Santos Ltd A.B.N. 80 007 550 923 Ground Floor, Santos Centre 60 Flinders Street Adelaide South Australia 5000 GPO Box 2455 Adelaide South Australia 5001 Telephone: 08 8116 5000 International: +61 8 8116 5000 Company Secretary & Office of General Counsel Facsimile: 08 8116 5623

31 May 2007

Company Announcements Office ASX Ltd

LISTING RULE 3.17

Pursuant to Listing Rule 3.17, I enclose a copy of the Buy-Back booklet and Buy-Back Tender Forms being forwarded to Santos Limited's ('Santos') shareholders in connection with Santos' current off-market share buy-back scheme.

James Baulderstone Company Secretary

THIS IS AN IMPORTANT DOCUMENT

If you are in doubt as to the action you should take, please consult your financial, taxation or other professional adviser immediately.

This Buy-Back is not being made, directly or indirectly, in the
United States or Canada. Copies of this document, and all materials related thereto, should not be sent or otherwise dishbued n'ormo the Inner States or tanaal

ASI SUNDAS ISOZA

Santos

SANTOS LIMITED OFFAMARKET BUYBACK BOOKLET

IMPORTANT DATES

MAY 2007

15 May Last day that Shares can be acquired to be eligible for Buy-Back franking entitlements

17 May Shares quoted ex-entitlement to participate in the Buy-Back on the ASX. Shares acquired on the ASX on or after this date will not generally confer an entitlement to participate in the Buy-Back

23 May Buy-Back Record Date: determination of eligible shareholders entitled to participate in the Buy-Back

UNE 2007

4 June Mailing of Buy-Back Documents to shareholders completed

12 June Tender Period opens

29 June Tender Period closes. Tenders must be received by the Registry no later than 7.00pm (Eastern Standard Time)

30 June Determination of the Buy-Back Price and scale back (if any) and entry into Buy-Back Contracts

The mot

9 July Dispatch/crediting of Buy-Back proceeds to participating shareholders completed

While Santos does not anticipate any changes to these dates and times, it reserves the right to vary them without notification. Any change in date or time will take effect from the time it is authorised by the Board and will be publicly announced as soon as practicable following the Board's authorisation. Santos may also decide not to proceed with the Buy-Back and may vary the size of the Buy-Back.

ERGIBILITY TO PARTICIPATE

Subject to the following, you are eligible to participate in the Buy-
Back if Shares are registered in your mame on the Buy-Back Record
Date (23 May 2007) and, in accordance with the Settlement Rules,
the Shares confer an

The Buy-Back Invitation is not being made to Excluded Foreign
Persons, in particular, any person who is in the United States or
who is a US Person or a resident of Canada is not entitled to
participate, directly or indirec or sent into the Brited States or Canada.

Any person receiving any of the Buy-Back Documents must not. distribute or send them into the United States or Canada, or make them available to any US Person or a resident of Canada (including
to any legal or beneficial owner of Santos shares that is a US
Person or a resident of Canada) or any person who is in the United

Santos vilámet autoritos fosdar Taressa

The date of this buoklet is 24 May 2007.

(a) from any person who does not represent that they are not IIII (and they are not acting on behalf of or for the account of a person who is) in the United States, a US Person, a resident of Carada or otherwise an Excluded Foreign Person; or

that have been postmarked in the United States or Canada
or that otherwise appear to Santos or its agents to have
been sent from the United States or Canada. KU)

American Depositary Receipts representing Sartos shares (ADRs) and Restricted Employee Shares may not be tendered kuotis Siv Sirk.

This document does not provide financial product advice and
has been prepared without taking into account your particular
objectives, financial situation or needs. You should consider
pottaining independent advice before m

Some words used in this booklet have defined meanings. Section 6 "Definitions and interpretation" defines the capitalised words used throughout this booklet.

CHAIRMAN'S LETTER

Dear Shareholder

On behalf of the Board of Santos, I am pleased to invite you to participate in an off-market buy-back of Santos' ordinary shares.

The Buy-Back, together with the 5% increase in dividends for 2006, is a result of the strong earnings and cash flows that Santos reported for the 2006 financial year.

Directors have considered a number of capital management initiatives and have concluded that the Buy-Back is the most effective way to deliver additional benefits to shareholders. In particular, the Buy-Back is expected to improve the efficiency of Santos' capital structure and result in improvements to earnings per share and return on equity which will therefore also benefit non-participating shareholders. The Buy-Back will also distribute franking credits to participating shareholders.

The Buy-Back will not impact upon Santos' ability to continue its significant investments in the Company's growth businesses, including short cycle time development projects such as Cooper Basin oil and the expansion of the Fairview field.

The Board of Santos also believes that the Buy-Back will not affect the capacity of Santos to pay fully franked dividends for the foreseeable future.

We are also pleased to note that on 1 May 2007, the Premier of South Australia announced a review of the 15% shareholder cap which has been in place since 1979. The outcome of the review is expected to be announced by the end of September 2007.

The Buy-Back is the subject of relief from ASIC, and the ATO has provided preliminary confirmation of the acceptability of the proposed terms.

This booklet contains important information on the Buy-Back, which will be conducted by way of a tender process. Shareholders may offer to sell their Shares at discounts of between 8 per cent and 14 per cent inclusive (at 1 per cent intervals) to the Market Price, or as a Final Price Tender (which is an election to receive the Buy-Back Price). Santos will determine the Buy-Back Price based on the Tenders lodged by shareholders.

The ATO has provided preliminary confirmation that it will accept that for Australian tax purposes the Buy-Back Price will comprise a capital component of \$2.79, with the remainder deemed to be a fully franked dividend. General information on the Australian tax consequences for participants is provided in Section 3 of this booklet.

Participation in the Buy-Back is optional and will have different consequences depending on your individual circumstances. It is recommended that you obtain professional financial advice if you are in any doubt as to whether you should participate.

I encourage you to read this booklet carefully. If, after reading this booklet, you have any queries on how the Buy-Back operates or how you can participate, please contact our enquiry line on 1300 366 075 within Australia or +613 9415 4612 from outside Australia. If you do not wish to participate in the Buy-Back, you do not need to take any action.

If you wish to participate, please ensure your Tender is received by no later than 7.00pm (Eastern Standard Time) on Friday, 29 June 2007.

Yours Sincerely

Stephen Gerland

Stephen Gerlach Chairman

KEY FEATURES OF THE BUY-BACK

Target size	Approximately \$300 million. However, Santos may vary the size of the Buy-Back depending on shareholder demand and market conditions
Tender range	Tenders can be lodged at discount percentages of 8 per cent to 14 per cent inclusive (at 1 per cent intervals) to the Market Price.
Market Price	The Market Price is calculated as the VWAP of Santos shares over the five trading days up to and including the Closing Date of 29 June 2007. The Market Price will be announced to the market by no later than 6,00pm (Eastern Standard Time) on the Closing Date and will be available to shareholders on Santos' website or by calling the Buy-Back enquiry line
Buy-Back Price	The Buy-Back Price will be calculated by applying the Buy-Back Discount selected by Santos under the tender process to the Market Price
Capital component of the Buy-Back Price:	\$2.79 -
Dividend component of the Buy-Back Price	The Buy-Back Price less the \$2.79 capital component
Etigible shareholders	You are eligible to participate in the Buy-Back if Shares are registered in your name on the Buy-Back Record Date (23 May 2007) and you are not an ineligible shareholder
Ineligible shareholders	Excluded Foreign Persons, including any person who is (or who is acting on behalf of or for the $\mathbb F$ account of a person who is) in the United States or who is a US Person or a resident of Canada, are not eligible to participate in the Buy-Back. In addition, ADRs and Restricted Employee Shares may not be tendered into the Buy-Back (see Section 5.2)
Buy-Back Record Date	Wednesday, 23 May 2007
Closing Date	7.00pm (Eastern Standard Time) on Friday, 29 June 2007
Buy-Back Contract entered into	Saturday, 30 June 2007

For Australian tax purposes, the sale proceeds for shareholders other than those taxed as companies will be taken to be the \$2.79 capital component increased by any amount that the Tax Value exceeds the Bay-Back Price.

For Australian tax purposes only.

WHAT TO DO?

If you are an eligible shareholder, it is your choice whether or not to participate in the Buy-Back. To ensure that you make an informed decision, you should read this booklet and consider the details carefully. If you are in any doubt as to the action you should take, you should consult your financial, taxation or other professional adviser immediately.

IF YOU DO CHOOSE TO PARTICIPATE

· Please refer to Section 2 for details on how to participate. You can choose any Tender Discount in the range between 8 per cent and 14 per cent inclusive (at 1 per cent intervals). to the Market Price at which you wish to have your Shares. bought back (see Section 1.9).
. You can choose to lodge a Final Price Tender and accept whatever Buy-Back Price is determined through the tender process (see Section 1.11).
. You can make your Tender conditional on one of the specified Minimum Prices set out on your Tender Form (see Section 1.20).
If your Tender is successful, the Australian tax consequences will depend on your particular circumstances (see Section 3).
* You should not have to pay any brokerage to sell your Shares Into the Buy-Back.
If you are an Issuer Sponsored Holder, you may tender your Shares via the Online Tender Facility at www.santos.com. Section 7 provides instructions on how to fill out a Tender Form in order to participate in the Buy-Back.

IF YOU DO NOT CHOOSE TO PARTICIPATE

* You do not need to take any action.
. The number of Shares you hold will not change.
As a shareholder, you will benefit from any improvement. in Santos' earnings per share and return on equity, and you will continue to be subject to the normal benefits
and investment risks associated with share ownership.
Some words in this booklet have defined meanings.

Important dates Chairman's letter	Inside cover 1 2
Section i:	Key features of the Buy-Back
	Details of the Buy-Back and tender process
1.1	What is an off-market buy-back tender?	5
1.2	Why is Santos implementing the Buy-Back?	5
1.3	What are the advantages of an off-market tender process?	5
1.4	Did Santos consider other ways of returning capital?	5.
1.5	Am I entitled to tender Shares into the Buy-Back?	5
1.6	How does the Buy-Back compare to selling my Shares on the stock market?	6
1.7	Do I have to tender my Shares?	6
1.8	What does the Buy-Back mean for me if I do not participate?	б
1.9	What price will Santos pay to buy back my Shares	6
1.10	How will I know what the Market Price is?	7
1.11	What is a Final Price Tender?	7
1.12	How will I know what the Buy-Back Price is?	7
1.13	Will all the Shares I tender be bought back?	T
1.14	How will I know how many of my Shares have been bought back?	7
1.15	How will Santos determine successful Tenders and any scale back?	7
1.16	When may a scale back apply?	7
1.17	What is the Priority Allocation?	8
1.18	What is a Small Holding Tender?	8
1.19	How will the scale back affect my Tender?	8
1.20	Can I elect a Minimum Price for the purchase of my Shares?	11
1.21	How have Santos shares performed over recent times?	11
1.22	Can ordinary shares held by Santos' employees be tendered?	12
1.23	How will I receive payment for Shares bought back?	12
1.24	Can I trade my Shares after submitting a Tender?	12
1.25	If I purchase other Shares during the Tender Period, will my tendered Shares be affected?	12.
Section 2:	How to submit a Tender
2.1	How do I participate in the Buy-Back?	14
$2.2\,$	Can I withdraw or amend my Tender?	15
2.3	How can I obtain additional Tender or Withdrawal/Amendment Forms?	16
Section 3:	Australian tax implications for shareholders
3.1	Introduction	18
3.2	Income tax - treatment of deemed dividend	18

3.3	Capital Gains Tax - disposal of Shares (acquired after 19 September 1985)	20
3.4	Worked tax example for Australian resident individuals and Australian complying superannuation funds	21
Section 4:	Effect of the Buy-Back on Santos
4.1	Full year results and other information	25
4.2	How will the Buy-Back be funded?	25
4.3	Impact of the Buy-Back on key financial indicators	25
4.4	Impact on Santos' franking account	25
4.5	Financial impact of the Buy-Back	26
4.6	What effect will the Buy-Back have on Santos' issued shares?	27
4.7	What effect will the Buy-Back have on the control of Santos?	27
4.8	Business Drivers and Outlook	27
4.9	Forward-looking statements	28
Section 5:	Additional information on the Buy-Back
5.1	Size of the Buy-Back	30
5.2	Excluded Foreign Persons, ADRs and Restricted Employee Shares	30
5.3	Shares held by trustees and nominees	30
5.4	Margin lending arrangements	30
5.5	Shareholders with more than one holding of Shares	30
5.6	Joint shareholders	31
5.7	Restrictions on the payment of Buy-Back proceeds	31
5.8	Rights under this Buy-Back Invitation cannot be transferred	31
5.9	The effect of submitting a Tender	31
5.10	Santos' rights to accept or reject Tenders and Tender Forms	32.
5.11	Santos' right to vary dates and times	32
	5.12 Santos' right to adjust Tenders	32
	5.13 Directors' entitlements	32
	5.14 ASIC and ASX relief	33
	5.15 Privacy	33
5.16	- Applicable Law	33
Section 6:	Definitions and interpretation
	6.1 Definitions	35
6.2	Interpretation	37
Section 7:	Illustrative Examples of Completed Tender Forms	39

ILI VVHAT IS AN OFF-MARKET BUY-BACK TENDER?

An off-market buy-back tender involves a company inviting eligible shareholders to offer to sell some or all of their shares to the company by way of a tender process. The shares bought back are subsequently cancelled, reducing the total number of shares the company has on issue. Under this Buy-Back, Shares may be tendered by eligible shareholders to Santos at any of the specified discounts in the Tender Discount range from 8 per cent to 14 per cent inclusive (at 1 per cent intervals) to the Market Price or as a Final Price Tender.

1.2 WHY IS SANITOS IMPLEMENTING THE BUY-BACK?

As a result of strong earnings and cash flows for the 2006 financial year, Santos has decided to return capital to shareholders via an off-market buy-back of approximately \$300 million, in addition to the 5% increase in dividends for 2006. Santos may repurchase more than the target amount of approximately \$300 million, depending on shareholder demand and market conditions.

The Board has concluded that the Buy-Back, combined with its current dividend policy, would be the most effective way to deliver additional benefits to shareholders. In particular, the Buy-Back is expected to improve the efficiency of Santos' capital structure and result in improvements to earnings per share and return on equity which will therefore also benefit non-participating shareholders. The Buy-Back will also distribute franking credits to participating shareholders.

Further information on the effect of the Buy-Back on Santos is set out in Section 4.

1.3 WHAT ARE THE ADVANTAGES OF AN OFF-MARKET TENDER PROCESS?

Santos is conducting the Buy-Back by way of an off-market tender process. The advantages of this process include the following:

· Both participating and non-participating shareholders are expected to benefit from the Buy-Back as:
for some shareholders, depending on their tax status, the after-tax return from participating in the Buy-Back may be greater than the sale of their Shares on-market;
the Buy-Back is expected to improve earnings per share and return on equity for shareholders who continue to hold Santos shares; and
the Buy-Back represents an efficient means of returning capital to shareholders and Santos' targeted amount of capital can be bought back within a relatively short period of time;
The Buy-Back allows Santos to buy back Shares at a discount of at least 8 per cent to the Market Price. This is likely to enable

Santos to buy back a greater number of Shares than under an on-market buy-back for the same amount of capital;

· Participation is optional and shareholders have maximum flexibility to tailor their participation to suit their own circumstances. In particular, you can choose:
whether to tender your Shares into the Buy-Back;
how many Shares to tender; and
the basis upon which to tender your Shares (for example, at what Tender Discount(s) or as a Final Price Tender, with the option to make your Tender conditional on a Minimum Price);
All eligible shareholders have an equal opportunity to participate in the Buy-Back;
· Santos is able to determine the most appropriate number of Shares to buy back based on shareholder demand;
Shareholders with small holdings are able to sell all of their Shares into the Buy-Back so as not to be left with a small parcel of Shares; and
· Shareholders should not have to pay any brokerage to sell their Shares into the Buy-Back.
1.4 DID SANTOS CONSIDER OTHER WAYS OF RETURNING CAPITAL?

The Board considered a number of capital management initiatives, including off-market buy-backs, on-market buy-backs, special dividends and pro-rata capital returns, and has concluded that an off-market buy-back would be the most effective way to deliver additional benefits to shareholders. In particular, the Buy-Back is expected to improve the efficiency of Santos' capital structure and result in improvements to earnings per share and return on equity which will also benefit non-participating shareholders. The benefits of the Buy-Back are discussed in Sections 1.2 and 1.3 above.

In contrast to an on-market buy-back, the Buy-Back will enable the purchase of Shares at a material discount to current market prices. As a result, the Buy-Back is expected to have a greater impact on earnings per share and return on equity than an onmarket buy-back as it enables a greater number of Shares to be purchased for the same amount of capital.

AM I ENTITLED TO TENDER SHARES INTO 1.5 THE BUY-BACK?

You will be eligible to participate in the Buy-Back if:

you have Shares registered in your name on the Buy-Back Record Date (23 May 2007);
those Shares are not Restricted Employee Shares; and
you are not an Excluded Foreign Person.

Shares acquired on the ASX on or after the ex-entitlement date (17 May 2007) generally will not be registered in your name by the Buy-Back Record Date and therefore will not carry an entitlement to participate in the Buy-Back.

If you are eligible to participate, the maximum number of Shares you are entitled to tender is set out in Box A on your Tender Form.

If you hold 500 Shares or less, and you wish to tender Shares into the Buy Back, you must tender all of your Shares at the same Tender Discount or as a Final Price Tender.

If you hold more than 500 Shares, you may tender different parcels of your Shares set out in Box A on your Tender Form at one or more Tender Discounts or as a Final Price Tender. However, you must tender a minimum of 500 Shares in aggregate.

The Buy-Back Invitation is not being made to any Excluded Foreign Person. In particular, the Buy-Back Invitation is not being made to any person in the United States or any US Person or a resident of Canada. ADRs and Restricted Employee Shares may not be tendered into the Buy-Back.

1.6 HOW DOES THE BUY BACK COMPARE TO SELLING MY SHARES ON THE STOCK MARKET?

Depending on your individual circumstances, if you sell your Shares on the ASX, the Australian tax consequences of doing so are likely to be different from selling your Shares into the Buy-Back (see Section 3 for general details in relation to Australian tax implications, but note that shareholders should consider their own particular tax circumstances).

