Santos Gets Approval for Mutineer-Exeter Field Development

Santos Limited and its partners have been given formal approval for the development of the Mutineer-Exeter oil fields in the Carnarvon Basin, offshore Western Australia. Production from the fields is expected to commence in mid 2005, with initial production forecast to be at a daily rate of 70,000 to 80,000 barrels of oil per day (bopd), building up to 100,000 bopd.

Total production is forecast to be around 13.8 million barrels in 2005 and approximately 35 million barrels in 2006, based on currently estimated proven and probable (2P) reserves of 101 million barrels of oil. The fields are estimated to have a production life of around seven years.

"Today represents another significant step forward in the growth of the Santos Group," the Company's Managing Director, Mr. John Ellice-Flint, said.

"It is another company-building development for us, following only four months after the formal approval for another Santos cornerstone project - the LNG stage of the Bayu-Undan project in the Timor Sea.

"Oil production from the Mutineer-Exeter development will provide Santos with a significant boost in oil production and revenue.

"Santos' share of peak oil production from Mutineer-Exeter in 2006 will be comparable with Santos' total oil production from all fields of 12 million barrels last year."

Capital expenditure for the Mutineer-Exeter development is A$480 million (A$160 million Santos share).

Development drilling is scheduled to commence in the first quarter 2004, with installation of the mooring systems for the Floating Production Storage and Offtake (FPSO) facility and sub sea infrastructure occurring prior to the FPSO arriving at the field.

Total field reserves are currently estimated to be 55 million barrels proven, 101 million barrels proven and probable and 169 million barrels proven, probable and possible. Reserves and production rates will be confirmed during development drilling. Production volume forecasts are also subject to the precise start-up date, field performance and the other factors affecting new oil developments.

Mr. Ellice-Flint said some sub-sea structural equipment had already been pre-ordered in order to safeguard the schedule to first oil.

Santos and its joint venture partners have received competitive tenders from FPSO contractors, to supply, own and operate the FPSO under a performance-based service agreement. This service agreement represents an estimated equivalent present cost of around $285 million for the facility over the most likely term. Full award of this contract will be finalized during October.

The Mutineer and Exeter fields are located in Exploration Permit WA 191-P. Santos (33.4% interest), is the operator, with joint venture partners, KUFPEC (33.4%), Nippon Oil Exploration (25.0%) and Woodside (8.2%).
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