Ladies and gentlemen, thank you for standing by and welcome to Santos 2018 Full Year Results. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advice you that this conference is being recorded today the 21 February 2018. I would now like to hand the conference over to your first speaker today, Mr. Kevin Gallagher. Thank you. Please go ahead.

Good morning, everyone and thank you for joining us for Santos' 2018 full-year results. With me today is our Chief Financial Officer, Anthony Neilson. 2018 was an excellent year for Santos, record financial results, the acquisition of Quadrant and strong results growth were just some of the highlights. I'm also very pleased to see, we've continued to drive down unit costs and deliver efficiency gains, despite higher oil prices and cost pressures seen across our industry. Before we start, I draw your attention to the usual disclaimer on Slide 2. I will start with some opening remarks about performance before handing over to Anthony to discuss the financial results. After Anthony's presentation, I'll take you through our operations and growth opportunities before opening the call to questions. Moving to Slide 3, our clear and consistent strategy to drive sustainable shareholder value by high-performance business with a low-cost disciplined operating model delivered record financial results for the company. We're continuing to step to a transformed build and growth strategy that we rolled out in 2016. These results demonstrate the turnaround of Santos we started three years ago has been delivered as promised. The full year highlights are shown on the slide and includes record free cash flow, underlying impact, EBITDAX and sales revenue. The result highlights are we generated more than $1 billion in free cash flow up 63%. EBITDAX is up 51% to a record $2.2 billion. Underlying profit is up 129% to a record $727 million after tax. As promised, we've also maintained a disciplined approach to capital management, but also delivering growth to the Quadrant acquisition and advancing organic growth projects around our core asset. Pleasingly, the Board has declared a final dividend of $0.062 per share fully franked. Together with the interim dividend, we have returned $0.097 per share to Santos shareholders, consistent with the sustainable dividend policy we announced last year. Moving to Slide 4, I've said before that we're running this business on a balanced portfolio basis. What you mean by balance is in terms of our asset mix. It's a balance between onshore and offshore, between natural gas and liquids and of course a balance between oil and CPI linked pricing and we're getting the balance right. The Quadrant acquisition is more waiting on lower cost, higher-margin conventional assets. You can see on this slide how the portfolio balance has improved. About 55% of our 2P reserves are in the offshore assets and P&G. Then of course there is a balance between CPI linked revenues and oil priced linked contracts. This is much more balanced now and gives us a nice natural hedge component to our portfolio and times of volatile oil prices. We're targeting to be free cash flow breakeven at less than $35 oil price in 2019, that includes all four CapEx except [indiscernible] and long leads of approximately $50 million, which we classify as major growth project expenditure. Every $10 increment in oil price above our free cash flow breakeven, increases free cash flow by between $300 million and $350 million in 2019. Moving to Slide 5, this is a great snapshot of our results and resources position. 2P reserves are placement in 2018 was 395%, obviously boosted by the Quadrant acquisition, but offset by the sale of our non-core Asian assets. The net contribution from acquisitions and disposals was 192 million barrels, but the story is not all about inorganic growth. Organic reserve replacement was 69%, continuing our improving trend on this key metrics. Reserves were added in the Cooper, Queensland on Western Australia. I'm pleased that we are again reporting our 2C, which is something you've been looking for. We had 2C resources of 1.8 billion barrels at the end of the year. We've taken the time to properly scrub the numbers. What excites me is not only the scale of our resource position, but that near term planned FIDs at Barossa, P'nyang, P&G and Dorado alone have the potential to commercialize over 300 million barrels to reserves. Over and above that, we also see continuing resource conversion from our onshore assets. The strong reserve and resource position provides the foundation for our growth to more than 100 million barrels of production by 2025 as shown on Slide 6 almost doubling our 2018 levels. The current base production from our core assets is relatively stable through this period. Then we've got the continued ramp up at GLNG and more gas coming out of Eastern Queensland as we continue to swap back into the Horizon contract and free up more Cooper Basin gas. We'll continue to develop the Cooper Basin as a high value swing producer. Then we the Barossa development, which will take our production out of Darwin to around 9 million barrels per annum and then we've got the PNG, LNG expansion and of course Dorado. What's particularly exciting for me is we'll spent so much effort putting in place a disciplined operating model to ensure we do not drop the ball on our base operations while we're building these growth projects, that is and will remain a key focus for the entire management team. Importantly, we can fund our growth out of free cash flow at $65 oil price, including all sustaining capital in the base business and the payment of dividends. What's also exciting is this chart does not include other upside opportunities in our portfolio like Narrabri, McArthur Basin, Petrel-Tern-Frigate, Van Gogh Infill Phase 2 and of course the very significant potential in the greater Bedout region around Dorado discovery. Undoubtedly one of the highlights of 2018 was the acquisition of Quadrant Energy. I am now on Slide 7. Quadrant materially strengthens our portfolio by adding high-margin conventional natural gas assets backed by CPI linked all-state contracts. Strong and stable cash flow from these assets will provide increased certainty during an upcoming period of major growth project delivery for Santos. Quadrant adds material scale to our WA business as shown by a standalone 2018 production of 18 million barrels and strong EBITDAX of $590 million. Integration of the business is proceeding well and we're on track to deliver the synergies as promised. Moving to Slide 8, our journey to become Australia's safest operator continues. While we have more work to do, I am pleased to see our safety performance improving back in line with 2014 levels, but with much higher activity. Personal safety improvements are built into all our scorecards and it is very important to me that we deliver them as well as continuing to pursue the excellent financial and operational results that we're seeing from the business. I'm also pleased with our improvement in process safety with our focus on preventing loss of containment, continues to deliver excellent results. We have today released our second Climate Change report, consistent with the TCFD guidelines. We had good feedback on last year's report and look forward to your ongoing feedback on our progress and targets. Santos' strategy recognizes the transition to a lower carbon future. Our aspiration is to achieve net zero emissions from our operations by 2050 in line with global ambitions to limit temperature rise to well below 2 degrees. In 2019, we will commence appraisal of our carbon capture utilization and storage project in the Cooper Basin. We will drill two well to test the concept, which also provides potential benefits in terms of enhanced oil recovery. In summary, it was an excellent year for Santos and we're in great shape to drive our growth forward and deliver shareholder returns. I'll now hand over to Anthony Neilson to provide a detailed review of our financial results.

