600803:新奥股份:Santos2017年半年度报告(原文)
Half-year report
incorporating Appendix 4D
SantosLimitedanditscontrolledentities.
Fortheperiodended30June2017,underListingRule4.2.
RESULTSFOR ANNOUNCEMENTTOTHEMARKET
APPENDIX4DFORTHEPERIODENDED30JUNE2017
2017 2016 Change
US$million US$million %
Revenuefromordinaryactivities 1,496 1,205 24
Statutory Profit/(Loss) from ordinary activities after tax
attributabletomembers (506) (1,104) 54
NetProfit/(Loss)fortheperiodattributabletomembers (506) (1,104) 54
Frankedamountper
InterimDividends Amountpersecurity securityat30%tax
UScents UScents
On23August2017,theDirectorsresolvednottopayaninterim
dividendinrelationtothehalf-yearended30June2017.
Ordinarysecurities Nil Nil
CONTENTS ABOUTSANTOS
Half-yearReport SantosisanAustraliannaturalgascompany.Establishedin
30June2017 Page 1954,thecompanyisproudtodelivertheeconomicand
environmental benefits of natural gas to homes and
Directors’Report 2 businessesthroughoutAustraliaandAsia.
ReviewandResultsofOperations 2 Fivecorelong-lifenaturalgasassetssitattheheartofa
Directors 6 disciplined, focused strategy to drive sustainable
shareholdervalue:theCooperBasin,GLNG,PapuaNew
Rounding 6 Guinea,NorthernAustraliaandWesternAustraliaGas.
Auditor’sIndependenceDeclaration 7 Eachofthesecoreassetsprovidestableproduction,long-
termrevenuestreamsandsignificantupsideopportunities.
Half-yearFinancialReport 8 With one of the largest exploration and production
ConsolidatedIncomeStatement 8 acreagesinAustralia,asignificantandgrowingfootprintin
ConsolidatedStatementof PapuaNewGuineaandastrategicinfrastructureposition,
ComprehensiveIncome 9 Santosis wellpositionedtobenefitfromthegrowing
ConsolidatedStatementof globaldemandforenergy.
FinancialPosition 10 TheSantosturnaroundisnowwellunderway.Athree
ConsolidatedStatementofCashFlows 11 phasestrategytoTransform,BuildandGrowthebusiness
ConsolidatedStatementof will drive returns as we continue to focus on the
ChangesinEquity 12 exploration,development,productionandsaleofnatural
NotestotheHalf-yearConsolidated gas.
FinancialStatements 13 Santosisfocusedondeliveringsustainableshareholder
Directors’Declaration 27 value by becoming a low-cost, reliable and high
IndependentAuditor’sReport 28 performancebusinesswiththefinancialflexibilitytobuild
andgrowthebusinessthroughtheoilpricecycle.
Appendix4Dcontinued 30
1 SantosLimitedHalf-yearFinancialReport�C30June2017
DIRECTORS’REPORT
DIRECTORS’REPORT
TheDirectorspresenttheirreporttogetherwiththeconsolidatedfinancialreportoftheconsolidatedentity,being
SantosLimited(“Santos”or“theCompany”)anditscontrolledentities,forthehalf-yearended30June2017,andthe
auditor’sreviewreportthereon.
REVIEWANDRESULTSOFOPERATIONS
Unlessotherwisestated,allreferencestodollarsaretoUSdollars.
Areviewoftheresultsoftheoperationsoftheconsolidatedentityduringthehalf-yearisasfollows:
Summaryofresultstable 2017 2016 Variance
mmboe mmboe %
Productionvolume 29.5 31.1 (5)
Salesvolume 40.1 40.9 (2)
$million $million
Productsales 1,453 1,191 22
EBITDAX1 718 491 46
Explorationandevaluationexpensed (53) (47) (13)
Depreciationanddepletion (348) (399) 13
Netimpairmentloss (920) (1,516) 39
EBIT1 (603) (1,471) 59
Netfinancecosts (139) (131) (6)
Taxationbenefit/(expense) 236 498 (53)
Netprofit/(loss)fortheperiod (506) (1,104) 54
Underlyingprofit/(loss)fortheperiod1 156 (5) 3220
1 EBITDAX(earningsbeforeinterest,tax,depreciation,depletion,explorationandevaluationandimpairment),EBIT(earningsbeforeinterestandtax)andunderlyingprofit/(loss)
arenon-IFRSmeasuresthatarepresentedtoprovideanunderstandingoftheunderlyingperformanceofSantos’operations.Underlyingprofitexcludestheimpactsofasset
acquisitions,disposalsandimpairments,aswellasitemsthataresubjecttosignificantvariabilityfromoneperiodtothenext,includingtheeffectsoffairvalueadjustmentsand
fluctuationsinexchangerates.Pleaserefertopage5forthereconciliationfromnetprofit/(loss)tounderlyingprofit/(loss)fortheperiod.Thenon-IFRSfinancialinformationis
unauditedhoweverthenumbershavebeenextractedfromthefinancialstatementswhichhavebeensubjecttoreviewbytheCompany’sauditor.
Salesvolume Salesrevenue
40.9 40.1 1,727
mmboe US$million 1,526 1,453
27.4 28.9 30.9 1,261 1,191
HY13 HY14 HY15 HY16 HY17 HY13 HY14 HY15 HY16 HY17
Salesvolumesof40.1millionbarrelsofoilequivalent Salesrevenuewasup22%comparedtotheprevious
(mmboe)were2%lowerthantheprevioushalf.Higher halfto$1.5billion,primarilyduetohigheroilandLNG
LNGsalesvolumesduetothe ramp-upofGLNG, prices.Theaveragerealisedoilpricewasup28%to
ongoingstrongproductionfromPNGLNG,andhigher US$55/bblandtheaveragerealisedLNGprice rose
domesticgassalesinWA,wereoffsetbyassetsalesand 26%toUS$7.21/mmBtu.
lowerCooperBasinsalesvolumes.
2 SantosLimitedHalf-yearFinancialReport�C30June2017
DIRECTORS’REPORT
Production GLNG
GLNGproducesliquefiednaturalgas(LNG)forexport
31.1 toglobalmarketsfromtheLNGplantatGladstone.Gas
28.3 29.5 isalsosoldintothedomesticmarket.Santoshasa30%
mmboe 24.5 25 interestinGLNG.
TheLNGplanthastwoLNGtrainswithacombined
nameplatecapacityof7.8mtpa.ProductionfromTrain
1commencedinSeptember2015andTrain2inMay
2016.FeedgasissourcedfromGLNG’supstreamfields,
Santosportfoliogasandthird-partysuppliers.
HY13 HY14 HY15 HY16 HY17 TheLNGplantproduced2.4milliontonnesinthefirst
Production was 5% lower than the previous half halfof2017andshipped42cargoes.
primarilyduetothesaleoftheVictorian,Mereenieand Santos aims to build GLNG gas supply through
Stagassets,partiallyoffsetbytheramp-upofGLNGand upstreamdevelopment,seekopportunitiestoextract
higherPNGLNGproduction. valuefromexistinginfrastructureanddriveefficiencies
ReviewofOperations tooperateatlowestcost.
Santos’operationsarefocusedonfivecore,long-life GLNG HY17 HY16
natural gas assets: Cooper Basin, GLNG, PNG, Production(mmboe) 5.6 4.3
NorthernAustraliaandWesternAustraliaGas.Other Salesvolume(mmboe) 10.6 9.1
assetsare runseparatelyforvalue asa standalone Revenue(US$m) 354 218
business. Productioncost(US$/boe) 5.95 7.34
EBITDAX(US$m) 156 65
CooperBasin Capex(US$m) 75 97
TheCooperBasinproducesnaturalgas,gasliquidsand
crudeoil.Gasissoldprimarilytodomesticretailers, GLNGEBITDAXwas$156million,141%higherthan
industryandfortheproductionofliquefiednaturalgas, thefirsthalfof2016.Thiswasaresultofhighersales
whilegasliquidsandcrudeoilaresoldindomesticand revenuereflectingtherampupofupstreamproduction
exportmarkets. andhigherLNGprices.
Santos’strategyintheCooperBasinistodeliveralow- Followingareview,Santosrecognisedanimpairment
cost,cashflowpositivebusinessbybuildingproduction, chargeagainstthecarryingvalueforGLNGof$867
investinginnewtechnologytolowerdevelopmentand millionaftertaxinthe2017half-yearaccounts.The
exploration costs, and increasing utilisation of impairmentwasprimarilyduetolowerforecastUS$oil
infrastructureincludingtheMoombaplant. prices.