In addition, to sell your Shares on the ASX, you may need to appoint a broker and pay brokerage whereas you should not need to appoint a broker or pay brokerage to participate in the Buy-Back.

However, it is likely that you will be able to sell your Shares through the ASX for a price that is higher than the Buy-Back Price. This is because the prices at which eligible shareholders can tender Shares into the Buy-Back are at discounts of between 8 per cent and 14 per cent inclusive to the Market Price. Therefore, it is likely that Santos' share price on the ASX will be higher than the Buy-Back Price during and possibly immediately after the Tender Period.

The ATO has provided preliminary confirmation that it will accept that for Australian tax purposes the Buy-Back Price will comprise a capital component of \$2.79, with the remainder deemed to be a fully franked dividend. The Buy-Back will be taken to occur on 30 June 2007 and Australian taxpayers will be required to include any net capital gain or loss, and the deemed dividend and attached franking credits, on Shares sold into the Buy-Back in their tax return for the year ending 30 June 2007.

To provide shareholders with an indication of the possible after-tax proceeds from selling their Shares into the Buy-Back compared to

selling their Shares through the ASX, Santos intends to provide access to a tax calculator through its website (www.santos.com) from 4 June 2007 to 6 July 2007.

By making the Buy-Back Invitation and setting the tender range, Santos is not making any recommendation or giving any advice on the value of your Shares or whether (or how) you should sell your Shares.

Before you decide what to do with your Shares, it is strongly recommended that you seek your own professional advice.

1.7 DO I HAVE TO TENDER MY SHARES?

No. Participation in the Buy-Back is entirely at your discretion. You do not have to tender your Shares if you do not want to. If you do not wish to participate, you do not have to take any action.

1.8 VYHAT DOES THE BUY-BACK MEAN FOR ME IF I DO NOT PARTICIPATE?

If you do not participate (because you chose not to participate, you are an Excluded Foreign Person or your Tender is unsuccessfut). the number of Shares you hold will not change as a result of the Buy-Back. After the Buy-Back is completed, you will hold a slightly larger percentage of the total shares in Santos (as there will be fewer shares on issue).

1.9 WHAT PRICE WILL SANTOS PAY TO BUY BACK MY SHARES?

The Buy-Back Price will be the price that equates to the largest Tender Discount in the range of between 8 per cent and 14 per cent inclusive (at 1 per cent intervals) to the Market Price that will enable Santos to purchase the amount of capital it determines to buy back.

For each Share purchased from you under the Buy-Back, you will receive a cash amount determined in accordance with the following formula:

$A = B \times (1 - C)$
Where: A is the Buy-Back Price (that is the price per Share
- rounded to the nearest cent, to be paid for all Shares bought back under the Buy-Back);

B is the Market Price; and
C is the Buy-Back Discount (as a percentage).

So, for example, if the relevant Market Price is \$12.00 and the Buy-Back Discount is 14 per cent, the Buy-Back Price would be \$10.32 (i.e. \$12.00 x (1-0.14)).

Santos does not intend to set the Buy-Back Price above the Tax Value. The Tax Value is the price used by the ATO to determine for Australian tax purposes the market value of the relevant Shares when the Buy-Back occurs. The Tax Value will be \$12.25, adjusted for the movement in the S&P/ASX 200 Index from the open of trading on 14 May 2007 to the close of trading on the Closing Date. The method for determining the Tax Value is explained in more detail in Section 3.3.

Santos will pay you the Buy-Back Price for each of your Shares accepted by Santos under the Buy-Back even if your Tender Discount is equal to or larger than the Buy-Back Discount.

E30 HOW WILL I KNOW WHAT THE MARKET PRICE IS?

The Market Price is calculated as the volume weighted average price of Santos shares over the five trading days up to and including the Closing Date (excluding certain trades - see definitions of VWAP and Market Price in Section 6.1 for further details).

To provide an indication of the Market Price, Santos will calculate and make available to shareholders the running VWAP during this five-day period. The running VWAP will be published on Santos' website at www.santos.com and will be available through the Buy-Back enguiry line from 8.30am on Tuesday, 26 June 2007 and will be cumulatively updated each day.

The actual Market Price, representing the VWAP for the full five-day period up to and including the Closing Date, will be available by no later than 6.00pm (Eastern Standard Time) on Friday, 29 June 2007, and can be obtained by accessing the website or by calling the Buy-Back enquiry line on 1300 366 075 (within Australia) or +613 9415 4612 (from outside Australia). Santos also intends to announce the Market Price to the ASX by 6.00pm (Eastern Standard Time) on the Closing Date.

LEE WHAT IS A FINAL PRICE TENDER?

A Final Price Tender is an offer to sell your Shares to Santos at whatever price is ultimately determined by Santos to be the Buy-Back Price under the tender process. The Buy-Back Price could be as low as a 14 per cent discount to the Market Price or as high as an 8 per cent discount to the Market Price. If a large number of Final Price Tenders are submitted, it is more likely that the Buy-Back Price will be at a larger discount to the Market Price.

Final Price Tenders are designed to make it easier for retail shareholders to participate successfully in the Buy-Back. They will only be scaled back if the Buy-Back Price is set at a 14 per cent discount to the Market Price and the total number of Shares tendered at that discount and as Final Price Tenders is more than Santos determines to buy back. Therefore, if you wish to increase the likelihood that your Shares will be bought back, you may consider submitting a Final Price Tender.

LI2 HOW WILL I KNOW WHAT THE BUY-BACK PRICE IS?

Santos will determine the Buy-Back Price and scale back (if any) on Saturday, 30 June 2007. Details of the Buy-Back Price and scale back (if any) will be posted on Santos' website at www.santos.com and lodged with the ASX on that date.

1.13 WILL ALL THE SHARES ITENIDER BE BOUGHT BACK!

The success of your Tender will depend on your Tender Discount, any Minimum Price you choose, the size and price of Tenders lodged by other shareholders and the total number of Tenders that Santos accepts. There is no guarantee that all or even some of your Tender will be accepted. Santos may also vary the size of the Buy-Back depending on shareholder demand and market conditions.

LE4 HOW WILL I KNOW HOW MANY OF MY SHARES HAVE BEEN BOUGHT BACK?

Details of the Buy-Back Price, Buy-Back size and scale back (if any) will be posted on Santos' website at www.santos.com and lodged with the ASX on 30 June 2007. This information should be available via the ASX on 2 July 2007. No later than 9 July 2007, Santos will send all shareholders who have tendered their Shares into the Buy-Back a statement notifying them of the number of their Shares (if any) that have been bought back and the price paid. Shareholders can also access this information on or after 2 July 2007 by contacting the Registry on 1300 366 075 within Australia or on +613 9415 4612 if you are calling from outside Australia. If you are a CHESS Holder, you will receive written confirmation from CHESS of the successful Tenders made on your holding or Tenders withdrawn by your controlling participant.

1.15 HOW WILL SANTOS DETERMINE SUCCESSFUL TENDERS AND ANY SCALE BACK?

If Santos proceeds with the Buy-Back and your Tender Discount is equal to or greater than the Buy-Back Discount, or you lodged a Final Price Tender, your Tender will be successful and your Shares will be bought back, subject to any scale back and, if applicable, any Minimum Price condition.

If your Tender Discount is smaller than the Buy-Back Discount, your Tender will be rejected and your Shares will not be bought back.

If you have chosen a Minimum Price and the Buy-Back Price is below that price, your Tender will be rejected and your Shares will not be bought back.

LI 6 VVHEN MAY A SCALE BACK APPLY?

A scale back may apply if the total number of Shares tendered at a Tender Discount, which is equal to or greater than the Buy-Back Discount, and as Final Price Tenders, is more than the total number of Shares Santos determines to buy back. In such circumstances, a scale back would apply as follows:

If the Buy-Back Discount is between 8 per cent and 13 per cent (inclusive):

Tenders at a Tender Discount greater than the Buy-Back $(a)$ Discount will be accepted in full:
$(b)$ Final Price Tenders will be accepted in full;
A Priority Allocation (see Section 1.17) will be bought back $(c)$ from each shareholder who tendered Shares at the Buy-Back Price. If the shareholder tendered a number of Shares equal to or less than the Priority Allocation at the Buy-Back Price, then all of those Shares will be bought back;
$(d)$ Small Holding Tenders (see Section 1.18) will be accepted in full;
(e) Tenders at the Buy-Back Discount (other than Final Price Tenders, Priority Allocations and Small Holding Tenders) will be accepted but will be scaled back on a pro-rata basis;
$(f)$ Tenders at a Tender Discount smaller than the Buy-Back Discount will be rejected;
Tenders conditional on a Minimum Price that is greater than $(a)$ the Buy-Back Price will be rejected.

If the Buy-Back Discount is 14 per cent:

Tenders at a 14 per cent Tender Discount and Final Price $(a)$ Tenders will be accepted but will be scaled back on a pro-rata basis (other than Priority Allocations and Small Holding Tenders);
$(b)$ A Priority Allocation will be bought back from each shareholder who tendered Shares at a 14 per cent Tender Discount and/or as a Final Price Tender. If the shareholder tendered a number of Shares equal to or less than the Priority Allocation at a 14 per cent Tender Discount and/or as a Final Price Tender, then all of those Shares will be bought back;
(c) Small Holding Tenders will be accepted in full;
$(d)$ Tenders at a Tender Discount smaller than 14 per cent will be rejected;
Tenders conditional on a Minimum Price that is greater than $(e)$ the Buy-Back Price will be rejected.

When the scale back is calculated, all fractions will be rounded down to the nearest Share.

If you want to reduce the likelihood of any scale back applying to your Tender, you may consider submitting a Final Price Tender (see Section 1.11 for further details). This is because if a scale back applies, Shares tendered as a Final Price Tender will only be scaled back if the Buy-Back Price is based on a 14 per cent Tender Discount.

ILIZ VVHAT IS THE PRIORITY ALLOCATION?

In the event of a scale back, Santos will buy back the first 500 Shares successfully tendered by each shareholder or such lesser number of Shares determined to be the Priority Allocation as is required to ensure that Santos buys back only the number of Shares it determines to buy back. If you successfully tender less than the Priority Allocation, then all of your Shares would be bought back as your Priority Allocation in the circumstances described above.

Santos is offering the Priority Allocation to ensure that small registered shareholders are not disadvantaged by any scale back and have the greatest opportunity to participate in the Buy-Back.

I.18 WHAT IS A SMALL HOLDING TENDER?

A Small Holding Tender is a Tender submitted by a shareholder who tenders all of their Shares at one or more Tender Discounts equal to or greater than the Buy-Back Discount and/or as a Final Price Tender and who would have a Small Holding (200 Shares or less) created as a result of the priority allocation and any scale back. As indicated above, Small Holding Tenders will be accepted in full and will not be scaled back.

However, if you become the registered holder of additional ordinary shares in Santos after the Buy-Back Record Date and, as a result, you are the registered holder of more Santos ordinary shares at the Closing Date than you held on the Buy-Back Record Date, then your Tender will not be a Small Holding Tender and the scale back will apply to your Tender as it would to any other Tender.

1.19 HOW WILL THE SCALE BACK AFFECT MY TENDER?

The details of any scale back will be posted on Santos' website at www.santos.com and lodged with the ASX on 30 June 2007. To assist you in understanding how a scale back may affect your Tender, the following two illustrative examples are provided.

Examples

As an illustration, it is assumed that four shareholders with various sized holdings each tender Shares into the Buy-Back. In each of the two different examples:

the Buy-Back Discount (and corresponding Buy-Back Price) and the scale back percentage are varied; but
the shareholder's total holding, the Shares tendered and the Tender Discounts are the same.

Example 1-14 per cent Buy-Back Discount and 10 per cent scale back (illustrative example only)

In Example 1, it is assumed the Market Price is \$12.00 and the Buy-Back Discount is 14 per cent, resulting in a Buy-Back Price of \$10.32. It is also assumed in this example that the Priority Allocation is 500 Shares, that there is a 10 per cent scale back and that the shareholders have not specified a Minimum Price condition. Please be aware that this is an example only. You should not rely on \$12.00 being the Market Price, nor \$10.32 being the Buy-Back Price. The outcome of each Tender would be as follows:

Example 1: Outcome of Tenders lodged

	Total holding	Shares	Tender	Price represented by Tender
Shareholder	of Shares	tendered	Discount $(\%)$	Discount (\$)	Outcome
	20.000	10.000		10.80	Not successful, no Shares bought back
		10.000		10.32	Partially successful, 9,050 Shares bought back
	1.000	500		11.04	Mot successful, no Shares bought back
		.500		Final Price	Successful, all 1,500 Shares bought back
				Tender
				10.44	Not successful, no Shares bought back

Shareholder A tendered 10,000 Shares at a 10 per cent Tender Discount and 10,000 Shares at a 14 per cent Tender Discount. The Tender submitted at a 10 per cent Tender Discount would not be successfut as it is smaller than the 14 per cent Buy-Back Discount. The Tender submitted at a 14 per cent Tender Discount would be successful but only 9,050 of the 10,000 Shares tendered would be bought back, as a result of the Priority Allocation and the 10 per cent scale back (see scale back table below). This is not a Small Holding Tender, as following the Priority Allocation and scale back, Shareholder A would be left with more than 200 Shares.

Shareholder B chose a Tender Discount that is smaller than the Buy-Back Discount so no Shares would be bought back.

Shareholder C tendered atl of their 1,500 Shares as a Final Price Tender. The Final Price Tender would be successful and all 1,500 Shares would be bought back at the Buy-Back Price of \$10.32. This is a Small Holding Tender as following the Priority Allocation of 500 Shares and scale back, Shareholder C would be left with 100 Shares (i.e. 10 per cent of the remaining 1,000 Shares), therefore the remaining shares would be bought back.

Shareholder D tendered 3,500 Shares at a 13 per cent Tender Discount. The Tender would not be successful as the 13 per cent Tender Discount is smaller than the 14 per cent Buy-Back Discount.

Example 1: Impact of scale back (illustrative example only)

	Shares tendered at a 14% Tender Discount or as Final Price	Shares subject to	Scale	Tender post scale back and Priority	Shares	Small Holding	Shares that are
Shareholder	Tenders	scale back ³	back ² $(%)$	Allocation ^2,3	remaining ^®	Tender ^s	bought back
	10.00	9.500	10	9,050	950	Nο	9,050
							Scale back not applicable
	1.500	1.000	10	1.400	100	Yes	1,500
							Scale back not applicable

1 Under the Priority Atlocation, the first 500 Shares are bought back from each shareholder who tenders Shares at the Buy-Back Discount (including Shares tendered as a Firal Price Tender under this example), before the scale back applies. For example, Shareholder C has 1,000 Shares that are subject to scale back (2,500-500 = 1,000).

2 A scale back of 20 per cent means 98 per cent of the Strares subject to scale back would be bought back (not including Sexall Holding Tenders).

3 When the scale back is calculated, fractions will be rounded down to the next. Share.

4 Shazes remaining refers only to Shazes remaining from those Shares which were tendered at a 14 per cent Tender Discount or as a Final Price Tender.

5 Shareholder Crendeved all of their Shares as a Final Price Tender. As a result of the Priority Altocation and scale back, Shareholder C would be left with a Small Holding Tender (i.e. 200 Shares or less).

Example 2-10 per cent Buy-Back Discount and 50 per cent scale back (illustrative example only)

In Example 2, it is assumed the Market Price is \$12.00 and the Buy-Back Discount is 10 per cent, resulting in a Buy-Back Price of \$10.80. It is also assumed in this example that the Priority Allocation is 500 Shares, that there is a 50 per cent scale back and that the shareholders have not specified a Minimum Price condition. Please be aware that this is an example only. You should not rely on \$12.00 being the Market Price, nor \$10.80 being the Buy-Back Price. The outcome of each Tender would be as follows:

Example 2: Outcome of Tenders lodged

	Total holding	Shares	Tender	Price represented by Tender
Shareholder	of Shares	tendered	Discount $(\%)$	Discount (\$)	Outcome
	20.000	10.000		10.80	Partially successful, 5,250 Shares bought back
		10.000		10.32	Successful, all 10,000 Shares bought back
	1.000	500		11.04	Not successful, no Shares bought back
	1.500	1,500		Final Price	Successful, all 1,500 Shares bought back
				Tender
				10.44	Successfut, all 3,500 Shares bought back

Shareholder A tendered 10,000 Shares at a 10 per cent Tender Discount and 10,000 Shares at a 14 per cent Tender Discount. The Tender submitted at a 10 per cent Tender Discount would be successful but only 5,250 of the 10,000 tendered would be bought back, as a result of the Priority Allocation and the 50 per cent scale back (see scale back table below). This is not a Small Holding Tender, as following the Priority Allocation and scale back, Shareholder A would be left with more than 200 Shares. The Tender submitted at a 14 per cent Tender Discount would also be successful as 14 per cent is greater than the Buy-Back Discount and all 10,000 Shares would be bought back at the Buy-Back Price of \$10.80.

Shareholder 8 chose a Tender Discount (8 per cent) that is smaller than the Buy-Back Discount (10 per cent) so no Shares would be bought back.

Shareholder C tendered atl of their 1,500 Shares as a Final Price Tender. The Final Price Tender would be successful and all 1,500 Shares would be bought back at the Buy-Back Price of \$10.80, as Final Price Tenders are not subject to scale back where the Buy-Back Discount (i.e. 10 per cent) is not the largest Tender Discount of 14 per cent.

Shareholder D tendered 3,500 Shares at a 13 per cent Tender Discount. The Tender would be successful and all 3,500 Shares would be bought back at the Buy-Back Price of \$10.80, as Tenders at a Tender Discount greater than the Buy-Back Discount (i.e. 10 per cent) will be accepted in full.

Example 2: Scale back table (illustrative example only)

Shareholder	Shares subject to scale back ²	Scale back ³ $(%)$	Tender post scale back and Priority Allocation ^3,4	Shares remaining ^s	Small Holdina Tender ^®	Shares that are bought back
	9.500	50	5,250	4.750	Νc	5,250
						Scale back not applicable
						Scale back not applicable
SEPTEMBER 1989	.	SECURITY IN THE RESIDENCE OF A REAL PROPERTY	5.	والمستحر والمترافيات		Scale back not applicable.