Thanks Kevin. Hello to all of you. As Kevin said, this is a record underlying and free cash flow results of the business. 2018 shows a strong and clean set of results including the Quadrant acquisition for the first time. The sustainability of Santos's transformation continues with embedded cost efficiencies, allowing us to generate high profitability and strong free cash flows. Moving to Slide 10, shows strong financial and operating performance continues to draw shareholder value. The key financial priorities continue to be around cost efficiencies, strong free cash flow and a balance sheet that supports our growth strategy. Firstly, cost efficiencies have continued to flow through to the bottom line. 2018 was hampered by increased planned and unplanned shutdown activity in particular the PNG earthquake. However, excluding these shutdowns, our production costs are down 6% to $7.62 a barrel. In addition Cooper Basin costs continue to decline down 12% to $8.17 a barrel. Secondly, we achieved a record $1 billion of free cash flow with a breakeven free cash flow of $31.30 a barrel for 2018. We're targeting a 2019 breakeven of below $35 a barrel, due to higher activity levels. Every $10 of barrel movement in oil price above our breakeven level will generate $300 million to $350 million in free cash flow in 2018. Thirdly, our net debt was $3.55 billion at year-end, an increase due to the completion of the Quadrant acquisition. Gearing was 33% at the end of the year and is forecast to decline to less than 30% by the end of 2019. With the balance sheet now in a strong position and our strong free cash flow, the Board has declared a fully franked final dividend of US$0.062 per share in line with our dividend policy. Slide 11 shows the key financial results for 2018 and a strong improvement trend across all key metrics. Sales revenue increased 18% to $3.7 billion, driven largely by higher prices. These higher prices combined with cost savings and efficiencies led to an EBITDAX of $2.16 billion up 51% from 2017. We recorded a record underlying net profit after tax of $727 million up 129% from 2017 and our free cash flow was also up 63% from 2017. Slide 12 shows the strong trend in underlying earnings. The company's focus on cost reductions and efficiency gains combined with higher realized crude oil prices of $75 a barrel, drive earnings higher. We have recorded our fourth successive year of growth in underlying net profit. Slide 13 outlines the strong free cash flow generation from the business. The company achieved over $1 billion in free cash flow, excluding an additional $152 million cash from asset sales. Operating cash flow increased 26% to $1.6 billion and investing cash flow excluding asset acquisitions and divestments was down on 9% to $572 million. With our strong free cash generation, we are now well placed to continue to reduce net debt as well as reinvest for growth and fund the dividend. Slide 14 shows the diversified nature of our portfolio. This really outlines the strength across our five core assets and the balanced nature of their contributions to EBITDAX and margins. You can see in this current oil price environment, how strong our EBITDAX margins are. PNG investment in Australia, two of our highest margin assets with strong stable cash flows, low-cost and margins in excess of 67%. You can also see that our Cooper Basin businesses are 45% margin and basically all of our segments have an EBITDAX margin of greater than 45%. Consistent with our disciplined operating model, all of our assets are free cash flow positive at an oil price of less than $40 a barrel. The quarter and acquisition further increases the EBITDAX and exposure that we have to our strong, stable high margin business in Western Australia. Slide 15 shows production and sales volumes. 2018 production was impacted by the sale of the Asian assets, the PNG earthquake and major plant shutdown at Darwin LNG. This was partially offset by higher production in the Cooper and Queensland businesses. This shows the diversification and strength we are building in our portfolio, being able to absorb major shutdowns and maintain growth in our core asset production. The acquisition of Quadrant is only reflected in our 2018 numbers from the completion date of 27th of November and added 1.8 million barrels. 2019's production guidance is 71 million barrels to 78 million barrels. Sales volume is 78.3 million barrels in 2018 is lower mainly due to the PNG earthquake, planned major shutdown activities and lower third-party sales due to the expiry of a large GLNG third-party gas supply contract at the end of 2017. This was offset partially by quadrant sales in the last 35 days of the year. 2019 sales volume guidance is 88 million barrels to 98 million barrels. Slide 16 shows cost efficiencies continue and our 2018 production cost declined from prior year to $8.05 a barrel. Production costs were impacted by the PNG earthquake and planned major shutdown activity during 2018. Production costs excluding major shutdown activities dropped 6% to $7.62 a barrel. This underlying cost reduction emphasizes that the delivery of our low-cost disciplined operating model continues and is also reinforced by Cooper's unit cost dropping by another 12% to $8.17 a barrel. Our 2019 production cost guidance is $7.50 to $8 a barrel. Slide 17 outlines our CapEx. 2018 CapEx was $759 million up 11% from 2017, mainly relating to increased activity in Cooper with 85 wells and Queensland with 305 wells plus the Bayu-Undan infill drilling program. as you can see from the chart in the middle of the page, improved efficiencies and productivity gains led to increased drilling activity in both the Cupid Basin and GLNG during the year, while significantly decreasing average drilling costs per well. With these significant sustainable efficiency gains now embedded in our onshore operations, we look to further increase our activity in 2019. We've added a full rig to the Cooper basin and this will increase activity in 2019 to drill around 100 wells. Also GLNG drilling is expected to increase to 350 wells to 400 wells. All of this activity is under a self-funded overriding model at less than $40 a barrel for both Cooper and GLNG. Due in part to these increased activity levels are 2019 CapEx increases to approximately $1.1 billion. Spending in the Cooper of approximately $300 million and GLNG of approximately $200 million funds the additional drilling activity and is consistent with the guidance we gave at the Investor day in September 2018. The Western Australian activity increased obviously includes our higher ownership of the assets following the Quadrant acquisition with CapEx of around $400 million. Just over half of the forecast 2019 West Australian CapEx is due to the full well exploration and appraisal program mainly relating to the appraisal of the significant Dorado Discovery plus the near-field exploration activities and the Hawaii equity position of up to 100% we have in these wells. We saw equity position does provide flexibility to optimize our portfolio and fund down at a later day. Even with the additional capital spending 2019 we are targeting a free cash flow breakeven of less than $35 a barrel. Slide 18 shows net debt at year-end was $3.55 billion and gearing of 33% plus the completion of the Quadrant acquisition. We are targeting a gearing ratio of less than 30% by the end of 2019. We have ample liquidity of 3.3 billion with cash flow on hand of $1.3 billion and undrawn bilateral facilities of $2 billion. Slide 19 shows our debt maturity profile at 31 December. Our gross debt is $4.1 billion including the PNG project finance debt, which is nonrecourse and the repayments come from the cash flows of that project. Once the PNG project debt is removed as shown on the right hand side, our non-PNG gross debt is $3.4 billion. 2019 debt maturities including the $600 million ACI facility, which is due next month will be ratified from our existing cash position plus new free cash flow generation post 31st of December. The $500 million Quadrant bridge facility, which is due in 2020 is expected to be refinanced in the first half of 2019. With these amounts repaid and refinanced, there are no other significant near term debt maturities. Slide 20, shows the Quadrant acquisition completed on the 27 November and we've completed the provisional purchase price accounting as at 31 December 2018, which is shown in the appendix to this presentation and in more detail in the notes to our financial statements. For 2018 financials are impacted by Quadrant from the completion date with revenue contribution of $80 million and EBITDAX contribution to $60 million. We're targeting combination synergies of $30 million to $50 million per annum across corporate costs, operational efficiencies and optimized marketing activities. Synergies have already begun to be achieved through the removal of duplication in some activities and reduction in headcount. I would like to finish by emphasizing the company's record underlying financial performance. Our balance sheet is strong. We've generated record free cash flow and we've declared a fully franked final dividend. This is a good quality and clean set of numbers including the Quadrant acquisition and a strong platform to continue to grow. Thank you and I'll now hand back to Kevin.