CooperBasin HY17 HY16 PapuaNewGuinea
Production(mmboe) 7.1 7.7 Santos’businessinPNGiscentredonthePNGLNG
Salesvolume(mmboe) 10.4 11.4 project.Completedin2014,PNGLNGproducesLNG
Revenue(US$m) 379 345 forexporttoglobalmarkets,aswellassalesgasandgas
Productioncost(US$/boe) 9.72 11.04 liquids.Santoshasa13.5%interestinPNGLNG.
EBITDAX(US$m) 157 104 TheLNGplantnearPortMoresbyhastwoLNGtrains
Capex(US$m) 84 90 withthecombinedcapacitytoproducemorethaneight
CooperBasinEBITDAXwas$157million,51%higher milliontonnesperannum.Productionfrombothtrains
thanthefirsthalfof2016primarilyduetohighersales commencedin2014andoperatedatrecordratesinthe
revenueimpactedbyhigheroilprices,inadditionto firsthalfof2017,producingfourmilliontonnesofLNG
lower production costs resulting from cost saving andshipping54cargoes.Condensateproductionwas
initiatives. 5.4millionbarrels.
Santos’shareofCooperBasinsalesgas andethane Santos’strategyinPNGistoworkwithitspartnersto
productionof28.6petajoules(PJ)waslowerthanthe aligninterests,andsupportandparticipateinbackfill
corresponding period (31.5 PJ) due to lower andexpansionopportunitiesatPNGLNG.
developmentactivityandnaturalfielddecline. In the first half of 2017, Santos and its partners
During the 2017 half-year, Santos recognised an announcedapotentiallysignificantnewgasdiscoveryat
impairmentwrite-backof$336millionaftertax.The Muruk,located21kilometresfromtheexistingPNG
impactsoflowerUS$oilpriceassumptionsweremore LNG production facilities atHides. Data from the
thanoffsetbyacontinuationofthecostefficienciesand Murukdrilling programwillbeevaluated toinform
performance improvement achieved during 2016 forwardappraisaloptions.Wellsitepreparationsare
allowingincreaseddrillingactivityandproduction. being planned ahead ofa potentialMurukappraisal
programin2018.
3 SantosLimitedHalf-yearFinancialReport�C30June2017
DIRECTORS’REPORT
PNG HY17 HY16 Santos’positionintwoWAdomesticgashubs(Varanus
Production(mmboe) 6.2 5.9 IslandandDevilCreek)providesopportunitiestomeet
Salesvolume(mmboe) 5.8 5.7 shortandlong-termdomesticgasdemandinthestate.
Revenue(US$m) 248 207 Santos’focusinWAistogrowproductionandmarket
Productioncost(US$/boe) 4.32 4.52 shareintheWAdomesticgasmarket.
EBITDAX(US$m) 203 165
Capex(US$m) 8 1 WAGas HY17 HY16
Production(mmboe) 4.3 4.7
PNGEBITDAXwas$203million,23%higherthanthe Salesvolume(mmboe) 4.5 3.9
firsthalfof2016mainlyduetohigherLNGprices. Revenue(US$m) 116 74
Productioncost(US$/boe) 5.29 4.78
NorthernAustralia EBITDAX(US$m) 116 126
Santos’businessinNorthernAustraliaisfocusedonthe Capex(US$m) 5 10
Bayu-Undan/Darwin LNG (DLNG) project. In
operationsince2006,DLNGproducesLNGandgas WAGasEBITDAXwas$116million,8%lowerthan
liquidsfor exporttoglobalmarkets.Santoshas an thefirsthalfof2016.
11.5%interestinDLNG.
TheLNGplantnearDarwinhasasingleLNGtrainwith Santos’shareofWesternAustraliagasandcondensate
anameplatecapacityof3.7mtpa.DLNGcontinuedto productioninthefirsthalfof2017was23.9PJand0.2
performstronglyinthefirsthalfof2017,producing1.7 mmbblrespectively.
million tonnes of LNG and shipping 26 cargoes. Otherassets�CAsia,NSWandWAOil
Condensateproductionwasthreemillionbarrels. Santos’ other assets have been packaged and run
Santos’strategyinNorthernAustraliaistosupport separately as a standalone business. These assets
planstoprogress DarwinLNG backfill,expand the includeSantosinterests inIndonesia,Vietnam, New
company’sacreagefootprintandappraisetheonshore SouthWalesandWesternAustraliaoil.Theportfolio
McArthurBasin. willbecontinuallyoptimisedtodrive efficiencyand
shareholdervalue.
Duringthefirsthalfof2017,atwo-wellappraisaldrilling Consistentwithoptimisingtheportfoliotomaximise
campaign in the Barossa field (Santos 25%) was value,Santossoldits Victorianassetsand Mereenie
successfully completed. Positive results from the (NorthernTerritory)effective1January2017.
campaign, including a successful production test of
Barossa-6,strengthened the field’s position as lead Otherassets HY17 HY16
candidatetosupplybackfillgastoDarwinLNG.The Production(mmboe) 4.2 6.2
campaignsignificantlyreducedresourceuncertaintyand Salesvolume(mmboe) 4.0 6.4
furtherconfirmedthehighdeliverabilitypotentialofthe Revenue(US$m) 167 217
primaryElangreservoir. Productioncost(US$/boe) 14.72 14.65
NorthernAustralia HY17 HY16 EBITDAX(US$m) 116 103
Production(mmboe) 2.1 2.2 Capex(US$m) 39 43
Salesvolume(mmboe) 2.2 2.2
Revenue(US$m) 78 71 OtherassetsEBITDAXwas$116million,13%higher
Productioncost(US$/boe) 17.36 16.95 thanthefirsthalfof2016.
EBITDAX(US$m) 45 37
Capex(US$m) 40 1 TotalproductionandsalesvolumesfromOtherassets
werelowerthantheprevioushalf-yearduetothesale
NorthernAustraliaEBITDAX was$45 million,22% oftheVictorian,MereenieandStagassets.
higherthanthefirsthalfof2016mainlyduetohigher During the 2017 half-year, Santos recognised an
commodityprices. impairmentchargeof$149millionaftertaxonthenon-
WAGas coreAndeAndeLumutassetinIndonesiafollowingan
Santosis oneofthelargestproducersofdomestic assessmentoftheimpactofloweroilprices.
naturalgasinWesternAustraliaandisalsoasignificant
producerofgasliquids.
4 SantosLimitedHalf-yearFinancialReport�C30June2017
DIRECTORS’REPORT
NetLoss
The2017firsthalfnetlosswas$506million;comparedwitha$1,104millionlossathalf-year2016.The$598million
decreaseinnetlossisprimarilyduetohigherproductsalesdrivenbyhighercommodityprices,inadditiontoabefore
taximpairmentlossof$920million;comparedwith$1,516millionathalf-year2016.
Netlossincludesitemsaftertaxof$662million(beforetaxof$959million),referredtointhereconciliationofnet
profit/(loss)tounderlyingprofit/(loss)below.
ReconciliationofNetProfit/(Loss)to 2017 2016
UnderlyingProfit/(Loss)1 $million $million
Gross Tax Net Gross Tax Net
Netprofit/(loss)aftertaxattributableto
equityholdersofSantosLimited (506) (1,104)
Add/(deduct)thefollowing:
Impairmentlosses 920 (231) 689 1,516 (455) 1,061
Gainsonsaleofnon-currentassets (68) 17 (51) 6 (2) 4
Insurancerecoveryonremediationandrelated
costsforincidents - - - (9) - (9)
Foreignexchangelosses/(gains) 93 (78) 15 29 (29) -
Fairvalueadjustmentsonembeddedderivatives
andhedges (32) 9 (23) 12 (4) 8
Onerouscontract 31 (9) 22 26 (8) 18
Redundancy/restructure 2 (1) 1 24 (7) 17
Otherone-offtaxadjustment 13 (4) 9 - - -
959 (297) 662 1,604 (505) 1,099
Underlyingprofit/(loss)1 156 (5)
1 Underlyingprofit/(loss)isanon-IFRSmeasurethatispresentedtoprovideanunderstandingoftheunderlyingperformanceofSantos’operations.Themeasureexcludestheimpacts
ofassetacquisitions,disposalsandimpairments,aswellasitemsthataresubjecttosignificantvariabilityfromoneperiodtothenext,includingtheeffectsoffairvalueadjustments
andfluctuationsinexchangerates.Thenon-IFRSfinancialinformationisunauditedhoweverthegrossnumberspresentedabovehavebeenextractedfromthefinancialstatements
whichhavebeensubjecttoreviewbytheCompany’sauditor.
