScAge 47.Directo
223、r since 5 September1994.Chairperson of theRemuneration Committee andmember of the Audit Committee of the Board.Chairperson of SGICHoldings Ltd and Director of MayneGroup Ltd and a Board member of theAustralian Broadcasting Corporation.Former Professor of Labour Studies at the Flinders University of
224、SouthAustralia and Director of the NationalInstitute of Labour Studies.IAN ERNEST WEBBER AO,BE,ATS,FCIT,FAIMAge 66.Director since 16 February1993 and member of the AuditCommittee and RemunerationCommittee of the Board.Director of Pacific Dunlop Ltd and WMC Ltd.Former Managing Director andDeputy Chai
225、rman of Chrysler AustraliaLtd and Managing Director ofMitsubishi Motors Australia Ltd.Former Chairman of Mayne NicklessLtd Group.ONE SANTOS The Senior Management TeamCORPORATEChief Executive Officer and Managing Director-John Ellice-FlintExecutive General Manager Corporate-John ReynoldsChief Informa
226、tion Officer-Einar VikingurGeneral Manager Drilling-Frank JonesGeneral Manager Human Resources-Kevin CoatesGroup General Counsel and Company Secretary-Michael RobertsGeneral Manager Finance and Investor Relations-Graeme BethuneGeneral Manager Accounting-Don PriestleyManager Strategic Planning and Pe
227、rformance-Geoff BrownVOLUME STREAMGeneral Manager Central Australia-Jon YoungGeneral Manager Northern Australia-Rod RaynerGeneral Manager Western Australia-Paul MooreGeneral Manager Engineeringand Facilities-Denis DareManager Reservoirand Production Engineering-Wilf LammerinkGROWTH STREAMGeneral Man
228、ager Southern Australia-Rick WilkinsonGeneral Manager South East Asia-Bob HallPresident Santos USA Corp-Kathy HogensonGeneral Manager Exploration-Jacques GouadainGeneral Manager Gas Commercialisation and Marketing-Bruce WoodManager Corporate Development-Janet CCORPORATEGOVERNANCECORPORATE GOVERNANCE
229、STATEMENTThe purpose of this statement is toprovide details of the main corporategovernance practices the Company hadin place during the past financial year.The Board of Santos Ltd is committedto good corporate governance and tothis end has had in place for a numberof years formal guidelines recordi
230、ngthe Boards policy on:Boardcomposition and appointment ofchairman;Board membership andattendance;the appointment andretirement of Directors;independentprofessional advice;compensationarrangements;external auditors;riskmanagement;and ethical standards.Except where otherwise indicated,references in t
231、his statement to the“Board guidelines”are to the formalguidelines in force during the pastfinancial year.The Board guidelines arereviewed by the Board on an annualbasis and as required.BOARD OF DIRECTORS AND ITSCOMMITTEESThe Board is responsible for the overallcorporate governance of the Companyincl
232、uding its strategic direction andfinancial objectives,establishing goalsfor management and monitoring theattainment of these goals.To assist in the effective execution of its responsibilities,the Board has established a number of BoardCommittees including a Nominationand Remuneration Committee(which
233、during the year was reconstituted intoseparate Nomination andRemuneration Committees),an AuditCommittee and an EnvironmentalCommittee.All Committees are chairedby,and comprised only of,non-executive Directors,except for theEnvironmental Committee,whichincludes the Managing Director as a member.The B
234、oard guidelinesprescribe that the Board is to meet at least 10 times a year.All current non-executive Directors,including the Chairman,are consideredto be independent Directors,asdefined in the 1999 guidelines of theAustralian Investment and FinancialServices Association.COMPOSITION OF THE BOARDThe
235、names and details of theexperience,qualifications,age,specialresponsibilities and shareholdings of each Director of the Company areset out on pages 28 and 29 of thisAnnual Report.The composition of the Board isdetermined in accordance with theCompanys Constitution and the Boardguidelines including:t
236、he Board is tocomprise a minimum of five and amaximum of 10 Directors(exclusive of the Managing Director);the Boardshould comprise a substantial majorityof non-executive Directors(currentlythe Board comprises seven non-executive and one executive Director);there should be a separation of theroles of
