PERTH (miningweekly.com) – Oil and gas major Santos has reported a 3% increase in production during the three months to June, compared with the previous quarter, on the back of higher production from its Western Australian assets.

Production in the second quarter reached 22.8-million barrels of oil equivalent, with sales volumes down 2% to 23.3-million barrels of oil equivalent, generating revenues of A$1.33-billion, an 18% decline on the previous quarter as a result of the sales volumes and lower commodity prices.

Production in the six months to June reached 45-million barrels of oil equivalent, down 13% from the previous corresponding period, while sales volumes were down by 15% to 47.1-million barrels of oil equivalent. Revenue for the interim period also declined by 21%, to A$2.96-billion.

“Our underlying business remains strong and has continued to perform well in a volatile oil price environment. Santos has delivered another solid quarter of production and cash flow generation demonstrating the strength of our business and the benefits of a diversified portfolio,” said Santos MD and CEO Kevin Gallagher.

“Free cash flow of more than $1.1-billion in the first half positions the company well to deliver shareholder returns, backfill and sustain our existing business while also investing in our decarbonisation projects.

“We were also pleased to see positive momentum for our Bayu-Undan carbon capture and storage (CCS) project. The Australian government introduced legislation to the parliament to implement the London Protocol’s cross-border provisions for CO₂ transport and storage and the Timor-Leste government included approval of the necessary legislation and regulation to allow CCS activity in the five-year legislative program mefor its new national parliament. These are key regulatory milestones to enable Bayu-Undan CCS.”

“Santos has also advanced its low carbon fuels ambition, establishing a partnership with Osaka Gas to investigate the feasibility of carbon neutral e-methane made from green hydrogen in the Cooper basin. E-methane is a low-carbon fuel that has the competitive advantage of being able to utilize existing infrastructure across the supply chain for natural gas,” Gallagher said.

“Our disciplined operating model positions us to deliver on our strategy to backfill and sustain our existing infrastructure, and decarbonise and develop future low carbon fuels as those markets develop.”

Santos this week narrowed its production volume guidance range to between 89-million and 93-million barrels of oil equivalent for the full year, while the sales guidance has remained unchanged at between 90-million to 100-million barrels of oil equivalent.

The company has also lowered its capital expenditure guidance for major projects from the A$1.8-billion previously guided to between A$1.5-billion and A$1.6-billion.