Strong first quarter free cash flow generation and major project delivery
Focus on operational excellence generates strong free cash flow
- Strong free cash flow from operations of US$692 million.
- Sales revenue of US$1.4 billion.
- Production of 21.8 mmboe despite severe weather events and planned maintenance activities.
- Bayu-Undan continuing to produce with gas being delivered into the Australian domestic market.
- Gearing of 19.7 per cent, excluding operating leases, at 31 March 2024 (23.2 per cent when included).
- PNG LNG customer price review completed, maintaining weighted average LNG prices for oil index contracts above 14 per cent slope.
- In PNG, high compression reliability from the operated assets continues to support strong oil and gas production. Drilling of the second Angore well in PNG completed and successfully reached target depth.
- GLNG commenced drilling on the first of seven horizontal wells in the Arcadia Valley Edge campaign, with the first well reaching its planned total depth of 4,985 metres, making it the longest measured depth well in Queensland.
Development projects powering ahead
- The Barossa Gas Project is now 70.6 per cent complete. Gas Export Pipeline pipelay due for completion within the next week. The first campaign of the SURF (Subsea, Umbilical, Risers and Flowlines) installation is complete. Thirteen of sixteen modules have been installed on the FPSO with sail away from Singapore to the field on track for first quarter 2025. The Darwin LNG life extension project is now 39 per cent complete.
- The Pikka Project was 47 per cent complete at 31 March 2024. Rig operations were completed on seven wells in the quarter. Four wells have been stimulated with three successfully flowed back. Flow back results compare favourably with pre-drill expectations. Vertical support members for the pipeline are more than 65 per cent complete, and pipelaying was more than 61 per cent complete for the winter season objectives. The seawater treatment plant was 62 per cent complete at the end of the quarter.
Santos Energy Solutions is tapping into strong regional demand for CCS
- The Moomba Carbon Capture and Storage (CCS) Project is 85 per cent complete and commissioning activities have commenced with first injection expected around mid-2024. Flow testing on four injection wells has been successfully completed.
- During the quarter a Memorandum of Understanding was signed with Liberty Primary Minerals Australia Pty Ltd (part of GFG Alliance) to enter into discussions for gas supply combined with CCS opportunities to support the green steel transformation of the Whyalla steelworks.
- PNG nature-based project received validation, a key milestone towards Gold Standard issuance of high-integrity emissions reduction units from the project.
Santos Managing Director and Chief Executive Officer Kevin Gallagher said the strong underlying business performance, combined with a disciplined focus on operational excellence, delivered a robust first quarter for 2024.
“The first quarter brought strong free cash flow which provides a solid foundation for the year ahead. It positions us well to fund shareholder returns, backfill and sustain our existing business, complete our major projects and grow our Santos Energy Solutions business,” Mr Gallagher said.
“I am very pleased that Barossa pipelaying activities are now almost complete and all other Barossa activities are progressing well with first gas expected in the third quarter 2025. The Pikka project has made excellent progress over the winter months in Alaska and is on track for first production in 2026.
“Barossa and Pikka are world-class projects that will be transformative for Santos and set the company up with long-term, stable cash flows for the next 10-15 years at least.
“Our Moomba CCS Project is on track for first injection of CO2 this year and will be a game-changer for decarbonising our own operations as well as opening opportunities for Santos to provide competitive decarbonisation services to customers and third parties, particularly in hard-to-abate sectors such as steel, cement and aviation.
“We can now see line of sight to our major projects progressively coming online in 2024, 2025 and 2026, putting us in a strong position to deliver sustainable, long-term shareholder returns.
“Our focus for 2024 is continuing to drive the disciplined low-cost operating model across the business and the execution of Barossa, Pikka and Moomba CCS projects whilst maintaining a strong balance sheet,” Mr Gallagher said.