237、 Chairman and Chief ExecutiveOfficer of the Company;and theChairman of the Board should be a non-executive Director.Under the Board guidelines,it is theresponsibility of the NominationCommittee to devise the criteria for,and review membership of,andnominations to,the Board.The primarycriteria adopte
238、d in selection of suitableBoard candidates are their capacity tocontribute to the ongoing developmentof the Company having regard to thelocation and nature of the Companyssignificant business interests and tothe candidates age and experience byreference to the age and diversity ofexperience of exist
239、ing Board members.When a Board vacancy exists or whereit is considered that the Board wouldbenefit from the services of a newDirector with particular skills,theNomination Committee hasresponsibility for proposing candidatesfor consideration by the Board and,where appropriate,engages theservices of e
240、xternal consultants.Prior to appointment,each Director isprovided with a letter of appointmentwhich,inter alia,encloses a copy of the Board guidelines.The expectationsof the Board in respect to a proposedappointee to the Board and theworkings of the Board and itscommittees are conveyed in interviews
241、with the Chairman and access providedto appropriate executives in relation todetails of the business of the Company.Under the Companys Constitutionapproximately one-third of Directorsretire by rotation each year andDirectors appointed during the year are required to submit themselves for election by
242、 shareholders at theCompanys next Annual GeneralMeeting.The Board guidelines prescribe that,under normal circumstances,Directors should retire at the firstAnnual General Meeting after reachingthe age of 72 years and not seek re-appointment.The current members of theNomination Committee,all of whomar
243、e non-executive Directors,are Mr S Gerlach(Chairman),Mr P C Barnett,Mr F J Conroy,Mr G W McGregor,Mr M A OLeary,Professor J Sloan and Mr I E Webber.INDEPENDENT PROFESSIONALADVICEThe Board guidelines set out thecircumstances and procedurespursuant to which a Director,infurtherance of his or her dutie
244、s,mayseek independent professional adviceat the Companys expense.Thoseprocedures require prior consultationwith,and approval by,the Chairmanand assurances as to the qualificationsand reasonableness of the fees of therelevant expert and,under normalcircumstances,the provision of theexperts advice to
245、the Board.REMUNERATIONThe Remuneration Committee is responsible for reviewing theremuneration policies and practices of the Company including:thecompensation arrangements forexecutive Directors and seniormanagement;the Companyssuperannuation arrangements;31employee share and option plans;and,within
246、the aggregate amount approvedby shareholders,the fees for non-executive members of the Board.Further information on these matters is included at pages 40 and 41 of thisAnnual Report and details of theCompanys employee share and optionplans are provided in Note 19 of theFinancial Report.No non-execut
247、iveDirector may participate in any of theCompanys share or option plans.Information in respect to indemnityand insurance arrangements forDirectors and senior executives appearsat page 41 of this Annual Report.The current members of theRemuneration Committee,all of whomare non-executive Directors,are
248、:Professor J Sloan(Chairperson),Mr S Gerlach and Mr I E Webber.AUDIT COMMITTEEThe Board guidelines require the Board to continue in existence anAudit Committee of the Board.The role of the Audit Committee isdocumented in a Charter,approved by the Board.The Charter was revisedduring the year.The Comm
249、ittee is required to meet at least three times per year andmembers may raise any mattersconsidered desirable.The role of the Audit Committeeincludes:examining the accountingpolicies of the Company to determinewhether they are appropriate and inaccordance with generally acceptedpractices;ensuring tha
250、t truth andfairness is reflected in the preparationand publication of the Companysfinancial reports;meeting regularlywith the auditors to reinforce theindependence of the auditors,todetermine the appropriateness ofinternal and external audit procedures,to review the performance of theauditors and to