1 Shates tendered as Final Price Tenders or at Tender Discounts greater than the Bay-Back Discount (i.e. 10 per cent) are not shown here as they are not subject to scale back if the Bay-Back Discount is not the largest fender Discount of 14 per cent.

2 Under the Psiority Atlocation, the first 500 Shares are bought back from each shareholdes who tenders Shares at the Buy-Back Price, before the scale back applies.

A scale back of 50 per centimeans 50 per cent of the Shares subject to scale back would be bought back (not inclading Small Holding Tenders).

When the scale back is calculated, all fractions are counded down to the next Share. $I_{\rm C}$

5 Shazes remaining refers only to Shazes remaining from those Shares which were tendered at a 10 per cent Tender Discount.

Shateholder A tendered all of their Shares at or below the Buy-Back Price. As a result of the scafe back and Priority Alforation, Shareholder A would be left with more than 200 Shares and so the Tender is not a Small Holding Tender.

I.20 CAN I ELECT A MINIMUM PRICE FOR THE PURCHASE OF MY SHARES?

If you choose to tender Shares into the Buy-Back, you will need to nominate a Tender Discount or lodge a Final Price Tender. In addition, you also have the option of making your Tender conditional on the Buy-Back Price being no less than one of the specified Minimum Prices set out on the Tender Form. Note that this is an additional option available to you but may affect the success of your Tender.

If you are concerned that movements in the Santos share price after you todge your Tender may result in your Tender corresponding to a lower Buy-Back Price than you are willing to sell your Shares for, then you may wish to make your Tender conditional on the Buy-Back Price being no less than a specified Minimum Price. If the Buy-Back Price is below your Minimum Price, then your Tender will be rejected and your Shares will not be bought back. If you choose to make your Tender conditional on the Buy-Back Price being no less than one of the specified Minimum Prices, you must do this in addition to nominating a Tender Discount or a Final Price Tender. If you fail to nominate a Tender Discount or a Final Price Tender, and only make your Tender conditional on a specified Minimum Price, your Tender will be invalid and will not be accepted by Santos.

1.21 HOW HAVE SANTOS SHARES PERFORMED OVER RECENT TIMES?

The closing price of Santos shares on the ASX on 11 May 2007, being the last trading day before the Buy-Back was announced, was \$12.25.

Santos' highest and lowest market sale prices during each of the preceding six months were as follows:

			Average
	Low	High	Closing Price
Period	'S}1	(\$)	$(5)^z$
December 2006	,,,,,,,,,,,,,,, 9.58	10.38	9.88
January 2007	9.17	$10\ 09$	9.62
February 2007	9.01	10.40	9.76
March 2007	3332000000000000 8.85		(0,2)
April 2007	10	131
May 2007 ³		12.62	12,20

Source: IRESS

1 Based on trading of Saratos shares during normal ASX trading hours.

Calculated as the average of the closing prices of Santos shares on the ASX for each trading day over the relevant month. $\overline{2}$

For the period from 1 May 2007 to 11 May 2007. 7

A graph indicating Santos' share price performance over the period from 1 January 2005 to 11 May 2007 is set out below.

Santos Limited share price Daily closing share price (\$)

1.22 CAN ORDINARY SHARES HELD BY SANTOS' EMPLOYEES BETENDERED!

Restricted Employee Shares are not eligible to be tendered into the Buy-Back and these shares have not been included on your Tender Form.

Any Santos employee who is located in the United States, a US Person or a resident of Canada is not eligible to participate in the Buy-Back.

Participation in the Buy-Back by Directors and selected executives is discussed in Section 5.13.

1.23 HOW WILL I RECEIVE PAYMENT FOR SHARES BOUGHT BACK?

If you have an existing direct credit authority for the payment of dividends on your Shares recorded on Santos' Share Register by 7.00pm (Eastern Standard Time) on Friday, 29 June 2007, all proceeds due to you under the Buy-Back will be credited to your nominated bank account.

If you wish to receive payment for Shares bought back in a form that is different from your current direct credit instructions for payment of dividends on your Shares, you may change your current direct credit instructions by providing written instructions to the Registry before 7.00pm (Eastern Standard time) on Friday, 29 June 2007. Please note that if you do alter your nominated bank account details, this will be taken to be your nominated bank account for future dividend payments.

Cheques and direct credit advices will be mailed to you at your risk to your address as shown on Santos' Share Register at 7.00pm (Eastern Standard Time) on Friday, 29 June 2007. It is your responsibility to inform the Registry of any changes to your contact details. Payments to bank accounts and dispatch of cheques are expected to be completed by 9 July 2007. Payments to the accounts and the dispatch of cheques to the addresses on Santos' Share Register will satisfy Santos' obligation to pay you for any Shares bought back.

1.24 CAN I TRADE MY SHARES AFTER SUBMITTING A TENDER!

Once you have tendered Shares into the Buy-Back, you should not:

· sell or offer to sell those Shares;
convert those Shares from an Issuer Sponsored Holding to a CHESS Holding or vice versa; or
move them between CHESS Holdings (for instance, if you change your controlling participant).

However, any Shares which you have not tendered into the Buy-Back may be sold or otherwise dealt with in the ordinary manner. Once you have submitted a Tender, you will not be able to deal with those shares before the end of the Tender Period unless you withdraw or amend your Tender, in accordance with the procedures set out in Section 2.2 of this booklet.

1.25 IF I PURCHASE OTHER SHARES DURING THE TENDER PERIOD, WILL MY TENDERED SHARES BE AFFECTED?

Shareholders who tender their Shares to Santos under the Buy-Back will be generally able to purchase additional shares in Santos on or after 17 May 2007 without compromising their Australian tax position in relation to the tendered Shares', specifically their entitiement for claiming related franking credits, on Shares sold into the Buy-Back. This is because:

. those additional shares will not carry an entitlement to participate in the Buy-Back; and
the ATO has provided preliminary confirmation that such additional shares acquired on an ex-entitiement basis on or after 17 May 2007 will be excluded from the 'last-in, first-out' principle of the 45-day rule. The newly purchased shares will not affect shareholders' ability to receive franking credits on Shares acquired on or before 15 May 2007 which are successfully tendered into the Buy-Back (refer to an explanation of the holding period rules in Section 3.2).

Shares acquired on 16 May 2007, while being eligible to participate in the Buy-Back, will generally not be entitled to the franking credits on Shares tendered into the Buy-Back and may jeopardise a shareholder's entitiement to franking credits on Shares that are successfully tendered into the Buy-Back.

General information on the Australian tax implications for shareholders participating in the Buy-Back is included in Section 3 of this booklet.

1 Provided the additional Shares are not registered on or before 23 May 2007

2.1 HOW DO I PARTICIPATE IN THE BUY-BACK?

The following pages provide instructions on how to complete your Tender Form. If you require assistance to complete your Tender Form, please contact the Buy-Back enguiry line on 1300 366 075 within Australia or +613 9415 4612 from outside Australia. If you are an Issuer Sponsored Holder, you may also tender your Shares via the Online Tender Facility at www.santos.com.

Example Tender Forms are included in Section 7. These are provided for illustrative purposes only. Santos is not providing any advice as to whether, or at what Tender Discounts, you should tender your Shares.

Step 1 - Decide how many Shares you wish to sell

Box A on your Tender Form sets out the maximum number of Shares you may tender. However:

$(a)$ if you hold 500 Shares or less, and you wish to tender Shares into the Buy-Back, you must tender all of your Shares at the same Tender Discount or as a Final Price Tender; and
$(b)$ if you hold more than 500 Shares, you may tender different parcels of your Shares set out in Box A on your Tender Form at one or more Tender Discounts or as a Final Price Tender. However, you must tender a minimum of 500 Shares in aggregate.

Step 2 - Choose your Tender Discount(s) and/or a Final Price Tender

Once you have determined the number of Shares you wish to sell, you need to indicate in Box C the discount(s) to the Market Price at which you are willing to sell these Shares (your Tender $Discount(s)$ ).

You may tender your Shares at any discount in the range (from 8 per cent to 14 per cent to the Market Price) set out on the Tender Form (Box C) or as a Final Price Tender (Box B). The discount at which you tender your Shares will represent the lowest price (i.e. the largest discount to the Market Price) at which Santos will buy back your Shares if your Tender is successful.

If you wish to increase the likelihood that your Shares are bought back, you may consider submitting a Final Price Tender (see Section 1.11).

If you hold more than 500 Shares, you may tender different parcels of your Shares at different Tender Discounts and/or as a Final Price Tender. However, you may not tender the same Shares at different Tender Discounts (or at both a specified Tender Discount and as a Final Price Tender). Each parcel of Shares tendered at a different Tender Discount or as a Final Price Tender is a separate Tender.

If you hold 500 Shares or less, you may only submit one Tender in respect of all of your Shares and such a Tender must be at one of the specified Tender Discounts or as a Final Price Tender.

Step 3 - Calculate the total number of Shares tendered

Calculate the total number of Shares tendered and insert that number at Box D.

The total number of Shares that you tender into the Buy-Back (as shown in Box D) should not exceed the number of entitled Shares that you held as at the Buy-Back Record Date (as set out in Box A).

Step 4 - Choose your Minimum Price (optional)

In addition to choosing to tender your Shares at the specified Tender Discounts and/or as a Final Price Tender, you may also elect to impose a Minimum Price condition on your Tender (see Section 1.20).

Step 5 - Submit your Tender(s)

How you submit your Tender(s) will depend on the type of holding you have. This will be specified on your Tender Form.

(a) Issuer Sponsored Holders

If you would like to participate in the Buy-Back, you need to either:

complete and sign your Tender Form at Box F and return it to the Registry as set out below; or
· tender your Shares via the Online Tender Facility at www.santos.com. You will need your securityholder reference number and postcode for validation to access the Online Tender Facility.

Tenders must be received no later than 7.00pm (Eastern Standard Time) on Friday, 29 June 2007.

If sending by mail

Santos Limited Buy-Back C/- Computershare Investor Services Pty Limited GPO BOX 52 Melbourne VIC 8060 Australia

You can use the enclosed reply-paid envelope if you are posting your Tender Form in Australia.

If delivering in person (during business hours only)

Santos Limited Buy-Back C/- Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford VIC 3067 Australia

Santos will not accept your Tender Form unless it is actually received at one of these addresses by 7.00pm (Eastern Standard Time) on Friday, 29 June 2007. You should allow sufficient time for this to occur if you are sending your Tender Form by mail.

If using the Online Tender Facility

Via the Online Tender Facility at www.santos.com. You will need your securityholder reference number and postcode for validation to access the Online Tender Facility.

If you are submitting your Tender online, do not send your original Tender Form to the Share Registry.

(b) CHESS Holders

You need to instruct your controlling participant (normally your broker) in sufficient time for them to process your Tender so that it is received by the Registry by 7.00pm (Eastern Standard Time) on Friday, 29 June 2007. The name of the controlling participant who manages your CHESS Holding as at the Buy-Back Record Date is printed on your Tender Form.

You should NOT send your Tender Form to the Registry.

If you are a CHESS Holder, you may receive written confirmation from CHESS of the Tenders made on your holding or Tenders withdrawn by your controlling participant. Irrespective of its wording, this confirmation is not an acceptance by Santos of any Tender.

2.2 CAN I WITHDRAW OR AMEND MY TENDER?

Once you have submitted a Tender, it can only be withdrawn or amended by following the procedures set out below.

(a) Issuer Sponsored Holdings

There are two ways to withdraw or amend a Tender you have submitted:

· submit a Withdrawal/Amendment Form, a copy of which is included at the back of this booklet; or
via the Online Tender Facility at www.santos.com. You will need your securityholder reference number and postcode for validation to access the Online Tender Facility.

Any amendment or withdrawal will not be effective unless it is received by 7.00pm (Eastern Standard Time) on Friday, 29 June 2007.

Using a Withdrawal/Amendment Form

Withdrawal of tenders

You may withdraw all of your Tenders by ticking the 'Withdrawal' box on the Withdrawal/Amendment Form, completing your shareholder details, signing the form and sending it to the Registry at the address provided so that it is received by no later than 7.00pm (Eastern Standard Time) on Friday, 29 June 2007.

Amendment of tenders

If you wish to change the terms of all or some of your Tenders or you wish to withdraw some (not all) of your Tenders, you must tick the 'Amendment' box on the Withdrawal/Amendment Form. You must then complete your shareholder details, complete the details of all of your Tenders on that form in accordance with the instructions shown on it and send it to the Registry so that it is received by no later than 7.00pm (Eastern Standard Time) on Friday, 29 June 2007.

The effect of amending your Tenders by submitting a Withdrawal/Amendment Form will be to withdraw all of your previous Tenders and (where applicable) replace them with the Tenders detailed on that Withdrawal/Amendment Form. On the Withdrawal/Amendment Form you will need to complete the details of all of the Tenders you wish to submit as if you had not previously submitted them. If your Withdrawal/Amendment Form is incomplete or incorrect, the Registry will make at least one attempt to contact you before the Closing Date. Where there is insufficient time or you cannot be contacted, your Withdrawal/Amendment Form may not be accepted (at Santos' absolute discretion) and your existing Tender may be accepted into the Buy-Back.

(b) CHESS Holdings

If you have a CHESS Holding, you will need to instruct your controlling participant in sufficient time for them to process your withdrawal or amendment by no later than 7.00pm (Eastern Standard Time) on Friday, 29 June 2007.

If you have a CHESS Holding, you should NOT send a Withdrawat/Amendment Form to the Registry.

The effect of your controlling participant withdrawing or amending one or more of your Tenders will be to withdraw those Tenders, and in the case of an amendment to replace the amended Tenders with new Tenders.

If you are a CHESS Holder, you will receive written confirmation. from CHESS of the withdrawals/amendments made in relation to your holding by your controlling participant. Irrespective of its wording, this confirmation is not an acceptance by Santos of your withdrawal or amendment of any Tender.

2.3 HOW CAN I OBTAIN ADDITIONAL TENDER OR WITHDRAWAL/AMENDMENT FORMS?

If you require an additional Withdrawal/Amendment Form or any replacement Tender Forms, please call the Santos Buy-Back enquiry line on 1300 366 075 within Australia or on +613 9415 4612 if you are calling from outside Australia between the hours of 8.30am and 5.30pm (Eastern Standard Time) on a business day. Withdrawal/Amendment Forms can also be obtained via the Online Tender Facility at www.santos.com.

You should keep in mind that, in order to withdraw or amend your Tender at or near the end of the Tender Period, you will need to have sent your form so that it is received by the Registry (or, for CHESS Holders, processed by your controlling participant) by no later than 7.00pm on Friday, 29 June 2007.

3.1 INTRODUCTION

Unless otherwise specified, this discussion is based on income tax legislation and administrative practice as at 24 May 2007. These laws, the interpretation of them by the courts, and administrative practice may change at any time, and sometimes with retrospective effect. Santos has received a draft Class Ruling from the ATO for shareholders who participate in the Buy-Back, which provides preliminary confirmation of a number of the statements contained in this summary. The ATO will not issue the Class Ruling in a form that is binding until after completion of the Buy-Back. Although it is not anticipated to be the case, when the binding Class Ruling is issued by the ATO, it is possible that it may express a view contrary to that set out below.

This general summary of the Australian income tax implications of participating in the Buy-Back is limited to shareholders who hold their Shares on capital account and therefore may be assessed for tax under the Capital Gains Tax ('CGT') provisions on Shares bought back by Santos. Some shareholders, for example those who carry on a business of dealing in shares, may be assessed on their dealings in shares other than under the CGT provisions. The tax consequences for those shareholders may differ significantly from those discussed below.

This general summary applies to an Australian complying superannuation fund provided it does not have a current pension liability.

The Buy-Back will constitute an 'off-market' buy-back for tax purposes. As Santos does not intend to set the Buy-Back Price at more than the Tax Value, all of the Buy-Back Price in excess of \$2.79 will be treated as a fully franked deemed dividend.

A shareholder participating in the Buy-Back will be taken, for CGT purposes, to have disposed of their Shares when Santos accepts the Tender. This is anticipated to be on Saturday, 30 June 2007. For Australian tax purposes, shareholders (other than those treated as Australian resident companies) will be treated as disposing of their Shares for the \$2.79 capital component plus the amount (if any) by which the Tax Value exceeds the Buy-Back Price. The Tax Value is expected to be A\$12.25 adjusted for movement in the S&P/ASX 200 Index from the opening of trading on 14 May 2007 to the close of trading on the Closing Date (expected to be 29 June 2007) (see Section 3.3).

The Buy-Back will be taken to occur on 30 June 2007 and Australian taxpayers will be required to include any net capital gain or loss, and the deemed dividend and attached franking credits, for Shares sold into the Buy-Back in their tax return for the year ending 30 June 2007.

3.2 INCOMETAX - TREATMENT OF DEEMED DIVIDEND

AUSTRALIAN RESIDENTS

What proportion of the dividend component must I include in my assessable income?

An Australian resident participating in the Buy-Back will be deemed to have received a dividend equal to the excess of the Buy-Back Price over \$2.79 for each Share bought back. The deemed dividend will be included in the Australian resident's assessable income.

If a shareholder, whose Shares are bought back, satisfies the holding period rules, the shareholder is entitled to the benefit of franking credits on the deemed dividend and will also:

. include the franking credit on the deemed dividend in his or her assessable income; and
be entitled to a tax offset equal to the franking credit.

The tax offset may reduce the total tax payable by the shareholder on their taxable income. If the shareholder's total tax offsets exceed the total tax payable on his or her taxable income, the shareholder may be entitled to a cash refund of that excess.

Will an Australian resident company be entitled to a credit in its own franking account?

Yes. If the company satisfies the holding period rules, the company should enter the franking credit in its franking account and it can be used to frank dividends that the company pays.

Will I be entitled to a tax offset?

Yes. If a shareholder satisfies the holding period rules the shareholder will be entitled to a tax offset of the amount of the franking credit and will also be required to include this amount in your assessable income. Individuals and complying superannuation entities whose tax offset exceeds the total tax payable may be entitled to a refund of the excess. Generally no refunds will be available to companies if the tax offset exceeds the tax payable, however they may be able to carry forward any excess tax offsets to reduce tax payable in future income years.

NON-RESIDENT SHAREHOLDERS

A non-resident shareholder who does not carry on business through a permanent establishment in Australia will not be liable to Australian income tax on the franked deemed dividend component of the Buy-Back Price.

