Santos : 2022 Second Quarter Report

On track to deliver merger integration synergies

Second Quarter Report

For period ending 30 June 2022

ASX: STO | PNGX: STO | ADR: SSLZY

21 July 2022

only	Record first half sales revenue and free cash flow
• Delivered record first half sales revenue of US$3.8 billion, up 85 per cent, and record free cash flow of
US$1.7 billion, up 199 per cent on the corresponding period
• Second quarter production of 25.5 million barrels of oil equivalent (mmboe) was slightly lower than the first
quarter, primarily due to expected natural field decline at Bayu-Undan and major planned maintenance
outages at PNG LNG, Darwin LNG and the Cooper Basin
• Generated US$843 million in free cash flow in the second quarter, bringing first half free cash flow to
	US$1.7 billion
use	Strong balance sheet supportive of disciplined growth and higher returns
• Strong free cash flows reduced gearing to 22.5 per cent at the end of June
• US$174 million of the initial US$250 million on-market share buyback completed by the end of the quarter
• Barossa project is 40 per cent complete and progressing on schedule and budget
• Pikka Phase 1 project in Alaska has received all major environmental and regulatory approvals and has
sufficiently advanced FEED work to achieve FID-ready status, as planned
	Decarbonisation and clean fuels

• Moomba CCS project is 18 per cent complete and progressing on schedule and budget
• Bayu-UndanCCS project is progressing with onshore and offshore FEED packages awarded during the quarter
• Trials of direct air capture technologies in the Cooper Basin planned for the second half 2023

• US$95 million in sustaining annual synergies achieved in the first six months of integration1
• Already exceeded the lower end of the merger integration synergies target range of US$90-115 million1

personalSantos Managing Director and Chief Executive Officer Kevin Gallagher said Santos delivered record production, sales revenue and free cash flow in the first half of 2022, demonstrating the strong performance of the base business and strategic benefits of our diverse portfolio, despite a number of major planned shutdowns in the second quarter.

Strong production combined with higher commodity prices delivered record first half free cash flow of US$1.7 billion, an increase of 199 per cent from the corresponding period last year.

"Santos is positioned as a leading and reliable LNG supplier into Asia and we are well placed to take advantage of growing Asian demand for LNG, which is forecast to double by 2050," Mr Gallagher said.

"At the same time, we supported the domestic gas market during a period of extreme demand by diverting gas from GLNG and committing to a fifth drilling rig in the Cooper Basin during the quarter.

For"Despite the period of price and demand volatility, Santos domestic gas customers paid significantly less than that paid

by international customers. These domestic prices are reflective of the long-term contracts that almost all of our Australian customers are on, rather than much publicised spot domestic market prices, which make up approximately

nly 10 per cent of the east coast gas market.

"Our new capital management framework announced in April combined with strong free cash flows position us well to provide returns to shareholders at the half-year results in August."

Comparative performance

Santos share	Unit	Q2 2022	Q1 2022	Change		2022 YTD	2021 YTD	Change
Production	mmboe	25.5	26.0	-2%	51.5	47.3	9%
Sales volume	mmboe	27.6		28.1	-2%		55.7		53.8	4%
Sales revenue	$million	1,879	1,887	0%	3,766	2,040	85%
Capital expenditure2	$million	453	436	4%	889	535	66%

1. Excludes integration and other one-off costs.
2. Capital expenditure including restoration expenditure but excluding capitalised interest.

Media enquiries	Investor enquiries	Santos Limited ABN 80 007 550 923
Claire Hammond	Andrew Nairn	GPO Box 2455, Adelaide SA 5001
[phone]	[phone] / [phone]	T [phone] F [phone]
[e-mail]	[e-mail]	www.santos.com

Sales volumes

	Product		Unit		Q2 2022	Q1 2022	Q2 2021		2022 YTD	2021 YTD
	LNG		000 t	1,393.9	1,541.8	1,064.9	2,935.7	2,392.5
	Domestic sales gas & ethane	PJ		56.5		50.8	67.2		107.3		130.1
	Crude oil	000 bbls		2,658.4		2,730.9	2,770.9		5,389.3		4,484.4
	Condensate	000 bbls		1,636.4		1,625.6	1,413.8		3,262.0		3,195.1
	LPG		000 t		42.3		51.1	67.8		93.4		132.1
	Sales
only	Own product	mmboe		22.8		23.9	20.5		46.7		43.3
use
	Third-party	mmboe		4.8		4.2	5.9		9.0		10.5
Total sales volume	mmboe	27.6	28.1	26.4	55.7	53.8

Second quarter sales volumes were slightly lower than the prior quarter primarily due to lower LNG volumes due to expected natural field decline at Bayu-Undan, which is anticipated to cease production in late 2022, and planned maintenance outages during the quarter, partially offset by higher third-party crude volumes from the Cooper Basin.