251、 provide the auditorswith confidential access to the Board;and referring matters of concern to theBoard as appropriate,and consideringissues which may impact on thefinancial accounts of the Company.Minutes and recommendations of theAudit Committee are distributed at thenext Board Meeting.The current
252、 members of the AuditCommittee are:Mr G W McGregor(Chairman),Professor J Sloan and Mr I E Webber.RISK MANAGEMENTThe Board has in place a number ofarrangements and internal controlsintended to identify and manage areasof significant business risk.Theseinclude the maintenance of:BoardCommittees;detail
253、ed and regularbudgetary,financial and managementreporting;established organisationalstructures,procedures,manuals andpolicies;audits(including internal andexternal financial,environmental andsafety audits);comprehensiveinsurance programs;and the retentionof specialised staff and externaladvisors.?Ma
254、nagement ofenvironmental risk-environmentalrisk is managed through:comprehensive environmentalmanagement systems;Environmental Committees atBoard and management levels;the retention of specialistenvironmental staff and advisors;regular internal and externalenvironmental audits;andimposing environmen
255、tal care as a line management responsibility.The current members of theCommittee are:Mr S Gerlach(Chairman),Mr P C Barnett,Mr MA OLeary and Mr J C Ellice-Flint.?Management of exploration risk-exploration risk is managedthrough internal control systemswhich include:formalised riskassessment procedure
256、s at theBusiness Unit level;Corporatereview in both prospect andhindsight;Board approval ofexploration budgets;and regularreporting on progress to theBoard.External reviews are alsoundertaken as necessary.?Investment appraisal-theCompany has clearly definedprocedures for capital expenditure.These in
257、clude:annual budgets;detailed appraisal and reviewprocedures;levels of authority;anddue diligence requirements whereassets are being acquired.?Financial reporting-acomprehensive budgeting systemexists with an annual budgetapproved by the Board.Monthlyactual results are reported againstbudget and,whe
258、re applicable,revised forecasts for the year areprepared and reported to theBoard.Speculative transactions areprohibited.Further details relatingto financial instruments andcommodity price risk managementare included in Note 33 of theFinancial Report.?Functional speciality and businessunit reporting
259、-all significant areasof Company operations are subjectto regular reporting to the Board.The Board receives regular reportson the performance of eachBusiness Unit and on exploration,development,finance,liquidsmarketing,safety,government,investor relations andenvironmental matters.Senior management a
260、ttend Board and Committee meetings,at which they report to Directors within theirrespective areas of responsibility.Thisassists the Board in maintaining itsunderstanding of the Companysbusiness and assessing the seniormanagement team.Where appropriate,advisers to the Company attendmeetings of the Bo
261、ard and of its Committees.Under the Companys Delegation ofAuthority,the Board is responsible,inter alia,for the approval of theannual corporate budget and forsignificant:acquisitions and disposalsof assets;expenditure decisionsoutside of the corporate budget;hedging of product sales;salescontracts;a
262、nd financing arrangements.ETHICAL STANDARDSIn pursuance of the promotion of highstandards of corporate governance,theBoard has,without adopting a formalcode of ethics,established andmaintained various internal standardswhich extend beyond requirementsprescribed by law.SHARE TRADING GUIDELINESIn addi
263、tion to the provisions of theCorporations Act,which apply to allSantos employees,the Company hasdeveloped specific written guidelinesthat prohibit Directors and executivesfrom acquiring,selling or otherwisetrading in the Companys shares if they possess material price-sensitiveinformation which is no
264、t in the public domain.The guidelines provide that Directorsand executives may,in general,onlytrade in Santos securities in the 21days commencing three days after theannouncement of the Companys halfyearly results,annual results andAnnual General Meeting.Sharetrading has also been permitted whenthe
