PERTH (miningweekly.com) – Oil and gas major Santos has reported record sales revenue of $1.07-billion for the second quarter ended June, on the back of improved commodity prices and a strong operational performance.
Production in the three months to June reached 22.5-million barrels of oil equivalent, down 9% on the first quarter, on the back of the sell-down of a 25% interest in Bayu-Undan and Darwin liquefied natural gas (LNG) to SK E&S in April this year, which was partially offset by stronger gas production in Western Australia and Queensland.
First-half production reached 47.3-million barrels of oil equivalent, which was 23% above the previous corresponding period, allowing Santos to narrow its full year production guidance to between 87-million and 91-million barrels of oil equivalent, while sales volumes guidance has been narrowed to between 100-million and 105-million barrels of oil equivalent.
Santos MD and CEO Kevin Gallagher said Santos had delivered another strong quarter of production, sales volumes and revenues, as the business benefited from stronger demand and higher prices. Domestic gas sales volumes were up 7% as Santos responded to higher customer demand.
“Our disciplined, low-cost operating model continues to drive strong performance with $572-million of free cash flow generated in the first half, and the business remains on track to deliver a free cash flow breakeven oil price of $25/bl this year. At current oil prices, Santos should generate over $1.1-billion in free cash flow in 2021.”
“Consistent with our 2021 strategic priorities, after taking the final investment decision (FID) on Barossa in March, we completed the sell-downs in Bayu-Undan and Darwin LNG, and have now commenced all key workstreams on Barossa as well as entering front-end engineering design for the Dorado project,” said Gallagher
“As I have always said, we will remain disciplined and cost-focused during this next phase of growth. Despite cost challenges across the industry, I am pleased that our continued focus on costs sees a lowering of our upstream production cost guidance.
“The Moomba carbon capture and storage (CCS) project is FID-ready, and we are actively exploring CCS opportunities at Bayu-Undan and the production of zero-emissions hydrogen at Moomba. These projects provide a competitive advantage as we seek to decarbonise our oil and gas assets on the path to net-zero emissions by 2040,” Gallagher said.