Termpaper final santos

American International University – Bangladesh

(AIUB)

Term Paper on

“Santos Ltd.”

A Term Paper Presented to the Faculty of Business Administration in

Partial Fulfillment of the Requirements for the Degree of Masters of

Business Administration.

Submitted to:

Prof. Dr. Md. Mahmodul Hasan

Faculty of Business Administration (MBA Program)

American International University – Bangladesh (AIUB)

Submitted By:

1Term paper of Santos by Kochhoper Dim

KOCHHOPER DIM

Strategic Management _Code: 01164_ Section: A

Sl.

No.

Name ID Sign

01. URMI,ROWNOK AFRIN 12-95756-2 Urmi

02. KHAN,NASMA TABASSUM 14-97516-1 Tabassum

03. MD.TANVIR SOBHAN 12-95849-2 tanvir

04. DEWAN,PLATO 13-96683-1 plato

Date of Submission: 2nd December, 2014


Letter of Transmittal

2nd December, 2014

To

Prof. Dr. Md. Mahmodul Hasan


Faculty of Business Administration (MBA Program)

American International University – Bangladesh (AIUB)

Banani, Dhaka- 1213

Subject: - Submission of term paper on Santos

Dear Sir,

Here is the term paper that you have assigned us as the partial

fulfillment of the Degree of Masters of Business Administration.

We have prepared our Term paper on “Santos” which we are submitting

along with this letter. It was an energizing experience throughout

semester and preparing this term paper further enhanced our insight

about how corporate level activities are being done.

The term paper is aimed to give an overview of how Strategic

Management takes place in Santos.. We hope that the analysis that we

have carried out is up to your expectations. It has been an insightful

experience for us and we tried our best to follow the tenets of

internship report.

Sincerely yours,

Kochhoper Dim

Strategic Management _Code: 01339_ Section: A


Sl.

No.

Name ID Sign

01. Urmi,Rownok Afrin 12-95756-2 Urmi

02. Khan,Nasma Tabassum 14-97516-1 badhon

03. Md.Tanvir Sobhan 12-95849-2 Tanvir

04. Dewan Plato 13-96683-1 Plato

ACKNOWLEDGEMENT

This term paper is made possible through the help and support

from everyone, including: parents, teachers, family, friends, and

in essence, all sentient beings. Especially, please allow us to

dedicate our acknowledgment of gratitude toward the following

significant advisor:

First and foremost, we would like to thank Prof. Dr. Md. Mahmodul

Hasan for his most support and encouragement. He kindly read our

paper and offered invaluable detailed advices on grammar,

organization, and the theme of the paper.


Finally, we sincerely thank to our parents, family and friends,

who provide the advice and other support. The product of this

research paper would not be possible without all of them.

EXECUTIVE SUMMARY

This term paper on strategic analysis of the Oil & Gas industry

with Santos, to help concerned managers gain a closer review of

changing environments in which the company operates. As a result,

they are able to position themselves in the marketplace, to make

better decisions on strategic management. As in the current

global economic recession with falling demand and uncertain

economic recovery, the need for business to identify strategic

issues becomes vital. This assists managers to review their

strategies, to identify their core competence, competitive

advantage and any sources of profit available to the business. In

this effort, they are able to respond to change and overcome the

situational difficulty and possibly achieve superior performance6

Term paper of Santos by Kochhoper Dim

afterwards. The report outlines appropriate strategic options for

business sustainability. In the situation of uncertain demand,

cost management needs to be effectively executed. Consolidation

and concentration within alliances may also be necessary for

reducing costs and gaining benefits. Restructuring is needed to

focus on routes of profitability. As to the case of Santos, the

company will continue to sustain and gain competitive advantages

forwards, considering that strategic management take full

advantages of their core competences, economies of scale,

learning and experience curves gained throughout its life. Cost

reduction is a long-term necessity for a capital-intensive Oil &

gas industry. Thus, cost cutting in the value chain needs to be

strictly considered. In view of short-term effect of an economic

downturn, strategic objectives for the situation should be

emphasis on market penetration by cutting price in existing

markets and competition on price basis when customers become

price-sensitive nowadays.


Definition of Strategy

Strategy (from Greek, "art of troop leader; office of general,

command, generalship") is a high level plan to achieve one or

more goals under conditions of uncertainty. Strategy is important

because the resources available to achieve these goals are

usually limited.

Strategy Matters:

Strategy is often the difference between:

success and failure, between mediocrity and excellence

a great manager and average managers

stumbling through life and moving ahead with purpose

Strategic Management ( Theory : 2000 – 2010)


• Strategic Management can be defined as (1) the art and

science of formulating, (2) implementing, and (3) evaluating

cross-functional decisions that enable an organization to

achieve its objectives.

• Strategic Management focuses on integrating management,

marketing, finance/accounting, production/operation,

research and development (R&D) and computer information

systems to achieve organizational success.

Strategic Management ( Theory : 2011 – 2015 ± )

• Strategic management involves strategy development, which is

comprised of five stages:

1. discovery,

2. strategic thinking,

3. strategic planning,

4. strategy roll-out,

5. strategy tune-up/adjustment.

1. Discovery,”Santos” requires all members of the team to

individually gather

information on an agreed upon set of attributes affecting the

organization.


2.Strategic thinking, “Santos” can be defined as ‘the

generation and application of business insights on a continual

basis to achieve competitive advantage’.

3.Strategic planning stage, “Santos” utilizes the insights

form the strategic thinking phase to assemble a mission

statement, set goals and objectives, audit the organization for

internal strengths and weaknesses, assess the external

environment for opportunities and threats, evaluate strategic

options, and then select and operationalize an organizational

strategy

4.The strategy roll-out phase, “Santos” turns the strategy into

activities and offerings and ensures that the strategy is

communicated well throughout the organization.

5. The strategy tune-up phase, “Santos” is a meeting held

several times per year to keep track of the progress of the

implemented strategy and adjust for changes in the internal and

external climate of the organization.