265、Company has a current disclosuredocument(prospectus)lodged withASIC.Under the guidelines,Directorsmust inform and receiveacknowledgement from the Chairmanor his representative(and executivesfrom the Secretary or a personappointed by the Board)of anintention prior to any dealings insecurities either
266、by themselves or by their associates.CONTINUOUS DISCLOSUREThe Company has developed policiesand procedures in accordance with its commitment to fulfilling itsobligations to shareholders and thebroader market for continuousdisclosure.The policy is regularlyreviewed and updated for changes to the law
267、and the Listing Rules.All material information disclosed to the ASX is posted on theCompanys website .Licence Area%InterestLicence Area%InterestLicence Area%InterestSouth AustraliaCooper Basin(Fixed Factor Area)(PPLs 6-20,22-25,27-61,63-75,78-117,119,120,124,126-130,132-140,143-146,148-151,153-155,1
268、57,159-166,169-181,183-186,188-190,192,193,195,196&198)59.8Patchawarra East Joint Operating Area(PPLs 26,76,77,118,121-123,125,131,142,147,152,156,158,167,182,187,191,194&197)69.4SA Unit and Downstream59.8QueenslandSouth-west QueenslandATP 259PNaccowlah(PLs 23-26,35,36,62,76-79,82,87,105,107,109,133
269、,149,175,181&182)55.5Total 66(PLs 34,37,63,68,75,84,88,110,129,130,134,140,142-144,150,168,178&Pipeline Licences No 8&14)70.0Wareena(PLs 113,114,141,145,148,153,157&158)61.2Innamincka(PLs 58,80,136,137&159)70.0Alkina72.0Aquitaine A(PLs 86,131,146&177)52.5Aquitaine B(PLs 59-61,81,83,85,97,106,108,111
270、,112,132,135,139&147)55.0Aquitaine C(PLs 138&154)47.850/40/10(PL 55)60.0SWQ Unit(PLs 5,9,12-13,16-18,31,34-40,46-48,62&64-72)60.1ATP 267P(Nockatunga)(PLs 33,50&51)59.1ATP 299P(Tintaburra)(PLs 29,38,39,52,57,95,169&170)89.0Surat BasinATP 212P(Major)(PLs 30,56&74)15.0ATP 336P(Kalima)85.0ATP 336P(Roma)
271、(PLs 3-13,93&Pipeline Licence No 2)85.0ATP 336P(Waldegrave)(PLs 10-12,28,69&89)46.3ATP 378P(Scotia/Burunga)(PL 176)100.0ATP 470P(Redcap)(PL 71)10.0ATP 471P(Bainbilla)(PL 119)16.7ATP 471P(Myall)51.0ATP 552P(Grail North)35.5ATP 552P22.0ATP 685P(Cockatoo Creek)100.0Boxleigh100.0PL 1(Moonie)100.0PL 1(2)
272、(Cabawin)100.0PL 1(2)(Cabawin Farm-out)50.0PL 2(Kooroon)52.5PL 2C(Alton)100.0PL 2C(Alton Farm-out)63.5PL 5(Barcoo)85.0PL 5(Drillsearch)21.3PL 5(Mascotte)42.5PL 11(Snake Creek East)25.0PL 12(Trinidad)92.5PL 1770.0PL 17(Bennett Exclusion)100.0PL 17(Leichardt Exclusion)70.0PLs 21,22,27&64(Balonne)12.5D
273、enison TroughATP 337P(PLs 41-45,54,67,173,183&Pipeline Licences No 10&11)50.0ATP 553P50.0FacilitiesWungoona Processing Facilities50.0Moonie to Brisbane Pipeline100.0Jackson Moonie Pipeline82.8Ballera to Mt Isa Pipeline18.0VictoriaOtway BasinPEP 153100.0PEP 15490.0PEP 16060.0PLs 4,5&7100.0PLs 6,9&109
274、0.0VIC P/4450.0VIC/RL7(La Bella)10.0VIC/RL8(Minerva)10.0Gippsland BasinVIC/RL1(Golden Beach)66.7VIC/RL2(Kipper)20.0VIC/RL3(Sole)70.0TasmaniaBass BasinT/RL1(Yolla)5.0Northern TerritoryAmadeus BasinOL 3(Palm Valley)48.0OLs 4 and 5(Mereenie)65.0RL2(Dingo)65.7Mereenie-Brewer Estate Pipeline65.0Offshore
275、Northern AustraliaCarnarvon BasinEP 6128.6EP 6228.6SANTOS GROUP INTERESTSas at 8 February Licence Area%InterestLicence Area%InterestLicence Area%InterestEP 6535.7EP 6635.7EP 32525.0EP 35735.7L1H28.6L1O28.6TL/215.0TL/328.6TL/435.7TL/735.7TP/228.6TP/3(1&2)35.7TP/3(3)75.0TP/7(1-3)43.7TP/7(4)18.7TP/1333
276、.3TP/1428.6WA-1-P22.6WA-7-L28.6WA-8-L(Talisman)37.4WA-13-L(East Spar)45.0WA-15-L54.2WA-15-L(Lower Area)36.0WA-20-L(Legendre)22.6WA-149-P18.7WA-191-P33.4WA-208-P20.0WA-209-P36.0WA-214-P20.0WA-264-P66.7WA-298-P20.0Browse BasinWA-239-P10.0WA-242-P33.3WA-281-P27.5WA-282-P42.5WA-283-P27.5Bonaparte BasinN
277、T/RL1(Petrel)95.0WA-6-R(Petrel West)95.0WA-18-P(Tern)100.0Timor SeaAC/L1(Jabiru)10.3AC/L2(Challis)10.3AC/L3(Cassini)10.3AC/P1533.3NT/P4740.0NT/P4840.0NT/P61100.0Timor GapZOCA 91-0125.0ZOCA 91-1221.4Bayu-Undan Gas Field11.8Papua New GuineaPDL 131.0PDL 315.9PL 33.6PPL 15735.3PPL 18942.6PPL 19031.3PPL
278、20648.0PPL 22840.0PRL 435.3PRL 535.3SE Gobe Unit9.4IndonesiaBentu61.1Korinci-Baru61.1Madura Offshore75.0Sampang45.0Warim20.0United States of AmericaAvg working interestGulf of Mexico EC 15580.0 EI 5920.0 EI 14320.0 EI 33520.0 VR 24775.0 WC 27250.0 WC 27650.0 WC 58280.0 WC 63250.0South Texas Aransas
