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Summary

Santos today released its 2020 Fourth Quarter Activities Report.

Record annual production at top end of upgraded guidance

  • Record annual production of 89 mmboe, 18% above the prior year and at the top end of upgraded guidance provided in December
  • Record quarterly production of 25.4 mmboe, 1% above the prior quarter
  • Record quarterly sales volumes of 31.1 mmboe, 7% above the prior quarter
  • Record annual sales volumes of 107.1 mmboe generated annual sales revenue of US$3.4 billion
  • Fourth quarter sales revenue of US$922 million, up 16%, primarily due to stronger LNG sales volumes (up 23%) and prices (up 25%)
  • Santos’ disciplined operating model continues to drive costs lower, with 2020 upstream unit production costs of ~US$8/boe at the lower end of the US$8.00-8.50/boe guidance range

Strong free cash flow and low breakeven oil price

  • Santos generated over US$725 million in free cash flow in 2020 despite lower commodity prices
  • Delivered 2020 free cash flow breakeven oil price of less than US$25 per barrel (before hedging) and less than US$20 per barrel (after hedging)
  • Net debt at the end of the year (including leases) was US$3.7 billion

Growth project milestones achieved

  • Significant milestones were achieved on the Barossa LNG project during the fourth quarter, including execution of a long-term LNG offtake agreement with Mitsubishi for 1.5 mtpa of Santos equity LNG, execution of agreements to transport and process Barossa gas through Darwin LNG, and regulator and joint venture consents for the sell-down of interests in Bayu-Undan and Darwin LNG
  • Moomba CCS project is FID-ready, subject to eligibility for Australian Carbon Credit Units
  • Work continues on the pre-FEED phase for the Dorado project, with FEED entry planned for the first half of 2021 for the Phase 1 oil project. Potential additional liquids tie-backs to be assessed with 2021/22 drilling

Santos Managing Director and Chief Executive Officer Kevin Gallagher said Santos delivered record annual production and sales volumes in 2020, and strong free cash flow of over US$725 million despite lower commodity prices.

“Our consistent and successful strategy combined with the disciplined, low-cost operating model continues to drive strong performance across our diversified asset portfolio and position us for disciplined growth.

“Significant milestones were achieved on the Barossa project during the fourth quarter, including the signing of a binding long-term LNG offtake agreement with Mitsubishi at a price based on JKM and execution of the gas transportation and processing agreements with Darwin LNG. Consents were also received for our sell-downs to SK E&S. Barossa is on-track for a final investment decision in the first half of 2021.

“2020 saw us ride through the bottom of the cycle while still generating free cash flow and deliver a record 4.3 million tonnes of Santos-equity LNG sales. We remain focused on controlling our costs and living by our disciplined operating model so we are set up to sustain our base business and remain resilient through the cycle even as we see the welcomed strengthening in prices over the past months. Our LNG projects currently have 10 spot cargoes scheduled in Q1.

“We also announced in December an ambitious roadmap to net-zero emissions by 2040, new emissions reduction targets and a commitment to work with our customers to reduce their emissions. Our Moomba carbon capture and storage project is now FID-ready, subject to eligibility for Australian Carbon Credit Units,” Mr Gallagher said.