The treatment of that component as a deemed dividend is a function of Australian tax law (Division 16K of the Income Tax Assessment Act 1936) and does not alter the fact that, for all other purposes, the entire Buy-Back Price is simply the proceeds from

selling the shares back to Santos. It cannot therefore be assumed, subject to specific overseas tax advice, that the tax laws of the jurisdiction in which the shareholder resides will treat any part of the Buy-Back Price as a dividend. This summary only relates to Australian tax implications and non-residents will need to seek their own advice, particularly in relation to their own jurisdictions.

For Australian tax purposes, the dividend component of the Buy-Back Price is specifically not subject to Australian withholding tax when received by a non-resident shareholder who does not carry on a business through a permanent establishment in Australia. This is because the dividend component is fully franked. The franking credits which are attached to the dividend component will generally have no further relevance for shareholders resident outside Australia and no part of those franking credits is refundable by the ATO to shareholders resident outside Australia.

Since the Buy-Back will proceed only at a price that represents at least an 8 per cent discount to the Market Price, shareholders resident outside Australia would generally be expected to receive a better price for their Shares by selling them on-market.

However, different consequences may arise if the non-resident shareholder holds Shares as part of a business conducted through a permanent establishment in Australia. In that case, specific Australian tax advice should be obtained.

HOLDING PERIOD RULES

The Australian tax legislation includes a number of rules which may prevent shareholders participating in the Buy-Back from claiming the benefit of franking credits and tax offsets on the deemed dividend component of the Buy-Back Price.

These rules are designed to, amongst other things, discourage trading in franking credits. These rules may deny the benefit of franking credits and tax offsets to shareholders generally, or because of the shareholder's particular circumstances.

Will the ATO deny me the tax offset or franking credit?

Santos has received preliminary confirmation from the ATO that the ATO will not make a determination to deny shareholders generally the benefit of tax offsets, or franking credits, on the deemed dividend under the Buy Back.

However, the particular circumstances of each participating shareholder will also be relevant in determining whether the rules deny the benefit of the tax offset or franking credit. For example, the period during which the shareholder holds the Shares and any arrangements the shareholder has in relation to the Shares will be important.

How long do I have to hold the Shares to be entitled to the tax offset and franking credit?

To qualify for the tax offset (and franking credit for shareholders that are companies) on the deemed dividend a resident shareholder must satisfy the '45-day rule'. The 45-day rule requires a resident shareholder to have held the Shares 'at risk' for a period of 45 days (excluding the days of acquisition and disposal) within a period beginning on the day after those Shares were acquired.

If the 45-day rule is not met, the shareholder will not:

include the franking credit on the deemed dividend in its assessable income; or
be entitled to a tax offset equal to the franking credit.

The 45-day rule is complex. Generally, a shareholder who is subject to the rule and has acquired the Shares on or before 15 May 2007 would have held their shares for 45 clear days in respect of the deemed dividend component of the Buy-Back Price, based on the current timetable.

Will I have held my shares at risk over this 45-day period?

A shareholder can still fail the requirements of the 45-day rule even if the shareholder acquired Shares on or before 15 May 2007. This may arise where the shareholder entered into other arrangements regarding the Shares, which reduce the risk of loss or opportunity for gain on the Shares. For example, granting anoption to another person to acquire the Shares would reduce that risk or opportunity.

In addition, if the shareholder is under an obligation to make related payments in respect of the deemed dividend arising on the Buy-Back Price, the shareholder may also not qualify for the tax offset or franking credit unless other at risk holding requirements are satisfied.

If I acquire shares after the ex-entitlement date will this impact Shares tendered into the Buy-Back?

The 45-day rule also operates on a last-in-first-out basis so that a shareholder will be deemed, for the purpose of applying the 45-day rule, to have disposed of the most recently acquired Shares under the Buy-Back. Generally, if the most recently acquired Shares were acquired on or after 16 May 2007, the shareholder may not qualify for the franking credit on the dividend deemed to have been received by a shareholder participating in the Buy-Back. Santos has received preliminary confirmation on the treatment of shares purchased on or after 17 May 2007, i.e. ex-entitlement to participate in the Buy-Back, will be excluded from the 'last-in-first-out' rule. These shares will therefore not affect the ability to receive franking credits on Shares acquired on or before 15 May 2007 which are tendered into the Buy-Back. If the Buy-Back Contract is formed on a day other than 30 June-2007, these dates may alter.

Shares acquired on 16 May 2007 may jeopardise a shareholder's entitlement to franking credits on shares tendered into the Buy-Back. This is because the 'last-in, first-out' rule will deem these shares to have been tendered into the Buy-Back.

Are there any holding period exemptions?

Shareholders who are individuals and whose total franking credit entitlement for the income year does not exceed \$5,000 should not be subject to the 45-day rule.

3.3 CAPITAL GAINS TAX - DISPOSAL OF SHARES (ACQUIRED AFTER 19 SEPTEMBER 1985')

Shareholders participating in the Buy-Back will be deemed for CGT purposes to have disposed of each Share for capital proceeds of \$2.79 plus the amount (if any) by which the Tax Value exceeds the Buy-Back Price.

What is the Tax Value?

In Taxation Determination TD2004/22, the ATO sets out its view in relation to determining the Tax Value of shares bought back off-market. TD2004/22 provides that the Tax Value should be determined as the volume weighted average price of the shares over the last five trading days before the first announcement of the Buy-Back, adjusted for the movement in the S&P/ASX 200 Index from the opening of trading on the day of announcement to the close of trading on the Closing Date.

The ATO has provided pretiminary confirmation that for the purposes of the Buy-Back, the Tax Value will be determined in accordance with the following formula:

6,307.6 was the operang level of the S&P/ASX 200 Index on 14 May 2007.

If the movement in the S&P/ASX 200 Index is significantly different from the movement in Santos' market price over the relevant period, Santos may approach the ATO to seek to vary the methodology used to determine the Tax Value.

If the Buy-Back Price was higher than the Tax Value, a portion of the deemed dividend equal to the difference between the Buy-Back Price and the Tax Value would be deemed to be unfrankable. However, as Santos intends to set the Buy-Back Price at no more than the Tax Value, this should not occur.

AUSTRALIAN RESIDENT SHAREHOLDERS

Will I make a capital gain or a capital loss on sale of Shares into the Buy-Back?

A capital gain for a Share disposed of under the Buy-Back will be the excess of the deemed capital proceeds over the CGT cost base of the Share.

Shares acquired on or before 19 September 1985 will not normally be subject to UST in Australia, however, the deemed dividend component of the Buy-Back Price for such Shares will be relevant for income tax purposes.

A capital loss for a Share disposed of under the Buy-Back will be the excess of the CGT reduced cost base of the Share over the deemed capital proceeds. No allowance for indexation or non-capital costs is made in determining the reduced cost base of the Share.

The capital loss which arises under the Buy-Back may be greater than the capital loss which may have arisen under an equivalent sale of the Shares on-market. This is because, for non-corporate shareholders, the capital proceeds under the Buy-Back are limited to \$2.79 plus the amount (if any) by which the Tax Value exceeds the Buy-Back Price, rather than the price at which the shareholder would have sold their Shares on-market. The lower deemed capital proceeds also means that any capital gain which may have arisen under an equivalent sale of the Shares on-market may be reduced or eliminated.

Any capital loss arising from the Buy-Back cannot be offset against the deemed dividend or any franking credit included in the shareholder's assessable income.

A corporate shareholder will only make a capital loss on the sale of the Shares if the reduced cost base of each of its Shares (without indexation for inflation) exceeds the Tax Value.

If a capital loss does arise from the Buy-Back, it can only be used to offset capital gains. Capital losses that are not used in the income year in which they arise may be carried forward and used to offset capital gains made in later income years subject to restrictions for shareholders who are not individuals such as the continuity of ownership test or the same business test.

Section 3.4 provides illustrative examples of the potential tax consequences for an Australian resident individual disposing of their Shares under the Buy-Back. The actual tax consequences will depend on the Buy-Back Price, the Tax Value, the individual's applicable marginal tax rate and their CGT cost base for the Shares.

Will I receive a CGT discount?

If you are an individual or complying superannuation fund and you have held your Shares for more than 12 months at the time you sell your Shares into the Buy-Back, you are eligible for the discount and need only include in your assessable income one-half (for individuals) and two thirds (for complying superannuation funds) of any net capital gain. A company is not entitled to any CGT discount.

Can the cost base be indexed?

Shareholders who acquired Shares at or before 11.45am (ACT time) on 21 September 1999, may choose whether to index the cost base to 30 September 1999 or if you are an individual or complying. superannuation fund, to apply the CGT discount in calculating a capital gain. Shareholders who acquired Shares after 11.45am (ACT time) on 21 September 1999 cannot index the cost base to 30 September 1999 and must apply the CGT discount in calculating any capital gain on disposal.

What will be my cost base?

Generally, the CGT cost base for a Share will be the amount the shareholder paid to acquire the Share together with certain incidental costs of acquisition, for example stamp duty and brokerage, and certain incidental costs of disposal. The cost base amount must also be adjusted for any capital reductions or bonus issues of shares.

NON-RESIDENT SHAREHOLDERS

Under Australian CGT rules, a taxable capital gain or capital loss should not arise for a non-resident participating in the Buy-Back unless the non-resident together with its 'associates' has, at the time of disposal of the Santos shares or for any continuous 12 month period within two years preceding the disposal, held 10 per cent or more of the issued shares of Santos.

However, different consequences may arise if a non-resident shareholder holds Shares as part of a business conducted through a permanent establishment in Australia. Specific Australian taxation advice should be obtained in that case.

3.4 WORKED TAX EXAMPLE FOR AUSTRALIAN RESIDENT INDIVIDUALS AND AUSTRALIAN COMPLYING SUPERANNUATION FUNDS

The following worked example sets out the potential tax consequences per Share for Australian resident individuals and Australian complying superannuation funds participating in the Buy Back for Shares acquired after 19 September 1985, and assumes a Buy-Back Price of \$10.32 (an assumed 14 per cent Buy-Back Discount to an assumed Market Price of \$12.00) and an illustrative cost base for CGT purposes of \$8.50 per Share. You should not rely on this price as being the actual Buy-Back Price; see Section 1.9 for an explanation of how the Buy-Back Price will be determined.

The 'Robert' example in the table assumes a Buy-Back Price of \$10.32 (an assumed 14 per cent Buy-Back Discount to an assumed Market Price of \$12.00) and an \$8.50 cost base for CGT purposes and provides more detailed commentary on the relevant calculations in notes A to I following the table. The column on the right of the table marked 'Your workings' is there to assist you should you choose to participate in the Buy-Back. It is intended to help you calculate your anticipated income tax and CGT consequences of participating in the Buy-Back.

It is important to understand that the table is an illustrative example only and is based on a number of assumptions including:

• A Buy-Back Price which may not be the actual Buy-Back Price. The actual Buy-Back Price and the amount of the franked deemed dividend will not be known until after the Buy-Back closes;

The discount capital gain method is used, which may or may not be applicable depending on a participating shareholder's circumstances; and
A Tax Value which may change (see Section 3.3). The actual Tax Value will not be known until after the Buy-Back closes.

In any event, the tax consequences for an individual or superannuation fund may be different from the example because of their particular circumstances. The amounts calculated under the tax table will not necessarily reflect the actual tax consequences for you if you choose to participate in the Buy-Back.

Tax cates later

To assist you, Santos intends to provide access to a tax calculator through its website at www.santos.com from approximately 4 June 2007 to 6 July 2007.

	Superfund		Australian resident individuals ¹
		$Income =$	$Incone =$	Income $=$
		\$0-\$6,000	\$6,001-\$25,000	\$25,001-\$75,000
	15%	$0.00\%$	16.50%	$-31.50%$
Per share A\$	tax rate	marginal tax rate	marcinal tax rate	marginal tax rate
والمحاورة والمتحدث والمتحال والمحافظ والمتحدث والمحافظ
Income tax consequences (deemed dividend)
	\$10.32
Illustrative Buy-Back Price		\$10.32 ( \$2.79)	\$10.32	\$10.32
Less: capital component	(52.79)		(52.79)	( \$2.79)
Assumed fully franked deemed dividend ²	5753	\$7.53	\$1.53	\$7.53
Add: gross up for franking credits	\$3.23	\$3.23	\$3.23	\$3.23
Assessable income	\$10.76	\$10.76	\$10.76	\$10.76
Tax on assessable income	(51.61)	\$0.00	(51.77)	(\$3.39)
Tax offset ³	\$3.23	\$3.23	\$3.23	\$3.23
Net tax offset (tax payable) on franked.
deemed dividend	\$1.62	\$3.23	\$1.46	(50.16)
After tax proceeds ³	\$9.15	\$10.76	\$8,99	\$7.37
e Segerment og til 1
CGI consequences (capital)

Capital component	\$2.19	\$2.79	32.79	\$2.79
Add: excess Tax Value over Buy-Back Price®	\$1,68	\$1.68	\$1.68	\$1.68
Less: Illustrative cost base	(58.50)	(\$8.50)	(18.50)	(\$8.50)
Nominal capital gain/ (loss) on disposal	(54.03)	( \$4.03)	(54.03)	\$4.03)
Discount capital gain/ (loss) ⁵	(52.69)	( \$2.02)	(52.02)	(\$2.02)
Tax impact of capital gain/ loss6	\$0.40	\$0.00	\$0.33	\$0.63
After tax proceeds ^5,6	\$3.19	\$2.79	\$3,12	\$3.42
Total after tax proceeds ^5,6	\$12.34	\$13,55	\$12,11	\$10,79

$\mathbf{1}$ For the purposes of the analysis, & is assumed that the marginal tax rate for individuals includes the Medicare levy at a rate of 1.5 per cent. The liability of an individual to pay the Medicare levy denerals on the individual's own circumstances.

This assumed fully franked deemed dividend (\$7.53) is catculated as the assessed Bey-Back $\overline{2}$ Price of \$10.32 less the fixed capital component of \$2.79.
3 This assumes the shareholder is fully entitled to the franking credits.
This assumes, for illustrative purposes only, that the market value for tax purposes (the "Tax Value") of the Shares is \$12.00. The actual Tax Value will be \$12.25, adjusted for the movement in the S&P/ASX 200 Index from the opening level on 14 May 2007 to the closing level on the Closing Cate (29 June 2007).
5 This assumes that the discosut capital gain method is used, which adjusts the total capital gain by a discount factor (50 per cent for individuals; 33% per cent for complying superannuation funds). Although capital losses, as sech, are not subject to discosut, it is assumed that capital losses are offset against capital gains and that the net amount is then discounted. If capital losses are offset against capital gains which cannot be discounted (e.g. on assets held for less than 12 months), the tax impact of the capital loss will be greater (more favourable) than shown in the table.
$\ddot{\theta}$ This assumes shareholders will be able to fully utilise capital losses to offset capital gains derived from other assets. The capital loss, which arises under the Buy-Back, may be different to any capital gain/loss which way have arisen under an equivalent sale of Shares on-rearket. This is because the capital proceeds under the Bay-Back are the aggregate of \$2.79 (the cash capital component) plus \$1.68 (the excess of the assumed Tax Value over the assumed Buy-Back Price). The \$1.68 is used for illustrative purposes ordy.

Robert example

Robert earns \$40,000 per annum and he is in a tax bracket that gives him a marginal tax rate of 31.5 per cent. Robert purchased 2,000 Santos shares at \$8.50 per share and as a consequence his cost base for CGT purposes is \$8.50. Robert is able to tender at any of the seven specified Tender Discounts in the range of 8 per cent to 14 per cent inclusive (at 1 per cent intervals) to the Market Price or as a Final Price Tender, and wants to calculate the income tax and CGT consequences for a given Buy-Back Price within the range on a per Share basis.

Income tax consequences

A If Robert decides to tender at a 14 per cent Tender Discount to the assumed Market Price of \$12.00 the equivalent Buy-Back Price would be \$10.32 per Share.
B The Buy-Back Price is made up of two components, a capital component of \$2.79 and a fully franked deemed dividend component. The assumed fully franked deemed dividend component would be \$7.53 per Share, representing the difference between the illustrative Buy-Back Price of \$10.32 and the capital component of \$2.79.

		Robert (example)	Your workings
$Income-$	Income $=$	$Incone =$	Income =
\$75,001-\$150,000	$$150.000+$	\$40,000
41.50%	46.50%	31.50%
marginal tax rate	marginal tax rate	marginal tax rate	marginal tax rate

510.32	\$10.32	Buy-Back Price = \$10.32 A	Buy-Back Price =
(82.79)	( \$2.79)	Capital component = (\$2.79) B	( \$2.79) Capital component $=$
57.53	\$7.53	$$10.32 - $2.79 = $7.53$ R	$-$ \$2.79 =
5.23	\$3,23	$$7.53*(0.3/0.7) = $3.23$ း	* $(0.3/0.7)$ =
\$10.76	\$10.76	$$7.53 + $3.23 = $10.76$ [	$+$ \$.
(54.46)	$($ \$5.00)	$-(510.76*31.5%) = (53.39)$ D	$\%$ = - (\$ 15
\$3.23	\$3,23	$$7.53*(0.3/0.7) = $3.23$ f	$*(0.3/0.7)$ =

(51.23)	(51.77)	$$3.23 - $3.39 = (50.16)$ f
\$6.30	\$5.76	$$7.53 \cdot $0.16 = $7.37$

\$2.79	\$2.79	Capital component = 12.79	Capital component = \$2.79
\$1.68	\$1.68	$$12.00$ $$10.32 = 51.68$	$-\overline{\$}$ $#$
(58.50)	$($ \$8.50)	$Cost base = ( $8.50)$	Your cost base =
(54.03)	( \$4.03)	$$2.79 + $1.68 - $8.50 = ($4.03) G$	$$2.79 + $$ - \$. $#$
(52.02)	( \$2,02)	$(54.03)^50\% = (52.02)^$	$\% =$
\$0.84	\$0.94	$$2.02^*31.5\%$ \$0.63	x $\% =$
\$3.63	\$3.73	$$2.79 + $0.63 =$ \$3.42	$$2.79 + $$ $#$
\$9.93	\$9,49	$$1.37 + $3.42 = $10.79$	$+5$ $\frac{1}{2}$

C The deemed dividend component of the Buy-Back Price will be fully franked; therefore it needs to be 'grossed up' by 3/7th for the franking credits that are attached to it. This gives Robert a 'grossed up' deemed dividend amount of \$10.76.
D Robert calculates his income tax liability by multiplying the 'grossed up' deemed dividend amount of \$10.76 by his marginal tax rate of 31.5 per cent.
E Robert must pay 16 cents of income tax on the deemed dividend component of every Share he sells in the Buy-Back. This is the difference between the tax already paid by Santos (\$3.23) and the tax payable at his marginal rate (\$3.39). Robert's net dividend proceeds after income tax are \$7.37 (i.e. \$7.53 less \$0.16) per Share.