EQUITYATTRIBUTABLETOEQUITYHOLDERSOFSANTOSLIMITED/DIVIDENDS
EquityattributabletoequityholdersofSantosLimitedat30June2017was$6,917million.
On23August2017,theDirectorsresolvednottopayaninterimdividendinrelationtothehalf-yearended30June
2017.
CASHFLOW
Thenetcashinflowfromoperatingactivitiesof$662millionwas127%higherthanthefirsthalfof2016. Thisincrease
isprincipallyattributabletohighersalesrevenuedrivenbyfavourableproductpricesandincreasedsalesvolume. Net
cashusedininvestingactivitiesof$244millionwas$264millionhigherthanthefirsthalfof2016primarilyduetothe
proceedsrealisedfromthedisposalin2016of$411millioncomparedto$130millionin2017.Cashflowsusedin
financingactivitieswere$99millionhigherthanthefirsthalfof2016predominantlyduetotheearlyrepaymentofa
$250millionECAfacility,offsetbytheproceedsonsharepurchaseplanof$148million.
OUTLOOKSalesvolumeguidanceisupgradedto77to82mmboeandproductionguidanceismaintainedintherangeof57to60mmboefor2017.POSTBALANCEDATEEVENTSOn23August2017,Santosexerciseditsoptiontoredeemits�1,000millionsubordinatednotesatthefirstcalldateof22September2017.On23August2017,theDirectorsofSantosLimitedresolvednottopayaninterimdividendinrelationtothehalf-yearended30June2017.5 SantosLimitedHalf-yearFinancialReport�C30June2017
DIRECTORS’REPORT
DIRECTORSThenamesofDirectorsoftheCompanyinofficeduringorsincetheendofthehalf-yearare:Surname OtherNamesAllen YasminAnitaCoates PeterRoland(Chairman)Cowan GuyMichaelFranklin RoyAlexanderGallagher KevinThomas(ManagingDirectorandChiefExecutiveOfficer)Goh HockHearl PeterRolandMartin GregoryJohnWaltonSheffield1 ScottDouglasGuthrie2 VanessaAnnShi3 Yujiang1 MrSheffieldceasedtobeaDirectorofSantosLimitedon4May2017atthecompletionofthe2017AnnualGeneralMeeting.2 DrGuthriewasappointedaDirectorofSantosLimitedbytheBoardwitheffectfrom1July2017andwillstandforelectionattheCompany’snextAnnualGeneralMeeting.3 MrShiwasappointedaDirectorofSantosLimitedbytheBoardwitheffectfrom26June2017andwillstandforelectionattheCompany’snextAnnualGeneralMeeting.EachoftheabovenamedDirectorsheldofficeduringorsincetheendofthehalf-year.TherewerenootherpersonswhoactedasDirectorsatanytimeduringthehalf-yearanduptothedateofthisreport.ROUNDINGAustralianSecuritiesandInvestmentsCommissionCorporations(RoundinginFinancial/Directors’Report)Instrument2016/191appliestotheCompany.Accordingly,amountshavebeenroundedoffinaccordancewiththatInstrument,unlessotherwiseindicated.AUDITOR’SINDEPENDENCEDECLARATIONAcopyoftheauditor’sindependencedeclarationasrequiredbysection307CoftheCorporationsAct2001(Cth)issetoutonpage7andformspartofthisreport.Thisreportismadeouton23August2017inaccordancewitharesolutionoftheDirectors.Director
23August2017
6 SantosLimitedHalf-yearFinancialReport�C30June2017
Ernst&Young Tel:+61884171600
121KingWilliamStreet Fax:+61884171775
AdelaideSA5000Australia ey.com/au
GPOBox1271AdelaideSA5001
Auditor’sIndependenceDeclarationtotheDirectorsofSantosLimited
AsleadauditorforthereviewofSantosLimitedforthehalf-yearended30June2017,Ideclaretothe
bestofmyknowledgeandbelief,therehavebeen:
a) nocontraventionsoftheauditorindependencerequirementsoftheCorporationsAct2001in
relationtothereview;and
b) nocontraventionsofanyapplicablecodeofprofessionalconductinrelationtothereview.
ThisdeclarationisinrespectofSantosLimitedandtheentitiesitcontrolledduringthefinancialperiod.
Ernst&Young
RJCurtin
Partner
Adelaide
23August2017
7 AmemberfirmofErnst&YoungGlobalLimited
LiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation
CONSOLIDATEDINCOMESTATEMENT
FORTHESIXMONTHSENDED30JUNE2017
30June 30June
2017 2016
Note $million $million
Productsales 2.2 1,453 1,191
Costofsales 2.3 (1,088) (1,081)
Grossprofit 365 110
Otherrevenue 43 14
Otherincome 74 74
Impairmentofnon-currentassets 3.4 (920) (1,516)
Otherexpenses 2.3 (170) (158)
Financeincome 4.1 14 6
Financecosts 4.1 (153) (137)
Shareofnetprofitofjointventures 5 5
Lossbeforetax (742) (1,602)
Incometaxbenefit 228 506
Royalty-relatedtaxbenefit/(expense) 8 (8)
Totaltaxbenefit 236 498
NetlossfortheperiodattributabletoownersofSantosLimited (506) (1,104)
EarningspershareattributabletotheequityholdersofSantos
Limited(￠)
Basiclosspershare (24.4) (62.4)
Dilutedlosspershare (24.4) (62.4)
Dividendspershare(￠)
Paidduringtheperiod 2.4 �C 4
Declaredinrespectoftheperiod 2.4 �C �C
Theconsolidatedincomestatementistobereadinconjunctionwiththenotestothehalf-yearfinancialstatements.
8 SantosLimitedHalf-yearFinancialReport�C30June2017
CONSOLIDATEDSTATEMENTOFCOMPREHENSIVEINCOME
FORTHESIXMONTHSENDED30JUNE2017
30June 30June
2017 2016
$million $million
Netlossfortheperiod (506) (1,104)
Othercomprehensiveincome,netoftax:
Othercomprehensiveincometobereclassifiedtoprofitorlossinsubsequent
periods:
Exchangegainontranslationofforeignoperations 116 12
Taxeffect �C �C
116 12
Gainonforeigncurrencyloansdesignatedashedgesofnet
investmentsinforeignoperations 132 113
Taxeffect (41) (34)
91 79
Gainonderivativesdesignatedascashflowhedges 9 4
Taxeffect (3) (1)
6 3
Netothercomprehensiveincometobereclassifiedtoprofit
orlossinsubsequentperiods 213 94
Itemsnottobereclassifiedtoprofitorlossinsubsequentperiods:
Actuarialgain/(loss)onthedefinedbenefitplan 2 (1)
Taxeffect (1) �C
1 (1)
Lossonfinancialliabilitiesatfairvaluethroughothercomprehensive
income(FVOCI) (30) �C
Taxeffect 10 �C
(20) �C
Netothercomprehensivelossnotbeingreclassifiedtoprofit
orlossinsubsequentperiods (19) (1)
Othercomprehensiveincome,netoftax 194 93
TotalcomprehensivelossattributabletoownersofSantos
Limited (312) (1,011)
Theconsolidatedstatementofcomprehensiveincomeistobereadinconjunctionwiththenotestothehalf-yearfinancial
statements.
9 SantosLimitedHalf-yearFinancialReport�C30June2017
CONSOLIDATEDSTATEMENTOFFINANCIALPOSITION
ASAT30JUNE2017
30June 31December
2017 2016
Note $million $million
Currentassets
Cashandcashequivalents 2,226 2,026
Tradeandotherreceivables 364 367
Prepayments 32 34
Inventories 284 321
Otherfinancialassets 17 7
Taxreceivable 6 15
Assetsheldforsale �C 180
Totalcurrentassets 2,929 2,950
Non-currentassets
Receivables 5 5
Prepayments 21 17
Investmentsinjointventures 47 56
Otherfinancialassets 145 152
Explorationandevaluationassets 3.1 422 495
Oilandgasassets 3.2 9,617 10,398
Otherland,buildings,plantandequipment 130 135
Deferredtaxassets 1,356 1,054
Totalnon-currentassets 11,743 12,312
Totalassets 14,672 15,262
Currentliabilities
Tradeandotherpayables 474 520
Deferredincome 9 23
Interest-bearingloansandborrowings 415 420
Currenttaxliabilities 2 3
Provisions 95 121
Otherfinancialliabilities 264 366
Liabilitiesdirectlyassociatedwithassetsheldforsale �C 103
Totalcurrentliabilities 1,259 1,556
Non-currentliabilities
Deferredincome 108 99
Interest-bearingloansandborrowings 4,565 4,819
Deferredtaxliabilities 210 221
Provisions 1,590 1,464
Otherfinancialliabilities 23 23
Totalnon-currentliabilities 6,496 6,626
Totalliabilities 7,755 8,182
Netassets 6,917 7,080
Equity
Issuedcapital 4.2 9,034 8,883
Reserves (317) (510)
Accumulatedlosses (1,800) (1,293)
Totalequity 6,917 7,080
Theconsolidatedstatementoffinancialpositionistobereadinconjunctionwiththenotestothehalf-yearfinancialstatements.
