PERTH (miningweekly.com) – Despite lower production and sales volumes in the first quarter ended March, oil and gas major Santos has been able to lower its costs.
During the three months to March, production reduced by 2% on the previous quarter, to 14.8-million barrels of oil equivalent, while sales volumes were down by 15%, to 18.6-million barrels of oil equivalent, primarily owing to the sale of the Victorian, Mereenie and Stag assets, while sales volumes were also affected by lower third-party volumes and the timing of liftings.
Despite the lower production and sales, Santos estimates that its 2017 free cash flow breakeven point has been reduced to $34/bl, down from $36.50/bl in 2015.
“Our costs have again been reduced, we have improved our free cash flow position and our net debt has been lowered,” MD and CEO Kevin Gallagher said on Thursday.
“Strong free cash flow combined with cash proceeds from assets sales and the share purchase plan enabled us to reduce net debt by $380-million in the first quarter. This is strong progress towards our target of $1.5-billion reduction in net debt by the end of 2019. We will continue to prioritise free cash flow for debt reduction,” Gallagher said.
Sales revenue for the quarter reached $684-million, compared with the $753-million generated in the fourth quarter of last year.
Santos has maintained its full-year production guidance of between 55-million and 60-million barrels of oil equivalent, and its sales volume target of between 73-million and 80-million barrels of oil equivalent.