6. Santos made its first significant discovery of natural gas

in the Cooper Basin with the Gidgealpa 2 well in 1963.

7. The 1980s saw Santos develop a major liquids business

following the discovery of oil at Tirraw


8. The Moomba 1 discovery in 1966 confirmed this region as a

major petroleum province in the early 1970s.

9. The gas discovery at Gidgealpa 2 flows at 3.2 million cubic

feet per day: the first encouraging discovery of natural gas in

the Cooper Basin.

According to the definition of strategic management our project

“Santos” fit into (theory 2011-2015+) as they also do strategic

planning, and thinking and strategic adjustment at the end.

Company Profile of Santos

An Australian energy pioneer since 1954, Santos is a leading oil and gas producer, supplying Australian and Asian customers.

With its origins in the Cooper Basin, Santos is one of Australia’s largest producers of gas to the domestic market and has the largest exploration and production acreage position in Australia of any company.


Inspection of Seaway Falcon pipelay vessel, Casino gas development, offshore Victoria.

Santos has also developed major oil and liquids businesses in Australia and operates in all mainland Australian states and the Northern Territory.

Santos also has an exploration-led Asian portfolio, with a focus on three core countries: Indonesia, Vietnam and Papua New Guinea.

Moomba processing plant, Cooper Basin, South Australia.

From this base, Santos is pursuing a transformational LNG strategy with interests in three LNG projects; Darwin LNG, PNG LNG and GLNG.

Our substantial pipeline of projects ensures Santos is well positioned to achieve our production goal of 80 to 90 million barrels of oil equivalent by 2020.

With over 3,000 employees across Australia and Asia, Santos’ foundations are based on safe, sustainable operations and workingin partnership with host communities, governments, business partners and shareholders.

Mission12


1. Santos actively describe their mission to the communities

in which they operate. They do this through using local

suppliers, creating employment and training opportunities and

supporting community organizations and events through

community sponsorships.

Vision

Santos vision is to be a leading oil and gas exploration and production company in Australia and Asia.

4. Strategic group map:

a. Extent of product diversity(Liquid Marketing)


Exploration and production

Figure : Extent of geographic coverage

Most Strategic Management Model


PESTEL ANALYSIS OF SANTOS

Political Economical

An unprecedented collapsein world crude oil pricesto US$10 per barrel sees Santos’ Australian exploration program halved.

South Australian Government repeals legislation restricting any one shareholder from owning more than 15% of Santos’ shares.

Gas supply contract signed for Reindeer project to supply

Santos and Apache announce plans to developthe Halyard field offshore Western Australia. Sale of 15% interest in the GLNG project to France’s Totalfor $650 million.

On 22 August 2014 the company

said its oil production was at its highest level in six years.

For the first half of 2014, Santos recorded sales revenue of $1.8-billion, an increase of20% on the comparable period the previous year. Sales volumes rose by 5% to 28.9-million barrels of oil equivalent.

Santos shareholders receive their first dividend of two cents per share, 24 years afterincorporation. The Strzelecki 3well flows at 2,400 barrels of oil per day: the highest onshore flow rate recorded at that stage.

New $90 million Newmont gas supply contract signed. $300 million off-market buy-back completed.

Social/Socio-Cultural Technological

Successful appraisal of the


Mutineer and Exeter oil fields offshore Western Australia signals the beginning of Santos’ first operated offshore oil development and one of Santos’ largest projects invalue terms.

Employees and contractors have specific responsibilities for minimizing environmental impacts, as detailed in theEnvironmental Vision, Commitment and Policy..

The company-wide Environment, Health and Safety Management System (EHSMS) provides a structured framework for effective environmental andsafety practice across all of Santos' activities and operations.

Santos' activities and operations The system, based on the ISO 14001 and AS 4801 standards, has beendesigned to ensure consistent standards for all employees and contractors.

Santos made its first significantdiscovery of natural gas in the Cooper Basin with the Gidgealpa 2well in 1963.

The 1980s saw Santos develop amajor liquids business followingthe discovery of oil atTirrawarra in the early 1970s.

Santos monitors environmental performance with company-wide andsite-specific key performance indicators.Emergency contingency plans, in place at all operating areas, are tested and updated on a regular basis.

December 2009, the PNG LNG project involves the development of gas and condensate resources

Environmental/Ecological Legal/Regulatory

Moomba experiences the worst flood in its recorded Santos' activities and


history, denying road access to the area for six months..

Santos reports and investigates environmental incidents, near misses and hazards. Issues of concern are incorporated into hazard registers.

In May 2008, groundwater contamination was reported to the Environment Protection Authority (EPA) following detection at Santos' Port Bonython site,Spencer Gulf, South Australia.

In May 2006, the Sidoarjo mudflow disaster occurred in East Java, Indonesia. Controversy exists surrounding the probable cause of the disaster whichhas displaced

operations. The system, based on the ISO 14001 and AS 4801 standards, has been designed to ensure consistent standards for all employees and contractors.

To promote high standards of corporate governance and ethical conduct the Company has provided its employees with a clear set ofrules, values and guidelines to

the Board Guidelines, the Companyhas adopted a Code of Conduct which prescribes that, in addition to compliance with all applicable legal requirements, the Board expects all Directors, executives

Santos systems and procedures arebased on an understanding and respect for human rights with ourprinciples consistent with the Universal Declaration of Human Rights.

STEER Analysis:

STEER analysis systematically considers Socio-cultural,

Technological, Economic, Ecological, and Regulatory factors.


http://en.wikipedia.org/wiki/East_Java

http://en.wikipedia.org/wiki/Sidoarjo_mud_flow

http://en.wikipedia.org/wiki/Sidoarjo_mud_flow

http://en.wikipedia.org/wiki/Spencer_Gulf

Five Forces Model:

SUPPLIER POWER

The suppliers are countries that have oil reservoirs and oilfields. It can be argued that here the bargaining power ofsuppliers is too high and they can choose the contractor.

