Photo by: Bloomberg
PERTH (miningweekly.com) – Oil and gas major Santos has reported a 31% increase in sales volumes for the quarter ended September, reflecting the ramp-up of Gladstone liquefied natural gas (LNG) project production and a strong performance from the Papua New Guinea LNG project.
Sales volumes for the quarter under review reached 21.3-million barrels of oil equivalent, up from the 16.2-million barrels reported in the previous corresponding period.
Production volumes for the same period were up 7%, to 15.5-million barrels of oil equivalent.
Despite a 6% decrease in average realised oil prices, the increase in sales volumes during the September quarter resulted in an 11% increase in revenues for the quarter, which reached $650-million during the period.
Santos MD and CEO Kevin Gallagher said on Friday that the company continued to focus on driving down its costs and applying available cash flow to reduce its debt.
“We are taking the right steps to ensure Santos becomes a strong and sustainable business, and that mindset guides our decision-making as we continue to reduce cost and maintain a strong capital discipline.”
Santos narrowed its full-year production guidance to between 60-million and 62-million barrels of oil equivalent, with sales volumes expected to reach between 81-million and 83-million barrels of oil equivalent.
Upstream production cost guidance has been lowered to between $9/bl and $9.50/bl produced, while capital expenditure (capex) has been reduced to $700-million.
Meanwhile, Santos has also established an oil price hedging policy to reduce the effect of commodity price volatility and support capex plans.
To date, Santos has hedged 7.3-million barrels of oil for 2017, using a zero-cost three-way collar structure.