Annual Report 200424
Santos added 57 million boe of
Proven (1P) reserves which
represents 121% of 2004
production.
Proven reserves at the end of the
year, after 47.1 million boe of
production and after divestments,
were 348 million boe, compared
with 338 million boe at the end
of 2003. 
The replacement of Proven
reserves exceeded Santos’ total
group production for the third
year in a row, with the
replacement rate for Proven
reserves averaging 130% over the
past three years: a good result
and in line with international
best practice.
Proven plus Probable (2P)
reserves increased by 54 million
boe prior to production, or by 7
million boe after production
which represents a reserves
replacement rate of 114%.
The 2004 reserves figures do not
include any potential reserve
bookings for the Jeruk oil
discovery in the Sampang PSC in
East Java or the Hiu Aman oil and
gas discovery in the Donggala PSC
in the Kutei Basin, offshore East
Kalimantan.
The average Proven reserve
replacement cost for 2004 was
US$12.37 per boe. Replacement
costs in any one year are affected
by the timing of spending and
reserve bookings, so a three-year
average is a more reliable
indicator of costs. Santos’ three-
year average replacement cost of
US$7.19 per boe is world-
competitive. 
2004 was also a significant year
in terms of development, with
some 102 million boe of 1P
reserves and 134 million boe of
2P reserves being moved from
undeveloped to developed,
significantly increasing the value
of reserves.
The material movements in
reserves during the year were as
follows:
• Onshore Australia – revisions
due to positive reservoir
performance and development
results in onshore Australia
added 18.5 million boe of 
1P reserves.
• Cooper Basin – poorer than
expected performance in some
tight gas fields and the
integration of results from
some previously unsuccessful
fracture stimulations resulted
in a 2P reserve reduction of 16
million boe. 
• Bayu-Undan – excellent results
from development drilling
program in the Bayu-Undan
field added 7 million boe of 
1P and 14 million boe of 2P
reserves.
• Mutineer-Exeter – a
disappointing appraisal and
development drilling campaign
resulted in downgrades in 1P
reserves of 10 million boe and
2P reserves of 13 million boe.
• John Brookes – integration of
the late 2003 drilling results in
the John Brookes gas field,
along with detailed reservoir
modelling, resulted in a
significant positive revision of
15 million boe of 1P and 32
million boe of 2P reserves.
• East Spar – disappointing
production performance
resulted in downgrades in 1P
reserves of 3 million boe and
2P reserves of 8 million boe.
• Maleo – sufficient progress
with commercialisation resulted
in the booking of 19 million
boe of 1P and 27 million boe
of 2P reserves.
• Acquisitions and divestments –
a net increase in 1P reserves of
12 million boe and 2P reserves
of 22 million boe from the
acquisition of certain Novus
Petroleum assets and an
increase in Patricia-Baleen
equity, with negligible
movement due to divestments.
The shift in Santos’ focus since
2001 is evidenced by the
reduction in onshore reserves and
the corresponding increase in
offshore reserves over time, as
shown in the charts below. This
trend can be expected to
continue as the central Australian
fields mature and new projects
move through the development
conveyor.
REPLENISHING AND UPGRADING RESERVES 
ONSHORE 1P AND 2P RESERVES
mmboe - nett
’01 ’02 ’03 ’04
474503
333 316
Probable Proven
0
100
200
300
400
500
600
OFFSHORE 1P AND 2P RESERVES
mmboe - nett
’01 ’02 ’03 ’04
258222
303 327
Probable Proven
0
100
200
300
400
500
600
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