THREAT OF SUBSTITUTES

Crude oil can’t be substituted by any other product, as it is not onlythe fuel but also the raw material for petrochemical industries.

DEGREE OF RIVALRY

number of competitors in the market : competitive rivalry ishigher as there are 3 more strong potential competitors eg.


Exxon Mobil Corporation, BHP BILLITON LIMITED,WOODSIDEPETROLEUM LTD.

market size and growth : Competition is always most intensein stagnating markets

exit barriers : it is difficult or expensive to exit oilindustry, firms will remain thus adding to the intensity ofcompetition

BUYER POWER

The buyers usually purchase in the oil markets, and the market priceis determined by the demand. The substitutes are not easily found , customers arent that sensitive to pirce change.

THREAT OF NEW ENTRANTS

As the capital for oil companies is too high, Level of technicalknowledge is too high and advanced, this has created a very highbarrier for the new entrants. So it can be concluded that thereis almost no threat of new entrants for Santos.

Degree of rivalry

1.Exxon Mobil

2.Chevron

3.Bp

4.Gasprom20


5.Nexen

6.Total S.A

7.Shell Oil Company

8.Petronas

Here are the competitor of this particular industry and therivalry is very intense among the firms and if the new entrancecomes among this situation then the competition will be moreintense and very limited scope to be successful with the giants .

SWOT ANALYSIS OF SANTOS:

## Strengths ## Weaknesses

Santos is a leading oil and gas producer & supplying Australian and Asian customers.

Santos is one of Australia’s largest producers of gas to the domestic market and has the largest exploration and production acreage position in Australia of any company.

By taking personal responsibilityand pride in our work to deliver timely, quality results that benefit Santos and help achieve our vision and strategy.

Santos' values are the guiding

Incraesing operational and manufacturing cost have been affecting the companys margins.

A smaller workforce means the opportunities to grow rapidly isrestricted.

Ground water contamination was reported to the environment protection authority (EPA)following detection at Santos port Bonython site ,spencer gulf ,south


principles that define how it conducts its business and what itstands for as a company. This means working as a team that discovers,delivers,collaborates,cares.

Australia Hydrocarbons were found floating on and in the ground water.

Oil and gas company is covered by a range of regulations that limit where, when and how extraction is done.

## Opportunities ## Threats

Santos has also developed majoroil and liquids businesses inAustralia and operates in allmainland Australian states andthe Northern Territory.

over 3,000 employees acrossAustralia and Asia, Santos’foundations are based on safe,sustainable operations andworking in partnership with hostcommunities, governments,business partners andshareholders.

By recognising the value andpower in diversity of thought andcommunicating openly tounderstand the perspectives ofothers; demonstrating leadershipby sharing what we know andrespectfully challenging eachother to achieve the best resultsfor all.

Santos monitors environmentalperformance with company-wide andsite-specific key performance

volatile global prices of oiland gas in whose explorationand production the company isengaged it can adversely impactits business.

Intens competition from otherlarger firms in theindustry,which have largerreserves revenues andoutreach,can make it lose itsmarket share.

Stringent emission standardsarising from governmental lawsand regulations can adverselyimpact its operations and reducerevenue.

Large underground deposits ofoil and gas. Extracting theseoil and gas deposits can resultin lasting damage to theenvironment.


indicators. Our EnvironmentalVision: "We will continuouslyseek to find new ways to minimiseour environmental impact acrossthe lifecycle of our activities".

Blue Ocean Strategy:

Santos is the world leading independent oil and gas

exploration and production company, based on prove reserves

and production of liquid and natural gas.They explore

for ,develop and produce crude. Santos is determined to grow

production by at least 5 percent above their base level and

they are working on achieving this. the discoveries in the

first half of 2001 will help us achieve this goal. Blue

Ocean Strategies competing head-to-head with other suppliers

for known customers in an existing industry. And Santos is

doing so with competing head to head with ConocoPhillips.

Open innovation:

Santos can and should use external ideas as well as internal

ideas, and internal and external paths to market, as the

firms look to advance their technology.


McKinsey – Seven S-Model:

1. Business Environment/Strategy: Santos strategy is to be the

world’s leader in the Oil & Gas industry. Our mission is to

be the leaders in the Oil & Gas industry. They intent to

provide the eminent quality service to the clients.

2. Shared Values: Santos actively describe their mission to the

communities in which they operate. They do this through using

local suppliers, creating employment and training

opportunities and supporting community organizations and

events through community sponsorships.

3. Structure: Emirates has a very structured Organizational

Chart. They organized their organization to different

departments and different management layers so that total

organizational operations run smoothly and ensure customer

satisfaction.

Need to put the diagram over here.

4. Staff: Santos staffs are highly qualified and experienced.

Top management employees are very experienced in the oil &

gas industry. They are very experience in setting company

business plan and strategy so that they can do profit. Others

staffs are also very skilled in their respective area and

they are always working hard to improve themselves.


5. System/Infrastructure: Santos is using latest machineries

in their pool to ensure quality and quantity full oil &

Gas . They have the reward system for both of their

corporate & regular customer . They are very much concern

about their customer feedback and they respect their

customers and always try to act according to their customer

feedback.

6. Skills: Santos always choose best human resources to run

the business. They are very much skilled and their know how

on Oil & Gas business is excellent.

7. Style: Santos always emphasize on quality. They have the

best on market experts to take care of the oil & gas quality

refueling. As we know oil & gas handling itself is a risky &

dangerous work to perform so they had a very safe & sound

system for security of the employees.

so they provide excellent security system and arrangements for

the employees so that they do not feel insecure. Their

operators and management are also very helpful. The employees

are also very energetic and dedicated to their works to bring

success for the company in every aspect.


