Santos today announced an after tax profit for the 1998 first half of $84.2 million, a decrease of 17.7% on the 1997 first half result of $102.3 million.
The result reflects a reduction in the price of crude oil, mitigated by solid operational performance.
Production volumes for the first half of 1998 increased by 5.5% compared with the 1997 first half, reaching a record 21 million barrels of oil equivalent (boe).
Increased production reflected first gas delivery to Mt Isa, commencement of oil production from the SE Gobe and Stag fields and increased condensate production.
Operating costs continued to be tightly controlled.
However the interim profit was adversely affected by a fall of 32.5% in the US dollar price of crude oil and similar falls in the prices of other petroleum liquids.
Directors have maintained the interim dividend of 12.0 cents per share, fully franked, the same as the 1997 interim dividend. The dividend will be paid on 18 November 1998 to shareholders registered in the books of the company at the close of business on 23 October 1998.
Earnings per share were 13.9 cents compared with 18.2 cents in 1997. Net operating cash flow per share was 32.1 cents compared with 35.1 cents in the 1997 first half.
Exploration achieved a 48% success rate during the half, with the highlights being the Cabernet gas discovery in the South Australian Cooper Basin and the Legendre South oil and Caribou gas discoveries in the Carnarvon Basin. The Cabernet field is already on production and development planning for Legendre is underway, with first production possible by 2001.
Commenting on the results the Managing Director, Mr Ross Adler said:
“Santos continued to deliver a solid operational performance during the half but profit was inevitably affected by the adverse oil price movement.
Even after taking account of the depreciation in the Australian dollar, the fall in crude oil prices reduced Santos’ revenue by $34 million compared with the 1997 first half.
However growth in production from new projects, the strength of Santos gas business (which is largely unaffected by oil prices) and tight control over operating costs helped to mitigate this impact.
We have already announced that, based on the operators’ present production forecasts for the Stag and Elang/Kakatua oil fields, we expect production and sales volumes for the year to be approximately 10% higher than in 1997. The recent production performance of both fields provides further confidence that this forecast can be achieved or possibly exceeded.
Based on this forecast, and assuming an oil price of US$14.00 per barrel (A$22.50 per barrel) earnings for the 1998 full year are expected to be approximately 12.5% below the record 1997 financial results.
Clearly, the final results for 1998 will depend upon the production volumes and oil prices actually achieved in the second half”.