CGT consequences

F For tax purposes, the price at which Robert will be deemed to have sold his Shares under the Buy-Back will be equal to the \$2.79 capital component plus any amount by which the Tax Value exceeds the Buy-Back Price. Based on an assumed Tax Value of \$12.00 and the assumed Buy-Back Price of \$10.32, the excess amount is \$1.68.

G Robert will be deemed to have sold his Shares under the Buy-Back for \$4.47 per Share (the \$2.79 capital component plus the \$1.68 excess of the assumed Tax Value over the assumed Buy-Back Price). Robert's reduced cost base is \$8.50 per Share. Thus, the maximum capital loss that Robert will be able to offset against capital gains, assuming his Shares are sold under the Buy-Back, is \$4.03 per Share (\$8.50 less \$4.47).
H Assuming Robert has held the other (gain) assets for more than 12 months, the discount capital gain method is used, which has the effect of adjusting the total capital loss by a discount factor of 50 per cent for individuals. The benefit of Robert's capital loss is therefore 31.5 per cent of half of \$4.03 (\$0.63).

Overall after tax proceeds

I Robert would receive after-tax proceeds of \$10.79 if he tenders his Shares at \$10.32 per Share (14 per cent Tender Discount to the assumed Market Price of \$12.00), based on the assumptions above and the notes to the table, \$10.32 minus \$0.16 income tax, plus \$0.63 benefit of capital loss.

Note: numbers may differ due to rounding

4.1 FULL YEAR RESULTS AND OTHER INFORMATION

2006 was a very good year for Santos from an operational perspective with production at the upper end of the target range and a record output of 61 million barrels of oil equivalent. Reported net profit after tax of \$643 million was 16% lower than in 2005 however, on an underlying basis, net profit after tax increased by 7% to \$683 million.

Santos continues to make significant investments in its growth businesses, including short cycle time development projects such as Cooper Basin oil and the expansion of the Fairview field. Coupled with its substantial contingent resource position, Santos has a number of options in its portfolio to leverage the growing global demand for energy, including LNG.

Based on the solid operating performance in 2006, the Board decided to again increase the annual dividend. The full year dividend declared of 40 cents per share, fully franked, represented a 5% increase from the 2005 full year dividend. The annual dividend has risen by 33% over the past two years, and continues an unbroken 16 year record of steady or increasing dividends.

Electronic copies and a webcast of Santos' 2006 full year results presentation can be accessed at www.santos.com. Announcements made by Santos after this date, including the 2007 Annual General Meeting addresses, may be of interest to shareholders. Any such announcements can be found on Santos' website at www.santos.com.

4.2 HOW WILL THE BUY-BACK BE FUNDED?

The Buy-Back will be funded by existing working capital and debt facilities. In addition, Santos intends to underwrite its dividend reinvestment plan for the 2007 interim and final dividends.

$4 - 3$ IMPACT OF THE BUY-BACK ON KEY FINANCIAL INDICATORS

The precise impact of the Buy-Back cannot be determined until the Buy-Back Price and the size of the Buy-Back are finalised. However, the Buy-Back is expected to improve Santos' earnings per share and return on equity in the 2007 and later financial years. The more shares that are purchased, the greater the expected enhancement.

4.4 IMPACT ON SANTOS' FRANKING ACCOUNT

The amount of franking credits that will be utilised under the Buy-Back will not be known until the Buy-Back Price and the total size of the Buy-Back are determined. By way of illustration, if it is assumed that \$300 million worth of Shares are repurchased under the Buy-Back at a Buy-Back Price of \$10.32, approximately \$107 million of franking credits would be utilised. In any event, the Board believes that the Buy-Back will not affect the ability of Santos to pay fully franked dividends in the foreseeable future.

4.5 FINANCIAL IMPACT OF THE BUY BACK

The table below sets out a summary of the pro-forma impact of the Buy-Back on Santos' Balance Sheet based on the assumptions in the footnotes below the table.

Consolidated balance sheet as at 31 December 2006

	Actual $(\text{5m})$	Pro-forma ^1,2 (\$m)

Current Assets
Cash and cash equivalents	158.7	158.7
Trade and other receivables	481.5	487.5
Inventories (1999)	16/4	167.4
Other current assets	36.1	36.1
	849.7	849.7
Assets classified as held for sale	210.8	210.8
Total current assets	1,050.5	1,060.5
Non-current Assets
Exploration and evaluation assets.	360.3	360.3
Oil and gas assets [Submitted]	5.2321	5232.1
Other land, buildings, plant and equipment	11/2	11/2
Other investments	45.2	45.2
Deferred tax assets	75.1	75.6
Other non-current assets	11.9	11.9
Total non-current assets	5,842.4	5,842.9
Total assets	6,902.9	6,903.4

Current Liabilities -
Trade and other payables. Deferred income	441.8 6.4	441.8 64
Interest-bearing loans and borrowings	159.7	159.1
Current tax liabilities	213.5	213.5
Provisions Services	134.8	134.8
Other current liabilities	8.9	8,9
	965.1	965.1
Liabilities directly associated with assets classified as held for sale	16.8	16.8
Total current liabilities	981.9	981.9
Non-current Liabilities
Interest-bearing loans and borrowings	1,490,0	1,791.5
Deferred income	11.3	11.3
Deferred tax liabilities -	51/5	51/5
Provisions Provisions	539.1	539.1
Other non-current liabilities	16	1.6
Total non-current liabilities	2,565.5	2,867.0
Total liabilities The Common Control	3,547.4	3,848.9
Net assets	3,355.5	3,054.5
Equity
Issued capital!	2.254.4	2.112.3
Reserves	(198.9)	(198.9)
Retained profits ³	1,300.0	1,081.1
Total equity	3,355.5	3,054.5

1 Pro-forma calculations assume the Buy-Back Price is \$20.32, the number of Shares bought back is 29.2 million and \$300 million worth of Shares are bought back. This Buy-Back Price is an example only. You should not rely on this price as being the Buy-Back Price. See Section 1.9 for an explanation on how the Buy-Back Price will be determined.

2 Pro-forma calculations assume, for litustrative purposes only, that the Suy-Sack is funded by Santos' bank debt fackities. Incidental costs of the Buy-Sack, assumed to be \$1.5 million, have been included in the pro-forma catculation.

3 Assuming a Bay-Back Price of \$10.32 per Share, \$2.79 per Share of the Buy-Back Price will be debited to contributed equity and the assumed balance of \$7.53 per Share will be debited to retained profits.

4.6 WHAT EFFECT WILL THE BUY-BACK HAVE ON SANTOS' ISSUED SHARES?

As at 14 May 2007, Santos had on issue 601.4 million fully paid ordinary shares.

Assuming a total of \$300 million worth of Shares are bought back, the following table sets out the number of Shares and the percentage of Santos' total issued shares which would be bought back assuming different Buy-Back Prices. The table is an example only and you should not rely on it as being the percentage of Shares which will be bought back. All Shares that Santos buys back will be cancelled.

		Number of Shares	Percentage of total
Tender Discount	Buy-Back Price assuming a Market Price of \$12.00 (\$)	bought back (millions)	issued shares (%)
$14\%$	10.32	29.1	4.83%
	10.44	28.1	4.78%
12%	10.56	28.4	4.12%
$-106$	10.68	$-28.1$	4.61%
10%	10.80	21.8	4.62%

	200200000000000000000000000000000000000

4.7 WHAT EFFECT WILL THE BUY-BACK HAVE ON THE CONTROL OF SANTOS?

Given the maximum number of Shares Santos is expected to purchase in the Buy-Back, the Buy-Back is not expected to have any change of control implications for Santos.

4.8 BUSINESS DRIVERS AND OUTLOOK

In its 2006 full year results presentation on 22 February 2007, its 2007 Annual General Meeting addresses on 1 May 2007 and investor presentations on 3, 10 and 21 May 2007, Santos detailed the five business areas that it believes will drive Santos' performance in the near and longer term (further detail can be found via Santos' webcast at www.santos.com). These are summarised as-

Cooper Basin off

A large scale opportunity where Santos enjoys unique competitive advantages in terms of its acreage and infrastructure position

Eastern Australian gas

Santos is the largest producer of domestic gas in Australia and is well positioned for increasing gas demand, with significant uncontracted reserves and extensive infrastructure

Western Australian oil and gas

Santos is a significant producer of gas in Western Australia for sale into the domestic market
In addition, Santos produces oil from a number of fields offshore from Western Australia, the most significant being the Mutineer-Exeter oil fields
During 2007, Santos will drill a number of short cycle time oil prospects close to existing production facilities

LNG projects

Santos is a partner in the ConocoPhillips operated Darwin LNG facility which commenced LNG production in early 2006, and the company is actively progressing on multiple fronts to grow its LNG exposure
Papua New Guinea LNG (operated by ExxonMobii) and Darwin LNG (operated by ConocoPhillips) provide potential opportunities to commercialise a large proportion of Santos' contingent resources within a reasonable timeframe

Asian Growth

During 2006, Santos focussed its strategy of seeking to identify and mature new core areas on Asia, and announced the intention to divest its USA business
Indonesia and Vietnam are countries where Santos is building material positions with near term development opportunities

As previously announced, Santos has made a provision in relation to the Sidoarjo mud flow incident near the Banjar Panji-1 onshore exploration well located in Indonesia, in which Santos' subsidiary, Santos Brantas Pty Ltd has a non-operated 18% interest. Details regarding this incident and its effect on Santos can be found in Santos' 2006 Annual Report. With the mudflow continuing, the complexity of the incident and the dynamic nature of the ongoing work, there is significant uncertainty surrounding this incident and its implications. Further announcements in relation to Santos' share of potential costs relating to the Banjar Panji-1 incident will be made as definitive information becomes available and has been evaluated.

On 1 May 2007, the Premier of South Australia announced a review of the 15% shareholder cap which has been in place in since 1979. The outcome of the review is expected to be announced by the end of September 2007.

Further details regarding Santos' prospects for the coming year can be found in Santos' full year results for 2006 and other reports, which can be accessed on its website at www.santos.com.

4.9 FORWARD-LOOKING STATEMENTS

Certain statements contained in the Buy-Back booklet, including statements in Section 4.8 above and statements regarding the implementation of the Buy-Back and its effect on our business and securities, may constitute 'forward-looking statements' for the purposes of applicable securities laws. Santos Limited undertakes no obligation to revise the forward-looking statements included in this booklet to reflect any future events or circumstances. The Company's actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors that could cause or contribute to such differences include the number of Shares bought back pursuant to the Buy-Back Invitation, the Buy-Back Price and general trading and economic conditions affecting Santos. Further information about Santos, its business and factors affecting its operations is contained in Santos' full year results for 2006 and other reports, which can be accessed on its website at www.santos.com.

ADINIONAL ROBAN

5.1 SIZE OF THE BUY-BACK

ASIC has granted Santos an exemption under subsection 2570(4) of the Corporations Act to permit Santos to conduct the Buy-Back in substantially the same manner as an equal access scheme. Further details of the exemption granted by ASIC are set out in Section 5.14. Under the Corporations Act, Santos may, without shareholder approval, buy back shares under an equal access scheme, provided that the number of voting shares bought back in the Buy Back and in any other buy-back conducted in the 12 months preceding the Buy-Back Date does not exceed 10 per cent of the smallest number of votes attaching to Santos' voting shares at any time during the 12 months preceding the Buy-Back Date.

Santos is targeting to buy back approximately \$300 million worth of Shares. However, Santos may vary the size of the Buy-Back depending on shareholder demand and market conditions. In any event, the targeted amount of the Buy-Back, and any increase arising from strong demand, will result in Santos being below the 10 per cent limit. Furthermore, Santos retains the discretion to buy back a lesser number of Shares than indicated in this booklet or no Shares at all.

5.2 EXCLUDED FOREIGN PERSONS, ADRS AND RESTRICTED EMPLOYEE SHARES

This Buy-Back Invitation is not being made to Excluded Foreign Persons. In addition, ADRs and Restricted Employee Shares may not be tendered into the Buy-Back.

Without limiting the rights that Santos otherwise has in relation to Tenders, a Tender submitted by an Excluded Foreign Person will not be accepted by Santos.

Specifically, any person who is (or who is acting on behalf of or for the account of a person who is) in the United States, or who is a US Person or a resident of Canada is not eligible to participate, directly or indirectly, in the Buy-Back. Copies of the Buy-Back Documents are not being mailed to or otherwise distributed or sent into the United States or Canada.

Any person receiving any of the Buy-Back Documents must not, directly or indirectly, distribute or send them into the United States or Canada or make them available to any US Person or resident of Canada (including to any legal or beneficial owner of Santos shares that is a US Person or a resident of Canada) or any person who is tocated in the United States or Canada.

Santos will not accept Tender Forms:

from any person who does not represent that they are not $(a)$ (and they are not acting on behalf of or for the account of a person who is) in the United States, a US Person or resident of Canada or otherwise an Excluded Foreign Person; or
$(b)$ that have been postmarked in the United States or Canada or that otherwise appear to Santos or its agents to have been sent from the United States or Canada.

By submitting a Tender Form, you warrant that you are not an Excluded Foreign Person.

5.3 SHARES HELD BY TRUSTEES AND NOMINEES

Trustees and nominees who hold Shares should inform the beneficial owners of the Shares about the Buy-Back, subject to any legal restrictions in the countries where such beneficial owners are resident and provided such persons are not Excluded Foreign Persons, and then aggregate all Tenders received from beneficial owners. It is the responsibility of the trustee or nominee to complete one aggregated Tender Form on behalf of all beneficial owners.

Trustees or nominees who hold Shares on behalf of, or for the account, of a US Person or a resident of Canada or a person in the United States must not inform any such person of the Buy-Back. It is the responsibility of the trustee or nominee to ensure that, when completing an aggregated Tender Form, it does not include any tender on behalf of a US Person or a resident of Canada or a person located in the United States.

For Issuer Sponsored Holdings, the trustee or nominee must ensure that an aggregated Tender Form is received by the Registry by 7.00pm (Eastern Standard Time) on the Closing Date (Friday, 29 June 2007). For CHESS Holdings, the trustee or nominee will need to aggregate all Tenders received from beneficial owners and provide instructions to its controlling participant in time for the aggregated Tender to be processed by 7.00pm (Eastern Standard Time) on the Closing Date (Friday, 29 June 2007).

Any scale back that applies to Shares tendered by trustees and nominees will be performed on a registered shareholder basis.

5.4 MARGIN LENDING ARRANGEMENTS

If you hold Shares under margin lending arrangements or if they are held as security for a loan or as Australian Clearing House Pty Limited collateral, you should ensure that your participation in the Buy-Back is permitted by those margin lending arrangements or that loan and security documentation or by Australian Clearing House Pty Limited.

5.5 SHAREHOLDERS WITH MORE THAN ONE HOLDING OF SHARES

You will receive a personalised Tender Form for each separate registered holding of Shares. For example, if you hold some Shares in your name and some Shares jointly with your spouse, you will receive two Tender Forms. You may tender Shares into the Buy-Back from any or all of your separate registered holdings provided that you complete the Tender Form and follow the instructions for each holding you wish to tender. Any scale back that applies to Shares tendered into the Buy-Back will be applied to each of those registered holdings as if they were held by different persons.

5.6 JOINT SHAREHOLDERS

If you hold your Shares jointly with another person (for example, your spouse) and you have an Issuer Sponsored Holding, you must complete and return the Tender Form in accordance with the instructions for joint holdings on the Tender Form.

$5.7$ RESTRICTIONS ON THE PAYMENT OF BUY-BACK PROCEEDS

Santos will pay shareholders the Buy-Back Price for each of their Shares that are bought back, unless it is prohibited from doing so.

5.8 RIGHTS UNDER THIS BUY BACK INVITATION CANNOT BE TRANSFERRED

This Buy-Back Invitation is personal to you. You cannot transfer your rights under this Buy-Back Invitation.

5.9 THE EFFECT OF SUBMITTING A TENDER

A Tender constitutes an offer to sell the tendered Shares to Santos on the terms and conditions set out in the Buy-Back Documents. A Tender does not, of itself, constitute a binding contract for the sate of the tendered Shares and cannot be enforced against Santos. Santos retains the discretion to accept or reject any Tender, and may choose to reject all Tenders.

If Santos accepts your Tender, a binding Buy-Back Contract is formed between you and Santos, and you must sell the tendered Shares to Santos on the terms and conditions set out in the Buy-Back Documents, including the terms and conditions set nut helow.