OrganogramOrganogram

Kenneth Charles BordaChairman,LLB, BA

David John Wissler KnoxManaging Director and Chief Executive OfficerBSc (Hons) Mech Eng, MBA, FIE Aust, FTSE

Roy Alexander Frankli OBEChairman of the environment,health, safty and sustainability committe and member of the people and remuneration committe of the board , BSc (Hons)

Gregory John Walton MartinChairman of the People & Remuneration and the FinanceCommittees of the Board B.Ec, LLB, FAIM, MAICD

Jane Sharman HemstritchMember of the People & Remuneration committee and Chairperson of the Audit and Risk Committee, BSc (Hons), FCA, FAICD


Hock GohMember of the Environment, Health, Safety and Sustainability Committee and the Audit and Risk Committee of the Board,B Eng (Hons) Mech Eng

Scott Sheffield member of the Finance Committee

Yasmin Allenmember of the Environment, Health, Safety and Sustainability Committee of the Board, BCom FAIC

Andrew SeatonChief Financial OfficerBEng Hons (Chem), GradDip BusAdmin

Peter ClearyVice President LNG Markets and Eastern Australia CommercialB. Comm, LLB

Petrina CoventryChief Human Resources OfficerB.ed, MBA, M.Ethics, Global EMBA, FAHRI, GAICD

James BaulderstoneVice President Eastern AustraliaLLB (Hons), BSc (Hons)


Trevor BrownVice President QueenslandBSc (Hons)

Rod DukeVice President Downstream Santos GLNGBEng (Hons) Chemical, GradDip Management

Diana HoffVice President Technical, Engineering and InnovationBSc Petroleum Engineering (Magna cum Laude)

John AndersonVice President Asia & WA/NTLLB, BEc, GDCL

Bill OvendenVice President Exploration & Subsurface (Acting)BSc (Hons) (Geology and Geophysics)

Christian PaechGeneral CounselLLB (Hons) BCom

David LimCompany SecretaryBEc, LLB, Ch.Sec


SWAN Analysis of Santos

## Strengths ## Weaknesses

1. Santos is a leading oil and gas producer, supplying Australian and Asian customers.

2. Santos is one of Australia’s largest producers of gas to the domestic market and has the largest exploration and production acreage position inAustralia of any company.

3. by taking personal responsibility and pride in our work to deliver timely, quality results that benefit Santos and help achieve our vision and strategy.

4. Santos' values are the guidingprinciples that define how it conducts its business and whatit stands for as a company.

1. incraesing operational and manufacturing cost have been affecting the company’s margins.2. A smaller workforce means the opportunities to grow rapidly is restricted.3. Ground water contamination was reported to the environment protection authority (EPA)following detection at Santosport Bonython site ,Spencer gulf ,south Australia Hydrocarbonswere found floating on and in the ground water.4.Oil and gas company is covered by a range of regulations that limit where, when and how extraction is done.


This means working as a team that discovers,delivers,collaborates,cares.

##Achievements: ## Next Step

Achievements of Santos within its

entire existence and until today,

we can tell with certainty that

this company has a very high level

of risk management. More than 600

international awards are testament

to the hard work and determination

of every member of the Santos.

Santos next step is increase their

supply in to more countries every

day in coming future.

TOWS Matrix OF SANTOS

Internal Score


## Strengths Santos is a leading oil

and gas producer,supplying Australian andAsian customers.

Santos is one ofAustralia’s largestproducers of gas to thedomestic market and hasthe largest explorationand production acreageposition in Australia ofany company

by taking personalresponsibility and pridein our work to delivertimely, quality resultsthat benefit Santos andhelp achieve our visionand strategy.

Santos' values are theguiding principles thatdefine how it conductsits business and what itstands for as a company.This means working as ateam thatdiscovers,delivers,collaborates,cares.

## Weaknesses incraesing operational

and manufacturing costhave been affecting thecompanys margins.

A smaller workforcemeans the opportunitiesto grow rapidly isrestricted

Ground watercontamination wasreported to theenvironment protectionauthority(EPA)followingdetection at Santosport Bonythonsite ,spencergulf ,south AustraliaHydrocarbons were foundfloating on and in theground water.

Oil and gas company iscovered by a range ofregulations that limitwhere, when and howextraction is done.

2.80


## Opportunities

.Santos has alsodeveloped major oil andliquids businesses inAustralia and operatesin all mainlandAustralian states andthe Northern Territory.

. over 3,000 employeesacross Australia andAsia, Santos’foundations are based onsafe, sustainableoperations and workingin partnership with hostcommunities,governments, businesspartners andshareholders.

By recognising the valueand power in diversityof thought andcommunicating openly tounderstand theperspectives of others;demonstrating leadership

## Threats

volatile global pricesof oil and gas inwhose exploration andproduction the companyis engaged it canadversely impact itsbusiness.

Intens competitionfrom other largerfirms in theindustry,which havelarger reservesrevenues andoutreach,can make itlose its market share.

Stringent emissionstandards arising fromgovernmental laws andregulations canadversely impact itsoperations and reducerevenue.

3.10


by sharing what we knowand respectfullychallenging each otherto achieve the bestresults for all.

Santos monitorsenvironmentalperformance withcompany-wide and site-specific key performanceindicators. OurEnvironmental Vision:"We will continuouslyseek to find new ways tominimise ourenvironmental impactacross the lifecycle ofour activities".

Large undergrounddeposits of oil andgas. Extracting theseoil and gas depositscan result in lastingdamage to theenvironment.

External

Value Chain Analysis

The aim of any value chain & network analysis is to understandthe systemic factors and conditions through which a valueframework and its firms can achieve higher levels ofperformance. With its origins in the Cooper Basin, Santos isone of Australia’s largest producers of gas to the domestic


market and has the largest exploration and production acreageposition in Australia of any company. Santos adopts verticalintegration into its core business structure, incorporatingdiversified properties. This resembles itself throughExploration, marketing and technology. Difficulties can arisewhen company make technology decisions independently alongtheir supply-chains. Thus, their information systems areneither coordinated nor compatible, and information is notreadily shared back and forth along the supply-chain. As it isbecoming more difficult and more challenging to find easilyaccessible new oil and gas discoveries while the existingfields are being depleted, they are being forced to take a moreintegrated approach to exploration, production, refining andmarketing operations. Thus, one way of crossing this dividetoday is by adopting better and improved secondary and tertiaryrecovery technologies across the entire Value-chain. Demandvariability amplification in a supply-chain is a big problem.Dynamics and instability in schedules are constantly amplifiedfrom downstream to upstream in a Chain and should be controlledor dampened. Without this controlling or dampening measure,instability will result to larger costs. Variability also comesfrom changes and updates of the demand forcast.Dynamic task onvariability make Santos more profitable in this field. On thebasis of this assessment, Santos outweighs competitiveadvantages over competitors, in terms of productivity, andentrepreneurial management.


