Santos production record drives sales volume and revenue growth

Santos has recorded a first half production record of 37 million barrels of oil equivalent and significant increases in sales volumes and revenue.

The first half production numbers represented a 32 per cent increase compared to the corresponding period, with sales volumes and revenue up 19 per cent and 18 per cent respectively.

The company also reported on the successful appraisal of its Dorado-2 oil and gas resource in the Bedout Basin, offshore Western Australia.

This has significantly de-risked future development of the operations with Santos now expecting a significant resource upgrade above its currently booked 2C resource for Dorado.

Santos’ Papua New Guinea LNG expansion also recorded strong results, as the company acquired a 14.3 per cent interest in PRL 3 which contains the P’nyang natural gas field.

Production at the PNG site subsequently increased from 4.6 million barrels of oil equivalent in the 2018 financial year, to 6.4 million in the 2019 financial year.

Onshore growth was significant for Santos as a record 102 wells were drilled at the company’s Gladstone LNG plant in Queensland, while 25 wells were drilled in the Cooper Basin.

The success of Santos’ year has resulted in the company generating $300 million in free cash flow in the June quarter, bringing total cash flow for the first half to over $600 million.

Santos managing director Kevin Gallagher said the record results was due to the company’s “disciplined operating model and approach to capital allocation.”

“The successful integration of our Western Australian business has exceeded expectations, Santos has now delivered positive free cash flow for 13 consecutive quarters,” he said.

“These cash flows underpin our brownfield growth strategy where we hit a number of significant milestones during the quarter, including farming-in to P’nyang and awarding the subsea contract for Barossa.”

Following successful appraisal of Dorado, Gallagher said the company expects to book significant resource and reserve upgrades at both operations.

He also signalled optimism for the remainder of the year, concluding that Santos “currently expect stronger production in the second half.”

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