SANTOS LIMITED — Capital/Financing Update 2003

STOCK EXCHANGE ANNOUNCEMENT

SUNSHINE GAS ACQUIRES INTEREST IN OUEENSLAND OIL & GAS FIELDS

11 July 2003

Sunshine Gas Limited (SHG) is pleased to advise that an agreement has been entered into for the purchase of the Interstate Group of Companies. The Interstate Group holds an approximate 15% interest in the Roma Oil and Gas producing fields. Santos Limited, as Operator, holds the remaining interest of approximately 85%.

The Roma Oil and Gas producing fields have historically been a key source of gas supply for south-east and central Queensland since the mid 1960's and complements Sunshine's current Queensland oil and gas assets. Sunshine Gas estimates that the 15% interest represents approximately 4 petajoules of proven and probable reserves of gas with approximately 12 petajoules of total proven, probable and possible gas reserves.

The continuing objective of SHG is to move towards positive cash flow from oil and gas assets as outlined in the Company's IPO Prospectus and other announcements. The Interstate purchase builds on the asset base that the Company has established during its first year as a listed ASX company.

Through part ownership in the Roma Oil & Gas fields, SHG will be obtaining immediate access to production infrastructure located adjacent to the company's recent Overston 1 gas discovery. This should facilitate early development of the Overston Field. (refer attached map)

The Company is paying a non-refundable deposit of $400,000 in two parts, $200,000 on signing and $200,000 on 1 August 2003. The total purchase price is $4,000,000 for all the shares in the Interstate Group of Companies and debt owed by the Interstate Companies to the vendor. The purchase is effective from 1 July 2003, with settlement in September 2003.

The Company proposes to fund the acquisition through the issue of 11 million redeemable convertible notes, to be issued at a conversion price of 50 cents to mainly sophisticated investors, conditional upon the approval by members of the resolutions at the General Meeting on 11 August 2003.

Assuming the total 11 million convertible notes are issued, raising $5.5 million, the Company would apply this cash to the acquisition of the Interstate Group of Companies, legal costs incurred in the acquisition, costs of the issue of the convertible notes and additional working capital of approximately $1 million.

Westpac Banking Corporation has been appointed Corporate Advisor to Sunshine Gas Limited.

Chris Blamey Company Secretary

Sunshine Gas Limited ABU 44 GRS 662 967

Registered Olfice: Level 2 Watsdront Placa 1 Engle Street Brisbane QLD 4080 Tel: 817 3221 4400 Tex: 617 3221 4477 PD Box 7808 Waterfront Place Brisbane OLD 4001 Sydney: Level 5 RACA House 89 Macquarie Street Sydney NSW 2000 Tel: 612 9241 2038 - Fax: 612 9241 5539 suuthinepräjaanshinegas.com.az varu.saatinegas.com.az

ROMA AREA OIL AND GAS FIELDS