Ann: Santos rejects Harbour proposal and terminates discussions, page-37

Dear Harbour Energy,

In case you are looking at SXY, now that STO have terminated discussions, SXY shareholders would expect a comparable (or better) offer for the same reasons outlined to you by STO.

The offer to STO implied a $21/2P reserve:

STO offer A$6.95 per share
2,083m shares
Giving market cap of A$14.5bn
Plus US$2.731bn (A$3.64bn) net debt
Enterprise value of A$18.1bn
2P reserves of 848mmboe
Offer has implied ratio of $21/2P reserve mmboe


Applying this metric to SXY's 118mmboe 2P reserves yields an equivalent offer of AUD$1.77 per share:

SXY has 2P reserves of 118mmboe
Applying $21 multiple
EV = A$2,478 million
Add back A$83m cash as at 31 March
Market cap =A$2,561 million
1,447m Shares
Equivalent offer $1.77



And yes, I am aware that applying a multiple does not take into quality of reserves or capex required to achieve production, but a DCF valuation tends to also support such an offer.

Please don't waste your time (or importantly ours) with a low ball offer, as our management team already have their hands full in trying to unlock this value for us with the stepped change in revenue and production coming over the next 12-18 months.

Cheers
Tt2000