PERTH (miningweekly.com) – Oil and gas major Santos has reported a 7% increase in net profits after tax for the full year ending December, with the ASX-listed company reporting record annual free cash flows.
Net profits after tax for the full year reached $674-million, up from the $630-million reported in the previous financial year, while earnings before interest, taxes, depreciation and amortization increased by 14%, from $2.1-billion to $2.4-billion.
Free cash flows for the full year were also up by 13% from $1-billion to $1.1-billion.
The financial results were driven by a 10% increase in sales, which were up from $3.6-billion to $4-billion.
Santos MD and CEO Kevin Gallagher said that the full-year results demonstrated the company’s cash-generative operating model.
“Consistent application of our disciplined operating model continues to deliver cost reductions and efficiencies, with normalized production costs down 8% to $6.97/bl of oil equivalent.
“The year was highlighted by record onshore drilling performance, lower unit costs, successful integration of the Quadrant acquisition and significant progress on our diversified portfolio of growth projects.
“The acquisition of ConocoPhillips’ 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.”
Gallagher said that the acquisition was expected to complete around the end of the first quarter of this year, subject to third-party consent and regulatory approvals.
“Following completion of the ConocoPhillips acquisition, we expect to take a final investment decision (FID) on the Barossa project to backfill Darwin LNG in the second quarter.
“Barossa is making good progress towards FID, with technical assurance processes well advanced and key contracts for the floating production storage and offloading, subsea production system and export pipeline all awarded. The Barossa and Darwin LNG partners are in advanced discussions to finalise the processing agreement for Barossa gas to support a FID.”
Gallagher noted that Santos was also targeting a front-end engineering and design (FEED) entry decision on the Dorado liquids project during the second quarter, while focusing on low-cost, efficient operations in the Cooper basin.
“We have also taken a FEED-entry decision for the Moomba carbon capture and storage project,” he added.
At the Gladstone LNG project, Santos’ operating model continues to support a development plan to unlock more gas over time, with the company recently lifting guidance to some 6.2-million tonnes a year of LNG sales, from this year.
“All of this growth activity is consistent with reaching our goal of more than 120-million barrels of oil equivalent production by 2025,” Gallagher said.