By submitting a Tender Form (whether by returning a Tender Form to the Registry, through the Online Tender Facility, or, if you have a CHESS holding, by instructing your controlling participant), you:

agree to the terms and conditions set out in the Buy-Back Documents;
· offer to sell to Santos on the Buy-Back Date the number of Shares nominated for sale on your Tender Form (adjusted in accordance with the terms and conditions set out in the Buy Back Documents) at your Tender Discount(s) and/or as a Final Price Tender (subject to any Minimum Price you may have chosen);
· agree that by Santos posting an announcement on its website at www.santos.com on the Buy-Back Date in relation to the Buy-Back Price and other details is:
effective notice or communication of Santos' acceptance of your Tenders that are submitted either:
- at a Tender Discount equal to or greater than the Buy-Back Discount; or
- as a Final Price Tender,

and which are submitted in accordance with the Buy-Back Documents at a price which is not less than your Minimum Price (if you have chosen one) and which are not rejected by Santos; and

effective notice of Santos' rejection of any of your Tenders submitted at a Tender Discount less than the Buy-Back Discount or where your Minimum Price (if you have chosen one) is greater than the Buy-Back Price;
· agree that a Buy-Back Contract is formed for the purchase of the relevant Shares upon the Board of Santos accepting your tender in accordance with the terms and conditions of this Buy-Back and posting an announcement on its website, and that the purchase of the relevant Shares is taken to occur at that time;
waive any requirement to receive further notice or communication from Santos of its acceptance or rejection of any Tender submitted by you;
warrant to Santos that at all times after you tender your Shares for sale into the Buy-Back, and on the Buy-Back Date, you are the registered holder of the Shares that you have tendered and that they are free from any mortgage, charge, lien or other encumbrance (whether legal or equitable) and from any third party rights and otherwise able to be sold by you;
warrant that you are a person to whom the Buy-Back Invitation may lawfully be made and whose participation in the Buy-Back is permitted under the laws of the jurisdiction in which you are resident;
. warrant that you are not (nor are you acting on behalf of or for the account of) a US Person, a resident of Canada, a person located in the United States or a person who is otherwise an Excluded Foreign Person;
warrant that you have not distributed or sent any Buy-Back Documents or other document referring to the Buy-Back into the United States or Canada or to any US Person or resident of Canada or ADR holder;
. warrant that you are not tendering shares represented by ADRs;
· authorise Santos (and its officers, agents or contractors) to correct any error in or omission from your Tender Form and/or Withdrawai/Amendment Form, and to insert any missing details;
. undertake not to sell or offer to sell Shares to any other person if, as a result, you will at any time after you submit your Tender until the Buy-Back Date hold fewer Shares than the number of Shares you have tendered;
acknowledge that neither Santos nor any other party involved in the Buy-Back has provided you with financial product advice, or any securities recommendation, or has any obligation to provide this advice or recommendation, concerning your decision to participate in the Buy-Back;
· authorise Santos to make payment:
by direct credit to your nominated account if you have a direct credit authority recorded on the Santos Share Register at 7.00 pm (Eastern Standard Time) on the Closing Date (Friday, 29 June 2007); or
if you do not have a direct credit authority, by cheque mailed to your address shown on the Santos Share Register at 7.00pm (Eastern Standard Time) on the Closing Date (Friday, 29 June 2007); and
· undertake that if you breach any of these covenants, undertakings, agreements or warranties you will indemnify Santos for all its costs arising from the breach.

You will be taken to have submitted a Tender when the Registry receives your validly completed Tender Form or, if you have a CHESS Holding, your Tender from your controlling participant through CHESS.

5.10 SANTOS' RIGHTS TO ACCEPTIOR REJECT TENDERS AND TENDER FORMS

At any time, Santos may (at its sole discretion);

· accept or reject any Tender or Tender Form; and/or
accept or reject a Tender not made on the terms and conditions set out in the Buy-Back Documents, or a Tender Form not submitted in accordance with the procedures set out in the Buy-Back Documents.

Santos will not accept any Tender or Tender Form that has been postmarked in the United States or Canada or that otherwise appears to Santos or its agents to have been sent or lodged from the United States or Canada.

5.11 SANTOS' RIGHT TO VARY DATES AND TIMES

While Santos does not anticipate changing any of the dates and times set out in the Buy-Back Documents (including, without limitation, the Closing Date and the Buy-Back Date), it reserves the right to vary them. Any change in date or time will take effect from the time it is authorised by the Board and will be publicly announced as soon as practicable following the Board's authorisation. Any such change will be taken to amend this booklet (and the other Buy-Back Documents) accordingly. Santos may also decide not to proceed with the Buy-Back.

Without limitation, Santos reserves the right to terminate the Buy-Back at any time prior to the date on which Santos enters into Buy-Back Contracts by making an announcement to the ASX to that effect.

5.12 SANTOS' RIGHT TO ADRIST TENDERS

If you are an eligible shareholder, you are entitled to sell into the Buy-Back the lesser of:

the number of Shares registered in your name on 23 May 2007 (and which, in accordance with the applicable Settlement Rules, confer an entitlement to participate in the Buy-Back); and
. the number of Shares you hold on the Closing Date, (your 'Entitled Shares').

If you submit one Tender of more than your Entitled Shares and Santos accepts your Tender, Santos will buy back only the number of your Entitled Shares.

If you submit more than one Tender and, in aggregate, you have tendered more than your Entitied Shares, Santos will buy back only the number of your Entitled Shares in the following order of priority:

. First acquiring that number of Entitled Shares as forms part of your Tender with the largest Tender Discount, which is equal to or greater than the Buy-Back Discount or submitted as a Final Price Tender (and, if you have chosen one, where your Minimum Price is satisfied); and
. then acquiring the remaining number of your Entitled Shares from your Tender with the second highest Tender Discount, which is equal to or greater than the Buy-Back Discount (and, if you have chosen one, where your Minimum Price condition is satisfied) and will repeat this process until all of your Entitled Shares successfully tendered are bought back.

If you select more than one Minimum Price, your Tender will be deemed conditional on the highest Minimum Price you have specified.

5.13 DIRECTORS' ENTITLEMENTS

Directors are entitled to participate in the Buy-Back, but the Santos Board has determined that all Directors and selected executives involved in implementing the Buy-Back should not participate in the Buy-Back in respect of Shares held beneficially by them or parties related to them. Accordingly, Directors and selected executives involved in implementing the Buy-Back will not participate in the Buy-Back.

SECTION S-ADDITIONAL INFORMATION ON THE BUY-BACK

5.14 ASIC AND ASX RELIEF

ASIC relief

ASIC has granted Santos an exemption under subsection 2570(4) of the Corporations Act. This exemption permits Santos:

to conduct the Buy-Back in substantially the same manner as an equal access buy-back, in accordance with Division 2 of Part 23.1 of the Corporations Act;
to use the scale back mechanism described in Section 1.16;
to invite all shareholders (other than Excluded Foreign Persons and any person who holds only Restricted Employee Shares) to offer for sale Shares in accordance with the terms and conditions of the Buy-Back Invitation;
to invite shareholders with 500 Shares or less to offer to sell Shares only if they submit one Tender for all their Shares at the same Tender Discount or as a Final Price Tender; and
not to accept any Tender received from an Excluded Foreign Person or in respect of Restricted Employee Shares,

provided certain conditions are met, including that the Buy-Back Price is calculated by applying the Tender Discount selected by Santos following the end of the Tender Period to the Market Price and that eligible shareholders are permitted to lodge a Tender conditional on a Minimum Price.

ASX relief

The ASX has granted Santos the following:

· a waiver from Listing Rule 7.40 to permit Santos to dispatch the Buy-Back Documents to shareholders within eight business days after the Buy-Back Record Date; and
a waiver from Listing Rule 3.8A to permit Santos to lodge an Appendix 3F on the second business day after the Closing Date.

5.15 PRIVACY

Santos is carrying out the Buy-Back in accordance with the Corporations Act. This involves the collection of personal information contained in Tender Forms to enable Santos to process your Tender. If you do not provide this information, Santos may be hindered in, or prevented from, processing your Tender.

The personal information collected by Santos will only be disclosed to Computershare Investor Services Pty Limited, in their capacity as the agent of Santos' share registrar, to a print and mail service provider, to Santos' advisers in relation to the Buy-Back and to financial institutions in respect of payments to you in connection with the Buy-Back or as required or authorised by law.

If you wish to access the personal information collected by Santos in relation to your shareholding, please write to Santos, c/- Santos Share Registry at the mailing address set out in the Tender Form.

5.16 APPLICABLE LAW

The Buy-Back Documents, your Tender and any Buy-Back Contract generally are governed by the laws of South Australia, Australia.

6.1 DEFINITIONS

In the Buy-Back Documents unless the context otherwise requires:

ACT means Australian Capital Territory.

ADRs means American Depositary Receipts representing fully paid ordinary shares in the capital of Santos.

ASIC means the Australian Securities and Investments Commission.

ASTC means the ASX Settlement and Transfer Corporation Pty Ltd (ABN 49 008 504 532), the securities clearing house of the ASX.

ASX means ASX Limited (ABN 98 008 624 691).

ASX Market Rules means the rules that form part of the operating rules of the ASX for the purposes of the Corporations Act.

ATO means the Australian Taxation Office.

Board or Santos Board means the Board of Directors of Santos or any duly constituted committee of the Board.

Buy-Back means the buy-back of Shares by way of a tender process as set out in the Buy Back Documents.

Buy-Back Contract means the contract formed on the Buy-Back Date between you and Santos at the time that Santos accepts your Tender (if and to the extent that Santos accepts your Tender).

Buy-Back Date means the date and time the Santos Board determines the Buy-Back Price, the total number of Shares to be bought back and the details of any scale back and accepts your Tender in accordance with the terms and conditions of this Buy-Back.

Buy-Back Discount means the discount to be selected by Santos, being the largest discount within the range of 8 per cent to 14 per cent inclusive (at 1 per cent intervals), which will enable Santos to buy back the number of Shares that it determines to buy back.

Buy-Back Documents means this booklet, the Tender Form and the Withdrawal/ Amendment Form.

Buy-Back Invitation means the invitation by Santos to eligible shareholders to offer to sell Shares to Santos as set out in the Buy-Back Documents.

Buy-Back Price means the price at which Santos will buy back Shares from Tenders it accepts in the Buy-Back, rounded to the nearest cent. This price is determined by applying the Buy-Back Discount selected by Santos to the Market Price.

Buy-Back Record Date means Wednesday, 23 May 2007 being the date of determination of shareholders entitled to participate in, and the number of Santos ordinary shares entitled to be tendered into, the Buy-Back.

CGT means capital gains tax.

CHESS means the Clearing House Electronic Subregister System.

CHESS Holder means a holder of Shares on the CHESS subregister of Santos.

CHESS Holding means a holding of Shares on the CHESS subregister of Santos.

Class Ruling means the ruling to be issued by the ATO on the tax implications of the Buy-Back for shareholders of Santos who participate in the Buy-Back.

Closing Date means Friday, 29 June 2007 unless Santos announces a later date.

Corporations Act means the Corporations Act 2001 (Cth), as modified by the relief described in Section 5.14.

Excluded Foreign Person means any person holding Shares:

. to whom Santos would be prohibited from paying money pursuant to:
the Banking (Foreign Exchange) Regulations 1959 (Cth);
Part 4 of the Charter of the United Nations Act 1945 (Cth);
the Charter of the United Nations (Terrorism and Dealings with Assets) Requlations 2002 (Cth); or
any other act, rule or regulation prohibiting Santos from making payments to a foreign person;
. to whom the Buy-Back Invitation may not lawfully be made under the laws of the jurisdiction in which they are resident; or
whose participation in the Buy-Back is not permitted under the laws of the jurisdiction in which they are resident;

For the avoidance of doubt, Excluded Foreign Persons includes any person who is (or who is acting on behalf of or for the account of a person who is) in the United States or who is a US Person or a resident of Canada.

Final Price Tender means a Tender in which the shareholder elects to receive the Buy-Back Price, whatever Santos determines it to be.

Issuer Sponsored Holder means a holder of Shares on the issuer sponsored subregister of Santos.

Issuer Sponsored Holding means a holding of Shares on the issuer sponsored subregister of Santos.

Market Price means the VWAP (as defined) of Santos ordinary shares on the ASX over the five trading days up to and including the Closing Date, calculated to four decimal places, as determined by Santos at 4.30 pm (Eastern Standard Time) on the Closing Date.

Minimum Price means one of the specified minimum prices on the Tender Form, which a shareholder may select in order for their Tender to be conditional upon the Buy-Back Price being not less than that amount.

Online Tender Facility means the internet facility offered under the Buy-Back for Issuer Sponsored Holders to submit their Tenders and to withdraw or amend their previously submitted Tenders.

Priority Allocation means 500 Shares or such lesser number of Shares as is required to ensure that Santos is able to buy back only the number of Shares it determines to buy back.

Registry means Computershare Investor Services Pty Limited, in their capacity as agent of Santos' Share Register.

Restricted Employee Shares means fully paid ordinary shares of Santos held pursuant to an employee incentive scheme where, as at the Buy-Back Record Date, the holder would not be entitied to sell those shares into the Buy-Back or where the shares are subject to forfeiture or restrictions on disposal under the terms of the scheme.

Santos means Santos Limited (ABN 80 007 550 923).

Santos Share Register means the share register of Santos.

Settlement Rules means the settlement rules of the ASTC as amended from time to time.

Shares means fully paid ordinary shares in the capital of Santos on issue as at the Buy Back Record Date. For the avoidance of doubt, Shares do not include ADRs or Restricted Employee Shares.

Small Holding means a holding of fewer than or equal to 200 Shares, except that it will not be a Small Holding where the holder has become the registered holder of more shares in Santos as at the Closing Date than were held by the holder as at the Buy-Back Record Date.

Small Holding Tender has the meaning given to that term in Section 1.18.

Tax Value for the purposes of the Buy-Back means:

Closing level of S&P/ASX 200 \$12.25 Index on the Closing Date x 6,307.6*

6,307.6 was the opening level of the S&P/ASX 203 Index on 14 May 2007.

Tender means a shareholder's offer to sell Shares to Santos at a specified Tender Discount or as a Final Price Tender and on the terms and conditions set out in the Buy-Back Documents as amended in accordance with the procedures set out in the Buy-Back Documents.

Tender Discount means one of the specified discounts to the Market Price (from 8 per cent to 14 per cent inclusive, at 1 per cent intervals) as set out on the Tender Form.

Tender Form means the form of offer by a shareholder to sell Shares to Santos under the Buy-Back, which is enclosed with this booklet, accessible through the Online Tender Facility or represented by instructions from a CHESS Holder's controlling participant (and includes a Tender Form amended in accordance with the procedures set out in the Buy-Back Documents).

Tender Period means the period within which shareholders may lodge, withdraw or amend a Tender in accordance with the Buy-Back Documents.

United States means United States of America, its territories and possessions, any State of the United States and the District of Columbia.

US Person has the meaning given by Regulation Sunder the United States Securities Act of 1933.

VWAP for a share over a period means the volume weighted average price including all trades on ASX's trading platform including the closing single price auction, but excluding all offmarket trades including but not limited to transactions defined in the ASX Market Rules as special crossings, crossings prior to the commencement of the open session state, crossings during overnight trading, overseas trades, trades pursuant to the exercise of options over shares, and any other trades that the Directors determine to exclude on the basis that the trades are not fairly reflective of supply and demand.

Withdrawal/Amendment Form means the form entitled 'Withdrawai/Amendment Form', a copy of which is included at the back of this booklet, and the form accessed via the Online Tender Facility that is required to withdraw or amend a previously submitted Tender.

You or shareholder means a holder of Shares in Santos.

SECTION 6: DEFINITIONS AND INTERPRETATION

6.2 INTERPRETATION

In the Buy-Back Documents, unless the context otherwise requires:

· Singular includes the plural, and vice versa;
. Words importing one gender include other genders;
. Other parts of speech and grammatical forms of a word or phrase defined in this document have a corresponding meaning;
· Terms used in the Buy-Back Documents and defined in the Corporations Act have the meanings ascribed to them in the Corporations Act;
. A reference to currency is to Australian dollars; and
A reference to time is to Eastern Standard Time, Australia.

The postal acceptance rule does not apply to Tenders.

Contacts

If you have any questions in relation to the Buy-Back please call the Santos Buy-Back enquiry line:

Within Australia

1300 366 075

From outside Australia

+613 9415 4612 8.30am to 5.30pm (Eastern Standard Time) on a business day. This page has been left intentionally blank.

ISSUER SPONSORED HOLDER TENDERING ONLY AS A FINAL PRICE TENDER (EXAMPLE ONLY)

In the example below, an Issuer Sponsored Holder has elected to tender part of their holding as a Final Price Tender. The steps taken in completing the Tender Form were as follows:

	Tender Form - Issuer Sponsored Holders THIS DOCUMENT IS IMPORTANT. IF YOU DO NOT UNDERSTAND IT PLEASE CONSULT YOUR PROFESSIONAL ADVISER. If you do not wish to pacticipate in the Buy-Back do not return this form. Please rotar to the instructions on the back of this form.
Step 1
The number of Shares tendered as a Final Price Tender (1,000) was noted in Box B.	EXAMPLE ONLY
	Please complete the fellowing esing black lisk ensy
	liver tender the following Shares to Santos Limited at the specified Tender И Straites you can tender 5000 Discognitis) and or as a Final Price Timote, on the letter and conditions set out in as at 23 May 2987 the Bay-Back Extermints:
	В inseri the number of Stares (if any) you 1000 115 a FAVAL PRIGE TENCER wish to tender-as a Firal Price Tender. 3 : souven the number of Shares (if any) you wish to
	14% Tender Discount tender next to the Tender Discount(s) at which you wish to leader those Shares.
Step 2	13% Tender Discount 98.8 Online Tender Facility: Prease note that house Spacecrad Refders may apply directly online by Tender Discount នាំ ខេត $-2%$ galog to www.santos.com. Issuer Sponsored . Haldens that apply in this manner weed not return
The total number of Shares tendered (1,000) was noted in Box D.	焊条 Tended Discoussi 超细针 siting Teorier Form. The If you hold 508 Shares or less (as shown in Box 10% Tention Disnotipal ង ខែ A), year neay only submit one Reader in respect of all of your Shares and such a Tender must be at 28 2 祭礼 Tenser Disponal one of the specified Thnow Discounds or as a Fisial Price Tender. 鍛 Tendor Disposal
Step 3	Đ TOTAL NUMBER OF SHARES TENDERED The number of Shares in Box Addinio the rander of Shares in Baxes Blasto C 1000 th must not be more than the and write that number in Box D. thinkler in Box A.
Contact details were noted in Box E.	Piesso provide your contact details in case we need to speak to you shout your Tender: 08) 8888 8888 Sample Customer 2116107 Contact Name Consact Daysinus Telephone
Stes 4	Please sign within the appropriate boxes below Individual or Joint Stratellolder 1 Joint Shareholder 2 Joint Searclaid ar 3
The shareholder signed at Box F and the completed and signed Tender Form was then mailed or delivered to the Registry.	S. Customer Sale Director and Solo Company Secretary Director/Gompany Secretary Director THIS BOX G IS OPTIGNAL - EXTHER LEAVE IT BLANK OR TICK ONE MINIMUM PRICE ONLY: You stoods only fick a Minimum Price if you wish ١G to make your Tander candidonal on the Buy-Buck Price buing no less from gay of the following prices. You will not receive loss show his amount for your Shaws, however your Shares will not be kought back if it o Mmntuns Price you hok is legion than the Boy-Back Price.
This is an example only. Please note the
Issuer Sponsored Tender Form is yellow in colour.	TENDER FORMS MUST BE RECEIVED BY THE REGISTRY BY 7.00PM (EASTERN STANDARD TIME) ON FRIDAY, 29 JUNE 2007 STO

