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Higher prices drive Santos profits

20th October 2022

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia


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PERTH ( – Oil and gas major Santos has delivered record year-to-date sales revenue on the back of higher third-quarter production and higher energy prices.

Year-to-date sales revenue reached $5.9-billion for the nine months to September, up 86% on the previous corresponding period, partly driven by a 12% increase in production during that period, which reached 77.6-million barrels of oil equivalent.

In the three months to September, Santos reported 26.1-million barrels of oil equivalent, a 2% interest on the previous quarter, with sales volumes in the same period rising 9% to 29.9-million barrels, and sales revenue increasing by 15% to $2.1-billion.

Santos MD and CEO Kevin Gallagher said Santos delivered another strong quarter with record sales revenue and free cash flow, demonstrating solid performance from the company’s liquefied natural gas (LNG) portfolio and its domestic gas business.

“Santos’ disciplined operating model has delivered strong production which, combined with higher commodity prices, resulted in record third-quarter free cash flow of over $1-billion, taking free cash flow for the first nine months of 2022 to $2.7-billion.

“Energy security is a top priority for countries in our region. Given the ongoing strong customer demand for our product now and into the future, Australia’s role as a major energy-producing nation has never been more important,” Gallagher said.

He told shareholders that Santos was committed to keeping the Australian domestic market supplied, while remaining a leading, reliable and low-cost LNG supplier into Asia.

“As the world sees strong demand for our products, we continue to focus on the critical dual purposes of delivering the energy the world needs while investing to decarbonise the energy supply chain.”

Santos on Thursday narrowed production and sales guidance for the full year to between 103-million and 106-million barrels of oil equivalent and between 110-million and 140-million barrels of oil equivalent, respectively.

Following the implementation of revised Cooper basin crude oil processing agreements from 1 July 2022, third-party crude volumes are no longer accounted as sales volumes. There is no impact on net profit and cashflow as a result of the new arrangements.

Major projects capital expenditure guidance is lowered to a range of $1.15-billion to $1.25-billion, primarily owing to timing of expenditure on major projects, including the suspension of drilling activities on the Barossa project following the Federal Court decision and the deferral of final investment decision (FID) on the Dorado project.

The Barossa gas and condensate project to backfill Darwin LNG is 46% complete, and the floating production and storage and offloading facility fabrication, subsea hardware manufacture and planning of the gas pipeline and sub-sea campaigns are all progressing as planned.

Barossa drilling operations were suspended following the Federal Court decision to set aside the acceptance by the regulator of the drilling and completion activities environmental plan. Santos is appealing the decision with a hearing on the appeal expected to be held in mid-November.

An FID to proceed with the Darwin pipeline duplication project was announced in August. The decision will extend the Barossa gas pipeline to the Santos-operated Darwin LNG facility and allow for the repurposing of the existing Bayu-Undan to Darwin pipeline to facilitate carbon capture and storage at Bayu-Undan.

Edited by Creamer Media Reporter




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