Santos Acquires Stake in Indonesian Deepwater Acreage

Santos Limited has acquired a 20 percent non-operated interest in two deepwater exploration permits offshore Indonesia. This is a continuation of Santos' strategies to add higher impact exploration acreage and build its South East Asian energy business.

The Popodi and Papalang Production Sharing Contract (PSC) areas lie in the deepwater portion of the Kutei Basin, offshore East Kalimantan, in water depths ranging from 1,650 to 2,450 meters (5,500 to 8,000 feet).

They are located seaward of West Seno, Indonesia's first deep-water producing oilfield which is scheduled to come onstream in the third quarter of 2003.

The PSC's were originally awarded to Zodan N.V. and Zudavi N.V. respectively (operators), with Unocal and AGIP farming-in shortly after the blocks were awarded by the Indonesian government in November 2001.

Three exploration wells targeting oil are planned to be drilled during the three year exploration program - two in the Popodi PSC and one in the Papalang PSC. Unocal will be drilling the wells. The first well is expected to be drilled in the Popodi PSC in October 2003. The work program for both PSC's includes the licensing and acquisition of 2D and 3D seismic data.

"This is frontier acreage in deepwater that adds to Santos' high-impact exploration program. It is high risk, but it is a good strategic fit and with the right joint venture team to do the job", said Santos' Managing Director, Mr. John Ellice-Flint.

"Acquiring good acreage is critical to building Santos' exploration portfolio. In line with our strategy, this acreage builds on our existing interests in Indonesia while opening up new frontier opportunities for Santos."

The Kutei Basin is a prolific hydrocarbon province with approximately four billion barrels of oil and forty trillion cubic feet of gas discovered to date.

The acquisition of the interests is subject to Indonesian regulatory consent. Approval of the farm-in is currently being processed by BPMIGAS.