Business|Energy|Financial|Flow|Gas|LNG|Oil And Gas|Oil-and-gas|Projects|SECURITY|Sustainable|Flow
Business|Energy|Financial|Flow|Gas|LNG|Oil And Gas|Oil-and-gas|Projects|SECURITY|Sustainable|Flow

Santos sets new records

16th February 2022

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia


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PERTH ( – Oil and gas major Santos has reported record free cash flows for the 2021 financial year on the back of higher oil and liquefied natural gas (LNG) prices, and a three-week contribution from the Oil Search assets.

Santos on Wednesday reported that production in the 2021 financial year had reached a record 92.1-million barrels of oil equivalent, a 3% increase on the 2020 production, with sales volumes in the period down by 3% from 107.1-million to 104.2-million barrels of oil equivalent.

However, sales revenue for the financial year was up 39% on the previous financial year, to $4.7-billion, while earnings before interest, taxes, depreciation and amortisation was up 48% to $2.8-billion, and underlying profits increased by 230%, from $287-million to $946-million.

Profits after tax for the full year were up 284%, from a loss of $357-million to a profit of $658-million.

Santos MD and CEO Kevin Gallagher said Santos delivered record production, free cash flow and underlying earnings in 2021, as strong base business performance positioned the company to benefit from higher commodity prices.

“The highlight of the year was the completion of our merger with Oil Search. The merger delivers increased scale and capacity to drive our disciplined, low-cost operating model and unrivalled growth opportunities over the next decade, all with a vision of becoming a global leader in the energy transition,” Gallagher said.

“The financial results we are announcing today include only three weeks of the merged company. Had the merger been in place for all of 2021, the combined asset portfolio would have generated more than $2.3-billion in free cash flow for the year.

“We will now seek to further optimise the portfolio, reduce gearing and conduct a review of our capital management framework including returns to shareholders.

“2021 brought global energy security into the spotlight with higher prices and a supply crunch in the wake of rapidly recovering demand and a lack of investment in new supply. It is vitally important that investment in new supply occurs and in a sustainable way. At Santos, we are focussed on supplying critical fuels more sustainably to meet society’s demand,” Gallagher said.

Capital expenditure on major growth projects is expected to be in the range of $1.15-billion to $1.3-billion in 2022, and a contingent amount of up to approximately $400-million could be added should the Dorado and Pikka projects take final investment decisions.

Sustaining capital expenditure is expected to be approximately $900-million and restoration expenditure is expected to be approximately $200-million in 2022. Sustaining and restoration expenditure is self-funded within the disciplined operating model and is included in the 2022 forecast free cash flow breakeven oil price of less than $25/bl.

Production in 2022 is expected to increase to a range of 100-million to 110-million barrels of oil equivalent primarily owing to higher production from Papua New Guinea (PNG) following the Oil Search merger.

This is expected to be offset by a lower share of Bayu-Undan production, which is expected to be approximately 10-million barrels of oil equivalent less than 2021, owing to a lower average working interest following the 25% sell-down to SK E&S in 2021, lower gross production as the field approaches end of field life and lower net entitlement under the production sharing contract owing to higher forecast LNG prices.

Sales volumes in 2022 are expected to be in the range of 110-million to 120-million barrels of oil equivalent.

Edited by Creamer Media Reporter


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