23 Jan 2009
Comparative performance at a glance
| Quarterly comparison | | Q4 2008 | Q3 2008 | Change % |
|---|
| Production |
mmboe |
13.6 |
13.2 |
+3% |
| Revenue |
A$million |
648 |
730 |
-11% |
| Corresponding period comparison | | Q4 2008 | Q4 2007 | |
|---|
| Production |
mmboe |
13.6 |
14.0 |
-3% |
| Revenue |
A$million |
648 |
647 |
0% |
| Full Year comparison | | 2008 | 2007 | |
|---|
| Production |
mmboe |
54.4 |
59.1 |
-8% |
| Revenue |
A$million |
2,762 |
2,489 |
+11% |
Production in line with 2008
- December quarter production of 13.6 mmboe improved by 3% compared to the September quarter following the reinstatement of production from John Brookes in September.
- Following the Varanus Island incident in June, initial production from John Brookes recommenced in early August with full production reinstated by early September.
- 2008 Cooper Oil production increased by 19% compared to the previous year, even though December quarter production was impacted by adverse weather conditions.
2009 production guidance
- 2009 production is expected to be in the range of 53 to 56 mmboe.
Record annual sales revenue
- 2008 sales revenue of $2.8 billion was a record for the Company.
- December quarter average portfolio gas price of $4.74 per gigajoule was 23% higher than the December quarter of 2007, primarily due to higher realised ethane and LNG prices.
- December quarter average realised oil price of A$89.81 per barrel was 19% lower than a year earlier, due to lower international oil prices offset by a weaker A$/US$ exchange rate.
Key activities during the period
- Appointment of Bechtel as downstream FEED contractor for Gladstone LNG.
- Transfer of Santos’ interest in the Brantas PSC in Indonesia, including the Banjar Panji-1 well, to a company associated with the project operator.
- Oil discovery with the Fletcher-3 exploration well in the Carnarvon Basin offshore Western Australia.
- Successful completion of $300 million off-market share buy-back.
- US$585 million Sino Iron gas sales contract signed in early January, with gas to be supplied from the Reindeer project in Western Australia.
Santos Chief Executive Officer David Knox said Santos had delivered production in line with guidance in 2008.
“Our portfolio of oil and gas assets delivered record sales revenue in 2008,” Mr Knox said.
“Moving into 2009, Santos is well positioned despite the global financial crisis. The Company has a very solid financial position, reinforced by a strong cash balance. We remain focussed on leveraging our solid base business in Australia while targeting significant growth through our LNG projects and focussed opportunities in Asia.”
2008 guidance
2008 production was in line with guidance. Production cost guidance has increased by $20 million primarily due unfavourable foreign exchange impacts on US$ denominated production costs combined with higher maintenance costs in the fourth quarter. Royalty related taxation expense guidance has reduced primarily due to actual realised oil prices during the fourth quarter being lower than assumed in previous guidance.
| Item | Previous guidance | Updated guidance |
|---|
| Production |
54–56 mmboe |
54.4 mmboe |
| Production costs |
$80 million higher than 2007 |
$100 million higher than 2007 |
| Depreciation, Depletion & Amortisation (DD&A) expense |
$12.30 per boe |
No change |
| Petroleum Resource Rent Tax (PRRT) and similar taxes expense (refer note below) |
$140 to $160 million (after tax) |
$120 to $140 million (after tax) |
| Capital expenditure (including exploration & evaluation) |
$1,500 million |
$1,629 million |
Further detail of 2008 capital expenditure, including exploration and evaluation expenditure, is reported in the table on page 5 in this release.
Other items of expense are expected to be consistent with 2007 outcomes, with the exception of net financing costs which are expected to be lower than 2007 due to the receipt in July of the cash payment from Petronas.
Guidance on 2008 financial outcomes above is preliminary in nature and subject to audit. As such, the actual results for the 12 months to 31 December 2008 may differ from the guidance given in this update.
2009 guidance
The Company expects 2009 production to be in the range of 53 to 56 mmboe.
Guidance on financial items will be provided with the full year results, expected to be released on 19 February.
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