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March quarter production impacted by flooding in Central Australia

  • Over the March quarter, the major floods in Central Australia and Queensland impacted Santos’ Cooper Basin activities. Compounding the floods were local rains of up to 600 mm over the Cooper operational areas. As a result, March quarter production of 12.4 mmboe was 6% lower than the March 2009 quarter.
  • Strong gas production from John Brookes and Indonesia offset lower production from the Cooper Basin and Victoria, resulting in quarterly natural gas, ethane and LNG production of 56 PJ being in line with the corresponding period.
  • Crude oil production was lower than the corresponding period, primarily due to flooding limiting access to wells combined with an unplanned shutdown at Mutineer-Exeter.
  • The flooding in Central Australia will result in an estimated 2 mmboe (net to Santos) of production being deferred. Consequently, 2010 production guidance has been reduced by 2 mmboe to a range of 49 to 52 mmboe.
  • 2010 Cooper Basin gas sales revenue is not expected to be materially impacted by the production deferral as customer deliveries are being met from a combination of current production and gas from storage.

Key activities during the period

  • PNG LNG proceeding to full project execution, with the completion of sales and purchase agreements with LNG buyers and financing arrangements with lenders.
  • First gas from the Henry and Netherby (VIC/P44) gas development, offshore western Victoria.
  • Sale of interest in Evans Shoal for up to $200 million with completion expected to occur in the second half of 2010.
  • 42% increase in year-end proved and probable (2P) reserves to a record 1.44 billion barrels of oil equivalent.

Santos Chief Executive Officer David Knox said the heavy rain and flooding in Central Australia would impact the company’s operations in the Cooper Basin for several months, but that the continued delivery of gas to customers was a significant achievement in difficult conditions.

“We continue to monitor conditions in the Cooper Basin to ascertain how quickly full production and development activity can resume, but we are confident the actions we have taken in response to the conditions will minimise disruption.”

“The GLNG project continues to make significant progress with FEED works nearing completion and detailed discussions ongoing with a number of LNG buyers for offtake from train one and train two. These discussions include the potential for buyers to purchase an equity stake in the project,” Mr Knox said.