Higher quarterly production as operations recover from wet weather
- Production of 11.9 million barrels of oil equivalent (mmboe) in the June quarter was 8% higher than the first quarter of 2011 and in line with the corresponding period in 2010.
- Following adverse weather conditions in the first quarter, Cooper Basin production operations and well construction activities are returning to normal as conditions dry out and access improves, however several fields remain flood-affected.
- Quarterly natural gas, ethane and LNG production was 6% above the first quarter due to higher production from the Cooper Basin, John Brookes and Victoria. The average realised gas price was $4.61 per gigajoule, 5% higher than the corresponding period.
- Quarterly crude production was 21% above the first quarter due to higher production from Western Australian assets and the Cooper Basin. Timing of oil shipments resulted in a 595,000 barrel net crude oil underlift in the first half, which is expected to be recovered during the remainder of 2011.
- Production guidance for 2011 is maintained at 47 to 50 mmboe.
Key activities during the period
- Construction progressing to schedule and budget on the US$16 billion, 7.8 million tonne pa GLNG project; clearing of the LNG plant site on Curtis Island is well advanced and the first concrete pour was made during the quarter.
- A significant gas discovery at the Zola-1 exploration well, located in the Carnarvon Basin offshore Western Australia. The well intersected more than 100 metres of net pay in a good quality reservoir.
- Oil discovery at the Finucane South exploration well, also located in the Carnarvon Basin and near to the existing Santos-operated oil production facilities at Mutineer-Exeter.
- Gas production commenced ahead of schedule from the Halyard well offshore Western Australia.
- New three-rig drilling fleet commissioned in the Cooper Basin.
- Growth projects in the base business (Chim Sáo, Reindeer and Wortel) remain on schedule for first production this year.
- Successfully acquired and analysed a shale core in the Moomba 185 well. Desorption testing indicates results commensurate with US producing shale gas basins.
Santos Chief Executive Officer David Knox said that while recovery from the flooding in central Australia was well underway, several fields remain flood-affected and the company’s operations in the Cooper Basin would continue to be impacted for several months.
“Gas and liquids production from the Cooper Basin improved in the June quarter, and we expect continued progress in coming months. It is also pleasing to report higher oil production from our Western Australian assets at a time of strong oil prices.”
Mr Knox said construction of the GLNG project was progressing to schedule and budget.
“GLNG construction activity is ramping up quickly. Site clearing and bulk earthworks at the LNG plant site on Curtis Island are well underway.
“GLNG is off to a good start. We are on schedule for first LNG in 2015,” Mr Knox said.
Santos announced on 18 July 2011 the acquisition of 100% of the outstanding ordinary shares in Eastern Star Gas Limited (ESG) via a recommended Scheme of Arrangement. Santos also announced the sale of a 20% working level interest in ESG’s permits in the Gunnedah Basin to TRUenergy for $284 million.
“The acquisition of ESG is a unique opportunity to consolidate our Gunnedah Basin interests and establish the leading position in Australia’s next major natural gas province. TRUenergy, one of Australia’s leading integrated energy companies, is an ideal partner to develop ESG’s permits with Santos,” Mr Knox said.
Completion of the acquisition of ESG and sale of interests to TRUenergy is expected by late October 2011.