Western Australian coast, in
which Santos has a one-third
interest, is the first offshore oil
field development which we
operate and is also the first of
five more offshore production
projects due to commence over
the next 18 months, three of
which are operated by Santos. 
Mutineer-Exeter appraisal
delivered a lower than expected
outcome in terms of reserves.
Conversely, at Bayu-Undan, where
the LNG project continues to
make steady progress towards
start-up in the first half of 2006,
Santos' fortunes went the other
way, as development drilling
upgraded Proven plus Probable
(2P) gas and liquids reserves 
by 14 million boe. 
The good news for the Mutineer-
Exeter project is that the field
has been developed under budget
and production is starting three
months ahead of schedule. 
The achievements in developing
Mutineer-Exeter are world class
and provide further evidence 
of the ability of Australian
companies to more than hold
their own on the global discovery
and development stage.
As projects like Minerva,
Mutineer-Exeter and Bayu-Undan
emerge from our development
pipeline, other projects enter 
and continue to advance. 
With contracts in place to supply
gas to customers in Western
Australia, we expect a mid-2005
start-up for the John Brookes
project in the offshore Carnarvon
Basin. Meanwhile, the Casino gas
field off the Victorian coast is 
on schedule to produce first gas 
in 2006, just four years after 
its discovery.
Several projects in Indonesia –
Maleo (gas) and Oyong (oil 
and gas) – have entered the
development pipeline at a design
phase. These projects are now
joined by Jeruk which, subject 
to further appraisal drilling and
commercial issues, has early
production potential. 
Our Sole, Kipper and Golden
Beach gas assets in the Gippsland
Basin, where we recently
completed acquisitions to
increase our interests and become
operator of the strategic Orbost
processing plant, are also at the
early development stage.
In all, Santos has an impressive
and exciting development outlook
over the next few years.
PERFORMANCE AGAINST
TARGETS
In last year’s Annual Report, 
I foreshadowed a series of
performance measures, together
with target levels for the 2004 
to 2006 period. At the time, I
highlighted that it was unlikely
that all of the targets would be
achieved in any one year, and
needed to be measured over 
the long run.
Our performance over 2004 is
summarised in the table below,
and while not all of the targets
were achieved, we are confident
that we are on track to meet them
within the timeframe set out.
Production was down, as
expected, but was further reduced
by the effects of the Moomba
incident. However, as previously
stated, we expect this trend to 
be reversed in 2005.
Reserve replacement has been
strong over the past three years,
averaging about 130%. While this
is below our long-term goal of
greater than 140%, it does not
include the recent Jeruk discovery
and is a solid result against the
industry average of less 
than 100%.
Similarly, our reserve replacement
cost for 2004 is above our target
due mainly to the high level 
of expenditure on major
development projects during the
year. On a three-year average
basis, which is more
representative of the nature 
of the business, the result is 
a reserve replacement cost of
US$7.19 – much more in line 
with our target.
The netback achieved in 2004 
was an improvement over 2003
and was on target due largely to
higher average product prices, but
also reflected the results of the
continuous improvement program.
All our financial measures
representing shareholder return
were favourable, being close to
targets which, given the difficult
start to the year, was an
exceptional result.
CONTINUOUS IMPROVEMENT
IMPORTANT
Our primary goal is to produce
higher returns for our shareholders
and, in our drive to do so, it is
important to identify ways in
which we might achieve more
efficient and cost-effective
outcomes. 
As a result, an important initiative
has been the introduction of a