279、Bay25.0 Ashland Deep62.0 Birdie Porter Green50.0 Fuhrken25.0 Lafite/Allen Dome40.0 Mountainside25.0 Oelrich100.0 Queen City47.0 Remmers64.0 Suemaur JV25.0 DSANTOSAREAS OF OPERATION050kilometresMoombaBalleraJacksonNew South WalesQueenslandSouthAustralia0200kilometresWesternAustraliaNorthernTerritoryZ
280、one ofCo-OperationTerritory ofAshmore&Cartier IslandsIndian OceanPetrelTernKakatuaElangJahalJabiruChallisSkuaBayu-UndanAC/P1591-1291-01AC/L3AC/L4WA-6-RNT/RL1WA-18-PWA-239-PWA-242-PWA-282-PWA-281-PWA-283-PTimorNT/P 47NT/P 48NT/P 61DarwinAC/L2AC/L10100kilometresWesternAustraliaStagEast SparWA-191-P(1)
281、WA-209-PWA-8-LWA-214-PWA-264-PEP 325WA-208-PWA-20-LWA-261-PTP/7(1)WA-214-PWA-13-LWA-15-LWA-191-P(2)TP/7(4)TL/2TP/7(3)WA-149-PTP/7(2)WA-1-P(1)WA-1-P(3)WA-1-P(2)TL/7TL/4EP 61(1,2,3)TP/13TP/14TP/2EP 62(1,2,3)L 1 HL 10EP 65EP 357TP/3(2)WA-298-PWA-24-P(1)TP/3(1)WA-24-P(2)Barrow IslandThevenard IslandRein
282、deerSouth Chervil ExclJohn BrookesLegendExplorationProductionSantos acreageOil fieldGas fieldProspectOil pipelineGas pipelineEthane pipeline01000kilometresAlice SpringsAmadeus BasinCooper/EromangaBasinsSurat Basin&Denison TroughMelbournePerthKalgoorlieMt IsaMcArthurRiverPt BonythonBrowse BasinCarnar
283、von BasinTimor GapTimor SeaDarwinIndian OceanGladstoneBrisbaneSydneyCanberraOtway BasinHobartSouthern OceanAdelaideSANTOS ACREAGE-Carnarvon BasinSANTOS ACREAGE-Bonaparte&Browse BasinSANTOS ACREAGE-Cooper Basin025kilometresTimboonPort CampbellPEP 153North PaaratteGas FacilitySouthern OceanCobdenVicto
284、riaPL 5PL 4VIC/RL8VIC/P44VIC/RL 7HeytesburyGas FacilityWarrnamboolPL 6PEP 154(A)PEP 154(B)La BellaMinervaSANTOS ACREAGE-Otway B35025kilometresKorinci-BaruPSCPulp&PaperMillPekanbaruTerusanSengBumiSegatBentuKorinci/PerakTerusanBaruManganPerakBesiBentu PSCProposed AsameraDuri pipelinePerak-Korinci Tren
285、dSumatra50kilometres0Sampang PSCSurabayaWunutMadura StraitMadura IslandJavaJava SeaAnggurOyongDukuhFlamboyanEnauMadura Offshore PSC0100kilometresPDL 1PPL 190PDL 3PPL 206Warim PSCStanleyKutubuHidesJuhuSE KanauWasumaW AnesiKumulOffshoreFacilityBarikewaSE GobePapua New GuineaPapuaBosaviPPL 228Kau 2PRL
286、4PRL 5PPL 1890200kilometresHoustonTexasQueen City(Mew)Ashland Deep(Runnells)MexicoRemmers/OelrichMountainside(Henderson)BP Green/FuhrkenLafite/Allen DomeSuemaurSuemaurSuemaurAransas BayWC632WC582EL59EL143EL335VR247WC272EC155WC276LouisianaSANTOS ACREAGE-Bentu PSC/Korinci Baru PSC(Sumatra)SANTOS ACREA
287、GE-Sampang PSC and Madura Offshore PSC(Java)SANTOS ACREAGE-Papua New Guinea01000kilometresPacific OceanPapua New GuineaWarimPapuaJavaSumatraAustraliaSE GobeIndonesiaSampangMaduraBentuKorinci-BaruSANTOS ACREAGE-South East AsiaSANTOS ACREAGE-USA10 YEARSUMMARY 1992-2001Santos average realised oil price
288、(A$/bbl)28.6527.6423.6424.9627.4327.4220.9527.5746.5445.53Financial Performance($million)Product sales revenue689.8680.2640.0671.6729.2778.5769.4944.51,497.11,459.7Total operating revenue741.5931.6727.3740.1804.0859.51,000.8995.61,556.21,561.8Foreign currency gains/(losses)(36.8)(7.3)66.3(16.0)25.03
289、.62.00.32.70.2Profit from ordinary activities before tax217.6279.9306.6241.0331.9322.3267.3339.6725.9627.6Income tax relatingto ordinary activities104.960.6116.2130.4136.0116.191.030.5239.1181.7Net profit after income tax attributable to the shareholders of Santos Ltd112.7219.3190.4110.6195.9206.217
290、6.3309.1486.8445.9Financial Position($million)Total assets2,821.82,831.22,897.22,915.53,443.44,036.24,236.14,338.74,659.85,048.7Net debt797.4711.2619.9642.0938.61,114.21,280.01,301.1866.61,060.8Total equity1,231.71,380.61,532.21,519.31,586.31,919.01,939.22,056.72,310.92,726.6Reserves and Production(
291、mmboe)Proved and Probable Reserves(2P)6706756637038601,009966941921724Production34.636.337.236.839.241.145.649.256.055.7ExplorationWells drilled(number)416663669111281344250Expenditure($million)76.779.691.987.9121.1190.1180.778.1100.1150.8Other Capital Expenditure($million)Field developments33.240.0
292、52.253.9105.8179.7158.1116.8187.1250.7Buildings,plant and equipment75.680.630.540.1150.3205.4165.7102.5153.5258.7Prior year amounts have,where applicable,been adjusted to place them on a comparable basis with current year amounts.As at 31 December199219931994199519961997199819992000200137As at 31 De