ISSUER SPONSORED HOLDER TENDERING ONLY AT A 12% TENDER DISCOUNT AND WITH A MINIMUM PRICE CONDITION (EXAMPLE ONLY)

In the example below, an Issuer Sponsored Holder has elected to tender their entire holding at a 12% Tender Discount and with a Minimum Price condition. The steps taken in completing the Tender Form were as follows:

Step 1	Santos Tender Form - Issuer Sponsored Holders. THIS DOCUMENT IS IMPORTANT. IF YOU DO NOT UNDERSTAND IT PLEASE CONSULT YOUR PROFESSIONAL ADVISER. If you do not wish to pacticipate in the Buy-Back do not raturn this form. Please refer to the instructions on the back of this form.
The number of Shares tendered at a 12% Tender Discount (10,000) was noted in Box C.	EXAMPLE ONLY
	Please complete the following asing black ink enty
	live tender the following Shares to Santos Limited at the specified Terefor И Shares you can tender 10000 Discountly) and of as a Final Poice Timote, on the letter and conditions set out in 89 @ 23 May 2007 the Boy-Back Cocombats:
	н inseri the number of Stares (if any) yini as a FiNAL PRICE TENSER wish to tender-as a Firat Price Teaser.
	G - Insert the number of Shares (if any) you wish to $14\%$ Terkius Discoant 誤合 tender next to the Tender Discount(s) at which
	you wish to fender those Shares. . 13% Taxier Discount 48.2
	Online Tender Facility: Presse note that Issue: Spacecred Refders may apply directly orders by $12\%$ 10000 Tender Discount aj a gaing to www.ssites.com, issuer Sponsored
Step 2	Rotanes that apply in this manner overt not return \$195 Testiet Discoval 25.5!! fibeiz Teoder Foem.
The total number of Shares tendered	If you hold 608 Shares or less (as shown in Box Tender Disence! 16% ងដែរ
(10,000) was noted in Box D.	A), you may only submit one Reader in respect of all of your Shares and such a Tender most be at 25.2 25. Tendor Discovert one of the specified Theory Discounts or as a
	Fisial Price Tender. 務 Tender Disposal 31.603
Step 3	Đ TOTAL NUMBER OF SHARES TENDERED The number of Shares in Box Áddi ap the rander of Sitores in Baxes B and C 10000 The range is the set from the and write that munther in Box [J.] Bundar in Box &
Contact details were noted in Box E.	Piease provide your costant details in case we need to speak to you about your fended: (08) 8888 8888 Sample Customer 2516107 Contact Name Consact Davinse Telephone
Step 4	Piease sign within the appropriate boxes below Individual or Joint Share tolder 1 Joint Shareholder 2 C nobleskives& tried
The shareholder signed in Box F.	S. Customer Sole Director and Sole Company Secretary Director/Company Secretary Director
Step 5	THIS BOX G IS OPTIONAL - EXTHER LEAVE IT BLANK OR TICK ONE MINIMIAN PRICE ONLY: You should mis lick a Minimum Price if you which to make your Tomlar candidoust on the Bay-Back Trice being no less from guy of the following prices. You will not receive loss than this amount for your Shares, Joneser your Shares will not be bought back if it o Mennium Pilou you hok is legion than the Buy-Back Press.
The shareholder chose the option of selecting a Minimum Price of \$10.00 as a condition of their Tender at Box G. The shareholder then mailed or delivered their completed and signed Tender Form to the Registry.	A\$0.00 46.92.84 8811.03 TENDER FORMS MUST BE RECEIVED BY THE REGISTRY BY 7.00PM (EASTERN STANDARD TIME) ON FRIDAY, 29 JUNE 2007 STO

This is an example only. Please note the Issuer Sponsored Tender Form is yellow in colour.

CHESS HOLDER TENDERING AT SPECIFIED TENDER DISCOUNTS AS WELL AS A FINAL PRICE TENDER (EXAMPLE ONLY)

In the example below, a CHESS Holder has elected to tender their entire holding at a combination of Tender Discounts and as a Final Price Tender. The steps taken in completing the Tender Form were as follows:

		Tender Form - CHESS Holders THIS DOCUMENT IS IMPORTANT. IF YOU BO NOT. UNDERSTARD IT PLEASE CONSULT YOUR PROFESSIONAL ADVISER. If you wash to participate in the Buy-Back, you must. instruct your controlling participent judentally your. sitoser) to submit your Tender(s), for your Tender(s). so be effective, De NOT return this form to the Registry. Please refer to the instructions on the back of this
Step 1 The number of Shares tendered as a Final Price Tender (1,000) was noted in Box B.	EXAMPLE ONLY	tom. Controlling CHESS participant as at 21 May 2007.
Step 2	Please complete the following using black ink only find tender the following Shares to Santas Limited at the specified Tender. Discoverite) and/or an a Finit Price Tender on the terms and concilions are out in . 100 Buy Back Documents.	Shares you can tendent 6500 ins at 23 May 2607.
The number of Shares tendered at the various Tender Discounts was noted in Box C.	. EI. Invest the namber of Shama of save you. wash to lender as a Final Price Shoder. ß irsen the number of Slaves (it way) you want to Insider mind to the Tender Discounties at which was with to tender those Strayes.	1000 as a FileAL PRICE TENDER 1500 aria : 2008 : Tenser Discount 33.3 (17) Tenduk Discourt
Step 3 The total number of Shares tendered $(1,000 + 1,500 + 4,000 = 6,500)$ was noted in Box D.	If you had 500 Shares or less (as shown in Box. A), you may turly subisit one funder in respect of all of your Shares and such a Tender must be at: one of the specified Turior. Discounts or as all Faul Peter fonder - Cost Annapolis	Tender Discount Is a 1 (12%) Torstar:Discolar uind Alba 4000 $58.81 - 10\%$ teraler Discount 眼睛上阴影 Terrior Discount
Step 4	Đ, TOTAL MUMBER OF SYARES TENDERED: Add so the natther of States in Boxes B and C and reflection has manifest in Box O.	at and 1:3% : Tender Discount The number of Shares in Hox. D interst not be exceed their the 6500 pionibili in Box A.
Contact details were noted in Box E. Step 5	Piesse powiée your comect details in case we smid to spank to you about your Tenifer." Sample Customer Corsact Name Confact Daythin Telephone ш Piease sign valtin the instructive traces treate. Ješní Shivabozdoz 2 studiyidisal or Joint Strassholder's	(08) 8888 8888 Joint Mexersolder 3
The shareholder signed at Box F and then communicated their instructions to the controlling participant (normally their broker).	S. Customer Sole Director and Sole Contracty Secretary Director/Company Secretary THIS BOX IS IS OPTIONAL - EITHER LEAVE IT BLANK OR TICK ONE MINIMUM PRICE ONLY: You shauld any tex a Mannesic Price II you want u. to nieki your fender coronisme on the Buy-Back Poke being ca lose fram you of the showing prose. You will not necessary here then this nament for your Stares. Convert your Shares will not be beingth back if the Minimum Price you look is higher than the Buy-Back Pilco. ASS (37 - A\$30.00	Director. A511.02
This is an example only. Please note the CHESS Holder Tender Form is red in colour.	TENDER FORMS MUST BE PROCESSED BY YOUR CONTROLLING PARTICIPANT BY 7.00PM (EASTERN STANDARD TIME) ON FRIDAY, 29 JUNE 2002 STO
do not send your chess holder tender form to the registry.

	ABN 80 007 550 923		Withdrawal/Amendment Form THIS DOCUMENT IS IMPORTANT. IF YOU DO NOT adviser.	UNDERSTAND IT PLEASE CONSULT YOUR PROFESSIONAL Please refer to the instructions on the back of this form.
	Please insert your name and address details Please insert your Securityholder Reference Number (SRN) or Holder Identification		Tick one box only. One box must be completed. OR Boxes A to G).	Withdrawal: I/we withdraw my/our previous Tender(s) in accordance with the Buy-Back booklet (complete Box F only). Amendment: I/we withdraw my/our previous Tender(s) in accordance with the Buy-Back booklet and wish to submit a replacement Tender(s) as set out below (complete
	Number (HIN) I/we tender the following Shares to Santos Limited at the specified Tender Discount(s) and/or as a Final Price Tender, on the terms and conditions set out in the Buy-Back Documents:		U	Shares you can tender as at 23 May 2007
U	Insert the number of Shares (if any) you			as a FINAL PRICE TENDER
Q	wish to tender as a Final Price Tender. Insert the number of Shares (if any) you wish to tender next to the Tender Discount(s) at which you wish to tender those Shares.			Tender Discount 14% at a 13% Tender Discount at a
	Online Tender Facility: Please note that Issuer Sponsored Holders may apply directly online by going to www.santos.com. Holders that apply in this manner need not return their Withdrawal/Amendment Form.			12% Tender Discount at a Tender Discount 11% at an
	If you hold 500 Shares or less, you may only submit one Tender in respect of all of your Shares and such a Tender must be at one of the specified Tender Discounts or as a Final Price Tenrier.			10% Tender Discount at a Tender Discount 9% at a Tender Discount 8% at an i
8	TOTAL NUMBER OF SHARES TENDERED Add up the number of Shares in Boxes B and C and write that number in Box D.			The number of Shares in Box D must not be more than the number in Box A.
羂	Please provide your contact details in case we need to speak to you about your Withdrawal/Amendment Form: Contact Name
M	Please sign within the appropriate boxes below.	Contact Daytime Telephone		Date
	Individual or Joint Shareholder 1 Joint Shareholder 2 Sole Director and Sole Company Secretary	Director/Company Secretary	Director	Joint Shareholder 3
n	THIS BOX G IS OPTIONAL - EITHER LEAVE IT BLANK OR TICK ONE MINIMUM PRICE ONLY: You should only tick a Minimum Price if you wish to make your Tender conditional on the Buy-Back Price being no less than one of the following prices. You will not receive less than this amount for your Shares, however your Shares will not be bought back if the Minimum Price you tick is higher than the Buy-Back Price. A\$9.00 A\$10.00		A\$11.00
	WITHDRAWAL / AMENDMENT FORMS MUST BE RECEIVED BY 7.00PM (EASTERN STANDARD TIME) ON FRIDAY, 29 JUNE 2007 IN ACCORDANCE WITH THE INSTRUCTIONS ON THE REVERSE OF THIS FORM
	STO			633939 69M33KE

$\cdots$

			Santos
--	--	--	--------	--	--	--

ABN 80 007 550 923

Withdrawing or Amending your Tender(s)
Shareholders who have tendered their Shares into the Buy-Back and who now wish to either withdraw or amend their Tender(s) must lodge this Withdrawal/Amendment Form.

How to complete the Withdrawal/Amendment Form

		Please complete the form using black ink only. Mark only one of the two boxes:	The instructions below are cross-referenced to the relevant section of this form. Defined terms have the same meaning as in the Buy-Back bookiet.
	Withdrawal - Tick the "Withdrawal" Box if you wish to withdraw your previous Tender(s) and you do not wish to submit a new replacement Tender(s). Please complete Box F.	or	Amendment - Tick the "Amendment" Box if you wish to amend your previous Tender(s) and submit a new replacement Tender(s). Please complete Box A through to Box G.
THE SEARCH		Back enquiry line on 1300 366 075 (within Australia) or +61 3 9415 4612 (from outside Australia).	Insert the total number of Shares registered in your name as at 23 May 2007 that confer an entitlement to participate in the Buy-Back. If you wish to participate in the Buy-Back, you can offer to sell some or all of these Shares to Santos Limited by ticking the Amendment box and following the instructions set out below. If you need to check the total number of Shares you may tender into the Buy-Back, please call the Santos Limited Buy-
	Final Price Tender Insert the number of Shares (if any) you AND/OR wish to tender as a Final Price Tender.	Ø Tender Discount Tender.	Insert the number of Shares (if any) you wish to tender at the specified Tender Discount. You may offer to sell parcels of Shares at up to 7 different specified Tender Discounts. Each parcel is treated as a separate If you hold 500 Shares or less, you may only submit one Tender in respect of all of your Shares and such a Tender must be at one of the specified Tender Discounts or as a Final Price Tender. If you hold more than 500 Shares, you may tender different parcels of Shares at one or more Tender Discounts and/or as a Final Price Tender. However, you must tender a minimum of 500 Shares in aggregate.
		need to add up the number of Shares in Boxes B and C and write the total in Box D.	After indicating the number of Shares you wish to tender as a Final Price Tender (Box B) and/or at a specified Tender Discount(s) (Box C), you
		Note that the number of Shares in Box D must not be more than the number of Shares in Box A.
	set out in Section 5.12 of the Buy-Back booklet.		If the number of Shares in Box D is more than the number of Shares in Box A, you will be deemed to have offered only the number of Shares shown in Box A and, if you have selected more than one Tender Discount and/or a Final Price Tender, your Tender will be adjusted in the manner
			Please provide your contact details in case we need to speak to you about your Withdrawal/Amendment Form.
■	Individual holders	(including the warranties, authorisations and undertakings set out in Section 5.9 of the Buy-Back booklet).	You must sign this form in Box F. By signing and returning this Withdrawal/Amendment Form, you acknowledge that you have read and understood the Buy-Back booklet and agree to, and make an offer to, sell your shares on the terms and conditions set out in the Buy-Back Documents Where a holding is in one name, the registered shareholder must sign.
	Joint holders	All holders must sign.
	Under Power of Attorney	of revocation of the power or the death of the donor of the power.	If not already noted by the Registry, an originally certified copy of the power of attorney must be sent to the Registry. Where this form is signed under power of attorney, the attorney declares that the attorney has no notice
	Deceased Estate	letters of administration to the Registry.	All executors should sign and, if not already noted by the Registry, send an originally certified copy of probate or
	Company	sole director who is also the sole company secretary, the sole director.	This form must be signed by 2 directors, a director and company secretary or, in the case of a company with a
		ADRs and Restricted Employee Shares may not be tendered into the Buy-Back.	By signing this Withdrawal/Amendment Form you confirm that you are not an Excluded Foreign Person and, in particular, are not (i) in the United States or Canada or a US Person (as defined in the Buy-Back booklet) or resident of Canada or (ii) tendering any Shares by means of this Withdrawal/Amendment Form on behalf of or for the account of a person in the United States or Canada or a US Person or resident of Canada.
ne de la propincia Altres de la propincia de la propincia de la propincia de la propincia de la propincia de la propincia de la		your Tender will be deemed to be conditional on the highest Minimum Price that you have specified.	THIS BOX G IS OPTIONAL - EITHER LEAVE IT BLANK OR TICK ONE MINIMUM PRICE ONLY: You should only tick a Minimum Price if you wish to make your Tender conditional on the Buy-Back Price being no less than one of the specified prices. You will not be paid less than this amount for your Shares, however if the Minimum Price you select is higher than the Buy-Back Price your Shares will not be bought back. If you complete Box G, you must also complete Box B and/or Box C. Tick no more than one Minimum Price in Box G - if you tick more than one Minimum Price,
		Santos Limited or its agents to have been sent from, the United States or Canada.	Santos Limited will not accept Withdrawal/Amendment Forms from any person (or person acting on behalf of or for the account of a person who is) in the United States or Canada or a US Person or resident of Canada or any Withdrawal/Amendment Form that has been postmarked in, or otherwise appears to
	Payment for Shares bought back	Santos Limited expects to dispatch payment for Shares bought back no later than 9 July 2007.
	Submitting your Withdrawal/Amendment Form
CHESS Holdings		Issuer Sponsored Holdings

You will need to contact your controlling participant (usually your broker) in sufficient Example of your controlling participant to
process your Withdrawal/Amendment Form
no later than 7.00pm (Eastern Standard Time) on 29 June 2007. Do not send your Withdrawal/Amendment Form to the Registry.

Issuer Sponsored Holdings
Your completed Withdrawal/Amendment Form must be received no later than 7.00pm (Eastern Standard Time) on 29 June 2007, at: If sending by mail Santos Limited Buy-Back C/o Computershare Investor Services Pty Limited GPO Box 52 MELBOURNE VIC 8060 Yarra Falls AUSTRALIA

If delivering in person (during business hours only) Santos Limited Buy-Back C/o Computershare Investor Services Pty Limited 452 Johnston Street ABBOTSFORD VIC 3067

2003/552 33252

$\circ$ ļ..... Ø)

This Withdrawal/Amendment Form relates to the Santos Limited Buy-Back booklet dated 24 May 2007 and should be read in conjunction with that booklet. If you require further information on how to complete this form please contact the Santos Limited Buy-Back
enquiry line on 1300 366 075 (within Australia) or +61 3 9415 4612 (from outside Australia).

WITHDRAWAL/AMENDMENT FORMS MUST BE RECEIVED BY 7.00PM (EASTERN STANDARD TIME) ON FRIDAY, 29 JUNE 2007.

Paper and printing of this booklet with the model

This booklet is printed on Monza Recycled which contains
elemental-chlorine-free (ECF) recycled fibre and fibre from

The paper is certified by the Forest Stewardship Council (FSC),
which promotes environmentally appropriate, socially beneficial,
and economically vishie management of the world's forests.

The booklet was printed by Vega Press, one of a small number
of printers in Australia certified by the FSC to continue the
chain of custody when printing on FSC-certified paper.