Sales revenues

personal	Product		Unit	Q2 2022	Q1 2022	Q2 2021	2022 YTD	2021 YTD
LNG		$million	1,073	1,116	421	2,189	848
Domestic sales gas & ethane	$million	287	252	319	539	604
Crude oil	$million	318	309	205	627	312
Condensate	$million	169	170	95	339	203
LPG		$million	32	40	36	72	73
Sales
	Own product	$million	1,596	1,632	832	3,228	1,611
	Third-party	$million	283	255	244	538	429
Total sales revenue	$million	1,879	1,887	1,076	3,766	2,040
Third-party purchase costs	$million	223	208	167	431	324

Second quarter sales revenues were in line with the first quarter, with lower overall sales volumes offset by higher gas, LNG and oil prices. 2022 first quarter sales revenues have been restated to exclude US$29 million for WA domestic gas sales which has been reclassified as other income. Total revenue/income and cash flow remains unchanged.

Average realised prices
For
Product	Unit		Q2 2022	Q1 2022	Q2 2021		2022 YTD	2021 YTD
		LNG price	US$/mmBtu		14.66	13.77	7.52		14.19	6.74
		Domestic gas price	US$/GJ	5.08	4.96	4.74	5.02	4.65
		East coast domestic	US$/GJ		6.60	6.37	5.35		6.49	5.33
		West coast domestic	US$/GJ		4.09	4.10	4.43		4.09	4.31
		Crude oil price	US$/bbl		119.55	113.09	74.06		116.28	69.57
		Condensate price	US$/bbl		102.95	104.63	67.65		103.79	63.61
		LPG price	US$/t		774.78	776.47	517.02		775.70	548.28

The average realised LNG price was higher than the prior quarter reflecting the linkage of sales contracts to an improving lagged Japan Customs-cleared Crude (JCC) price, partially offset by lower average JKM spot prices. Three-month lagged JCC averaged US$86/bbl in the second quarter compared to US$80/bbl in the first quarter of 2022. Santos' LNG projects shipped 58 cargoes in the second quarter, of which nine were spot cargoes (Darwin LNG 5, PNG LNG 4) sold on a JKM-linked basis.

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Production by asset

only
Asset	Unit		Q2 2022	Q1 2022	Q2 2021		2022 YTD	2021 YTD
		Western Australia	mmboe	7.0	6.5	8.5	13.5	16.6
		Cooper Basin	mmboe		3.5	3.5	3.9		7.0	7.9
		Queensland & NSW	mmboe		3.5	3.4	3.4		6.9	6.7
		PNG	mmboe		10.4	10.6	3.0		21.0	6.1
		Northern Australia & Timor-Leste	mmboe		1.1	2.0	3.7		3.1	10.0
		Total production	mmboe	25.5	26.0	22.5	51.5	47.3
use
Production by product
		Product	Unit		Q2 2022	Q1 2022	Q2 2021		2022 YTD	2021 YTD
		Sales gas to LNG plant	PJ	78.6	81.9	54.7	160.5	123.5
		Domestic sales gas & ethane	PJ	49.1	46.8	59.0		95.9	117.4
		Crude oil	000 bbls	1,881.6	2,134.3	1,343.4		4,015.9	2,407.2
personal	Condensate	000 bbls	1,414.9	1,513.8	1,249.4		2,928.7	2,744.0
LPG	000 t	35.6	40.5	48.6		76.1	109.3
Total production	mmboe	25.5	26.0	22.5	51.5	47.3

Second quarter production was two per cent lower than the first quarter primarily due expected natural field decline at Bayu-Undan and planned maintenance outages during the quarter at PNG LNG, Darwin LNG and the Cooper Basin, partially offset by stronger domestic gas production in Western Australia.

A data worksheet containing unaudited quarterly sales, revenue, production and capital expenditure tables in Excel f rmat is available on Santos' website.

2022 Guidance

Production and sales volume guidance are narrowed to 102-107 mmboe and 110 to 116 mmboe, respectively. Major projects capital expenditure guidance is lowered slightly, reflecting timing of expenditures which are expected to be weighted to the second half. Production cost guidance is lowered to $7.90-8.30/boe. Depreciation, depletion and amortisation is expected to be approximately US$850 million in the first half and approximately US$1.7 billion for the full-year.

	2022 Guidance item	Previous guidance	Updated guidance
	Production	100-110 mmboe	102-107 mmboe
	Sales volumes	110-120 mmboe	110-116 mmboe
For	~$1,100 million	No change
	Capital expenditure - base including restoration
	Capital expenditure - major projects	~$1,150-$1,300 million	~$1,100-$1,200 million
	Capital expenditure - contingent major projects,	Up to ~$400 million	Up to ~$350 million
	subject to FID1
	Upstream production costs	$8.00-8.50/boe	$7.90-$8.30/boe
	Depreciation, depletion and amortisation	na	~$1.7 billion

1 Unsanctioned projects contingent amount of up to ~$350 million for Dorado phase 1 and Pikka phase 1 (subject to FID).

2022 Half-year results

Santos will release its results for the half-year ended 30 June 2022 on Wednesday 17 August 2022. The first-half report (incorporating Appendix 4D) and associated investor presentation will be available on Santos' website at www.santos.com. A webcast briefing including investor/analyst questions will also be available on Santos' website from 11:00am AEST on 17 August 2022. Financial information included in this report is unaudited and subject to finalisation of the company's accounting and audit processes, and Board review. As such, actual results for the half-year ended 30 June 2022 may differ from the information given in this report.

