Santos today released its 2019 Second Quarter Activities Report.
Record production and revenue
- First half production of 37 mmboe was a record for Santos and 32% above the corresponding period.
- Sales volumes of 45.2 mmboe were up 19% and sales revenues up 18% to $2 billion in the first half.
Major growth projects advanced
- Dorado-2 appraisal success confirmed a larger than anticipated major oil and gas resource in the Bedout Basin, offshore Western Australia, significantly de-risking a future development. Santos now expects to book a significant resource upgrade above its currently booked 2C resource for Dorado.
- PNG LNG expansion advanced by the signing of a binding letter of intent to acquire a 14.3% interest (pre-government back-in) in PRL 3 which contains the P’nyang natural gas field.
- The Barossa project entered exclusive negotiations with the Darwin LNG Joint Venture for the supply of backfill gas to Darwin LNG and also awarded the subsea production system contract ahead of a planned FID by early 2020.
- Higher quarterly and year-to-date production in both the Cooper Basin and GLNG.
- A record 102 wells were drilled in GLNG during the quarter (100% success rate) and 25 wells drilled in the Cooper Basin (80% success rate) including fastest ever Cooper total well execution of 4.3 days.
Strong free cash flow
- Santos generated $300 million in free cash flow in the second quarter, bringing total free cash flow for the first half to over $600 million.
- Strong free cash flows reduced net debt by $0.3 billion in the second quarter to $3.1 billion (excluding the impact of the new AASB 16 Leases standard).
Santos Managing Director and Chief Executive Officer Kevin Gallagher said the first half of 2019 had delivered record production volumes and sales revenues, along with strong free cash flow of over $600 million.
“Our disciplined operating model and approach to capital allocation has delivered a strong first half result and the successful integration of our Western Australian business has exceeded expectations.”
“Santos has now delivered positive free cash flow for thirteen consecutive quarters.”
“These cash flows underpin our brownfield growth strategy where we hit a number of significant milestones during the quarter, including farming-in to P’nyang and awarding the subsea contract for Barossa.”
“Following successful appraisal of Dorado and Moomba South, we expect to book significant resource and reserve upgrades respectively for these assets.”
“We are also hitting record drilling rates in the onshore business and completed two appraisal wells for our carbon capture, utilisation and storage project in the Cooper Basin.”
“Second quarter production was however impacted by planned maintenance in the Cooper Basin and PNG LNG.”
“With this maintenance activity now mostly behind us, we currently expect stronger production in the second half,”
Mr Gallagher said.