Photo by: Bloomberg
PERTH (miningweekly.com) – Oil and gas major Santos has reported higher production in the second quarter ended June 30; however, the lower realised oil price caused sales revenue to plummet.
In the quarter under review, Santos produced 14.3-million barrels of oil equivalent, up from 14-million barrels produced in the first quarter of this year, and the 12.8-million barrels produced in the second quarter of last year.
The increase in production reflected a full quarter of production from the Papua New Guinea (PNG) liquefied natural gas (LNG) project, and increased production from the Cooper basin.
Crude oil production for the quarter was down 6% on the previous quarter, primarily owing to lower production in Western Australia owing to the Mutineer-Exeter/Fletcher Finucane floating production storage and offloading vessel being offline.
Meanwhile, sales volumes for the three months to June rose to 15.7-million barrels of oil equivalent, compared with the 15.2-million barrels sold in the first quarter.
However, sales revenue fell to $786-million for the second quarter, despite the higher output.
The average oil price achieved for the quarter was A$83/bl, which was 15% higher than the previous quarter, but 32% below the corresponding quarter of last year.
CEO and MD David Knox said the company was taking positive steps to strengthen its operating positions in the lower oil price environment.
“Year-to-date capital expenditure is 53% below 2014 levels and our production costs for the first half are tracking below guidance at A$1.40/bl of oil.”
Knox said the company’s flagship Gladstone LNG (GLNG) project was progressing well as it moved towards first LNG around the end of the third quarter.
All upstream facilities had been commissioned and were fully operational.
The $18.5-billion GLNG project, which is a joint venture between Santos and LNG producers Petronas, Total and Kogas, will convert coal-seam gas to LNG.
The project involves developing gasfields from the Bowen and Surat basins in south-western Queensland and transporting the gas through a 420 km underground pipeline to an LNG plant on Curtis Island, off the coast of Gladstone.
For the full year, Santos was expecting production to be between 57-million and 64-million barrels of oil equivalent.