Figure: Santos Value chain

Exploration

Locate underground rock formation that may contain Hydrocarbons or resources

Bidding for exploration Using technology to find new oil resources

Production

Define the well architecture and development Scheme Extract as much hydrocarbons or resources as

possible Bringing oil to the surface using natural and

artificial methods Invest Production field development

Processing

Converting crude oil into finished products Treating gas to be sent to markets


Refining

Refinery economics Catalytic cracking & refinery complexity

Transportation

Moving oil to refineries To consumers with tankers, trucks and pipelines Build and operate natural gas compressing and

processing equipment Oil spills Shipping cost

Marketing

Slogan “we have Energy” Distribution systems define Distributing and selling refined products Convenience stores/places

S=SpecificTo keep the Sustainable DevelopmentReport current, key performancemetrics are updated every year.

M=Measurable

There worldwide annual averagecrude oil sales price fromcontinuing operations remainedrelatively flat in 2012, from


$105.52 per barrel in 2011 to$105.72 per barrel in 2012

A=Achievable A strong and stable leadership

team, ambitious yet calculated

decision-making and ground-

breaking ideas all contribute

to the creation of great

companies.

R=RealisticEach of Santos businesses isresponsible for integratingsustainability issues into day-to-day operations, projectdevelopment and decision making.

T=TimeSantos is one of the successfulindustries. They have talentworkforce those are responsibleto do the work effectively andefficiently in timely.

E=EncompassingSantos is evaluating anddeveloping technologies for


renewable energy, and isleveraging expertise,intellectual property andphysical assets in pursuit ofeconomically feasible, renewableenergy business opportunities.

R=ReviewedA career with Santos is arewarding one. They value theirpeople and ensure that therewards and benefits arecomprehensive, competitive inthe market.

GREAT Model

By using GREAT Model, Santos will create the long term proposal.

G=Goals Santos is pursuing a transformational LNG strategy with interests in three LNG projects;

Santos is well positioned to achieve theirproduction goal of 80 to 90 million barrels of oil equivalent by 2020.


R=Result The main role is to ensure economic andsocial benefits

oil and gas production with good, safestewardship of the country’s naturalresources and environmental care.

E=Expectations

conducted in accordance with thelaws and regulations of the variousjurisdictions

Santos will preclude discriminationbased on gender, region, race,national or ethnic origin, culturalbackground, social group,disability, sexual orientation,marital status, age or politicalopinion.

A=Abilities

The ability to adapt a new environment andstrong cultural awareness and people.

T=Timing At the end of 2013, Santos announced thatproved plus probable (2P) petroleum reserveswere 1,368 million barrels of oil equivalent(mmboe).


http://www.oilandgasuk.co.uk/environment.cfm

http://www.oilandgasuk.co.uk/healthandsafety.cfm

VISA Model

Vi-Vision Vision; Our vision is to be a leading oil and gas

exploration and production company in Australia and

Asia.

S =

Strategy

Santos has a good and effective business model

which is very helpful to gain company objectives

and help to company become leader in the oil & Gas

Industry .

A =Action

Plan

• “Santos is working on a action plan to

ensure that they get more market coverage &

moving as a quality & efficient company.


This will include more employees.

PURE Objective

P=Positive Increase market share as much as possible

Retain and improve frequent to business

class travelers market share

Tap competitive cost carriers market

achieve company’s return on investment

Committed to promoting positive social &

economic Impact

U=UnderstoodSantos treats also all the employees equally.Talent is not nationality exclusive, andtheir diversity of nationalities, cultures,religious and ethnic

R=Recorded The key to the Santos success has been the CONTINUITY of its management team.


E=EthicalTo promote high standards of corporategovernance and ethical conduct the Company hasprovided its employees with a clear set ofrules, values and guidelines to follow whencarrying out their work as a Santos employeeand representative.


The BCG Matrix

High


BCG STARS ( )

(high growth, high market

share)

BCG QUESTION MARKES (?)

(high growth, low

market share)

BCG CASH COWS ($)

(low growth,high market

share)

BCG DOGS

(low growth, low market

share)

Business

Gro

wth Ra

te (

Mark

et

Growth)

Low

High

Low

IMPLEMENTATION:

According to BCG matrix Santos relative position (Market Share) is

high and business Growth rate (Market growth) is low that means Santos

BCG matrix position is in CASH COWS ($).

Market Analysis Including Market

Segmentation

Market Analysis

Market risks are occurred in a specific market and associatedwith the market’s characters.

1) The effects of changing commodity prices

The revenues, operating results and future rate of growth arehighly dependent on the prices that the Company receives for


Relative Position (Market

the crude oil, natural gas, condensate, naphtha, liquidpetroleum gas,and Liquefied Natural Gas (LNG). The factorsinfluencing these prices are beyond the Company’s control.

2) Any material change in the factors and assumptionsunderlying Santos’s estimates of crude oil, and natural gasreserves could impair the quantity and value of thosereserves.

Reserve estimation is a process that involves estimatingvolumes to be recovered from underground accumulations ofcrude oil, and natural gas that cannot be directly measured.

3) Without a successful addition to Santos’s proved reserves,its future crude oil, and natural gas production will decline,resulting in an adverse impact to the business. This istypical of energy companies.

