ASX / Media Release

      28 June 2018

      Santos announces sustainable dividend policy
      In line with Santos’ stated purpose to provide sustainable returns to our shareholders, the
      Board has approved a new Dividend Policy.

      Santos will look to pay ordinary dividends that are sustainable through the oil price cycle and
      will target a range of 10% to 30% payout of free cash flow1 generated per annum.

      Furthermore, given the cyclical nature of the industry, the Board will also consider additional
      returns to shareholders above the ordinary dividend when business conditions permit.

      Santos’ strategy has been to establish a low cost operating model that is designed to deliver
      strong cash flows through the oil price cycle.

      Since 2016, Santos has successfully executed the Transform phase of the strategy to simplify
      the company to focus on five core long-life natural gas assets, reduce costs and increase
      efficiencies to become Australia’s lowest cost onshore operator, and position the balance
      sheet for growth by significantly reducing net debt. During this period, dividends remained
      suspended as the company prioritised debt repayment.

      Santos is on track to achieve its net debt reduction target in the second half of 2018, more
      than a year ahead of schedule and now has a significantly stronger balance sheet to support
      the company’s growth strategy. This positions the company to return to sustainable dividend
      payments to shareholders.

      In determining the appropriate dividend payment, the Santos Board will consider the
      company’s growth profile, cash flow and funding requirements, balance sheet strength,
      capital structure, and franking credit balance. The declaration and amount of any dividend
      payment remains at the discretion of the Board.

      Should market conditions remain supportive and the company continues to make good
      progress to its debt reduction target ahead of plan, the Board will look to restore dividends
      to shareholders when it considers the 2018 half-year financial results in August.

      Ends.

      1
          Free cash flow is operating cash flow less investing cash flow (including all sustaining capital expenditure, exploration spend
          and interest payments). The Board will have the discretion to adjust free cash flow for individually material items, including
          major growth spend (for example, capital expenditure associated with the proposed Barossa development and PNG LNG
          expansion projects), and asset acquisitions and disposals.




Media enquiries                                  Investor enquiries                               Santos Limited ABN 80 007 550 923
Joanna Vaughan                                   Andrew Nairn                                     GPO Box 2455, Adelaide SA 5001
+61 2 9276 1134 / +61 (0) 419 111 779            +61 8 8116 5314 / +61 (0) 437 166 497            T +61 8 8116 5000 F +61 8 8116 5131
joanna.vaughan@santos.com                        andrew.nairn@santos.com                          www.santos.com
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