10 SantosLimitedHalf-yearFinancialReport�C30June2017
CONSOLIDATEDSTATEMENTOFCASHFLOWS
FORTHESIXMONTHSENDED30JUNE2017
30June 30June
2017 2016
$million $million
Cashflowsfromoperatingactivities
Receiptsfromcustomers 1,542 1,278
Interestreceived 14 7
Dividendsreceived 7 6
Pipelinetariffsandotherreceipts 43 7
Paymentstosuppliersandemployees (739) (824)
Explorationandevaluationseismicandstudies (28) (35)
Royaltyandexcisepaid (26) (16)
Borrowingcostspaid (126) (105)
Incometaxespaid (37) (24)
Incometaxesreceived 23 �C
Royalty-relatedtaxespaid (13) (10)
Otheroperatingactivities 2 7
Netcashprovidedbyoperatingactivities 662 291
Cashflowsfrominvestingactivities
Paymentsfor:
Explorationandevaluationassets (93) (58)
Oilandgasassets (262) (314)
Otherland,buildings,plantandequipment (3) (7)
Acquisitionsofoilandgasassets (14) �C
Borrowingcostspaid (5) (15)
Proceedsondisposalofnon-currentassets 130 411
Otherinvestingactivities 3 3
Netcash(usedin)/providedbyinvestingactivities (244) 20
Cashflowsfromfinancingactivities
Dividendspaid �C (43)
Repaymentsofborrowings (368) (75)
Proceeds/(costs)fromissuesofordinaryshares 148 (3)
Netcashusedinfinancingactivities (220) (121)
Netincreaseincashandcashequivalents 198 190
Cashandcashequivalentsatthebeginningoftheperiod 2,026 839
Effectsofexchangeratechangesonthebalancesofcashheldinforeign
currencies 2 5
Cashandcashequivalentsattheendoftheperiod 2,226 1,034
Theconsolidatedstatementofcashflowsistobereadinconjunctionwiththenotestothehalf-yearfinancialstatements.
11 SantosLimitedHalf-yearFinancialReport�C30June2017
CONSOLIDATEDSTATEMENTOFCHANGESINEQUITY
FORTHESIXMONTHSENDED30JUNE2017
EquityattributabletoownersofSantosLimited
Financial Accumulated
Issued Translation Hedging liabilitiesat profits Accumulated Total
capital reserve reserve FVOCI reserve losses equity
$million $million $million $million $million $million $million
Balanceat1January2016 8,119 (808) (12) �C 121 1 7,421
Transferretainedprofitstoaccumulatedprofitsreserve �C �C �C �C 258 (258) �C
Itemsofcomprehensiveincome:
Netlossfortheperiod �C �C �C �C �C (1,104) (1,104)
Othercomprehensiveincome/(loss)fortheperiod �C 91 3 �C �C (1) 93
Totalcomprehensiveincome/(loss)fortheperiod �C 91 3 �C �C (1,105) (1,011)
Transactionswithownersintheircapacityasowners:
Sharesissued 21 �C �C �C �C �C 21
Dividendstoshareholders �C �C �C �C (66) �C (66)
Share-basedpaymenttransactions �C �C �C �C �C 4 4
Balanceat30June2016 8,140 (717) (9) �C 313 (1,358) 6,369
Balanceat1July2016 8,140 (717) (9) �C 313 (1,358) 6,369
Netlossfortheperiod �C �C �C �C �C 57 57
Othercomprehensiveincome/(loss)fortheperiod �C (113) 16 �C �C 2 (95)
Totalcomprehensiveincome/(loss)fortheperiod �C (113) 16 �C �C 59 (38)
Transactionswithownersintheircapacityasowners:
Sharesissued 743 �C �C �C �C �C 743
Share-basedpaymenttransactions �C �C �C �C �C 6 6
Balanceat31December2016 8,883 (830) 7 �C 313 (1,293) 7,080
Openingbalanceadjustmentonadoptionofnewaccountingstandard
(referNote5.4) �C �C �C �C �C (5) (5)
Balanceat1January2017 8,883 (830) 7 �C 313 (1,298) 7,075
Netlossfortheperiod �C �C �C �C �C (506) (506)
Othercomprehensiveincome/(loss)fortheperiod �C 207 6 (20) �C 1 194
Totalcomprehensiveincome/(loss)fortheperiod �C 207 6 (20) �C (505) (312)
Transactionswithownersintheircapacityasowners:
Sharesissued 151 �C �C �C �C �C 151
Sharebuy-back(heldasTreasuryshares) (3) �C �C �C �C �C (3)
Share-basedpaymenttransactions 3 �C �C �C �C 3 6
Balanceat30June2017 9,034 (623) 13 (20) 313 (1,800) 6,917
Theconsolidatedstatementofchangesinequityistobereadinconjunctionwiththenotestothehalf-yearfinancialstatements.
12 SantosLimitedHalf-yearFinancialReport�C30June2017
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SECTION1: BASISOFPREPARATION
Thissectionprovidesinformationaboutthebasisofpreparationofthehalf-yearfinancialreport,andcertainaccounting
policiesthatarenotdisclosedelsewhere.
1.1 CORPORATEINFORMATION
SantosLimited(“theCompany”)isacompanylimitedbysharesincorporatedinAustraliawhosesharesarepublicly
tradedontheAustralianSecuritiesExchange(“ASX”). Thecondensedconsolidatedfinancialreportofthe
Companyforthesixmonthsended30June2017(“thehalf-yearfinancialreport”)comprisestheCompanyandits
controlledentities(“theGroup”). SantosLimitedistheultimateparententityintheGroup.
Thehalf-yearfinancialreportwasauthorisedforissueinaccordancewitharesolutionoftheDirectorson23
August2017.
Thehalf-yearfinancialreportispresentedinUnitedStatesdollars.
1.2 BASISOFPREPARATION
Thisgeneralpurposehalf-yearfinancialreporthasbeenpreparedinaccordancewithAASB134InterimFinancial
ReportingandtheCorporationsAct2001.
Thehalf-yearfinancialreportdoesnotincludeallnotesofthetypenormallyincludedwithintheannualfinancial
reportandthereforecannotbeexpectedtoprovideasfullanunderstandingofthefinancialperformance,financial
positionandcashflowsoftheGroupastheannualfinancialreport.
Itisrecommendedthatthehalf-yearfinancialreportbereadinconjunctionwiththeannualfinancialreportforthe
yearended31December2016andconsideredtogetherwithanypublicannouncementsmadebytheCompany
duringthesixmonthsended30June2017,inaccordancewiththecontinuousdisclosureobligationsoftheASX
listingrules.
1.3 SIGNIFICANTACCOUNTINGJUDGEMENTS,ESTIMATESANDASSUMPTIONS
Thesignificantaccountingjudgements,estimatesandassumptionsadoptedinthehalf-yearfinancialreportare
consistent withthoseappliedinthepreparationoftheGroup’sannualfinancialreportfortheyearended
31December2016.
13 SantosLimitedHalf-yearFinancialReport�C30June2017
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SECTION2: FINANCIALPERFORMANCE
ThissectionfocusesontheoperatingresultsandfinancialperformanceoftheGroup.Itincludesdisclosuresof
segmentalfinancialinformationanddividends.
2.1 SEGMENTINFORMATION
TheGrouphasidentifieditsoperatingsegmentstobethefivekeyassets/operatingareasoftheCooperBasin;
GladstoneLNG(“GLNG”);PapuaNewGuinea(“PNG”);NorthernAustralia;andWesternAustraliagas;basedon
thenatureandgeographicallocationoftheassets,plus“Other”non-coreassets.Thisisthebasisonwhichinternal
reportsareprovidedtotheChiefExecutiveOfficerforassessingperformanceanddeterminingtheallocationof
resourceswithintheGroup.
Segmentperformanceismeasuredbasedonearningsbeforeinterest,tax,impairment,explorationandevaluation,
depletion,depreciationandamortisation“EBITDAX”.Corporateandexplorationexpenditureandinter-segment
eliminationsareincludedinthesegmentdisclosureforreconciliationpurposes.