The rate of production generally declines as reserves arereduced. This depends on the extent whether Santos conductssuccessful exploration and development activities, or, throughengineering studies, identifies additional or secondaryrecovery reserves.

Market Segmentation

Demographic segmentation:

The Group has identified its operating segments to be the fourbusiness units of Eastern Australia; Western Australia andNorthern Territory (“WA & NT”); Asia Pacific; and GladstoneLNG (“GLNG”), based on the different geographical regions andthe similarity of assets within those regions.


The Asia Pacific operating segment includes operations inIndonesia, Papua New Guinea, Vietnam, India and Bangladesh.

Behavioral segmentation:

Segment performance is measured based on earnings beforeinterest, tax, impairment, exploration and evaluation, andgains or losses on sale of non-current assets and controlledentities (“EBITX”). Corporate and exploration expenditure andinter-segment eliminations are included in the segmentdisclosure for reconciliation purposes.

Competitor Analysis

Chevron:

Chevron Corporation is an American multinational energy corporation. One of the successor companies of Standard Oil, it is headquartered in San Ramon, California, and active in more than 180 countries. Chevron is engaged in every aspect ofthe oil, gas, and geothermal energy industries, including exploration and production; refining, marketing and transport;chemicals manufacturing and sales; and power generation.

Conoco Phillips:

ConocoPhillips Co. is an American multinational energy corporation with its headquarters located in the Energy Corridor district of Houston, Texas in the United States. Conoco Inc. founded in 1875 as the Continental Oil and Transportation Co. Based in Ogden, Utah, the company was a coal, oil, kerosene, grease and candles distributor in the West. It is the world's largest independent pure-play


http://en.wikipedia.org/wiki/Candle

http://en.wikipedia.org/wiki/Kerosene

http://en.wikipedia.org/wiki/Coal

http://en.wikipedia.org/wiki/Ogden,_Utah

http://en.wikipedia.org/wiki/Texas

http://en.wikipedia.org/wiki/Houston

http://en.wikipedia.org/wiki/Energy_Corridor

http://en.wikipedia.org/wiki/Energy_Corridor

http://en.wikipedia.org/wiki/Energy

http://en.wikipedia.org/wiki/Multinational_corporation

http://en.wikipedia.org/wiki/Power_generation

http://en.wikipedia.org/wiki/Refining

http://en.wikipedia.org/wiki/Petroleum#Extraction

http://en.wikipedia.org/wiki/Exploration

http://en.wikipedia.org/wiki/Geothermal

http://en.wikipedia.org/wiki/Gas

http://en.wikipedia.org/wiki/Petroleum

http://en.wikipedia.org/wiki/San_Ramon,_California

http://en.wikipedia.org/wiki/Standard_Oil

http://en.wikipedia.org/wiki/Standard_Oil#Successor_companies

http://en.wikipedia.org/wiki/Energy

exploration and production company and is also one of the Fortune 500 companies.

Exxon Mobil:

Exxon Mobil Corp., or ExxonMobil, is an American multinationaloil and gas corporation headquartered in Irving, Texas, UnitedStates. It is a direct descendant of John D. Rockefeller'sStandard Oil company, and was formed on November 30, 1999, bythe merger of Exxon and Mobil (formerly Standard Oil of NewJersey and Standard Oil of New York). It is affiliated withImperial Oil which operates in Canada. The world's largestcompany by revenue, ExxonMobil is also the second largestpublicly traded company by market capitalization

Profitability ratios Return on Asset(ROA):

Chevron:

Conoco Phillips:

Exxon Mobil:

Santos

00.10.2

ROA

Series1

Company name

Ratio

Return on Equity(ROE):


http://en.wikipedia.org/wiki/List_of_corporations_by_market_capitalization

http://en.wikipedia.org/wiki/List_of_corporations_by_market_capitalization

http://en.wikipedia.org/wiki/List_of_companies_by_revenue

http://en.wikipedia.org/wiki/List_of_companies_by_revenue

http://en.wikipedia.org/wiki/Imperial_Oil

http://en.wikipedia.org/wiki/Mobil

http://en.wikipedia.org/wiki/Exxon

http://en.wikipedia.org/wiki/Standard_Oil

http://en.wikipedia.org/wiki/John_D._Rockefeller

http://en.wikipedia.org/wiki/Texas

http://en.wikipedia.org/wiki/Irving,_Texas

http://en.wikipedia.org/wiki/List_of_petroleum_companies

http://en.wikipedia.org/wiki/Multinational_corporation

http://en.wikipedia.org/wiki/Fortune_500

Chevron:

Conoco Phillips:

Exxon Mobil:

Santos

00.150.3

ROE

Series1

Company name

Ratio

Debt to Equity Ratio:


Chevron:

Conoco Phillips:

Exxon Mobil:

Santos

00.61.2

Debt to Equity

Series1

Company name

Ratio

Intensity of Rivalry Among EstablishedFirms

Company Name ChevronConocoPhillips

Exxon

Mobil Santos

Reserve(billion barrels) 11.2 4.3 1.6 1.4

Employee(thousands) 64.5 19 75 78.4

Operated country 180 27 50 77


EFE Matrix

The External Factor Evaluation (EFE) Matrix of SANTOS

Key External Factors Weight Rating WeightedScore

OPPORTUNITIES1. Santos has also developed major oil andliquids businesses in Australia andoperates in all mainland Australian statesand the Northern Territory.

0.10 4 0.40

2. over 3,000 employees across Australia and Asia, Santos’ foundations are based onsafe, sustainable operations and working in partnership with host communities, governments, business partners and shareholders.

0.20 4 0.80

3. By recognising the value and power in diversity of thought and communicating openly to understand the perspectives of others; demonstrating leadership by sharing what we know and respectfully challenging each other to achieve the bestresults for all.

0.15 4 0.60

4. Santos monitors environmental performance with company-wide and site-specific key performance indicators. Our Environmental Vision: "We will continuously seek to find new ways to minimise our environmental impact across the lifecycle of our activities".

