Santos Outlines Plan to Boost Oil Production

Santos Managing Director Mr. John Ellice-Flint said "It is oil and liquids that provide the high margin upside for our investors." The Company plans to target increased near-term oil production through optimization of existing oil fields and discoveries. It is seeking to try advanced technology on previously un-commercial Cooper Basin oil reservoirs, drilling up to 16 wells at a cost of $25 million. It will also participate in infill drilling in the Legendre oil field in the Carnarvon Basin and possible development of already discovered fields in the Timor Sea.

Mr. Ellice-Flint also said the Company's flagship growth projects, the Bayu-Undan liquids development and the Mutineer-Exeter oil development, which will also begin to contribute to oil and liquids production in 2004 and 2005. The Mutineer Exeter fields are estimated to have approximately 120 million barrels of proven and probable oil reserves - a 50 per cent increase in Santos' total oil reserves. The current target was to achieve full Mutineer-Exeter project sanction before the end of 2003, with first production in 2005. "A Floating Production and Offloading facility concept has been selected for development of the oil fields," Mr. Ellice-Flint said.

"In order to progress the development as efficiently as possible, four major internationally recognized contractors have been pre-qualified and a technical definition phase has commenced," he said. This will be followed by a commercial tender phase for the lease of the facility to be completed by end June.

The Mutineer-Exeter oil discoveries are part of a profile of growth projects being assembled by Santos to take the Company forward in the longer term. The Company's growing portfolio of exploration acreage also provides potential for future growth. "Today, we have more exploration acreage in Australia than any other company as a result of acreage awards in the offshore Otway, Sorell, Duntroon, Browse and Houtman Basins".