Santos increases output expectations for 2017

PERTH (miningweekly.com) – Australian oil and gas major Santos has increased its production and sales expectations for the full 2017, following another strong quarter.

The ASX-listed company was now expecting to produce between 57-million and 60-million barrels of oil equivalent during the full 2017, while sales volumes were expected to reach between 75-million and 80-million barrels of oil equivalent.

The new guidance compared with the previous production guidance of between 55-million and 60-million barrels of oil equivalent, and the expected sales volumes of between 73-million and 80-million barrels of oil equivalent.

During the second quarter ended June, Santos produced 14.7-million barrels of oil equivalent, down 1% from the previous quarter, while sales volumes was up 16%, to 21.5-million barrels of oil equivalent, up from 18.6-million barrels.

Sales revenue for the quarter was up by 12% on the previous quarter, to $769-million.

Santos MD and CEO Kevin Gallagher said on Thursday that the second-quarter results delivered further progress on reducing costs, lowering net debt and improving free cash flow.

“Compared to the end of 2016, our net debt position is $600-million lower, to $2.9-billion, and our forecast free cash flow breakeven for 2017 now sits at $33/bl, well below the $47/bl at the beginning of 2016.”

Gallagher said that more efficient, lower cost operations had enabled Santos to increase drilling activity at both its Cooper Basin and across its Gladstone liquefied natural gas (GLNG) acreage.

“This has been achieved as a result of the significant improvements in drill, complete and connect upstream operations unit costs performance over the last 18 months. These additional wells will help boost production over the next few years so Santos can deliver increased gas supply for the domestic market. Santos also executed a number of term gas sales into the east coast domestic market during the second quarter.”