0.10 2 0.20


THREATS1. volatile global prices of oil and gas in whose exploration and production the company is engaged it can adversely impactits business.

0.20 3 0.60

2.Intens competition from other largerfirms in the industry,which have largerreserves revenues and outreach,can make itlose its market share.

0.10 2 0.20

3.Stringent emission standards arising from governmental laws and regulations canadversely impact its operations and reducerevenue.

0.05 2 0.10

4.Large underground deposits of oil and gas. Extracting these oil and gas depositscan result in lasting damage to the environment.

0.10 2 0.20

4= the response is superior3= the response is above average2= the response is average1= the response is poor Rating

TOTAL 1.00 2.55

The total weighted score of this matrix reveals that SANTOShave a strong score of 3.10 which is higher than normal. The


3.10

company’s ability in responding to external forces issufficient.

CPM Matrix

The Competitive Profile Matrix (CPM) MATRIX OF SANTOS

SANTOS

EXXON

MOBIL

CONOCO

PHILIIPS

Critical Success

Factors

Weight Rating Score Rating Score Rating Score

Advertising 0.153

0.454 0.60 3

0.45Quality of

Services

0.104 0.40 4 0.40 4 0.40

Price

Competitiveness

0.104 0.40 4

0.404 0.40


Management 0.15 4 0.60 4 0.60 4 0.60

Financial

Position

0.154

0.604 0.60 3 0.45

Global Expansion 0.203 0.60

40.80 4 0.80

Customer Loyalty 0.104

0.403 0.30 3 0.30

Market Share 0.05 4 0.20 3 0.15 3 0.15

Total 1.00 3.65 3.85 3.55

4 = Major Strength; 3 = Minor Strength; 2 = Minor Weakness; 1 = Major

Weakness

QSPM (Quantitative Strategic Planning

Matrix) for SANTOS

Key Factors

Alternative 1-Exploration In AUSTRALIA

Alternative 2- Exploration In ASIA

Weight

Alternatives

Scores

TotalAlternatives

Weight

AlternativesScores

TotalAlternatives


Scores ScoresStrengths:Santos is a leading oil and gas producer, supplying Australian and Asian customers. 0.10 4 0.40 0.10 3

0.30Santos is one of Australia’s largest producers of gas to the domestic market and has the largest exploration and production acreage position inAustralia of any company. 0.20

4

0.80 0.20 3 0.60

by taking personal responsibility and pride in our work to deliver timely, quality results that benefit Santos and help achieve our vision and strategy.

0.15 30.45 0.15 2

0.30Santos' values are the guidingprinciples that define how it conducts its business and whatit stands for as a company. This means working as a team that discovers,delivers,collaborates,cares. 0.10 3 0.30 0.10

2 0.20

Weaknesses:incraesing operational and manufacturing cost have been affecting the companys margins.A smaller workforce means the opportunities to grow rapidly

0.20

1

0.20

0.30

0.20

0.10

1

0.20

0.20


is restricted. 0.10 3 3

2

Ground water contamination wasreported to the environment protection authority (EPA)following detection at Santos port Bonython site ,spencer gulf ,south Australia Hydrocarbons were found floating on and in the ground water.

0.05

1

0.05 0.05 1 0.05

Oil and gas company is coveredby a range of regulations thatlimit where, when and how extraction is done. 0.10 3 0.30 0.10 1

0.10

Sum Weights 100% 100%

OpportunitiesSantos has also developed major oil and liquids businesses in Australia and operates in all mainland Australian states and the Northern Territory.

0.15 30.45 0.15 2

0.30 over 3,000 employees across Australia and Asia, Santos’ foundations are based on safe,sustainable operations and working in partnership with host communities, governments,business partners and 4

0.80 0.20 2 0.40


shareholders. 0.20By recognising the value and power in diversity of thought and communicating openly to understand the perspectives ofothers; demonstrating leadership by sharing what we know and respectfully challenging each other to achieve the best results for all.

0.15 2

0.30 0.15 1

0.15Santos monitors environmental performance with company-wide and site-specific key performance indicators. Our Environmental Vision: "We willcontinuously seek to find new ways to minimise our environmental impact across the lifecycle of our activities".

0.10 4

0.40 0.10 3

0.30Threatsvolatile global prices of oil and gas in whose exploration and production the company is engaged it can adversely impact its business.

0.15 10.15

0.152

0.30Intens competition from other larger firms in the industry,which have larger reserves revenues and outreach,can make it lose its market share.

0.15 20.30 0.15 2

0.30Stringent emission standards arising from governmental laws

0.05


and regulations can adversely impact its operations and reduce revenue. 0.05 2 0.10 0.05 1

Large underground deposits of oil and gas. Extracting these oil and gas deposits can result in lasting damage to the environment.

0.05 2 0.10

0.05 1

0.05

Sum Weights 100% 100%

Sum Total Alternatives Scores 5.40 > 3.50

From above calculation we can see that exploration in Australia is better than exploration in AUSTRALIA is better than exploration in ASIA for SANTOS company.that means Alternative -1 is better than Alternative -2

Financial Analysis

Profit Margin:


2011 2012 2013

0.00%5.00%

10.00%15.00%20.00%25.00%30.00% 27.06%

16.08%14.33%

Profit Margin

Profit Margin

Year

Profit Margin

(Percentage)

Profit margin was lower compare to the previous year

Earning per share

2011 2012 2013

020406080

100 85

54 53

Earning Per Share

Earning Per share

Year

EPS(cents)


In 2013 Earning per share was 53cents which is almost in a linewith the prior year

Return on Investment

2011 2012 2013

0.00%10.00%20.00%30.00%40.00%50.00%

48.07%

33.48%25.64%

Return On Investment

Return of Investment

Year

ROI(Percentage

)

Return on invesment is not enough compare to the previous year.

Dividends per share


2011 2012 2013

05

1015202530

30 30

22

Dividends Per Share

dividends Per share

Year

DPS(cents)

.