Thank you, Anthony. As you can see, Anthony and his team have done a great job with the balance sheet. My whole leadership team has continued to do an excellent job in what has been another high piece focused on locking in low-cost operating model and pursuing value accretive growth. Now let's take a look across our operations starting on Slide 22. Our disciplined operated model is actually quite simple, but very important. Essentially, we've got a group of core assets. These are long life assets with stable base production profiles and sustaining activities that are self funded. All of these assets are free cash flow positive in normal operating conditions at or less than $40 oil price. We're achieving this today with significant headroom. Slide 22 shows how the operating model was driving the fantastic results we're seeing in the Cooper Basin and GLNG today. Despite higher oil prices and cost pressures, we're seeing elsewhere in the industry, we have maintained a focus on low-cost and efficient performance. A great team can deliver lower, cost more efficient drilling. We expect to drill around 100 wells this year more wells in a single year since 2014 and we'll continue to test new operating limits hitting a record to production online time of 28 days for our Cooper oil well. In order to make the next breakthrough in performance, we will be drilling an increasing proportion of horizontal wells to further lower unit development costs. With our GLNG partners, we're targeting a record 350 to 400 wells in Queensland this year. GLNG well costs were down a father 6% in 2018 and are down a massive 84% since 2015. The efficiency journey is not over yet and we're going to remain focused on continuing to get even better at what we do. Moving to Slide 23 and the Cooper Basin, what a great story, production is growing again. We've continued to drive costs lower and increase productivity with production cost per barrel down 12%. In 2019, we will begin to convert oil wells to solar power and commence appraisal drilling of the carbon capture utilization and storage project. On Slide 24, our focus on low cost efficient drilling combined with our renewed focus on the rocks is delivering improved reserve replacement in the Cooper. In 2019 about 60% of the forecast well program is focused on prospective and contingent resource conversion opportunities. I am confident that renewed focus on high grading exploration and appraisal will continue to build on our reserve position in the basin. Slide 25 sets out the deep resource inventory we have in the Cooper. 2C at the end of 2018 was 299 million barrels of oil equivalent more than double of route 2P. If you were to assume even a conservative conversion rate, we have more than 20 years of field life ahead of us and this is before our significant prospective resource position. The appraisal of the Moomba South is just the first of several large scale project appraisal programs focused on resource conversion. The program added 12 million barrels of 2C in 2018 in addition to the 41 million barrels we already had booked. Eight wells were drilled at Moomba South and under safety gas P and a target [indiscernible] formation. Gas P's range from 17 to 56 meters underpinning our predrilled volume estimates. Gas samples indicate a lower CO2 content from the adjacent Moomba field production areas. The first five wells of the campaign have now been successfully brought online with a peak single well stabilize gas flow of 2.5 million standard cubic feet per day established. Incremental upside in the [indiscernible] and Exelon reservoir complexes have also been demonstrated with a number of wells encountering near year virgin pressures and better-than-expected atrocities and permabilities and we have the emerging opportunity in the Granite Wash Play, which flowed gas in the Moomba South appraisal wells and confirmed the productive capacity of this new play. Planning is now underway to commence further drilling towards the end of 2019 and parallel with field development planning for the Moomba South project. Moving to Queensland, on Slide 26, we are on track to meet our GLNG sales target. Equity gas production continues to build and the upstream development projects on Roma East and Acadia are progressing very well. First gas from Roma East has already been delivered. The field currently has 86 wells online and we're forecasting this to grow to 380 wells by the end of the year. As you know the GLNG plan has peer capacity and we are in discussions with our partners to access our capacity for Santos Gas and other partners gas. At New South Wales Narrabri Gas project is currently being assessed by the Department of Planning. Gas customers are very keen for Narrabri Gas to come into the market and discussions are progressing one potential off take agreements subject of course to project sanction. Moving to Slide 27 the table shows a scale of WA business following the Quadrant acquisition. On a combined 2018 pro forma basis, WA would have production of 29 barrels of oil equivalent. Revenue of $1.1 billion and EBITDAX of over $800 million. Western Australia is now our largest business segment and contains low-cost, high-margin assets with stable cash flows. Western Australia also has significant growth potential and we're getting the drill as shown on Slide 28. Last month we successfully completed fine coal info project was begun in September and involved drilling and completing two subsea wells and connecting two existing infrastructure. The wells involve drilling horizontal sections in the reservoirs as long as 3,500 meters, only 950 meters below the sea bed. The wells came on production in January ahead of predrill estimates. The program also de-risk several short cycle production growth opportunities. The campaign was delivered safely and efficiently, highlighting the tremendous offshore expertise we have brought into the business. Later this quarter we'll kickoff a four well Santos operating drilling company, covering Corbis, Dorado and Rock South. I'm particularly excited by the Dorado Appraisal program. We'll drill two wells to appraise a discovery and rather key reservoir information to inform our feed entry decision planned for next year. Corbis is a reindeer backfill candidate, close to existing infrastructure while Rock South is a Dorado lookalike. With high equity interest in these wells of up to 100%, we have the opportunity to create value through strategic pondering and ongoing portfolio optimization. Moving to Slide 29 Darwin LNG continues to perform strongly. The bio undone infill well project was successfully delivered by an operator ConocoPhillips under budget and ahead of schedule with increased well deliverability and higher liquids production. We continue to make good progress on Barossa with the contracts beds end for the subsea production system and beds due shortly for the FPSO and pipeline contracts. Marketing discussions are progressing well with positive response from buyers for Barossa volumes. Overall we're on track for FID towards end of this year or early next year. On Slide 30, PNG LNG continues to be a well-run, high-performing asset in our portfolio. Despite the extended outage caused by the PNG equation February, which were first and foremost a humanitarian tragedy, LNG production resumed earlier than expected and the plant has been performing at record rates. Discussions are ongoing with our operator and joint venture partners to achieve alignment for expansion. I don't have update for you today, but as soon as I do, I will let you know. Santos will also benefit from two additional Papua LNG trains through a shared facility access fee that will reflect the value of our investment in PNG LNG infrastructure. On Slide 31, our strategy to focus on five core long life assets and lock in a sustainable low-cost operating model is delivering clear results. Record financial performance, strong reserves ads, the acquisition of Quadrant and the return to shareholder dividends, highlighted a very good year for Santos. We're delivering on our promise to transform, build and grow the company. On that note, I am going to wrap up now and thank you for joining us today. I'll now open the call to questions.

