Moreover the oil and gas extraction industry is a high concentration industry

Moreover the oil and gas extraction industry is a

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per boe but still higher than Woodside and some other competitors. Moreover, the oil and gas extraction industry is a high concentration industry where the top four companies are predicted to take 47.7% revenue in 2018-19 (IBISWorld, 2019). While Santos only takes 6.7% market share which is lower than its competitors such as Woodside, BHP Group Limited and Chevron Australia Holdings Pty Ltd (see Appendix 3). Considering the economic scale, the competitors are much stronger for both sales and production volume. Additionally, it is pointed out that Santos’ oil and gas extraction revenue growth is also underperforming (IBISWorld, 2019). By analyzing ratios, the higher creditors turnover for Santos means it is more likely to face the bad debt risk and is less liquid than industry average level (see Appendix 4).
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4 Management and Governance Santos Ltd identifies as a publicly listed company comprising of a Board of Directors as its corporate governance structure. Committees of the board involve the Audit and Risk Committee, Nomination Committee, People and Remuneration Committee and the Environment, Health, safety and Sustainability Committee. Managerial responsibilities are appointed to the Chief Executive Officer (Kevin Gallagher) in addition to a robust executive committee with Anthony Neilson as the Chief Financial Officer (Santo.com, 2019). Santos is largely an Australian owned company where the 5 biggest shareholders amount to 72.8% of total shares and are incorporated in Australia. The largest shareholder being HSBC Custody Nominees (Australia) Limited followed by Citicorp Nominees Pty Limited consists of 26.3% and 22.2% of total shares (IBISWorld, I. 2019). SWOT Analysis Strength 1: Competent in Acquisition Santos is actively expanding its market, which contribute to establish market presence, increase market share, gain a wider customer base, raise funds for new development and reduce the burden from competitors. For example, Santos acquired Quadrant Energy for $2.15 million on 22 August 2018. Through the acquisition, Santos has increased the ownership and operatorship of the high-quality portfolio of its long life, low cost natural gas assets in Western Australia (Santos.com, 2019). This helps generate value from backfilling and third-party natural gas opportunities. In terms of financial impact, the acquisition of Quadrant Energy leads to an increase in EBITDAX of $60 million and a revenue increase of $80 million which is greater than the material buffer of 10%. The risk of potential misstatement may increase as the acquisition is significant and complex. Strength 2: High reserve-replacement ratio The reserve-replacement ratio is an indicator to assess the performance of oil and gas extraction or production companies. It refers to the amount of proved reserves added to the proven reserve base of a company according to the amount of oil and gas produced during the year. It is stated that if the ratio is 100%, then the production is sustainable, and for companies with ratios greater than 100%, production is likely to increase. Comparing with other companies in this industry, Santos has a high reserve-replacement ratio of 298%, which indicates that Santos has long-term growth potential. Additionally, the estimation of reserve could be a key account that may lead to
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