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2.1SEGMENTINFORMATION(continued) Corporate,
Northern exploration,
CooperBasin GLNG PNG Australia WAGas Other eliminations Total
$million 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Revenue
Salestoexternalcustomers 319 330 347 210 248 207 78 71 116 74 165 214 180 85 1,453 1,191
Inter-segmentsales* 60 15 7 8 �C �C �C �C �C �C 2 3 (69) (26) �C �C
Otherrevenuefrom
externalcustomers 16 8 4 6 2 3 �C �C 19 �C 3 �C (1) (3) 43 14
Totalsegmentrevenue 395 353 358 224 250 210 78 71 135 74 170 217 110 56 1,496 1,205
Costs
Productioncosts (69) (85) (34) (31) (27) (26) (35) (37) (25) (23) (61) (91) 12 20 (239) (273)
Otheroperatingcosts (37) (40) (33) (35) (22) (19) (3) �C (8) (2) (8) (8) (78) (66) (189) (170)
Third-partyproduct
purchases (73) (108) (84) (62) (1) (1) �C �C �C �C �C �C (120) (79) (278) (250)
Inter-segmentpurchases* (1) (2) (57) (30) �C �C �C �C �C �C �C �C 58 32 �C �C
Other (58) (14) 6 (1) 3 1 5 3 14 77 15 (15) (57) (72) (72) (21)
EBITDAX 157 104 156 65 203 165 45 37 116 126 116 103 (75) (109) 718 491
Depreciationanddepletion (72) (97) (96) (107) (52) (52) (29) (24) (36) (36) (50) (66) (13) (17) (348) (399)
Explorationandevaluation
expensed �C �C �C �C �C �C �C �C �C �C �C �C (53) (47) (53) (47)
Netimpairmentreversal
/(loss) 480 �C (1,238) (1,500) �C �C �C �C (6) �C (152) (16) (4) �C (920) (1,516)
EBIT 565 7 (1,178) (1,542) 151 113 16 13 74 90 (86) 21 (145) (173) (603) (1,471)
Netfinancecosts (139) (131) (139) (131)
Lossbeforetax (742) (1,602)
Incometaxbenefit 228 506 228 506
Royalty-relatedtax
benefit/(expense) �C �C �C �C �C �C �C (1) (11) (4) 11 (9) 8 6 8 (8)
Netlossfortheperiod (506) (1,104)
*Inter-segmentpricingisdeterminedonanarm'slengthbasis.Inter-segmentsalesareeliminatedonconsolidation.
15 SantosLimitedHalf-yearFinancialReport�C30June2017
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2.2 REVENUE
30June2017 30June2016
$million $million
Productsales:
Gas,ethaneandliquefiedgas 1,053 806
Crudeoil 262 285
Condensateandnaphtha 106 76
Liquefiedpetroleumgas 32 24
Totalproductsales1 1,453 1,191
1.Totalproductsalesincludethirdpartyproductsalesof$392million(2016:$278million).
2.3 EXPENSES
30June2017 30June2016
$million $million
CostofSales:
Productioncosts:
Productionexpenses 208 232
Productionfacilitiesoperatingleases 31 41
Totalproductioncosts 239 273
Otheroperatingcosts:
LNGplantcosts 32 26
Pipelinetariffs,processingtollsandother 88 85
Onerouspipelinecontract 31 26
Royaltyandexcise 30 19
Shippingcosts 8 14
Totalotheroperatingcosts 189 170
Totalcashcostofproduction 428 443
Depreciationofplant,equipmentandbuildings 221 238
Depletionofsubsurfaceassets 126 157
Totaldepreciationanddepletion 347 395
Third-partyproductpurchases 278 250
Decrease/(increase)inproductstock 35 (7)
Totalcostofsales 1,088 1,081
Otherexpenses:
Selling 7 9
Corporate 48 57
Depreciation 1 4
Foreignexchangelosses 93 29
(Gain)/lossfromchangeinfairvalueofderivativefinancial
assetsdesignatedasfairvaluethroughprofitorloss (2) 1
Fairvaluehedges,(gains)/losses:
Onthehedginginstrument 5 10
Onthehedgeditemattributabletothehedgedrisk (35) 1
Explorationandevaluationexpensed 53 47
Totalotherexpenses 170 158
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2.4 DIVIDENDS
Dividend Total
pershare US$
US￠ million
Dividendspaidduringtheperiod:
2017 Nodividendswerepaidduringtheperiod. nil nil2016 Final2015ordinary�Cpaid30Mar2016 (A$0.05) 4 66 Alldividendspaidwerefrankedatthetaxrateof30%. Dividendsdeclaredinrespectofthecurrentperiod: On23August2017,theDirectorsresolvednottopayaninterimdividendinrelationtothehalf-yearended 30June2017.17 SantosLimitedHalf-yearFinancialReport�C30June2017NOTESTOTHEHALF-YEARCONSOLIDATEDFINANCIALSTATEMENTS
FORTHESIXMONTHSENDED30JUNE2017
SECTION3: CAPITALEXPENDITURE,OPERATINGASSETSANDRESTORATIONOBLIGATIONS
ThissectionincludesinformationabouttheassetsusedbytheGrouptogenerateprofitsandrevenue,specifically
informationrelatingtoexplorationandevaluationassets,oilandgasassets,andcommitmentsforcapitalexpenditure
notyetrecognisedasaliability.
Thelifecycleofourassetsissummarisedasfollows:
Explorationand AppraisalDrilling Development Production Decommissioning Abandonmentand
Evaluation Restoration
3.1 EXPLORATIONANDEVALUATIONASSETS
Sixmonthsended
30June 31December 30June
2017 2016 2016
$million $million $million
Balanceatthebeginningoftheperiod 495 551 520
Acquisitions 35 36 1
Additions 57 57 59
Expensed (18) (55) (16)
Impairmentlosses (156) (55) (4)
Transfertooilandgasassetsindevelopment �C �C (1)
Transfertooilandgasassetsinproduction (6) �C (15)
Transfertoassetsheldforsale �C (28) �C
Exchangedifferences 15 (11) 7
Balanceattheendoftheperiod 422 495 551
Comprising: Acquisitioncosts 82 150 186 Successfulexplorationwells 290 249 253 Pendingdeterminationofsuccess 50 96 112 422 495 55118 SantosLimitedHalf-yearFinancialReport�C30June2017NOTESTOTHEHALF-YEARCONSOLIDATEDFINANCIALSTATEMENTS
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3.2 OILANDGASASSETS
Sixmonthsended
30June 31December 30June
2017 2016 2016
$million $million $million
Assetsindevelopment
Balanceatthebeginningoftheperiod 90 149 1,037
Additions 4 3 58
Transferfromexplorationandevaluationassets �C �C 1
Transfertooilandgasassetsinproduction �C (61) (946)
Disposals �C �C (2)
Exchangedifferences �C (1) 1
Balanceattheendoftheperiod 94 90 149
Producingassets
Balanceatthebeginningoftheperiod 10,308 10,840 11,367
Additions1 179 (44) 353
Transferfromexplorationandevaluationassets 6 �C 15
Transferfromoilandgasassetsindevelopment �C 61 946
Transfertoassetsheldforsale �C (126) �C
Disposals �C (46) (2)
Depreciationanddepletionexpense (334) (326) (381)
Netimpairment(losses)/reversals (764) 23 (1,512)
Netimpairmentlossesonassetstransferredtoheldforsale �C (4) �C
Exchangedifferences 128 (70) 54
Balanceattheendoftheperiod 9,523 10,308 10,840
Totaloilandgasassets 9,617 10,398 10,989
Comprising: Explorationandevaluationexpenditurepending commercialisation 182 223 338 Othercapitalisedexpenditure 9,435 10,175 10,651 9,617 10,398 10,989 1.Includesimpactonrestorationassetsfollowingchangesinfuturerestorationprovisionassumptions. 3.3 CAPITALCOMMITMENTS Therehasbeennomaterialchangetothecapitalcommitmentsdisclosedinthemostrecentannualfinancialreport.
19 SantosLimitedHalf-yearFinancialReport�C30June2017
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3.4 IMPAIRMENTOFNON-CURRENTASSETS
Impairmentexpense 30June2017 30June2016
$million $million
Explorationandevaluationassets 156 4
Oilandgasassets 764 1,512
Totalimpairment 920 1,516
ThecarryingamountsoftheGroup’soilandgasassetsarereviewedateachreportingdatetodeterminewhether
thereisanyindicationofimpairment.Whereanindicatorofimpairmentexists,aformalestimateoftherecoverable
amountismade.
Theexpectedfuturecashflowestimationisbasedonanumberoffactors,variablesandassumptions,themost
importantofwhichareestimatesofreserves,futureproductionprofiles,thirdpartysupply,commodityprices,costs
andforeignexchangerates.Inmostcases,thepresentvalueoffuturecashflowsismostsensitivetoestimatesof
futureoilprice,discountratesandproduction.