[Operator Instructions] Ladies and gentlemen we’ll now begin the question and answer session. The first question we have is from the line of Ben Wilson from Royal Bank of Canada. Your line is now open, sir.

Good morning, Kevin and Anthony. I just had a couple of questions on your reserves report and thanks for giving us resources again. Firstly on reserves and also related to resources, are you able to just confirm have you made a reserve booking for Mahalo? And secondly, is your resource or contingent resorts booking associated with the Dorado asset consistent with what we've heard from your JV partner with regards to the oil resource there?

Well, it's Kevin, let me just start with the Mahalo to 2C for Mahalo at this stage and in terms Dorado, I can’t comment and what our joint venture partners are seeing. But yeah, but I don't want to comment on whether or not we're in agreement with them.

So you kind of confirm of that 2C resource that you've gotten in WI there what related to the Dorado asset.

No.

Okay. And second question just on related to the Dorado entity, you mentioned before you higher equity interest in that. Are you able to give a sense of what the decision gates are around when you -- when and if you may look to find out an interest in that asset.

Well, both Anthony and myself indicated in the presentation, Ben, we’ve got a very high equity levels across all of our assets in Western Australia at this point in time. Now, the good thing about those assets is that there's a lot of interest across the sector from many different parties to de-fragment those assets. As you know, we're about to embark upon an appraisal program and we're focused on that at this point time as well as bedding in the quadrant organization and to Santos and delivering on our synergies and throughout 2019, we will work to identify or to determine what we believe the optimum equity levels across the portfolio are on those assets and obviously we'll inform the market if and when we decide to do anything. But it gives us a lot of strategic flexibility.

Okay, great. And just one last quick one on a bit of Blue Sky as well, there’s some Ducasse prospect up in the territory there a bit about it, but it looks like a pretty big pre sell play. Are you able to give a broad probability of success on that one.

We will be able to give you after we drilled the well Ben and that's not too far away hopefully. For all of our northern territory onshore well the Ducasse prospect and the two McArthur wells we're just currently working through the approval process with the Northern Territory regulator and yeah, we'll hope to drill all three of those wells in the dry season. Again, our equity levels there are pretty high in the 75% mark and something else we will be looking at longer term to determine the optimum equity levels in those prospects also.

Okay, that's great. Thanks very much.

Thank you. The next question we have is from the line of James Redfern from Merrill Lynch. Your line is now open.