Vega Press is certified for ISO 14001:2004 (Environmental IIII)
Management Systems),

The printing process uses digital printing plates which eliminate
film and associated chemicals. The vegetable-based links use
renewable sources such as flax, rather than the traditional mineral
pils which emit higher volu

Fisancial Adviser and a community of the community of the community of the community of the community of the

Santos ABN 80 007 550 923	form.	UNDERSTAND IT PLEASE CONSULT YOUR PROFESSIONAL ADVISER. If you wish to participate in the Buy-Back, you must instruct your controlling participant (normally your broker) to submit your Tender(s), for your Tender(s) to be effective. Do NOT return this form to the Registry. Please refer to the instructions on the back of this Controlling CHESS participant as at 23 May 2007
Please complete the following using black ink only I/we tender the following Shares to Santos Limited at the specified Tender Discount(s) and/or as a Final Price Tender, on the terms and conditions set out in the Buy-Back Documents:		Shares you can tender as at 23 May 2007
B Insert the number of Shares (if any) you wish to tender as a Final Price Tender.		as a FINAL PRICE TENDER
C. Insert the number of Shares (if any) you wish to tender next to the Tender Discount(s) at which you wish to tender those Shares If you hold 500 Shares or less (as shown in Box A), you may only submit one Tender in respect of all of your Shares and such a Tender must be at one of the specified Tender Discounts or as a Final Price Tender. TOTAL NUMBER OF SHARES TENDERED Add up the number of Shares in Boxes B and C and write that number in Box D.		14% Tender Discount at a 13% Tender Discount at a 12% Tender Discount at a 11% Tender Discount at an 10% Tender Discount at a 9% Tender Discount at a 8% Tender Discount at an The number of Shares in Box D must not be more than the number in Box A.
t.	Please provide your contact details in case we need to speak to you about your Tender:

Contact Name	Contact Daytime Telephone	Date
Please sign within the appropriate boxes below. Individual or Joint Shareholder 1 Sole Director and Sole Company Secretary G	Joint Shareholder 2 Director/Company Secretary	Joint Shareholder 3 Director THIS BOX G IS OPTIONAL - EITHER LEAVE IT BLANK OR TICK ONE MINIMUM PRICE ONLY: You should only tick a Minimum Price if you wish to make your Tender conditional on the Buy-Back Price being no less than one of the following prices. You will not receive less than this amount for your Shares, however your Shares will not be bought back if the Minimum Price you tick is higher than the Buy-Back Price.

How to complete this Tender Form
The instructions below are cross-referenced to the relevant section on the front of this form. Defined terms have the same meaning as in the

А below).	This is the total number of Shares registered in your name as at 23 May 2007 that confer an entitlement to participate in the Buy-Back. If you wish to participate in the Buy-Back, you can offer to sell some or all of these Shares to Santos Limited (by following the instructions set out
В Final Price Tender Insert the number of Shares (if any) you AND/OR wish to tender as a Final Price Tender.	Tender Discount С Insert the number of Shares (if any) you wish to tender at the specified Tender Discount. You may offer to sell parcels of Shares at up to 7 different specified Tender Discounts. Each parcel is treated as a separate. Tender. If you hold 500 Shares or less, you may only submit one Tender in respect of all of your Shares and such a Tender must be at one of the specified Tender Discounts or as a Final Price Tender. If you hold more than 500 Shares, you may tender different parcels of Shares at one or more Tender Discounts and/or as a Final Price Tender. However, you must tender a minimum of 500 Shares in aggregate.
D	After indicating the number of Shares you wish to tender as a Final Price Tender (Box B) and/or at a specified Tender Discount(s) (Box C), you need to add up the number of Shares in Boxes B and C and write the total in Box D. Note that the number of Shares in Box D must not be more than the number of Shares in Box A.
set out in Section 5.12 of the Buy-Back booklet.	If the number of Shares in Box D is more than the number of Shares in Box A, you will be deemed to have offered only the number of Shares shown in Box A and, if you have selected more than one Tender Discount and/or a Final Price Tender, your Tender will be adjusted in the manner
Е	Please provide your contact details in case we need to speak to you about your Tender Form.
	You must sign this form in Box F. By signing and returning this Tender Form, you acknowledge that you have read and understood the Buy-Back booklet and agree to, and make an offer to, sell your shares on the terms and conditions set out in the Buy-Back Documents (including the warranties, authorisations and undertakings set out in Section 5.9 of the Buy-Back booklet).
Individual holders Joint holders	Where a holding is in one name, the registered shareholder must sign. All holders must sign.
Under Power of Attorney	If not already noted by the Registry, an originally certified copy of the power of attorney must be sent to the Registry. Where this form is signed under power of attorney, the attorney declares that the attorney has no notice of revocation of the power or the death of the donor of the power.
Deceased Estate	All executors should sign and, if not already noted by the Registry, send an originally certified copy of probate or letters of administration to the Registry.
Company	This form must be signed by 2 directors, a director and company secretary or, in the case of a company with a sole director who is also the sole company secretary, the sole director.
may not be tendered into the Buy-Back.	By signing this Tender Form you confirm that you are not an Excluded Foreign Person and, in particular, are not (i) in the United States or Canada or a US Person (as defined in the Buy-Back booklet) or resident of Canada or (ii) tendering any Shares by means of this Tender Form on behalf of or for the account of a person in the United States or Canada or a US Person or a resident of Canada. ADRs and Restricted Employee Shares.
G	THIS BOX G IS OPTIONAL - EITHER LEAVE IT BLANK OR TICK ONE MINIMUM PRICE ONLY: You should only tick a Minimum Price if you wish to make your Tender conditional on the Buy-Back Price being no less than one of the specified prices. You will not be paid less than this amount for your Shares, however if the Minimum Price you select is higher than the Buy-Back Price your Shares will not be bought back. If you complete Box G, you must also complete Box B and/or Box C. Tick no more than one Minimum Price in Box G - if you tick more than one Minimum Price, your Tender will be deemed to be conditional on the highest Minimum Price that you have specified.
been sent from, the United States or Canada.	Santos Limited will not accept Tender Forms from any person (or person acting on behalf of or for the account of a person who is) in the United States or Canada or a US Person or resident of Canada or any Tender Form that has been postmarked in, or otherwise appears to Santos Limited or its agents to have
Payment for Shares bought back	Santos Limited expects to dispatch payment for Shares bought back no later than 9 July 2007.
Submitting your Tender Form	You will need to contact your controlling participant (usually your broker) in sufficient time for your controlling participant to process your Tender no later than
7.00pm (Eastern Standard Time) on 29 June 2007.
	DO NOT RETURN THIS FORM TO SANTOS LIMITED OR THE REGISTRY This Tender Form relates to the Santos Limited Buy-Back booklet dated 24 May 2007 and should be read in conjunction with that booklet.
	If you require further information on how to complete this form please contact the Santos Limited Buy-Back enquiry line on 1300 366 075 (within Australia) or +61 3 9415 4612 (from outside Australia).

$\frac{0}{5}$

Please complete the following using black ink only I/we tender the following Shares to Santos Limited at the specified Tender Discount(s) and/or as a Final Price Tender, on the terms and conditions set out in the Buy-Back Documents: В Insert the number of Shares (if any) you: wish to tender as a Final Price Tender. C. Insert the number of Shares (if any) you wish to tender next to the Tender Discount(s) at which you wish to tender those Shares. Online Tender Facility: Please note that Issuer Sponsored Holders may apply directly online by going to www.santos.com. Issuer Sponsored- Holders that apply in this manner need not return their Tender Form. If you hold 500 Shares or less (as shown in Box A), you may only submit one Tender in respect of	THIS DOCUMENT IS IMPORTANT. IF YOU DO NOT UNDERSTAND IT PLEASE CONSULT YOUR PROFESSIONAL ADVISER. If you do not wish to participate in the Buy-Back do not return this form. Please refer to the instructions on the back of this form. Shares you can tender as at 23 May 2007 as a FINAL PRICE TENDER 14% Tender Discount at a 13% Tender Discount at a 12% Tender Discount at a 11% Tender Discount at an






all of your Shares and such a Tender must be at one of the specified Tender Discounts or as a Final Price Tender.	10% Tender Discour ata $9\%$ Tender Discount at a 8% Tender Discount at an
TOTAL NUMBER OF SHARES TENDERED Add up the number of Shares in Boxes B and C and write that number in Box D.	The number of Shares in Box D must not be more than the number in Box A.
Please provide your contact details in case we need to speak to you about your Tender
Contact Daytime Telephone Contact Name	Date
Please sign within the appropriate boxes below. Individual or Joint Shareholder 1 Joint Shareholder 2 Sole Director and Sole Company Secretary Director/Company Secretary	Joint Shareholder 3 Director
THIS BOX G IS OPTIONAL - EITHER LEAVE IT BLANK OR TICK ONE MINIMUM PRICE ONLY: You should only tick a Minimum Price if you wish to make your Tender conditional on the Buy-Back Price being no less than one of the following prices. You will not receive less than this amount for your Shares, however your Shares will not be bought back if the Minimum Price you tick is higher than the Buy-Back Price. A\$10.00 A\$9.00	A\$11.00

How to complete this Tender Form

	Buy-Back booklet. Please complete the form using black ink only.	The instructions below are cross-referenced to the relevant section on the front of this form. Defined terms have the same meaning as in the
	below).	This is the total number of Shares registered in your name as at 23 May 2007 that confer an entitlement to participate in the Buy-Back. If you wish to participate in the Buy-Back, you can offer to sell some or all of these Shares to Santos Limited (by following the instructions set out
В	Final Price Tender insert the number of Shares (if any) you AND/OR wish to tender as a	C Tender Discount Insert the number of Shares (if any) you wish to tender at the specified Tender Discount. You may offer to sell parcels of Shares at up to 7 different specified Tender Discounts. Each parcel is treated as a separate Tender.
	Final Price Tender.	If you hold 500 Shares or less, you may only submit one Tender in respect of all of your Shares and such a Tender must be at one of the specified Tender Discounts or as a Final Price Tender.
		If you hold more than 500 Shares, you may tender different parcels of Shares at one or more Tender Discounts and/or as a Final Price Tender. However, you must tender a minimum of 500 Shares in aggregate.
D		After indicating the number of Shares you wish to tender as a Final Price Tender (Box B) and/or at a specified Tender Discount(s) (Box C), you need to add up the number of Shares in Boxes B and C and write the total in Box D.
		Note that the number of Shares in Box D must not be more than the number of Shares in Box A.
	set out in Section 5.12 of the Buy-Back booklet.	If the number of Shares in Box D is more than the number of Shares in Box A, you will be deemed to have offered only the number of Shares shown in Box A and, if you have selected more than one Tender Discount and/or a Final Price Tender, your Tender will be adjusted in the manner
Е		Please provide your contact details in case we need to speak to you about your Tender Form.
F		You must sign this form in Box F. By signing and returning this Tender Form, you acknowledge that you have read and understood the Buy-Back booklet and agree to, and make an offer to, sell your shares on the terms and conditions set out in the Buy-Back Documents (including the warranties, authorisations and undertakings set out in Section 5.9 of the Buy-Back booklet).
	Individual holders Joint holders	Where a holding is in one name, the registered shareholder must sign. All holders must sign.
	Under Power of Attorney	If not already noted by the Registry, an originally certified copy of the power of attorney must be sent to the Registry. Where this form is signed under power of attorney, the attorney declares that the attorney has no notice of revocation of the power or the death of the donor of the power.
	Deceased Estate	All executors should sign and, if not already noted by the Registry, send an originally certified copy of probate or letters of administration to the Registry.
	Company	This form must be signed by 2 directors, a director and company secretary or, in the case of a company with a sole director who is also the sole company secretary, the sole director.
	may not be tendered into the Buy-Back.	By signing this Tender Form you confirm that you are not an Excluded Foreign Person and, in particular, are not (i) in the United States or Canada or a US Person (as defined in the Buy-Back booklet) or resident of Canada or (ii) tendering any Shares by means of this Tender Form on behalf of or for the account of a person in the United States or Canada or a US Person or a resident of Canada. ADRs and Restricted Employee Shares
G		THIS BOX G IS OPTIONAL - EITHER LEAVE IT BLANK OR TICK ONE MINIMUM PRICE ONLY: You should only tick a Minimum Price if you wish to make your Tender conditional on the Buy-Back Price being no less than one of the specified prices. You will not be paid less than this amount for your Shares, however if the Minimum Price you select is higher than the Buy-Back Price your Shares will not be bought back. If you complete Box G, you must also complete Box B and/or Box C. Tick no more than one Minimum Price in Box G - if you tick more than one Minimum Price, your Tender will be deemed to be conditional on the highest Minimum Price that you have specified.
	been sent from, the United States or Canada.	Santos Limited will not accept Tender Forms from any person (or person acting on behalf of or for the account of a person who is) in the United States or Canada or a US Person or resident of Canada or any Tender Form that has been postmarked in, or otherwise appears to Santos Limited or its agents to have
	Payment for Shares bought back	Santos Limited expects to dispatch payment for Shares bought back no later than 9 July 2007.
	Submitting your Tender Form 7.00pm (Eastern Standard Time) on 29 June 2007.	Send your completed and signed Tender Form or, if mailing in Australia, use the enclosed reply-paid envelope so that your Tender Form is received no later than
	If sending by mail Santos Limited Buy-Back C/o Computershare Investor Services Pty Limited	If delivering in person (during business hours only) Santos Limited Buy-Back
	GPO Box 52 MELBOURNE VIC 8060 AUSTRALIA s gove	C/o Computershare Investor Services Pty Limited Yarra Falls New York 452 Johnston Street ABBOTSFORD VIC 3067 .
		This Tender Form relates to the Santos Limited Buy-Back booklet dated 24 May 2007 and should be read in conjunction with that booklet.
		If you require further information on how to complete this form please contact the Santos Limited Buy-Back. enquiry line on 1300 366 075 (within Australia) or +61 3 9415 4612 (from outside Australia).
		TENDER FORMS MUST BE RECEIVED BY THE REGISTRY BY 7,00PM (EASTERN STANDARD TIME) ON FRIDAY, 29 JUNE 2007.
		Do not send this Tender Form to the Registry if you have submitted your Tender via the Online Tender Facility. $\sim$

AI assistant

SANTOS LIMITED — Proxy Solicitation & Information Statement 2007

65872_rns_2007-05-30_75f4c7fc-1f28-4f17-b63e-1a829ac6a0e0.pdf

LISTING RULE 3.17

THIS IS AN IMPORTANT DOCUMENT

Santos

SANTOS LIMITED OFFAMARKET BUYBACK BOOKLET

IMPORTANT DATES

MAY 2007

UNE 2007

The mot

ERGIBILITY TO PARTICIPATE

Santos vilámet autoritos fosdar Taressa

CHAIRMAN'S LETTER

Dear Shareholder

KEY FEATURES OF THE BUY-BACK

WHAT TO DO?

IF YOU DO CHOOSE TO PARTICIPATE

IF YOU DO NOT CHOOSE TO PARTICIPATE

TABLE OF CONTENTS

ILI VVHAT IS AN OFF-MARKET BUY-BACK TENDER?

1.2 WHY IS SANITOS IMPLEMENTING THE BUY-BACK?

AM I ENTITLED TO TENDER SHARES INTO 1.5 THE BUY-BACK?

1.7 DO I HAVE TO TENDER MY SHARES?

1.8 VYHAT DOES THE BUY-BACK MEAN FOR ME IF I DO NOT PARTICIPATE?

1.9 WHAT PRICE WILL SANTOS PAY TO BUY BACK MY SHARES?

E30 HOW WILL I KNOW WHAT THE MARKET PRICE IS?

LEE WHAT IS A FINAL PRICE TENDER?

LI2 HOW WILL I KNOW WHAT THE BUY-BACK PRICE IS?

1.13 WILL ALL THE SHARES ITENIDER BE BOUGHT BACK!

LE4 HOW WILL I KNOW HOW MANY OF MY SHARES HAVE BEEN BOUGHT BACK?

1.15 HOW WILL SANTOS DETERMINE SUCCESSFUL TENDERS AND ANY SCALE BACK?

LI 6 VVHEN MAY A SCALE BACK APPLY?

ILIZ VVHAT IS THE PRIORITY ALLOCATION?

I.18 WHAT IS A SMALL HOLDING TENDER?

1.19 HOW WILL THE SCALE BACK AFFECT MY TENDER?

Examples

I.20 CAN I ELECT A MINIMUM PRICE FOR THE PURCHASE OF MY SHARES?

1.21 HOW HAVE SANTOS SHARES PERFORMED OVER RECENT TIMES?

Santos Limited share price Daily closing share price (\$)

1.22 CAN ORDINARY SHARES HELD BY SANTOS' EMPLOYEES BETENDERED!

1.23 HOW WILL I RECEIVE PAYMENT FOR SHARES BOUGHT BACK?

1.24 CAN I TRADE MY SHARES AFTER SUBMITTING A TENDER!

1.25 IF I PURCHASE OTHER SHARES DURING THE TENDER PERIOD, WILL MY TENDERED SHARES BE AFFECTED?

2.1 HOW DO I PARTICIPATE IN THE BUY-BACK?

(a) Issuer Sponsored Holders

If sending by mail

If delivering in person (during business hours only)

If using the Online Tender Facility

(b) CHESS Holders

2.2 CAN I WITHDRAW OR AMEND MY TENDER?

(a) Issuer Sponsored Holdings

Withdrawal of tenders

Amendment of tenders

(b) CHESS Holdings

2.3 HOW CAN I OBTAIN ADDITIONAL TENDER OR WITHDRAWAL/AMENDMENT FORMS?

3.1 INTRODUCTION

3.2 INCOMETAX - TREATMENT OF DEEMED DIVIDEND

AUSTRALIAN RESIDENTS

What proportion of the dividend component must I include in my assessable income?

Will an Australian resident company be entitled to a credit in its own franking account?

Will I be entitled to a tax offset?

NON-RESIDENT SHAREHOLDERS

HOLDING PERIOD RULES

Will the ATO deny me the tax offset or franking credit?

How long do I have to hold the Shares to be entitled to the tax offset and franking credit?

Will I have held my shares at risk over this 45-day period?

If I acquire shares after the ex-entitlement date will this impact Shares tendered into the Buy-Back?

Are there any holding period exemptions?

What is the Tax Value?

AUSTRALIAN RESIDENT SHAREHOLDERS

Will I make a capital gain or a capital loss on sale of Shares into the Buy-Back?

Will I receive a CGT discount?

Can the cost base be indexed?

What will be my cost base?

NON-RESIDENT SHAREHOLDERS

Tax cates later

Robert example

Income tax consequences

CGT consequences

SANTOS LIMITED Proxy Solicitation & Information Statement 2007

How to complete this Tender Form
The instructions below are cross-referenced to the relevant section on the front of this form. Defined terms have the same meaning as in the