SANTOS LIMITED — Proxy Solicitation & Information Statement 2011

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14 October 2011

Dear Fellow ESG shareholder,

I am writing to provide you with a brief update and encourage you to vote on the proposal by Santos Ltd (“Santos”) to acquire all of the issued ordinary shares of Eastern Star Gas (“ESG”) not already held by Santos and TRUenergy Investments Pty Ltd (“TRUenergy”) via a Scheme of Arrangement (“the Scheme”) as well as Santos’ proposal to acquire all ESG shares held by TRUenergy (“TRU Acquisition”).

Unanimous ESG Directors recommendations

The ESG Directors unanimously recommend that ESG shareholders vote in favour of the Scheme and the TRU Acquisition in the absence of a superior proposal. Furthermore, each ESG Director intends to vote all ESG shares controlled by him, representing 45.5m shares or approximately 5.9% of shares eligible to vote[1] , in favour of the relevant resolutions, in the absence of a superior proposal. Further, the Independent Expert has concluded that the Scheme is in the best interests of ESG Shareholders.

Based on Santos’ closing share price of $12.80 on 13 October 2011 and the transaction exchange ratio of 0.06881 Santos shares for each ESG share held[2] , the implied offer price is currently $0.88 per ESG share, representing a 48% premium to ESG’s share price immediately prior to the offer.

The Eastern Star Gas Board believes the Santos Proposal reflects the strategic value implicit in Eastern Star Gas’s resource position, will immediately crystallise the long term value of the Narrabri Gas Project and addresses the commercialisation and funding challenges and risks associated with bringing the Narrabri Gas Project to fruition on a standalone basis.

The proposal provides continued exposure to the Narrabri Gas Project with the additional benefit of the project development experience and capability, balance sheet strength and benefits associated with being part of a larger and more diversified oil and gas company.

The Scheme Booklet lodged by ESG on the 23 September 2011 sets out all the information relating to the Scheme and the TRU Acquisition and the detailed reasons for the ESG Directors’ unanimous recommendations of the Scheme and the TRU Acquisition. The Scheme Booklet is available on the ESG website at www.easternstar.com.au.

Scheme Resolution and TRU Acquisition Resolution

For the Scheme to proceed, the Scheme Resolution must be passed by:

• A majority in number (more than 50%) of ESG shareholders who vote on the Scheme Resolution; and

• At least 75% of the votes cast on the Scheme Resolution.

The Scheme must also be approved by the Federal Court of Australia.

The ESG Directors encourage each ESG shareholder to exercise their right to vote on the Scheme Resolution. ESG shareholders are encouraged to read the Scheme Booklet, including

1 Shares held by Santos or TRUenergy will not be eligible to vote on both the Scheme Resolution and TRU Acquisition Resolution.

2 Since the proposal was announced, Santos has declared an interim dividend of A$0.15 per share resulting in an upward adjustment to the ratio of Santos shares for every ESG share held from the initially announced figure of 0.06803 to 0.06881.

Eastern Star Gas Limited Sydney Brisbane Narrabri Lvl 7, 51 Pitt St Lvl 16, 40 Creek Street 300 Yarrie Lake Road ABN 29 094 269 780 Sydney, NSW, 2000 Brisbane, QLD, 4000 Narrabri, NSW, 2390 PO Box 4526 GPO Box 1103 PO Box 3042W [email protected] Sydney, NSW, 2001 Brisbane, QLD, 4001 Narrabri, NSW, 2390 www.easternstar.com.au Ph:(02) 9251 5599 Ph:(07) 3136 1500 Ph:(02) 6792 3400 Fax:(02) 9251 2299 Fax:(07) 3018 0533 Fax:(02) 6792 3418

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the Independent Expert’s Report, in full. Your vote in favour of the Scheme is critical to the success of the acquisition of ESG by Santos.

For the TRU Acquisition to be approved, the TRU Resolution must be passed by at least 50% of the votes cast on the resolution. Shareholders need to vote separately on the Scheme and the TRU Acquisition and as such the Scheme is not conditional upon the TRU Acquisition (i.e. the acquisition of ESG by Santos will still proceed if the Scheme is approved but the TRU Acquisition is not approved).

If the Scheme does not proceed, ESG will remain listed on ASX and it would be the ESG Directors’ intention to continue operating ESG in line with its previously stated objectives to commercialise the Narrabri Gas Project. This would entail raising additional funds from equity capital markets with the risk that ESG shareholders may be diluted and any proceeds raised will likely be at a significant discount to the equivalent of the scheme consideration.

Action required by ESG shareholders

A number of voting options are available for ESG shareholders:

• Vote in person at the Scheme Meeting to be held at 10am on Friday 28 October 2011 at the Grand Ballroom No. 2, Shangri-La Hotel, 176 Cumberland Street, The Rocks, Sydney, NSW. The General Meeting to consider the TRU Acquisition will take place at 11am, or as soon thereafter as the Scheme Meeting is concluded;

• Complete your proxy voting form enclosed with the Scheme Booklet and return it to ESG’s share registry in accordance with the directions set out in the proxy form, to be received no later than 10am on Wednesday 26 October 2011 ; or

• Lodge your vote online at www.investorcentre.linkmarketservices.com.au in accordance with the instructions on the website, by no later than 10am on Wednesday 26 October 2011 .

Full details of the proposed transaction are available in the Scheme Booklet and shareholders with any questions about their ESG shares or any other matter in the Scheme Booklet should contact the ESG information line on 1800 704 395 within Australia and + 61 2 8256 3393 outside Australia between 9.00am and 5.00pm, Monday to Friday.

I would like to take this opportunity to thank you for your continued support of ESG, and I look forward to you participating in the decision about ESG’s future.

Yours sincerely,

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The Hon. John Anderson Chairman

Sydney Brisbane Narrabri Lvl 7, 51 Pitt St Lvl 16, 40 Creek Street 300 Yarrie Lake Road Sydney, NSW, 2000 Brisbane, QLD, 4000 Narrabri, NSW, 2390 PO Box 4526 GPO Box 1103 PO Box 3042W Sydney, NSW, 2001 Brisbane, QLD, 4001 Narrabri, NSW, 2390 Ph:(02) 9251 5599 Ph:(07) 3136 1500 Ph:(02) 6792 3400 Fax:(02) 9251 2299 Fax:(07) 3018 0533 Fax:(02) 6792 3418

Eastern Star Gas Limited ABN 29 094 269 780 [email protected] www.easternstar.com.au