Thank you. Good morning, Kevin. Just three questions please. The first one just a housekeeping question, I know that there's no guidance provided for DDNA in 2019, which is like a little bit unusual compared to previous guidance. Just wondering what the reasons for that and I've got two more please.

Is that James, sorry.

Yeah, James.

Yeah, John this is Anthony, yeah look DDNA we will give some further guidance as we progress through the -- obviously with our purchase price accounting, a whole balance sheets had to be reset and so DDNA will change as a result of the Quadrant acquisition. So for now, previous guidance is probably a good way to follow it and we'll give further guidance probably as all with that quarterly or half yearly results.

Okay, thank you. Second question is San Jose is expected to finally depending on the coming months in PNG, just wondering if you could please provide a rough guide to what the purchase price might be, just as a rough indication of what we should expect for this place.

Well, James I mean, that's obviously subject to confidential negotiations. And the last thing, I'd want to do on this call would be the state what I think the price is going to be. So we're still in those discussions. And obviously, once we conclude those discussions, we'll be able to make an announcement on that and we'll clarify exactly at that point in time what the purchase price is.

Very good. Understand. And then last quick one is just -- could you remind me on that by when you expect to position from the Department of Planning and then what next steps are after that? Thank you.

Well, consistent with what was said before James is that we, at the process goes to plan, we would expect the decision sort of the third quarter so this year and as I said in the presentation, we're getting a lot of interest right now from manufacturers and potential buyers looking for off take agreements in place some of which are looking to set up operations in the region. So that's quite exciting and obviously so subject to the project being approved of course. But we'll continue to work through the regulatory approval processes and hopefully we'll be in a position to make announcement in the third quarter this year.

Thank you. The next question we have is from the line of Mr. James Byrne from Citi. Your line is now open.

Good morning guys. So the first question I had was on upstream production costs guidance, which is effectively flat year-on-year after you normalize for those shutdown. Now the time of the Quadrant acquisition given the cost there on a daily basis, which is below the bottom ends of your guidance is stated today. So you obviously going to have a full year contribution from Quadrant, you're going to get some synergies presumably through account the '19, the OpEx is flat. Can you perhaps explain why that, is it high production at Cooper perhaps?

Thanks, James. Yes. Now look, I mean we are anticipating further synergies to come through in 2019 guidance. Basically though, the range we've given for OpEx 752 I apologize is consistent with the normalized end of 2019 results of 762. So hopefully basically we come in at the low end of that guidance with synergies and further OpEx reductions in sightings but we are factoring in obviously Quadrant community business and we're factoring in that into the range of $759.

Got it, okay. I wanted to ask question about gas market, pretty broadly on the East Coast. So if we say certain [indiscernible] politician running an election campaign and decides to go a bit harder on rhetoric in the gas industry. You talk about how high gas prices may or may not be threatening manufacturing jobs. Wondering how you guys sent those think you might be able to defend against central allegations that you're part of the problem. And the reason that I asked just to be clear is because this is a question I've been getting from shareholders.

Well, look, I mean, first of all, I'm not going to speculate on what politicians may or may not do, we'll deal with if and when anything occurs, and not space. What I can see as on both sides of politics, I think it's very much appreciated what Santos are doing to support the domestic gas market here on the East Coast. We're increasing the number of wells across the Cooper Basin quite considerably we're increasing production and the Cooper Basin. And of course, we're continue to progress the approval process for the Narrabri gas project which still represent the best single opportunity to bring gas, additional gas volumes into the market and the short to medium-term here on the East Coast. I will remind you James, that all gas from the Narrabri gas project is earmarked for the domestic gas market. And so I think Santos will be seen today as a company that's very focused on supporting the domestic market and I think if you spoke to many of the manufacturers they would acknowledge the work that Santos is doing, what the manufacturers to free up more gas.

Okay, that's really clear. In terms of more gas supply your Queensland suppliers to say it's pretty strong compared to my forecast or setting we might be able to talk about Arcadia a little bit. Hopefully, you could give me a sort of a number to think about for the 2, 3 in Arcadia, but failing that. I mean what do we need to see from Phase 1 to ultimately think about sanctioning the Phase 2 and ultimately 3 to unlock the dented that 2, 3?

Well, I'm not going to give a forecast or speculate what Arcadia maybe now they will communicate it today have the projects going we've got our Phase 1, which is 136 wells, we've got 56 of those wells drill, we're ahead of schedule and delivering within budget expectations. And as I said, we expected first well online by the end of this quarter. We'll wait and see how that performs. And that's going to give us information that will then obviously feed into a decision making for future development of resource. But so far, so good, it's going well along with Roma East and the other operations in Queensland. But I think the point to make there is that, there is no shortage of gas. We've got hundreds of years of gas supply on the East Coast. There's lots of gas and the current whether that be in Queensland or other areas across the East coast of Australia. And I genuinely believe that as we continue to develop our understanding in Australia of the role that gas has to play as the energy -- the transition energy source if you like for by transition to lower carbon future, the gas will play an increasing part in Australia's energy and policy.

So I presume that you reject the notion in the press today from a consultancy that one train in Queensland will need to shutdown in order to protect the domestic gas market?

Well, just hope I'm not paying for that report. But all I would say James is that there's no news there, I mean that's all, excuse me, we gave a forecast back in December 2016 that we were planning to run GLNG. As I said million tons per annum project for the foreseeable future and we give guidance to the market then to model it that way, as far as I can see nothing's changed we're still will be 6 million tons per annum sales by the end of this year that's the plan, nothing's changed.

Thank you. And you have the next question from the line of Andrew Hodge from Macquarie. Your line is now open.