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Western Australia

only	Santos share	Unit		Q2 2022	Q1 2022	Q2 2021		2022 YTD	2021 YTD
Sales volume
		Sales gas	PJ		34.8		31.4	43.4		66.2		85.8
		Condensate	000 bbls		277.6		194.3	310.0		471.9		629.6
		Crude oil	000 bbls	808.7	1,424.1	1,165.0	2,232.8	1,165.0
		Total sales volume	mmboe	7.1	7.0	8.9	14.1	16.5
		Total sales revenue	$million		277		320	304		597		500
		Production
		Sales gas	PJ	34.7	30.4	43.4	65.1	85.7
use	000 bbls		243.6		259.3	374.6		502.9		721.3
		Condensate
		Crude oil	000 bbls		837.4		1,009.8	766.3		1,847.2		1,239.7
		Total production	mmboe	7.0	6.5	8.5	13.5	16.6
		Capital expenditure	$million	94	89	90	183	134

Domestic gas production and sales were higher than the prior quarter due to higher customer demand. Oil production was lower than the prior quarter due to natural decline of production wells. A three-week planned shutdown of the Ningaloo Vision FPSO is scheduled for the third quarter.

personal2022 first quarter sales revenues have been restated to exclude US$29 million for WA domestic gas sales which has been reclassified as other income due to the value associated with an embedded derivative in an existing contract. Total revenue/income and cash flow remains unchanged.

As previously announced (refer to Santos' ASX release of 1 June 2022) a new contract was executed with Yara to supply over 120 petajoules of natural gas over five years, starting at the completion of Santos' current agreement with Yara in 2023.

The Spartan project continued to make good progress in support of developing additional reserves to be processed through Varanus Island. The project is on track to start-up in early 2023, with regulatory approvals and key equipment delivery progressing to plan.

The Dorado development FEED is nearing completion and working towards being FID-ready in the second half of the year. The initial phase of development will involve gas reinjection to maximise liquids recovery ahead of a second phase of gas export from the field, which offers backfill supply to Santos' existing domestic gas infrastructure in Western Australia.

For

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Cooper Basin

only	Santos share	Unit	Q2 2022	Q1 2022	Q2 2021	2022 YTD	2021 YTD
Sales volume
	Sales gas and ethane1	PJ	14.1	15.0	16.4	29.1	35.0
	Condensate1	000 bbls	207.0	397.6	603.1	604.6	991.6
	LPG1		000 t	42.3	38.6	44.2	80.9	82.2
	Crude oil
		Own product	000 bbls	591.0	471.0	488.5	1,062.0	1,121.2
		Third-party	000 bbls	778.8	346.8	1,116.4	1,125.6	2,196.1
		Total	000 bbls	1,369.8	817.8	1,604.9	2,187.6	3,317.3
	Total sales volume	mmboe	4.3	4.1	5.4	8.4	11.0
	Total sales revenue	$million	282	237	244	519	466
	Production
	Sales gas and ethane	PJ	14.3	14.5	16.0	28.8	32.6
	Condensate	000 bbls	226.4	215.0	270.2	441.4	540.3
useLPG		000 t	29.2	31.4	35.1	60.6	70.7
	Crude oil	000 bbls	543.8	578.1	576.1	1,121.9	1,165.4
personal	Total production	mmboe	3.5	3.5	3.9	7.0	7.9
	Capital expenditure	$million	88	73	71	161	141

1 Sales volumes include own product and third-party volumes.

Cooper Basin production was slightly lower than the previous quarter due to a higher volume of planned maintenance work and impacts of wet weather events leading to flooding which caused delays to the development program. Oil production was lower due to maintenance at the Limestone Creek facility. A one-month planned maintenance outage was completed at the Port Bonython terminal during the quarter.

Twenty-one wells were drilled and fourteen gas wells were connected across the Cooper Basin in the second quarter. Drilling activities continued to be impacted during the second quarter by significant rainfall and subsequent flooding.

Santos and its joint venture partner committed to a fifth drilling rig in the Cooper Basin during the quarter, which is expected to deliver additional gas for the domestic market in the second half of the year.

The Moomba South Granite Wash horizontal well was successfully placed on long term test during the quarter.

The Moomba CCS project is progressing on budget and schedule. Forecast first CO2 injection remains on track for 2024 with 18 per cent of works complete at the end of the quarter. Pre-shutdown scopes have been completed for the CO2 train tie-in at Moomba along with testing of new gas turbines.

Santos is partnering with Australia's national science agency, CSIRO, to develop what is hoped could become the lowest cost direct air capture technology in the world. The collaboration will continue to develop CSIRO Carbon AssistTM technology which removes CO2 directly from the atmosphere and higher-concentrationpost-combustion scenarios. The ForCO2 can then be safely and permanently stored as part of a CCS project or utilised for beneficial uses. Trials of the

technology in the Cooper Basin are planned for the second half of 2023.

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