293、cember1992199319941995199619971998199920002001Share InformationShare issuesNumber of issued ordinaryshares at year end(million)498.6517.9539.6539.6539.6607.3607.8608.2610.4579.3Number of issued preferenceshares at year end(million)3.5Weighted average number of ordinary shares(million)495.7518.8539.2
294、553.3553.4583.7605.6606.1608.3612.4Dividends per ordinary share ordinary()21.022.022.023.024.025.025.027.030.030.0 special()5.010.0Dividends ordinary($million)102.7112.3117.2123.6129.0151.3151.4163.7182.7179.9 special($million)25.861.2Ratios and StatisticsEarnings per share()22.742.335.320.035.435.3
295、29.151.080.072.8Return on total operating revenue(%)15.223.526.214.924.424.017.631.031.328.6Return on average equity(%)9.416.813.17.212.611.89.115.522.317.7Return on average capital employed(%)7.312.310.36.19.68.77.111.516.714.1Net debt/equity(%)64.751.540.542.359.258.166.063.337.538.9Net interest c
296、over(times)5.97.08.35.86.25.44.45.29.19.7GeneralNumber of employees1,4681,5261,4921,4711,4611,6151,6501,6451,6311,713Number of holdersof ordinary shares35,49242,06850,59555,68455,48265,45981,28681,41676,45786,472Market capitalisation($million)1,2891,9881,8682,1112,7413,8262,6542,5163,6703,589Dividen
297、dDividend Dividend 1 for 8EmployeeEmployeeEmployeeEmployeeReinvestment Reinvestment Reinvestmentrights issue/Share PlanShare Plan/Share Plan/Share Plans/PlanPlanPlan/EmployeeExecutiveExecutiveExecutiveExecutiveShare PlanShare PlanShare Plan/Share Plans/Share Plan RestrictedShareShares/Buy-back/Exerc
298、iseExerciseof Optionsof Options/Schemes ofarrangementsCONTENTSDirectors Statutory Report38Financial ReportStatements of Financial Performance42Statements of Financial Position43Statements of Cash Flows44Notes to the Financial Statements1Statement of Accounting Policies452Revenue from Ordinary Activi
299、ties483Expenses from Ordinary Activities484Depreciation,Depletion and Amortisation485Borrowing Costs 496 Profit from Ordinary Activities497Taxation498Dividends509 Receivables5010 Inventories5011 Other Assets5012 Exploration and Development Expenditure5113 Land and Buildings,Plant and Equipment5114 O
300、ther Financial Assets5215 Intangibles5216 Payables5217 Interest-Bearing Liabilities5218 Provisions5319 Contributed Equity5420 Reserves5721 Retained Profits5822 Earnings per Share5823 Investments in Controlled Entities5824 Interests in Joint Ventures6125 Notes to Statements of Cash Flows6226 Related
301、Parties6227 Executives and Directors Remuneration6428 Remuneration of Auditors6529 Segment Reporting6530 Commitments for Expenditure6531 Superannuation Commitments6632 Contingent Liabilities6633 Additional Financial Instruments Disclosure6734 Economic Dependency68Directors Declaration69Independent A
302、udit Report69FINANCIAL REPORT38DIRECTORS STATUTORY REPORTThe Directors present their report together with the financial report of Santos Ltd(“the Company”)and the consolidated financial report of the consolidated entity,being the Company and its controlledentities,for the financial year ended 31 Dec
303、ember 2001,and the auditors report thereon.Informationin this Annual Report referred to by page number in this report or contained in a Note to the financialstatements referred to in this report is to be read as part of this report.1.Directors,Directors Shareholdings and Directors MeetingsThe names
304、of Directors of the Company in office at the date of this report and details of the relevantinterest of each of those Directors in shares in the Company at that date are as set out below:SurnameOther NamesShareholdings in Santos LtdOrdinaryResetSharesConvertiblePreferenceSharesBarnettPeter Charles 1
305、2,394ConroyFrancis John 1,900Ellice-Flint John Charles(Managing Director)1,000,000*GerlachStephen(Chairman)27,305McGregor Graeme William 10,000200OLearyMichael Anthony 4,725SloanJudith 2,500125WebberIan Ernest 20,771200The above named Directors held office during and since the end of the financial y
306、ear.Except where otherwise indicated,all shareholdings are of fully paid ordinary shares.*These shares are Restricted Shares issued on the terms described in Note 19 to the financialstatements.No Director holds shares in any related body corporate,other than in trust for the Company.At the date of t
