Ann: Annual Reserves Statement and expected impairment, page-2

Santos today released its Annual Reserves and Resource Statement. Proved plus probable
(2P) reserves were 933 million barrels of oil equivalent (mmboe) at the end of 2020, an
increase of 34 mmboe before production.
Key highlights:
• 138 per cent three-year 2P reserves replacement
• 102 per cent Cooper Basin three-year 2P reserves replacement
• 184 per cent GLNG 2P reserves replacement in 2020
• 41 mmboe 2P reserves added in Northern Australia and Timor-Leste through the
ConocoPhillips acquisition and sanction of infill drilling at Bayu-Undan
• Reserve revisions of -15 mmboe in PNG and -20 mmboe in Western Australia,
including the Reindeer gas field in WA leading to expected US$98 million impairment
of goodwill
2P reserves increased by 34 mmboe before production in 2020. The annual 2P reserves
replacement was 38 per cent and the three-year replacement 138 per cent.
Santos Managing Director and Chief Executive Officer Kevin Gallagher said the company
was pleased to release its Annual Reserves Statement, highlighting strong overall reserves
replacement over three years and positive results in the onshore assets.
“Today’s statement is the result of Santos’ disciplined annual reserves review and accounting
processes, which include external audit of approximately 95 per cent of total 2P reserves.
We are also pleased to revert to our previous process of releasing our reserves and
resources ahead of our annual results,” Mr Gallagher said.
The acquisition of ConocoPhillips’ assets in Northern Australia and Timor-Leste combined
with the sanction of infill drilling in the Bayu-Undan field added 41 mmboe in 2020.
A final investment decision on the Barossa project is expected in the first half of 2021, which
would see approximately 380 mmboe commercialised to 2P reserves.
Consistent application of Santos’ disciplined operating model delivered reserves increases in
the onshore assets in 2020. The Cooper Basin achieved 102 per cent three-year 2P reserves
replacement and a 2C to 2P conversion rate of approximately 70%. Reserves upgrades were
also delivered in GLNG’s Fairview, Roma and Arcadia fields, and GLNG achieved 184 per
cent 2P reserves replacement in 2020.

These reserve additions were partially offset by a reclassification of 16 mmboe of Juha 2P
reserves in PNG to contingent resources and a 27 mmboe 2P reserves revision at the
Reindeer gas field offshore Western Australia. The revision at Reindeer is due to water
ingress occurring earlier than previously modelled combined with seismic analysis showing a
lower structure across a portion of the field. The Reindeer revision was partially offset by
reserves increases at the Spar-Halyard and Van Gogh fields in WA of nine mmboe in
aggregate.

Santos acquired an additional 55 per cent interest in the Reindeer field through the Quadrant
Energy acquisition in 2018. The acquisition has delivered significant value for shareholders
through synergies of over US$60 million per annum and a leading position in the highly
prospective Bedout Basin, including an 80 per cent interest in the world-class Dorado field
(150 mmbbl liquids gross 2C) where FEED-entry is targeted for the first half of 2021.
After accounting for the Reindeer revision and 2020 production, Santos had 1,277 petajoules
of 2P sales gas reserves in WA at the end of 2020, providing approximately 1.8-times
coverage for existing contracts. In addition, Santos had 1,275 petajoules of 2C sales gas
resource in WA at end 2020 and 401 mmboe of total 2C resource when including liquids.
Santos expects to recognise an impairment of goodwill of approximately US$98 million
before and after tax in the 2020 full-year results to be released on 18 February 2021 as a
result of the Reindeer reserves revision, and other impairment charges of approximately
US$41 million before tax (US$29 million after tax) related to other late-life, exploration and
evaluation assets as part of the regular review of asset carrying values.
The expected impairments will be in addition to the US$756 million before tax impairment
due to lower oil price assumptions included in Santos’ 2020 half-year results released in
August 2020.