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Barossa Gas Project: Learn more

Santos today released its 2021 Third Quarter Report.

Record sales revenue and record free cash flow

  • Strong base business performance and improved commodity prices delivered record quarterly sales
    revenue of US$1.14 billion, up 6%, and record quarterly free cash flow of US$359 million, up 33%
  • Gross Bayu-Undan production was higher in the quarter due to the successful start-up of the first well in
    the infill drilling program. Gas production was also stronger in Queensland and PNG. Despite the higher
    production, Santos’ net third quarter production of 21.9 mmboe was 3% lower than the second quarter
    following the 25% sell-down in Bayu-Undan and Darwin LNG completed at the end of April and a lower net
    entitlement to Bayu-Undan production under the terms of the Production Sharing Contract
  • Continued growth in GLNG equity gas production from the Roma and Arcadia fields contributed to a 20%
    increase in LNG production and supports forecast LNG production above 6.4 million tonnes in 2021
  • Strong free cash flows reduced net debt (including leases) to US$3.1 billion and gearing to 29.7% at the
    end of September. Gearing is forecast to be less than 28% at year-end at current commodity prices

Disciplined and phased growth

  • Barossa 15% complete and progressing on schedule and budget, with first steel cut for the FPSO hull
  • Award of major FEED contracts for the Dorado project
  • Registration of the Moomba CCS project with the Clean Energy Regulator underway

Merger with Oil Search to create a regional champion of size and scale

  • In September, Santos and Oil Search entered into a definitive agreement to merge the two companies in
    an all-scrip transaction
  • Upon completion of the merger, Santos shareholders will own approximately 61.5% of the merged entity
    and Oil Search shareholders will own approximately 38.5%
  • The merger is on track for completion by year-end and is subject to a limited number of customary
    conditions, including Oil Search shareholder approval, regulatory approvals and Papua New Guinea court

Santos Managing Director and Chief Executive Officer Kevin Gallagher said Santos had delivered another strong quarter. Sales revenues and free cash flow were records for Santos as the business benefited from higher commodity prices, including JKM pricing for 12 LNG cargoes sold during the quarter.

“Our disciplined, low-cost operating model continues to drive strong performance with US$931 million of free cash flow generated in the first nine months of 2021. At current commodity prices, Santos should generate close to US$1.3 billion in free cash flow for the full year.

“Consistent with our strategy, our next phase of growth will be disciplined and phased. We are making good progress on the Barossa project, awarded the major FEED contracts for Dorado and commenced the process to register the Moomba CCS project with the Clean Energy Regulator. Once registration is complete, we will be in a position to take a final investment decision to proceed with Moomba CCS.

“The proposed merger with Oil Search is on track for completion by year-end, subject to customary conditions including Oil Search shareholder approval. I’m very happy with how the merger is progressing, and particularly acknowledge the positive comments from PNG Prime Minister Hon. James Marape, at what is an incredibly important time for energy markets and energy companies around the world.

“Size and scale have never been more important as we look to fund the energy transition to net-zero emissions, and the merger is expected to create one of the top-20 companies in our sector globally and a top-20 ASX-listed company.”