307、his report,Mr J C Ellice-Flint holds 3,000,000 options under the Santos ExecutiveShare Option Plan and subject to the further terms described in Note 19 to the financial statements.Details of the qualifications,experience and special responsibilities of each Director are set out onpages 28 and 29 of
308、 this Annual Report.Directors MeetingsThe number of Directors Meetings and meetings of committees of Directors held during the financialyear and the number of meetings attended by each Director are as follows:Nomination andSurnameOther NamesDirectorsAuditEnvironmentalRemunerationRemunerationMeetings
309、CommitteeCommitteeCommitteeCommitteeNo.ofNo.ofNo.ofNo.ofNo.ofNo.ofNo.ofNo.ofNo.ofNo.ofMtgsMtgsMtgsMtgsMtgsMtgsMtgsMtgsMtgsMtgsHeld*Attended Held*AttendedHeld*AttendedHeld*Attended Held*AttendedUhrig1John Allan441111BarnettPeter Charles11112211ConroyFrancis John11911Ellice-Flint John Charles111122Ger
310、lachStephen1111221133McArdle2John Walter55McGregor Graeme William11105511OLearyMichael Anthony11112211SloanJudith1111551144 WebberIan Ernest111155 1143*Reflects the number of meetings held during the time the Director held office,or was a member ofthe Committee,during the year.1Retired as a Director
311、 of the Company on 4 May 2001.2Retired as a Director of the Company on 14 July 2001.A Special Committee of the Board,comprising S.Gerlach,F.J.Conroy and G.W.McGregor,wasestablished in relation to the Share Buy-Back and issue of Reset Convertible Preference Shares.TheCommittee held two meetings and t
312、hese were attended by all members of that Committee.39As at the date of this report,the Company had an audit committee of the Board of Directors.Particulars of the Companys corporate governance practices appear on pages 30 and 31 of thisAnnual Report.2.Principal ActivitiesThe principal activities of
313、 the consolidated entity during the financial year were:petroleumexploration;the production,treatment and marketing of natural gas,crude oil,condensate,naphthaand liquid petroleum gas;and the transportation by pipeline of crude oil.No significant change in thenature of these activities has occurred
314、during the year.3.Review and Results of OperationsA review of the operations and of the results of those operations of the consolidated entity during thefinancial year are contained in pages 3,5 to 14,16 to 18 and 20 to 26 of this Annual Report.4.DividendsIn respect of the financial year:(a)the Dire
315、ctors on 13 February,2002 declared a fully franked final dividend of 15 cents per fully paidordinary share be paid on 2 April,2002 to members registered in the books of the Company as atclose of business on 8 March,2002 and declared that such dividend be a Class C franked dividendto the extent of 10
316、0%.This final dividend amounts to approximately$86.8 million;(b)a fully franked dividend of$143.4 million($3.54 per share)was paid to members participating inthe Companys off market share buy-back on 4 December,2001;and(c)a fully franked interim dividend of$92.9 million(15 cents per share)was paid t
317、o members inSeptember 2001.A fully franked final dividend of$91.7 million and a fully franked special dividend of$61.2 million onthe 2000 results(15 and 10 cents per share respectively)were paid in April 2001.Indication of thesedividend payments was disclosed in the 2000 Annual Report.5.State of Aff
318、airsIn the opinion of the Directors,there were no significant changes in the state of affairs of theconsolidated entity that occurred during the financial year other than those referred to on pages 3,6,7,12,13,18 and 19 of this Annual Report,including those relating to:the issue of$350 million ofRes
319、et Convertible Preference Shares(refer Note 19 to the Financial Statements);the Buy-Back of$250million fully paid ordinary shares(refer Note 19 to the Financial Statements);the issue of 4,524,568fully paid ordinary shares pursuant to schemes of arrangement to acquire all outstanding shares andoption
320、s in Natural Gas Australia Ltd(refer Note 19 to the Financial Statements);and the results ofthe reserves review and reclassification undertaken during the year.6.Environmental RegulationThe consolidated entitys Australian operations are subject to various environmental regulationsunder Commonwealth,
