PERTH (miningweekly.com) – Oil and gas major Santos has reported a 28% increase in annual production for the full year ending December, marking a record output of 75.5-million barrels of oil equivalent.

Sales revenue for the full year were also up by 10%, to a record A$4-billion, from the sale of 94.5-million barrels of oil equivalent.

MD and CEO Kevin Gallagher said on Wednesday that in addition to the record annual production and revenues, Santos had also delivered lower unit production costs, demonstrating the effectiveness of the company’s disciplined cash generative operating model.

“The year was highlighted by highest ever free cash flow of more than A$1.1-billion, record onshore drilling performance, lower unit production costs and significant progress on our diversified portfolio of growth projects.

“The acquisition of ConocoPhillips’ natural gas assets in northern Australia and Timor-Leste, announced in October, is fully aligned with our growth strategy to build on existing infrastructure positions and delivers operatorship and control of strategic liquefied natural gas (LNG) infrastructure at Darwin.”

Santos last year struck the $1.39-billion deal to acquire Conoco Phillips’ northern Australian business, which included a 37.5% interest in the Barossa project and Caldita Field, its 56.9% interest in the Darwin LNG facility and Bayu-Undan Field, its 40% interest in the Poseidon Field, and its 50% interest in the Athena Field.

Production associated with the assets being sold was approximately 50 000 barrels of oil equivalent a day for the first half of 2019 and proved reserves were approximately 39-million barrels of oil equivalent at year-end 2018.

“Also in the Northern Territory, better than expected gas flow rates from the ongoing Tanumbirini-1 ventrical well tests are very encouraging and an important step in Santos’ appraisal of the significant resource potential of the McArthur basin,” Gallagher said on Wednesday.

“Natural gas is forecast to supply a quarter of the world’s total energy demand by 2040 and Santos, with its portfolio of long-life natural gas assets, is well positioned to benefit as we seek to deliver 120-million barrels of oil production by 2025.

“We are also investing in projects to lower emissions and assessing the significant potential for carbon capture and storage in the Cooper basin,” Gallagher said.

Looking ahead at 2020, Santos has placed a production guidance of between 79-million and 87-million barrels of oil equivalent, with sales volumes expected to reach between 99-million and 107-million barrels.

Some A$950-million in capital will be spent on the base business, and a further A$500-million on major growth projects.