Thanks guys I'm just to pick up on Jamie's question Anthony for so on the operating costs. So 762 this year kind of stripping out that number. If I look at again, the Quadrant deal that you had said to me, Quadrant was that put all my 730 and you're adding 19 million barrels, I guess I'm a little bit surprised that you can obtain you doing a lot more work as well on sort of stripping out more costs. And I said the range of things probably a little bit higher than most people are expecting. So can you give a little bit more detail about like, what kind of could potentially going to shift that one way or another?

Yes, look, as I said, we change it, we are anticipating on coming down to the to the bottom end of the guidance range at this stage. We have obviously got a much broader portfolio now and look, there is some shutdown activities nothing major but there is activities that's built into 2019 budget as well which is another fully loaded cost that I've given areas 750 [indiscernible] that's not a normalized costs. So really the way you guys looking at it, you should be comparing the items five to the range of 750 is that makes sense.

Yes, okay. And then secondly, on CapEx for this year as well, that the amount of CapEx you guys are spending in WA was probably a bit of a surprise to me with 400, and even with the sort of formal appraisal that you guys are looking at, can you kind of give a breakdown about how much of that is being spent on sort of stay in business for WA assets and then broadly what, how much is actually going towards the growth potential?

To that Andrew, look out of the 400 obviously they are they bought a wells or jack-up drilled. So they're not on sure well, they are expensive so those four wells contributed probably just over half of the 400 million to give you a ballpark range. So for all the exploration and appraisal activities which also includes saws make this is roughly as a half 400. There is some abandonment in the WA business with asset so that that's in the $400 million and then Stein businesses is probably around about a quarter or side of that 400 so it's not going to [indiscernible].

And then last question really was just I guess kind of picking up on the question about some quarter and how you guys going to think about the business going ahead. I guess just in terms of how you guys set up the business are you guys wanting to make sure that you had sort of a fully developed program and know what the results are before you ever kind of consider feeling down or just given that you're going be coming into additional CapEx with P&G as well as with J&J that you might potentially try and fill down and I guess maybe easier ultimate interest question the ultimate interest 40% to 60%.

Look Andrew I mean we’re not going to respectfully and we're in the and the interest point would be the good thing here is we've got options. There’re lot of strategic optionality a lot of interest in the assets and particularly a lot of interest in Dorado, the equity levels are high, and it's fair to say that it's very unlikely we would want to proceed and develop those equity levels. And given the CapEx exposure would that would provide going forward. But, as I said, a lot of strategic optionality. And so you know, it's not just a case of the price we can get for the assets it’s the case of the strategic outcomes we can drive through any partnering and our content strategies. And so we'll announce any outcomes on that front if and when we do it at this point in time, there's nothing more to add.

One thing I can say just and response to your earlier question to Anthony. We are ahead of schedule on our targeted synergy commitments. On quadrant integration. And we will obviously provide more of an update on how that's going through the year as we progress. But I'm very confident we will deliver these synergies as we promised the time of the acquisition.

Thank you. We have the next question from the line of James [ph] from Deutsche Bank. Please ask your question.

Thanks for taking my question. Back in 2010, you are affected by floods in Queensland. Can you give any comment now as to the recent rains and floods that have had the weather that might have any potential impact on your operations?

Sorry, who asked that question.

James.

Okay. Look we've been operating at the Cooper Basin for a long, long time James and flood are not anything and indeed I have some photographs of people doing well maintenance a few years back and rowing boats and some of our locations. And so we are very well developed mitigation plan. We work with the MESH office to ahead of the game in terms of reviewing weather forecast and we typically unless our mitigation plans sometimes up to a week in advance of expected flood type activity just as we do with cycles and our offshore operations in Western Australia. So when that's how that has been happening for years minimal to negligible impact on production would be expected from any floods and it's very much business as usual in the Cooper Basin.

Okay. And on CapEx guidance 1.1 billion that's going to be for your divestments and acquisitions through the year but you are aiming obviously to pay the dividend out of the free cash flow. So do you have an idea at the end of this year what your net CapEx is going to be after you maybe do the PNG and other farming or other deals that you've got to do?

Look, I think at this point in time, James, we'll stick with the guidance what given and obviously as things change we would [indiscernible] as appropriate.

Okay. And can I just ask one last one you just mentioned that you're in discussions with GE LNG about accessing spare capacity is that going from the 6 million tons that you aim little bit that targeted at the end of this year? Is it up to are you talking about the spare capacity up to 7.8, which is the nameplate I think?

Well look, the reality is the planted operate up to 8.4 million tons per annum quite comfortably we believe and so yeah, as a project we're planning to run a 6 billion tons per annum but at the same we have initiated and we’re in discussions with a joint venture partners now about putting access arrangements in place for the JV partners to bring other gas to those facilities and utilize any allege that exists above the project production volumes.

Thank you. Next question is from the line of Mark Samter from MST Marquee. Please ask your question.

Couple of questions if I can. First one on Slide 25, couple of questions around that. Is it too simplistic thinking of 2C there at the moment, when you FID that at the end of the year, is there any reason why that doesn't fit?

It's probably a little bit too simplistic Mark. But obviously I would be hoping a significant portion of it would.

And I guess when we look at that 2C to 2P conversion 70% on average over the last three years, your JV partner has a [indiscernible] number for these assets, overly conservative on these things?

Look, I mean I think tale will tell, I mean I think two telling things I'd like you to take away from that chart mark would be that we've shown you the conversion rate the targeted 2C conversion rate at 70% on average over the last 3 years. But I can tell you it's a very similar number over many other you know over much longer period. So over number of years it's typically around that 70% that we convert. So it's very reliable. But importantly if you look at the bullets that talk about the perspective resource, we've got very similar conversion rate of perspective resource when we target that through our exploration activities, it can go straight 2C and a significant amount of 2P from straight from perspective opportunities last year. So, I think it's fair to say that those perspective potential across copper basin, as we have numbers we have moved some of that 2C back into perspective classification for the time being, but as you can see as we continue to ramp up the number of wells that we're drilling then my hope would be that you're going to see a much higher reserve for placement ratio and you'll see that 2C replacement ratio increasing as well.