Estimatesoffuturecommoditypriceshavebeenupdatedfromthepreviousreportingdate.
Futureprices(US$/bbl)usedwere:
2017 2018 2019 2020 2021 20221
50.00 55.00 60.00 65.00 70.00 78.51
1.BasedonUS$70/bbl(2017real)from2022escalatedat2.4%in2017and2.3%ineachyearthereafter.
ThefutureestimatedforeignexchangerateappliedisA$/US$0.70in2017,andA$/US$0.75inallsubsequentyears.
ThediscountratesappliedtothefutureforecastcashflowsarebasedontheGroup’sweightedaveragecostof
capital,adjustedforriskswhereappropriate.Therangeofpre-taxdiscountratesthathavebeenappliedtonon-
currentassetsisbetween10.3%and16.2%.
Intheeventthatfuturecircumstancesvaryfromtheseassumptions,therecoverableamountoftheGroup’soiland
gasassetscouldchangemateriallyandresultinimpairmentlossesorthereversalofpreviousimpairmentlosses.
Duetotheinterrelatednatureoftheassumptions,movementsinanyonevariablecanhaveanindirectimpacton
othersandindividualvariablesrarelychangeinisolation.Additionally,managementcanbeexpectedtorespondto
somemovements,tomitigatedownsidesandtakeadvantageofupsides,ascircumstancesallow.Consequently,itis
impracticabletoestimatetheindirectimpactthatachangeinoneassumptionhasonothervariablesandhence,on
thelikelihood,orextent,ofimpairmentsorreversalsofimpairmentsunderdifferentsetsofassumptionsin
subsequentreportingperiods.
Recoverableamountsandresultingimpairmentwrite-downs/(reversals)recognisedforthehalfyearended30June
2017are:
Subsurface Plantand Recoverable
assets equipment Total amount1
Segment $million $million $million $million
Explorationandevaluationassets:
AAL�CIndonesia Exploration 149 �C 149 nil2
PNG�CPPL287 Exploration 4 �C 4 nil2
GunnedahBasin Exploration 3 �C 3 nil2
Totalimpairmentofexplorationandevaluation
assets 156 �C 156
Oilandgasassets�Cproducing:
GLNG GLNG �C 1,238 1,238 4,155
Cooper CooperBasin (256) (224) (480) 1,380
Barrow Other �C 6 6 nil
Totalimpairmentofoilandgasassets (256) 1,020 764
Totalimpairmentofexplorationand
evaluationandoilandgasassets (100) 1,020 920
1.Recoverableamountsrepresentthecarryingvaluesofassetsbeforedeductingthecarryingvalueofrestorationliabilities.Allproducing
oilandgasassetamountsarecalculatedusingthevalue-in-usemethod,whilstallexplorationandevaluationassetamountsusethefair
valuelesscostsofdisposalmethod.
2.Impairmentofexplorationandevaluationassetsrelatestocertainindividuallicences/areasofinterestthathavebeenimpairedtonil.
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3.4 IMPAIRMENTOFNON-CURRENTASSETS(continued)
Explorationandevaluationassets
TheimpairmentofAALhasarisenmainlyfromtheimpactofloweroilprices.
Oilandgasassets
GLNG
Sincethelastcarryingvalueassessmentat31December2016therehavebeenanumberofchangestorelevant
assumptions,principallylower US$oilprices,thathaveimpactedtherecoverableamount. Additionally,the
AustraliangovernmenthasintroducedregulationsrelatingtotheAustralianDomesticGasSecurityMechanismsince
31December2016.Theimpactonrecoverableamountoftheloweroilpriceassumption,combinedwithahigher
discountrateandlowerassumedvolumesofthirdpartygas,hasbeenpartiallyoffsetbyhigherassumedequitygas
volumesresultingfrompositiveupstreamperformanceandlowercosts.
CooperBasin
WhilsttheCooperBasinhasbeenimpactedbylowerUS$oilpriceassumptions,thishasbeenmorethanoffsetby
lowerforecastdevelopmentcostscombinedwithincreaseddrillingactivityandproduction,resultinginareversal
ofimpairment.
Sensitivity Totheextenttheoilandgascashgeneratingunitshavebeenwrittendowntotheirrespectiverecoverableamounts inthecurrentandprioryears,anychangeinkeyassumptionsonwhichthevaluationsarebasedwouldfurther impactassetcarryingvalues.Whenmodelledinisolation,itisestimatedthatchangesinthekeyassumptionswould resultinthefollowingadditionalimpairment/lowerimpairmentreversal: Oilpricedecrease
Production Discountrate US$5/bblall
Sensitivity decrease5% increase0.50% years
$million $million $million
GLNG 270 237 504
CooperBasin 265 70 257
21 SantosLimitedHalf-yearFinancialReport�C30June2017
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SECTION4: FUNDINGANDRISKMANAGEMENT
Ourbusinesshasexposuretocapital,credit,liquidityandmarketrisks.Thissectionprovidesinformationrelatingto
ourmanagementof,aswellasourpoliciesformeasuringandmanagingtheserisks.
4.1 FINANCEINCOME/(COSTS)
30June 30June
2017 2016
$million $million
Financeincome:
Interestincome 14 6
Totalfinanceincome 14 6
Financecosts:
Interestpaidtothirdparties (136) (131)
Deductborrowingcostscapitalised 5 15
(131) (116)
Unwindoftheeffectofdiscountingonprovisions (22) (21)
Totalfinancecosts (153) (137)
Netfinancecosts (139) (131)
22 SantosLimitedHalf-yearFinancialReport�C30June2017
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4.2 ISSUEDCAPITAL
Sixmonthsended
30June 31December 30June 30June 31December 30June
2017 2016 2016 2017 2016 2016
Numberofshares Numberofshares Numberofshares $million $million $million
Movementinfullypaidordinaryshares
Balanceatthebeginningoftheperiod 2,032,389,675 1,774,816,198 1,766,210,639 8,883 8,140 8,119
Institutionalplacement,netofcosts �C 256,000,000 �C �C 740 �C
Rightsissue,netofcosts �C �C �C �C �C (2)
Sharepurchaseplan,netofcosts 50,847,537 �C �C 151 �C �C
SantosDividendReinvestmentPlan �C �C 8,205,002 �C �C 23
SantosEmployeeShare1000Plan �C 297,036 �C �C 1 �C
SantosEmployeeShareMatchPlan �C 719,764 �C �C 2 �C
Sharespurchasedonmarket(Treasuryshares) �C �C �C (3) �C �C
IssueofTreasurysharesonvestingof
employeeshareschemes �C �C �C 3 �C �C
Replacementofrestrictedclassesofordinary
shareswithsharespurchasedonmarket (21,281) �C �C �C �C �C
Sharesissuedonvestingofshareacquisition
rights 5,365 188,755 390,063 �C �C �C
SharesissuedonvestingofExecutiveDeferred
Short-termIncentive �C 253,747 �C �C �C �C
SharesissuedonvestingofExecutiveStrategy
Grant �C 106,827 �C �C �C �C
SantosNon-executiveDirectorShareholding
Plan �C 7,348 10,494 �C �C �C
Balanceattheendoftheperiod 2,083,221,296 2,032,389,675 1,774,816,198 9,034 8,883 8,140
23 SantosLimitedHalf-yearFinancialReport�C30June2017
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4.3 FINANCIALRISKMANAGEMENT
Exposuretoforeigncurrencyrisk,interestraterisk,commoditypricerisk,creditriskandliquidityriskarisesinthe
normalcourseoftheGroup’sbusiness.TheGroup’soverallfinancialriskmanagementstrategyistoseektoensure
thattheGroupisabletofunditscorporateobjectivesandmeetitsobligationstostakeholders.Derivativefinancial
instrumentsmaybeusedtohedgeexposuretofluctuationsinforeignexchangerates,interestratesandcommodity
prices.
TheGroupusesvariousmethodstomeasurethetypesoffinancialrisktowhichitisexposed. Thesemethods
includecashflowatriskanalysisinthecaseofinterestrate,foreignexchangeandcommoditypricerisk,andageing
analysisforcreditrisk.
FinancialriskmanagementiscarriedoutbyacentraltreasurydepartmentwhichoperatesunderBoard-approved
policies.Thepoliciesgoverntheframeworkandprinciplesforoverallriskmanagementandcoversspecificfinancial
risks,suchasforeignexchangerisk,interestraterisk,creditrisk,approvedderivativeandnon-derivativefinancial
instruments,andliquiditymanagement.
