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Santos today released its 2019 First Quarter Activities Report

Record quarterly production

  • First quarter production of 18.4 mmboe was a record for Santos and 33% higher than the corresponding quarter, primarily due to sustained strong asset performance and the acquisition of Quadrant Energy.
  • Production in the quarter was impacted by cyclone activity in Western Australia and by facility outages in the Cooper Basin.
  • Sales volumes of 22.8 mmboe were 21% higher than the corresponding quarter.
  • Sales revenue was up 28% to $1,015 million, the second highest quarterly revenue on record.

Drilling activity levels increasing within disciplined Operating Model

  • 26 wells drilled in the Cooper Basin (85% success rate) and 87 in GLNG (100% success rate).
  • Successful completion of the Cooper Basin Moomba South project phase 1 appraisal program, with seven of eight wells on line and two new plays identified with significant resource potential in the Granite Wash and the Fractured Granite.
  • Corvus-2 appraisal well (Santos 100%) offshore Western Australia discovered a significant gas resource.
  • Muruk-2 appraisal well (Santos 10% economic interest) in PNG confirmed the field is a significant gas discovery which is located nearby existing PNG LNG infrastructure.

Strong free cash flow generation and gross debt reduced

  • Santos generated a record $327 million in free cash flow in the quarter.
  • $1.1 billion in gross debt repaid during the quarter, partly funded by $600 million Reg-S bond issuance.
  • Net debt reduced to $3.4 billion as at 31 March after the payment of 2018 full-year dividend but excluding the impact of new AASB leasing standard.
  • Santos had cash and cash equivalents of $1 billion and gross debt of $4.4 billion at the end of the quarter.

Santos Managing Director and Chief Executive Officer Kevin Gallagher said: “Santos’ first quarter delivered record production volumes and a record free cash flow for a single quarter.”

“Our brownfield growth strategy and disciplined Operating Model continue to drive strong free cash flow to support our growth ambitions across our five long-life natural gas assets. This disciplined approach to capital allocation has now delivered positive free cash flow for twelve consecutive quarters.”

“Highlights of the quarter included strong onshore drilling success rates, completion of phase 1 of the Moomba South appraisal project, and drilling success with the Muruk-2 and Corvus-2 appraisal wells.”

“We also commenced the drilling of pilot wells for our carbon capture, utilisation and storage project in the Cooper Basin.”

“Our operations were however impacted by cyclone activity in Western Australia towards the end of the quarter and also by facility outages in the Cooper Basin.”

“The integration of the Quadrant business is proceeding well and we are on track to deliver the integration synergies promised.”

“In the second quarter, we look forward to continued drilling success, including commencing appraisal of the exciting Dorado oil discovery offshore Western Australia,” Mr Gallagher said.

Production guidance is maintained at between 71 and 78 mmboe and sales volumes between 88 and 98 mmboe.