Perfect. And just another question on Queensland gas opportunities you talked about as we discussed in with JV partners, putting gas into the plant, you guys didn't in the end, I don't know [indiscernible] was a competitor prices or not, you spoke at investor day about pretty unique synergies for some change in the view or is just disciplined and the right assets at the right time?

Well, look, I think discipline is important if we're looking at these things. Whether it be organic development or inorganic acquisition, the cost of supply is our focus and so that discipline is important that you're doing overpay or you're doing overspending in your development. But my view on those synergies that you referred to, Mark, has not changed. I believe there's a lot of gas in Queensland and we will continue to look at the opportunities to build a portfolio. What is pleasing is that the joint venture now has got a very clear plan for it's equity gas and obviously one that maximize that production but is also looking at how we can create more value through this asset and we're working together with a joint venture partners to ensure that we can get a better higher volume outcome for all of us and that means looking at how we can utilize that 2.4 million tons of gas that we have right now.

Thank you. Next question is from Joseph Wong from UBS. Your line is now open, sir.

I thought I might just ask in terms of - can you comment on the performance of Fairview. So in the last quarter we saw production I guess increase, which is kind of positive sign, can you provide any more guidance in terms of where you see these steady state for Fairview?

Well, look, I mean we're not going to break the forecast of -- we're not going to breakdown the forecast for each individual field, it's pleasing to see the Fairview production stabilizing, eventually the increase as you see in the last quarter. We were sort of forecasting that would harm for some time, it's good to see that coming through. But you know it's just this ongoing field maintenance and field development activities. We will hope that we'll see strong performance from Fairview this year. We're currently ahead of some of our early year forecast, that's good. But we're also looking for strong performance from the Roma field this year and obviously Scotia continuing to ramp up and we got Arcadia coming through - the wells coming online shortly as well. So, we're looking at all of those GLNG fields to play their part and we still expect very strong performance from Fairview for a long time to come.

Okay. And if I just move towards that in terms of wording but I've noticed there's a slight slippage for FID I guess now moving towards early 2020 to late 2019. Just wondering if there's any comment you can add on that?

I'm covering my basis by end of the year, first quarter 2019. The project is progressing well, ConocoPhillips is doing excellent job. We talked about some of the contract bids coming in. But I guess I'm covering my basis a little bit by saying end of the year first quarter, but fairly consistent with what we'd be seeing for some time now.

Next question is from the line of Saul Kavonic from Credit Suisse. Your line is now open.

A few questions if I may. If we can start on the Quadrant restoration provisions of around $900 million I guess approaching almost half of the value of the deal, and so your swing kind of 30%-50% either way can greatly impact the value of that acquisition. I'm trying to understand the basis for your Quadrant restoration provisions, is that being a conservative estimate based on full restoration back to kind of initial conditions? What kind of assumptions you made regarding the regulatory requirements to actually decommission those facilities?

At a high level, so we have based those assumptions on current regulator practice. And we were in discussions with the regulator regularly about what acceptable practices are and we base all of our assessments and evaluations on current regulator and industry practice.

Understood. Are you able to give some color on - in terms of a time frame for the next 3 to 4 years, how much of that $900 million you envisage could be required to be spent in that kind of shorter time frame period?

Just on the $900 million and you referenced back to value, so the $900 million is an accounting provision by some risk credit US dollars is quite low at the moment. So it's nowhere near a whack valuation that you would do when you're buying an asset; so, there's a big difference between the $900 million risk credit right discounted versus a whack discount of the same provisions. Just to that value equation for you. With regards to spend, you look at those it triples out over the next sort of 15 to 20 years obviously there's a big difference mixing the assets there. There is at the front end nice and some Harriet expenditure which is the most near term expenditure that we have. It's nothing overly significant but the Harriet portion of that discounted $900 million, so the provision portion Harriet is probably about 40% of that $900 million, and Harriet over the next 5 to 10 years relatively in manner of that. So there's no massive launch.

Got it, that's really helpful. On Narrabri a couple questions on Narrabri, the first one is, my understanding is with upcoming state election and the disaster, the disaster up there that the Narrabri thing is now actually coming into contention after being a relatively safe national seat. Do you see risk as we head into the election that anti-gas message might come out to try and kind of push the votes over the line up there?

I'm not going to speculate on political campaigns and messaging and the election. Our approval is in the hands of the regulator, and we work with the regulator to go through that process. And like I said earlier, our hope is that we'll know where we are in Q3. I mean ultimately, this is a project that's got a lot of interest from manufacturers. As I said earlier, it's the single largest and quickest source of gas from domestic market here in the East Coast, and let me just emphasize affordable and reliable source of gas on the East Coast, it can provide up to 50% of New South Wales gas or energy needs over the next few years. And it can generate significant jobs and protect significant jobs by supplying gas to manufactures. So, I think there's a lot of desire for this project to proceed and all we can really do is walk through the approval processes with the regulator.

To follow-up on that line of thought, did I hear you correctly that you said you're in discussions with Narrabri with potential gas buyers who are looking to set up new operations on the East Coast. Are you suggesting that if Narrabri goes ahead, we could see additional gas intensive manufacturing on the East Coast?

That would be correct.

And is that suggesting I mean most gas intensive manufacturing comp their current price points that some of that gas you'd be willing to contract at a significantly subsidized rate?

Well, no. What it suggests is that it be moving closer to the supply and taken out pipeline costs and transport costs.

Lastly on coming back to Barossa. Do you see any potential opportunities at Santos to increase the position there, it is SK what exit Barossa or ENI and any impacts the TONG power plant?