(a) Foreigncurrencyrisk
Foreignexchangeriskarisesfromcommercialtransactionsandvaluationsofassetsandliabilitiesthatare
denominatedinacurrencythatisnottheentity’sfunctionalcurrency.
TheGroupisexposedtoforeigncurrencyriskprincipallythroughthesaleofproductsdenominatedin
currenciesotherthanthefunctionalcurrency,borrowingsdenominatedineurosandcapitalandoperating
expenditureincurrenciesotherthanUSdollars,principallyAustraliandollars.Inordertoeconomicallyhedge
foreigncurrencyrisk,theGroupfromtimetotimeentersintoforwardforeignexchange,foreigncurrency
swapandforeigncurrencyoptioncontracts.
TheGrouphascertaininvestmentsindomesticandforeignoperationswhosenetassetsareexposedtoforeign
currencytranslationrisk.
AllforeigncurrencydenominatedborrowingsofAustraliandollarfunctionalcurrencycompaniesareeither
designatedasahedgeofUSdollardenominatedinvestmentsinforeignoperations(2017:$158million;2016:
$824million),swappedusingcross-currencyswapstoUSdollarsanddesignatedasahedgeofUSdollar
denominatedinvestmentsinforeignoperations(2017:$1,410million;2016:$1,410million),oroffsetbyUS
dollardenominatedcashbalances(2017:$1,875million;2016:$1,500million).Asaresult,therewerenonet
foreigncurrencygainsorlossesarisingfromtranslationofUSdollar-denominatedborrowingsrecognisedin
theincomestatementin2017.
Monetaryitems,includingfinancialassetsandliabilities,denominatedincurrenciesotherthanthefunctional
currencyofanoperation,areperiodicallyrestatedtoUSdollarequivalents,andtheassociatedgainorlossis
takentotheincomestatement. Theexceptionisforeignexchangegainsorlossesonforeigncurrency
provisionsforrestorationatoperatingsitesthatarecapitalisedinoilandgasassets.
(b) Marketrisk
Cashflowandfairvalueinterestraterisk
TheGroup’sinterestrateriskarisesfromitsborrowings.Borrowingsissuedatvariableratesexposethe
Grouptocashflowinterestraterisk.BorrowingsissuedatfixedratesexposetheGrouptofairvalueinterest
raterisk.
TheGroupadoptsapolicyofensuringthatthemajorityofitsexposuretochangesininterestrateson
borrowingsisonafloatingratebasis. Interestrateswapshavebeenenteredintoasfairvaluehedgesof
medium-termnotes,long-termnotesandsubordinateddebt. Whentransacted,theseswapshadmaturities
rangingfrom1to20years,alignedwiththematurityoftherelatednotes.
TheGroup’sinterestrateswapshadanotionalcontractamountof$1,777million(2016:$1,777million)and
anetfairvalueof$71million(2016:$83million).Thenetfairvalueamountswererecognisedasfairvalue
derivatives. Commoditypriceriskexposure TheGroupisexposedtocommoditypricefluctuationsthroughthesaleofpetroleumproductsandotheroil pricelinkedcontracts. TheGroupmayenterintocommoditycrudeoilpriceswapandoptioncontractsto manageitscommoditypricerisk.At30June2017,theGrouphas5.52millionbarrelsofopenoilpriceoption contracts(31December2016:10.95millionbarrels),coveringcalendar2017exposures.The3-wayoption structuredoesnotqualifyforhedgeaccounting,withthemovementinfairvaluerecordedintheIncome Statement.TheGroupcontinuestomonitoroilpricevolatilityandtoassesswhetherfurthercommodityprice hedgingisappropriate.24 SantosLimitedHalf-yearFinancialReport�C30June2017NOTESTOTHEHALF-YEARCONSOLIDATEDFINANCIALSTATEMENTS
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4.3 FINANCIALRISKMANAGEMENT(continued)
(c) Hedging
Hedgesinplace
TheGrouphasissued�1,000millionsubordinatednoteswithanaveragefixedinterestrateof8.25%.
Inordertoreducethevariabilityofthecashflowsarisingfromtheeuroprincipalandinterestpaymentsto
September2017,theGroupenteredintocross-currencyinterestrateswapcontractsinMarch2011,under
whichithasarighttoreceiveinterestatfixedeuroratesandpayinterestatfloatingUSdollarinterestrates.
Thesecontractsareinplacetocoverprincipalandinterestpaymentson�950millionofthesubordinated
notesthroughtothefirstcalldateinSeptember2017.
Subordinatednotestotalling�50millionhavebeenswappedtoafixedUSdollarinterestrateof8.48%through
tothefirstcalldateinSeptember2017.
TheGrouphasenteredintoUSdollarinterestrateswapcontracts,underwhichithasarighttoreceive
interestatfloatingUSdollarratesandpayinterestatfixedUSdollarinterestrates. Thesecontractsarein
placetocovercouponpaymentson$1,200millionofUSdollarfloatingrateloansthroughtoMarch2019.
Thecross-currencyandinterestrateswapcontractsarerecognisedatfairvalueandallgainsandlosses
attributabletothehedgedrisksarerecognisedinthehedgereserveandreclassifiedintotheincomestatement
whentheinterestexpenseisrecognised.
(d)Fairvalues
Theinitialfairvaluesofreceivables,payables,interest-bearingliabilitiesandotherfinancialassetsand
liabilities,whicharenotsubsequentlymeasuredatfairvalue,approximatetheircarryingvalue.
Thefollowingsummarisesthesignificantmethodsandassumptionsusedinestimatingthefairvaluesof
financialinstruments:
Derivatives Thefairvalueofinterestrateswapsiscalculatedbydiscountingestimatedfuturecashflowsbasedonthe termsofmaturityofeachcontractandusingmarketinterestratesforasimilarinstrumentatthereporting date.Wherethesecashflowsareinaforeigncurrency,thepresentvalueisconvertedtoAustraliandollars attheforeignexchangespotrateprevailingatreportingdate. Financialliabilities Fairvalueiscalculatedbasedonthepresentvalueoffutureprincipalandinterestcashflows,discountedat themarketrateofinterestatthereportingdate. Wherethesecashflowsareinaforeigncurrency,the presentvalueisconvertedtoAustraliandollarsattheforeignexchangespotrateprevailingatreportingdate. Interestratesusedfordeterminingfairvalue Theinterestratesusedtodiscountestimatedfuturecashflows,whereapplicable,arebasedonthemarket yieldcurveandcreditspreadsatthereportingdate.Theinterestratesincludingcreditspreadsusedto determinefairvaluewereasfollows: 30June2017 31December2016 % % Derivatives (0.4)�C3.3 (0.3)�C3.9 Loansandborrowings (0.4)�C3.3 (0.3)�C3.9 TheGroupusesthefollowinghierarchyfordetermininganddisclosingthefairvalueoffinancialinstruments byvaluationtechnique: Level1:quoted(unadjusted)pricesinactivemarketsforidenticalassetsandliabilities; Level2:othertechniquesforwhichallinputswhichhaveasignificanteffectontherecordedfairvalueare observable,eitherdirectlyorindirectly; Level3:techniqueswhichuseinputswhichhaveasignificanteffectontherecordedfairvaluethatarenot basedonobservablemarketdata. AlloftheGroup’sfinancialinstrumentswerevaluedusingtheLevel2valuationtechnique.25 SantosLimitedHalf-yearFinancialReport�C30June2017NOTESTOTHEHALF-YEARCONSOLIDATEDFINANCIALSTATEMENTS
FORTHESIXMONTHSENDED30JUNE2017
SECTION5: OTHER
Thissectionprovidesinformationthatisnotdirectlyrelatedtothespecificlineitemsinthefinancialstatements,
includinginformationaboutcontingentliabilities,eventsaftertheendofthereportingperiod,andchangesto
accountingpoliciesanddisclosures.
5.1 ACQUISITION/DISPOSALOFCONTROLLEDENTITIES
Therewerenoacquisitionsordisposalsofcontrolledentitiesduringthesixmonthsended30June2017.
5.2 CONTINGENTLIABILITIES
Therehasbeennomaterialchangetothecontingentliabilitiesdisclosedinthemostrecentannualfinancialreport.
5.3 EVENTSAFTERTHEENDOFTHEREPORTINGPERIOD
On23August2017,Santosexerciseditsoptiontoredeemits�1,000millionsubordinatednotesatthefirstcall
dateof22September2017.
On23August2017,theDirectorsofSantosLimitedresolvednottopayaninterimdividendinrelationtothe
half-yearended30June2017.
