Santos ‘well placed’ to withstand low oil price, reports strong output

PERTH (miningweekly.com) – Oil and gas major Santos has achieved its highest yearly production rate since 2007, on the back of a strong December quarter.

Santos produced 14.9-million barrels of oil equivalent in the December quarter, which was in line with the 15.1-million barrels produced in the previous corresponding quarter.

Santos stated on Friday that the Papua New Guinea liquefied natural gas (LNG) and Darwin LNG operations had produced at record rates during the fourth quarter, while the Gladstone LNG project had ramped-up as expected, following first LNG output in late September.

The fourth quarter production brought Santos’s full-year output to 57.7-million barrels of oil equivalent, which was a 7% increase on the previous year’s production, and within the company’s guidance range of 57-million to 59-million barrels of oil equivalent.

Despite the consistent production figures in the December quarter, revenues for the period fell by 24%, compared with the previous corresponding period, to A$828-million, as the oil price continued to decline. The average realised oil price had declined 33% during the same period.

Executive chairperson Peter Coates said on Friday that the fourth quarter results reflected Santos’s response to the challenging oil price environment, adding that the company would continue to review its operational and development plans with a focus on preserving cash.

“Santos is well placed to withstand an extended period of low oil prices, with A$4.8-billion in cash and committed undrawn debt facilities, and no material debt maturities until 2019.”

Coates added that the company’s focus would continue to be on reducing its capital expenditure (capex) , as well as building upon the significant improvements that Santos had made in its operating efficiency.

Full-year capex of A$1.66-billion was below guidance for 2015, and 54% lower than the previous year, while full-year production costs a barrel were 10% lower.