Breakeven Analysis

We also know, Break Even Point ¿ ¿CostPrice–VariableCost

Santos BEP, 2013 =22573÷(3600-2194)* GM

=16.054

In AED Million 2013

Revenue 3600 100%

COGS 2194 60.94%


Gross Margin 140639.05%

Fixed Cost 22573

Break EvenPoint

16.05Xof GM

It is observed that for year 2013, the company was incurringmanaged to have a positive gross margin of 1406 AED million.On year 2013 the Fixed Cost of Santos was 22573 AED millionmeaning to achieve the break-even point the company will haveto make sure that it has at least a sales volume that givesaround 16.05 times of the gross margin in year 2013.

The company earned AED 39.05 AED for each Revenue of 100 AED.In 2013 the Fixed cost of the company is 22573 AED Million

So we have to earn (100/39.05) * 22573 = 57805.37 Million

In percentile format, the cost equation for the company foryear 2013 would be:

Cost = 0.60X + 22573 Million

In percentile format, Revenue = 1X

1X = 0.60X + 22573Million

or, X = 57805.37 Million

However, traditionally, a costs around AED 100061


Cost Revenue = 1X

Cost = 0.60X + 22573 AED Million

Break Even Sales Volume 57805.37 or5.7 Billion AEDMillion

22573

Number of barrels

Figure:Break Even Analysis For Santos

KSF Analysis (Industry key Success Factor)1. Technology – related KSFs

After a thorough technical evaluation of the available solutions

on the market, Santos selected Intergraph® SmartPlant® Enterprise

because of its integrated lifecycle approach, which is aligned

with the company's vision. The new information management system

is established using SmartPlant Enteprise for Owner Operators

(SPO), which is then integrated with the other SmartPlant

Enterprise design and engineering solutions.


With the integrated suite of SmartPlant Enterprise

solutions, including SPO, Santos is able to view, manage,

and control the continuously changing engineering design

basis more easily. An integrated system ensures

synchronization of information, so that the "virtual plant",

along with in-plant documentation and IT systems, is always

consistent, accurate, and up-to-date.

Using Intergraph technology, Santos has established an

engineering information management system across the entire

project life cycle while supporting improved business

processes.

Production - related KSFs

Santos has continued to deliver a strong forward

production profile by having focused on developing

significant optionality in portfolios across both

Australia and Asia.

2. Skills and Capability – related KSFs

The company were committed to open, honest and

collaborative engagement to reassure and provide

confidence that its proposed operations were safe,

sustainable and delivered a positive outcome for the

local community and shareholders.


3. Other types of KSFs

Establishing constructive partnerships with both local and

global organisations is an important part of achieving

success in the oil and gas business.

A number of acquisitions in the 1990s provided Santos with

additional opportunities onshore and offshore Australia,

Indonesia and Papua New Guinea.

The Board acknowledges that a key determinant of success

relied on the ability of Santos to gain the trust of the

communities in which it operates.

Strategy Evaluation and Contingency Plan

Substantial pipeline of projects ensures Santos is well

positioned to achieve our production goal of 80 to 90 million

barrels of oil equivalent by 2020.

Business strategy:

Australia:

Growing strong domestic base business

Exploration success offshore Western Australia with the Bianchi and Winchester wells.

Fletcher Finucane project (Western Australia) first oil ahead of


schedule and under budget. Further shale gas success in the

Cooper Basin with the Moomba-194 unconventional well.

Santos uniquely positioned to meet higher demand for domestic and exportnatural gas.

LNG:

Delivering our transformational

LNG portfolio

PNG LNG more than 90% complete and ontrack for first LNG in the third quarter of 2014.

GLNG approaching 75% complete and on track for first LNG in 2015.

Capital cost estimates for both projects unchanged.

Asia:

Building a focused exploration-led portfolio

Dua (Vietnam) and Peluang (Indonesia)projects on track for first production by mid-2014.

Acquisition of a 50% interest in the Ande Ande Lumut oil field offshore Indonesia.

Farm-in to exploration licenses in the PNG Foreland.

Multiple options for PNG LNG expansion.

Recommendation:


Santos need to find out sustainable energy field wherethey can produce long term oil and gas and supply inmarket.

Like others energy producing company they should operateon shore project in Bangladesh to increase their businessvolume.

Santos need to focus on increasing their operations in different countries.through this they can increase more porfit for organization.

Conclusion:In long lasting business a company should develop a strongstrategy to survive in the market competing with othercompetitors and achieved it goodwill from customers as well asshareholders, stakeholders. Santos should manage those thingsin its long lasting business. There are few environmentconscious group who are activated in environmental problem andthey should take care about this matter and not work such away so sea creature fall in danger. As their selling becomehigher they should increase their supply of oil and gascontinuously. They should search new wells for increase ofproduction and brand employee for attracting perfect employeein their company for better output. Then they can developthemselves and make them top supplier of oil and gas in Asiaand Australia.

According to Rumelt’s 4 criteria SANTOS evaluation criteria is“ADVANTAGE” (Creation or maintenace of competitive advantage).


References:Fred R.David, Strategic management (12th edition) concepts andcases, prentice-hall

http://www.santos.com/company-profile.aspx

http://www.santos.com/exploration-acreage/bangladesh.aspx

http://en.wikipedia.org/wiki/Santos_(company)

http://www.mbaskool.com/brandguide/energy/7987-santos-energy.html

http://www.santos.com/company-profile/directors-management.aspx

http://www.investopedia.com/features/industryhandbook/porter.asp

http://www.energy-business-review.com/archive/4294542555

http://au.investsmart.com.au/shares/asx/Santos-STO.asp

Annual Report of Santos 2013.


http://au.investsmart.com.au/shares/asx/Santos-STO.asp

http://www.energy-business-review.com/archive/4294542555







http://en.wikipedia.org/wiki/Santos_(company)

http://www.santos.com/exploration-acreage/bangladesh.aspx

http://www.santos.com/company-profile.aspx

Termpaper final santos

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