321、State and Territory legislation,including under applicable petroleumlegislation and in respect to:its South Australian operations,some 34 State and Commonwealth Actsand licences(nos.EPA 2569,1259,888 and 2164)issued under the Environmental Protection Act,1993;its Queensland operations,some 27 State
322、and Commonwealth Acts and licence no.150029issued under the Environmental Protection Act,1994;its Northern Territory operations,some 15Territory and Commonwealth Acts;its offshore operations,some 29 State,Territory andCommonwealth Acts;and its Victorian operations,some 22 State and Commonwealth Acts
323、.Applicable legislation and requisite environmental licences are specified in the entitys relevantEnvironmental Compliance Manuals,which Manuals form part of the consolidated entitys overallEnvironmental Management System.Compliance performance is monitored on a regular basis and in various forms,in
324、cluding environmental audits conducted by regulatory authorities and by theCompany,either through internal or external resources.During the financial year:no fines wereimposed;no prosecutions were instituted;and no notice of non-compliance with the abovereferenced regulations was received from a reg
325、ulatory body.7.Events Subsequent to Balance DateIn the opinion of the Directors there has not arisen in the interval between the end of the financialyear and the date of this report any matter or circumstance that has significantly affected or maysignificantly affect the operations of the consolidat
326、ed entity,the results of those operations,or thestate of affairs of the consolidated entity in future financial years.408.Likely DevelopmentsCertain likely developments in the operations of the consolidated entity and the expected results ofthose operations in future financial years are referred to
327、at pages 5 to 9,11,14 to 18,20 and 22 of thisAnnual Report.Further information about likely developments in the operations of the consolidatedentity and the expected results of those operations in future financial years has not been included inthis report because disclosure of the information would
328、be likely to result in unreasonable prejudiceto the consolidated entity.9.Directors and Senior Executives EmolumentsThe remuneration policies and practices of the Company,(including the compensation arrangements for executive Directors and senior management),the Companys superannuationarrangements,t
329、he fees for non-executive members of the Board(within the aggregate amountapproved by shareholders),the Companys employee share and option plans and executive and seniormanagement performance review and succession planning are matters referred to and considered bythe relevant Committee of the Board,
330、which has access to independent advice and comparativestudies on the appropriateness of remuneration arrangements.Non-executive Directors-As indicated above,within the aggregate amount approved by shareholders,the fees of the Chairman and non-executive Directors are set at levels which represent the
331、responsibilities of and the time commitments provided by those Directors in discharging their duties.Regard is also had to the level of fees payable to non-executive Directors of comparable companies.Non-executive Directors are also entitled to receive a retirement payment upon ceasing to hold offic
332、eas a Director.The retirement payment(inclusive of superannuation guarantee charge entitlements)ismade pursuant to an agreement entered into with each Director in terms approved by shareholders atthe 1989 Annual General Meeting.Senior Executives-Remuneration levels are competitively set to attract,r
333、etain and motivateappropriately qualified and experienced senior executives capable of discharging their respectiveresponsibilities.Remuneration packages of senior executives include long term performance based components in theform of equity participation through the Santos Executive Share Option Plan.Options issued underthe Plan are linked to the longer term performance of the Company and are on
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