PERTH (miningweekly.com) – ASX-listed Santos has reported record yearly production, record sales revenue and record free cash flows for the year ended December, on the back of a strong December quarter.
Santos MD and CEO Kevin Gallagher said Santos delivered record yearly production and sales revenue in 2021, as strong base business performance positioned the company to benefit from higher commodity prices.
Yearly production reached 91.2-million barrels of oil equivalent, up from the 89-million barrels of oil equivalent produced in the full 2020, while quarterly production reached 22.9-million barrels, up 5% on the previous quarter.
Sales volumes for the full year were down to 104.2-million barrels in the full year, compared with the 107.1-million barrels in the 2020 year, with quarterly sales volumes reaching 26-million barrels, up from the 24.4-million sold in the September quarter.
While sales volumes for the full year were down, sales revenues in the full year increased by 39%, from $3.38-million to $4.71-million, while sales revenue in the fourth quarter increased to $1.53-million, up from the $1.1-million reported in the September quarter.
Free cash flow of around $1.5-billion for the year was also a record and more than double the level in 2020.
“Our disciplined, low-cost operating model continues to drive strong performance across the business and has positioned us to take full advantage of the increase in commodity prices. The completion of the Oil Search merger delivers us the size and scale to deliver even stronger outcomes in 2022 and beyond,” Gallagher said.
“I was particularly pleased that we were able to complete the merger before the end of 2021 and in just 130 days from the announcement of our intent to merge with Oil Search, and this sets us up for what is going to be a very busy 2022.”
Oil Search shareholders received 0.6275 new Santos shares for each Oil Search share held, with the merged entity having a diversified portfolio of high quality, long-life, low-cost assets across Australia, Timor-Leste, Papua New Guinea (PNG) and North America with significant growth optionality.
The enlarged company will have a combined 2P+2C resource base of 4.9-billion barrels of oil equivalent, an investment grade balance sheet with more than $5.5-billion of liquidity to self-fund development projects, whilst maintaining further optionality and flexibility to optimise the portfolio, a target gearing of less than 30%, and strong environmental and social governance credentials including maintaining Oil Search’s social and community investment in PNG and North America, including the Oil Search Foundation.
“Consistent with our strategy, our next stage of growth will be disciplined and phased. The Barossa project is 20% complete and making excellent progress, while I was delighted to announce the final investment decision (FID) on the Moomba carbon capture and storage project in November. The Dorado Phase 1 and Pikka Phase 1 projects are progressing towards FID this year,” Gallagher said on Thursday.
“Our merger with Oil Search delivers increased scale and capacity to drive a disciplined, low-cost operating model and unrivalled growth opportunities over the next decade – with a vision of becoming a global leader in the energy transition.”