5.4 SIGNIFICANTACCOUNTINGPOLICIES
Theaccountingpoliciesadoptedinthepreparationofthehalf-yearfinancialreportareconsistentwiththoseapplied
inthepreparationoftheGroup’sannualfinancialreportfortheyearended31December2016,exceptfornew
standards,amendmentstostandardsandinterpretationseffectivefrom1January2017.
Thefollowingstandards,allconsequentialamendmentsandinterpretations,applicablefrom1January2017,have
beenadoptedbytheGroup.Theseamendmentstostandardsandinterpretationshavenotimpactedonthe
accountingpolicies,financialpositionorperformanceoftheGroup,oronpresentationordisclosureinthehalf-year
financialreport,withtheexceptionofAASB9,whichisdiscussedbelow:
AASB2016-1AmendmentstoAustralianAccountingStandards�CRecognitionofDeferredTaxAssetsforUnrealised
Losses-AASB112
AASB2016-2AmendmentstoAustralianAccountingStandards�CAmendmentstoAASB107
Inaddition,severalotherstandardamendmentswereapplicableforthefirsttimein2017,butwerenotrelevant
totheGroupanddonotimpactthehalf-yearfinancialreport.
AdoptionofAASB9�CFinancialInstruments
TheGroupelectedtoearlyadoptAASB9FinancialInstrumentsfrom1January2017.AASB9replacesAASB139
FinancialInstruments:RecognitionandMeasurement,andgenerallysimplifiestheclassificationandmeasurementof
financialinstruments,introducesanewexpectedcreditlossmodelforcalculatingimpairmentoffinancialassets,
andalignshedgeaccountingmorecloselywithanentity’sriskmanagementpractices.
TheGrouphasappliedthenewhedgeaccounting requirementprospectively,whiletheremainderofthe
requirementsofAASB9havebeenappliedretrospectivelyinlinewiththerequirementsofthestandard.
TheadoptionofAASB9resultsinthefollowingkeychangesintheGroup’saccountingandreporting:
FortheGroup’sfinancialliabilitiesthataremeasuredatFairValuethroughProfitandLoss(“FVTPL”),the
elementofgainsorlossesattributabletochangesintheGroup’sowncreditriskwillnowberecognisedin
OtherComprehensiveIncome(“OCI”)insteadorprofitandloss,andaccumulateinareservecalled“Financial
LiabilitiesatFVOCI”.Duringthehalf-yearended30June2017thisamountedtoa$20millionloss.
Hedgingeffectivenesstestingwillnowbeperformedonaprospectivebasiswithnodefinednumericalrange
ofeffectivenessappliedinthistesting.
TheGroupholdsanequityinvestmentpreviouslymeasuredatamortisedcostunderAASB139whichisnow
measureatFVTPL.Anopeningadjustmentof$5millionlosshasbeenrecognisedinretainedearningsupon
initialmeasurementunderAASB9.
NootherchangesarisingfromtheadoptionofAASB9havehadamaterialeffectonthefinancialreportingofthe
Group.
26 SantosLimitedHalf-yearFinancialReport�C30June2017
DIRECTORS’DECLARATION
FORTHESIXMONTHSENDED30JUNE2017
InaccordancewitharesolutionoftheDirectorsofSantosLimited(“theCompany”),westatethat:
IntheopinionoftheDirectorsoftheCompany:
1. ThefinancialstatementsandnotesoftheconsolidatedentityareinaccordancewiththeCorporationsAct2001
(Cth),including:
(a) givingatrueandfairviewoftheconsolidatedentity’sfinancialpositionasat30June2017andofits
performanceforthehalf-yearendedonthatdate;and
(b) complyingwithAccountingStandardAASB134InterimFinancialReportingandtheCorporationsRegulations
2001(Cth);and
2. TherearereasonablegroundstobelievethattheCompanywillbeabletopayitsdebtsasandwhentheybecome
dueandpayable.
Datedthis23rddayofAugust2017
OnbehalfoftheBoard:
Director
Adelaide
27 SantosLimitedHalf-yearFinancialReport�C30June2017
Ernst&Young Tel:+61884171600
121KingWilliamStreet Fax:+61884171775
AdelaideSA5000Australia ey.com/au
GPOBox1271AdelaideSA5001
IndependentAuditor'sReviewReporttotheMembersofSantos
Limited ReportontheHalf-YearFinancialReportConclusion Wehavereviewedtheaccompanyinghalf-yearfinancialreportofSantosLimited(theCompany)andits subsidiaries(collectivelytheGroup),whichcomprisesthecondensedconsolidatedstatementof financialpositionasat30June2017,thecondensedconsolidatedstatementofcomprehensive income,condensedconsolidatedstatementofchangesinequityandcondensedconsolidated statementofcashflowsforthehalf-yearendedonthatdate,notescomprisingasummaryof significantaccountingpoliciesandotherexplanatoryinformation,andthedirectors’declaration. Basedonourreview,whichisnotanaudit,nothinghascometoourattentionthatcausesustobelieve thatthehalf-yearfinancialreportoftheGroupisnotinaccordancewiththeCorporationsAct2001,including:
a) givingatrueandfairviewoftheconsolidatedfinancialpositionoftheGroupasat30June2017
andofitsconsolidatedfinancialperformanceforthehalf-yearendedonthatdate;and
b) complyingwithAccountingStandardAASB134InterimFinancialReportingandtheCorporations
Regulations2001.
Directors’ResponsibilityfortheHalf-YearFinancialReport
ThedirectorsoftheCompanyareresponsibleforthepreparationofthehalf-yearfinancialreportthat
givesatrueandfairviewinaccordancewithAustralianAccountingStandardsandtheCorporations
Act2001andforsuchinternalcontrolasthedirectorsdetermineisnecessarytoenablethe
preparationofthehalf-yearfinancialreportthatisfreefrommaterialmisstatement,whetherdueto
fraudorerror.
Auditor’sResponsibility
Ourresponsibilityistoexpressaconclusiononthehalf-yearfinancialreportbasedonourreview.We
conductedourreviewinaccordancewithAuditingStandardonReviewEngagementsASRE2410
ReviewofaFinancialReportPerformedbytheIndependentAuditoroftheEntity,inordertostate
whether,onthebasisoftheproceduresdescribed,anythinghascometoourattentionthatcausesus
tobelievethatthehalf-yearfinancialreportisnotinaccordancewiththeCorporationsAct2001
including:givingatrueandfairviewoftheGroup’sconsolidatedfinancialpositionasat30June2017
anditsconsolidatedfinancialperformanceforthehalf-yearendedonthatdate;andcomplyingwith
AccountingStandardAASB134InterimFinancialReportingandtheCorporationsRegulations2001.
AstheauditoroftheGroup,ASRE2410requiresthatwecomplywiththeethicalrequirements
relevanttotheauditoftheannualfinancialreport.
Areviewofahalf-yearfinancialreportconsistsofmakingenquiries,primarilyofpersonsresponsible
forfinancialandaccountingmatters,andapplyinganalyticalandotherreviewprocedures.Areviewis
substantiallylessinscopethananauditconductedinaccordancewithAustralianAuditingStandards
andconsequentlydoesnotenableustoobtainassurancethatwewouldbecomeawareofallsignificant
mattersthatmightbeidentifiedinanaudit.Accordingly,wedonotexpressanauditopinion.
28 AmemberfirmofErnst&YoungGlobalLimited
LiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation
Independence Inconductingourreview,wehavecompliedwiththeindependencerequirementsoftheCorporations Act2001.
Ernst&Young
RJCurtin LACarr
Partner Partner
Adelaide
23August2017
29 AmemberfirmofErnst&YoungGlobalLimited
LiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation
APPENDIX4D
FORTHESIXMONTHSENDED30JUNE2017
For‘ResultsforAnnouncementtotheMarket’refertopage1ofthisHalf-yearReport
NTABACKING
30June2017 30June2016
Nettangibleassetbackingperordinarysecurity N/A N/A
CHANGEINOWNERSHIPOFCONTROLLEDENTITIES
Therewerenoacquisitionsordisposalsofcontrolledentitiesduringthesixmonthsended30June2017.
DETAILSOFJOINTVENTUREANDASSOCIATEENTITIES
Percentownershipinterestheld
attheendoftheperiod
30June2017 30June2016
% %
Jointventureentities
DarwinLNGPtyLtd 11.5 11.5
GLNGOperationsPtyLtd 30.0 30.0
GLNGPropertyPtyLtd 30.0 30.0
LohengrinPtyLtd1 �C 50.0
PapuaNewGuineaLiquefiedNaturalGasGlobalCompanyLDC 13.5 13.5
1 companyderegisteredon7May2017.
30 SantosLimitedHalf-yearFinancialReport�C30June2017
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