Well, look, there's nothing imminent in that base. I don’t want to start. We have a lot of confidence in ConocoPhillips as an operator. We enjoy a partnership with them. It's been a very good partnership for Santos over a long period of time. But as I've often said, I love the Darwin operation. I love the prospectively offshore in that area. As you know, we're exploring on shore and of course successfully very significant potential in the McArthur Basin of more than 100 TCF of gas in place estimated across in the Copper Basin. So the answer to that question is - and the future of that opportunity was to arise. Of course Santos would be interested and establishing a stronger position in that asset or those upstream opportunities. But that's not the case today. The great thing for us is we've got 5 crores assets and all of them offer growth opportunities, organic and inorganic and all of those opportunities are competing for capital across our portfolio and we've moved very quickly and to a place as an organization where each is competing against the others now and the best rate of return project will win.

Understood, and look forward to those on a short NTE well results later this year. Sorry, one more, the WA drilling CapEx you mentioned, understand Dorado but I want to call this is Rock South, I just want to understand are those drilling commitments, are they required or otherwise why do you actually need to drill those now if you actually need those additional wells drilling gas online in the next couple years?

Well, I think from memory one, one as a commitment but the reality is that when you bring a rig in, the synergies, the cost savings by drilling them on one campaign rather than two split campaigns, 6, 9, 12 months apart just makes sense to do that.

You have the last question from the phone from the line of Mr. Baden Moore from Goldman Sachs. Sir, you may ask your question.

I was just wondering the Queensland, New South Wales 2C resource that you've given us, I think I'm right to think that that's predicated on your long-term oil price assumption to a net back LNG price if you like for realized gas price; can you give any guide on perhaps how sensitive that 2C would be to changes in that gas price?

Well, first of all, the first part of your statement is correct. So I can confirm that. In terms of sensitivity, I'm not sure how to answer that question. What I can say is that we are the lowest cost on shore developer and I continually see that by focusing on cost of supply we will continually over time strengthen our resource position on our on-shore assets, and that's what we're very focused on.

Put it another way, if we saw I guess the departure from netback LNG processing outlook, would that risk hose 2C resources?

Well, as I've said, our model, our operating model assumes every asset is going to be free cash flow positive that will forge as I said in my presentation earlier all of our assets have considerable headroom through that. And as our portfolio, 2018 financial free cash flow breakeven just over 31, and so that continuing to focus on cost of supply, continually focusing on getting a free cash flow breakeven down and we'll strengthen our resource position over time and we believe there's more to go on that journey. And so by setting at always we have I think we've got a better headroom there.

And then I think if we go back to your last strategy day, the run rate of 6 million tons into GLNG, I think that factored in some diversion of gas from other markets to the export. Is that still part of your base case?

Yeah, look, what we said in December 16 was that we had a sales target of 6 million tons per annum and of course we've diverted some gas back in the domestic market. What is relatively a healthy prices, I mean I want to emphasize that point, it's pretty much LNG netback or better in some cases depending what the oil price is doing any point in time and so yeah we include those volumes.

Okay. And maybe just a quick question for Anthony. I was just wondering if you could add a bit more color around your other cost have moved around a lot over the second half. Can you give any color on what the big moving parts in there?

You're talking about other operating costs Baden?

Yeah.

Yeah, look I think the main driver in other operating cost have really been around top one tariffs and tolls and they're actually lower if that's what you're saying from previous year, and they're mainly lower due to lower third-party contract that expired at the end of 2017, Queensland. So that was one of the bigger drivers that we had and that's reflected in a lower third-party sales volumes as well. So that lower third-party sales volume flows through to a lower part one tariff and towing cost which is you know.

Okay. So we shouldn't expect top line cost continue to decline in forward years?

No, that's right. As third party contracts unwind then yes they will but basically speaking the large drop has already occurred due to expiry of one of those large contracts. So going forward it's been a tuition that there's a level of flatness there.

We have one more question from the line of Daniel Butcher from CLSA. Sir, you may ask your question.

Just one quick one from me on GLNG CapEx. Just curious I mean as being in line with the guidance you gave 2 years ago the CapEx this year. I'm just curious whether you can confirm that the guidance you gave 2 years ago for 2020 plus which is I think it's 375 that sort of still stands or whether some sort of modification to what you're thinking long-term for GLNG?

Well, I don't think I gave guidance 2020 plus. Dan, I think you're referring to some previous guidance that was given some time in the past. We've not given guidance beyond the current year. But actually I'm not going to be able to give you any guidance for 2020 plus today. What I can see about that number though as the number for this year is that that maybe the same number but we're delivering a lot more wealth, and I think that's the important point to take when you talk about CapEx is that you can see on Slide 17 where we show the relationship to the total comp expense across our onshore assets and the number of wells we're drilling. Over time we're getting a lot more hopes in the ground for the same or less money.

Sure, I might take it a slightly different way then I mean in terms of the build out you lost infrastructure being put in there and processing facilities and compression. If you do to Phase 2 to Arcadia, will that be able to use that already built compression or we need a lot more infrastructures as well.

Look it's incremental, we will develop the infrastructure in the most efficient way that we going forward and indeed over the last couple of years, Rob and the team up in Queensland have delivered a lot more again for a lot less CapEx and really optimizing the use of existing infrastructure and many of those projects has been reported over the course of last 12 months, 18 months of current significantly ahead of schedule and under budget because of the efficiencies that Rob and the team have been driving across those Queensland operations.

Thank you. There are no further questions at this time. I would now like to hand the conference back to today's presenters, please continue.

Okay. I'd just like to thank everybody for the time this morning and I look forward to catching up with many of you as we go on our road shows over the next few weeks. Thank you very much.

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect.