Annual Report 200410
2004 WAS A YEAR OF GOOD
OPERATING RESULTS
Overall the increase in 2004 profit
of 16% reflected a year of sound
operating performance. Sales
revenue was a record $1,501
million, up 2.5% on 2003,
reflecting higher prices across
most products and was achieved
despite lower production as a
result of the Moomba incident
and declining output from late
life fields.
Santos benefited from higher
world oil prices and realised
US$51.83 per boe in 2004, an
increase of 19% over 2003. The
benefit of higher world oil prices
substantially offset the impact 
of lower production volumes. 
Santos was also able to negotiate
higher domestic gas prices (up
4% on average) and deliver new
revenue streams from project
start-ups and acquisitions during
the year.
PRODUCTION HAMPERED BY
MOOMBA INCIDENT
2004 production was lower due 
to the Moomba incident, which
reduced production by 4.6 million
boe. Field decline reduced
production by a further 
5.0 million boe.
Offsetting these factors, Santos’
growth projects are starting to
come on line and have begun to
reverse the decline experienced
over the past three years. Two
projects were commissioned in
2004: the Bayu-Undan liquids
project and the Minerva gas
project. In addition, acquisitions
contributed 0.8 million boe to
production. 
For 2005, production is expected
to improve by around 15%, or 
4% excluding the impact of the
Moomba incident. Santos now
expects production to be around
54 million boe in 2005. This
increase is largely driven by the
commissioning of Mutineer-Exeter
in March 2005 and the John
Brookes gas field in the middle 
of the year.
PRODUCTION COSTS 
UNDER CONTROL
Production costs in 2004 were
$309 million, up $45 million or
17% on 2003. Analysis shows
that Santos was able to continue
to effectively control its costs 
in the face of significant external
pressures in the form of rising
services and materials prices.
Examining production costs in
detail reveals:
• the start-up of Bayu-Undan and
acquisitions added $16 million
to Santos’ cost base
• changes in our accounting
added a further $16 million 
to Santos’ production costs
• higher insurance premiums 
($8 million) and one-off stock
write-offs ($5 million) were
offset by $17 million in cost
savings largely as a result of
Santos’ continuous
improvement initiatives
• the Moomba incident resulted
in $17 million of one-off costs
in 2004.
Piecing this together, the key
themes in our financial
performance were:
• cost savings in established
production areas more than
offset increases in the price 
of services and materials
• Santos’ cost base rose as
production from new
developments and acquisitions
were added to the Company’s
expanding portfolio of
producing assets.
ANALYSING FINANCIAL PERFORMANCE 
‘The sound operating results
achieved in 2004 underline 
the changing face of Santos
towards a higher value, higher
margin business. We ended the
year with a strong financial
position and our financial
flexibility intact. ’   
PETER WASOW
Chief Financial Officer
’01 ’02 ’03 ’04
PRODUCTION AND SALES REVENUE
Revenue Net profit after tax Production
1,460
445
322 327 380
1,478 1,465
54.257.355.7
1,501
47.1
0
500
1000
1500
2000
0
10
20
30
40
50
60
$million
mmboe
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