Annual Report 200416
ACQUIRING NEW ACREAGE
Future exploration success depends
on quality exploration acreage.
Santos acquired five exploration
blocks in three hydrocarbon
provinces during 2004. The most
significant of these were in Egypt
and Indonesia.
Egypt and surrounding countries
are a focus area for Santos. The
Company has farmed in to three
exploration blocks in Egypt with
US petroleum group, Devon
Energy, committing approximately
$70 million to an eight-well
exploration joint venture over 
the next three years in the Gulf 
of Suez. This is Santos’ first move
into the North Africa–Middle East
region, which is considered the
world’s premier hydrocarbon
province.
Santos continues to seek other
exploration opportunities in this
area, concentrating on the Gulf 
of Suez and the onshore Desert
Basins.
Santos has acquired six
exploration permits in Indonesia
over the past three years,
including an interest in the
Donggala PSC in the Kutei Basin
during late 2004. This block lies
between Santos’ other Kutei
acreage: the Papalang and 
Popodi PSCs.
The addition of the Donggala PSC
gives Santos a particularly strong
presence in the Kutei Basin and
covers a highly prospective trend,
while adding to the Company’s
growing Indonesian operations.
Other exploration acreage
portfolio management and
activities during 2004 included:
• the award of exploration permit
T/36P in the Sorell Basin,
offshore Tasmania
• the addition of three new
venture areas in the shallow
waters of the Gulf of Mexico
and onshore Montana and 
Texas, which significantly
expands and diversifies the 
US exploration acreage and
prospect inventory
• the farm-out of a 16.67%
interest in the WA-264-P
permit offshore Western
Australia to Beach Petroleum
• the farm-out of a 60% interest
and operatorship of the NT/P61
permit in the Bonaparte Basin,
offshore northern Australia to
ConocoPhillips
• the farm-out of a 70% interest
in the deep water exploration
block, Nth Bali 1 PSC, offshore
East Java Basin to Total 
and Mitsui
• the farm-out of a 25% 
interest in the VIC P/51 
block containing the Callister
prospect to Mitsui & Co
subsidiary Mitwell Energy
Resources. 
These farm-outs continued the
trend of risk-sharing with quality
partners.
ADDING MATERIAL PROSPECTS
Santos is now in a position that
exploration success in 2004 and
good acreage management has
created future options that will
ultimately translate into greater
value for the business in 2005
and beyond.
This has been achieved by
focusing on ‘basin excellence’ .
This means becoming a technical
leader in basins, within our focus
areas, entering early where
possible to keep entry costs
down, balancing the commercial
and the technical risks and
selecting the right co-venturers.
An example of this is the strong
position Santos has created in
the Kutei Basin, with interests in
three neighbouring production
sharing contracts: Popodi,
Donggala and Papalang.
2004 also marked the year that
Santos drilled its first operated
deep water wells – a significant
achievement for a company that
had its beginnings in a desert
environment.
2004 EXPLORATION 
EXPENDITURE BY CATEGORY
Drilling
$63.6 million
Geoscience and other
$37.5 million
Seismic 
$17.2 million
New ventures
$7.3 million
2004 EXPLORATION 
EXPENDITURE BY REGION
Offshore Australia
$32.6 million
Onshore Australia
$23.4 million
South East Asia 
$41.4 million
United States
$28.2 million
KUTEI BASIN
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