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              [html]<thead><tr><td>The Santos base business comprises production from assets in all of the Company ’ s extisting producing fields.</td><td>and increased interests at Patricia - Baleen. Amadeus Basin gas production remained flat as declining production was</td><td>delineation wells on the deepFrio trend contributed with improved condensate content during the year.</td><td>program achieved better than predicted rate improvements for all three gas wells. Three means wells. Three management, c2I exercise than therefore and there weill exercise therefore and there weill exercise the treatments will exerci</td></tr></thead><tbody><tr><td>Santos is countering decline from mature fields with strategies such as optimisation and trialling new technologies to maximise output, while running an exploration</td><td>development drilling during the second half of 2004 at Palm Valley and Mereenie.</td><td>LPG production declined by 34 % to 158.600 tonnes in 2004 from 240.700 tonnes in 2003, due mainly to the effects</td><td>These programs will now be extended to a variety of more complex and possibly harsher oil and gas wellbore / reservolr environments during 2005.</td></tr><tr><td>while running an exploration program which aims to add new projects and production.</td><td>Crude oil production was 13 % lower at 9.5 million barrels, down from 10.9 million barrels in the</td><td>of the Moomba incident on the production of liquids through the liquids recovery plant. Production</td><td>Santos increased gas well deliverability in the Cooper Basin by 63 TJ per day through</td></tr><tr><td>At all times, ensuring the safety of all operations and minimising any environmental impacts remains paramount.</td><td>β - cHour y - area would declined at Stag. Legendre and 3abiru - Challis. Successful infill drilling at Legendre and Stag helped turn around declines for</td><td>Total body partially offset this decrease. APPLYING NEW TECHN0L0GIES Reservoir studies have identified</td><td>numerous projects brought online during 2004. Some 8 PJ of incremental gas production resulted during 2004 from this resultinis - wilce sprearment</td></tr><tr><td>2004 PRODUCT10.13NPACTEDBY KOOKIIA. INCIDENTSantor ' total production in 2004. fell from $ 4.2 million boe in 2003 to 47.1 million boe, primarily due to the effects of the 1.2anuary</td><td>these fields during the second half of 2006. The program to improve production at Stag will continue into 2005 as simulation studies suggest further drilling and lincreased water injection</td><td>ural : suine : owen perineasuring reservoirs may have significant potential to increase recoveries through activities such as additional Infilt drilting, fracture stimulation and waterflooding.</td><td>optimacon program, 19ext results were achieved at a significantly lower cost than conventional development drilling and substantially exceeded targets set at the beginning of the year.</td></tr><tr><td>incident at Moomba that resulted in a reduction of 4.6 million boe, together with declining performance from the East Spar and Stag fields in the Carnarvon Basin, offshore Western Australia.</td><td>Cooper Basin oil production declined just 4 % during 2004 due to successful delineation, development and production optimisation at several fields, particularly Merrimelia, Derrilyn</td><td>in the Cooper Basin in drilling, completions and artificial lift optimisation during 2006 to improve product delivery and recovery In order to reduce production costs per unit.</td><td>While the Cooper Basin is a mature hydrocarbon area, Santos Is drilling wells which can be commercialised quickly and cost - effectively, delivering strong cash flow which can be applied</td></tr><tr><td>Sales gas and ethane production fell 14 % during the year from 22.8 P3 to 190.5 P3. Production</td><td>particularly Merrimelia, Derrilyn and Mulberry. Amadeus Basin oil production declines were made</td><td>To this end, further reductions in costs for 2005 are targeted by increasing the focus on fit for purpose rigs and larger</td><td>to other growth opportunities. A further focus in 2004 was to leverage Cooper Basin infrastructure ; for example, via</td></tr><tr><td>declined in the Cooper Basin and gas production from the onshore Otway Basin ceased with the divestment of these interests.</td><td>less severe through successful. drilling at Mereenie. Condensate production increas hv. 90 %, fover, 3.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9.9, 9</td><td>by increasing the focus on fit for purpose rigs and larger campaigns. These efforts will be supported by a significant boost</td><td>gas swaps, and increase prices under existing agreements.</td></tr><tr><td>However, gas production was steady or increased in four of five other areas of operation. This</td><td>Δ ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 3 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 4 ‐ 1 ‐ 4 ‐ 1 ‐</td><td>in 3D seismic acquisition that commenced at the end of 2003 and continues in 2005.</td><td>An increased Gas Sales Agreement was reached with CS Energy which resulted in an additional seven wells being drilled at the Scotia coal seam methane gas field in eastern Queensland.</td></tr><tr><td>illustrates the success of Santos ’ continued efforts to diversify its base business and to optimise existing production.</td><td>expected performance during 2004, offsetting the lower condensate production from the Cooper Basin due to the Moomba Incident and decline at East Spar</td><td>Colled tubing underbalanced drilling operations were performed at three gas wells and one cill well, while multiple pinpoint fracture stimulations were</td><td>Lower Cooper Basin gas production was partly offset by higher gas production from eastern Queensland through</td></tr><tr><td>incident and decline at East Spa as the field approached the end of its production life. Crevolanceta nervoluntion from that</td><td>Fracture stimulations were performed at five new gas wells, with between three and six fracs performed in each well.</td><td>appraisal and development success at Churchie, new interests in Indonesia at Kakap and Brantas</td><td>United States was also improved by almost 0.1 million barrels as successful development and</td></tr><tr><td>These introductory programs are providing encouraging initial results. The underbalanced drilling</td></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr></tbody>
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