exploration and evaluation expenditure under the IFRS conceptual framework commencing 1 January 2005.
Exploration and 
evaluation expenditure
Under A-IFRS the cost of employee remuneration provided in the form of equity-based remuneration (including
shares and options) will be measured based on the fair value of those instruments and amortised to the profit and
loss over the vesting period.
Equity-based payments
The majority of the controlled entities within the Santos Group that have petroleum operations in foreign
jurisdictions will have the US dollar as their functional currency. The first time application of A-IFRS will result in
the net assets of those foreign controlled entities to be translated from their US dollar functional currency to
Australian dollars using the spot rate at 1 January 2004. The differences arising from the initial application of this
accounting standard will be reflected in the foreign currency translation reserve at 1 January 2004.
Functional currency
Restoration liabilities will be discounted to present value and capitalised as a component part of capitalised
exploration and development expenditure and property, plant and equipment. The capitalised cost is to be amortised
over the life of the assets and the provision is accreted periodically to the profit and loss as the discounting of the
liability unwinds.
Restoration liabilities
Defined benefit superannuation plan surpluses and deficits will be recognised in the statement of financial position
and the changes in these values each period will be recognised either directly in the statement of financial
performance, progressively using a “corridor” approach or directly in retained earnings. The effective date of this
standard is 1 January 2006, however the Company is allowed to adopt earlier at 1 January 2005.
Defined benefit
superannuation surplus 
and deficits
Deferred tax assets and liabilities will generally be based on the differences between the accounting and tax basis
of assets and liabilities under the “balance sheet” approach which will result in the recognition of additional
deferred tax assets and liabilities.
Deferred tax assets
and liabilities
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