Santos Keeps Output but Cuts Costs
Australian oil and gas producer Santos hit the upper end of its 2017 production guidance range while bringing in its capital expenditure lower than its previously flagged expectations, the company said January 24.
“In 2017, our turnaround strategy to delivery a low-cost, reliable and high performance business progressed ahead of expectations. Santos is now a stronger, more resilient company with the capacity to execute and bring on-line growth opportunities across its core long-life natural gas assets,” Santos CEO Kevin Gallagher said.
Its Q4 production was steady with Q3 at 15mn barrels of oil equivalent (boe), which rounded the year out at 59.5mn boe, down marginally from 61.6mn boe the previous year. Santos’ guidance for 2017 was 58mn boe-60 mn boe. For 2018, it expects production of 55mn boe-60mn boe.
The company’s capital expenditure for 2017 totalled $682mn, which was below its given guidance for the year of $700mn-$750mn, sales volumes of 83.4mn boe was above guidance of 79mn boe-82mn boe and upstream production costs of $8.07/boe produced was in the guidance range of $8/boe-$8.25/boe, it said.
Santos expects 2018 sales volumes to be in the range of 72mn boe-78mn boe, capital expenditure is expected to be $825mn-$875mn and upstream unit production costs to be $8.20/boe-$8.80 boe.
“Santos’ new operating model has set a disciplined framework to drive shareholder value as we seek to further reduce costs, build production and maximise operating cash flow,” Gallagher said.
The company, which is a leading Australian domestic gas supplier and major LNG exporter, focuses on five core, long-life gas and LNG assets. They include the Gladstone LNG facility in Queensland; its Northern Australian business which includes a partnership in Darwin LNG; its Western Australia and Cooper Basin gas assets; and shares in the Papua New Guinea LNG project.
“In 2018, we will increasingly focus on the Build and Grow phases of our strategy as we progress growth opportunities in Northern Australia, PNG and Narrabri, and ramp-up drilling in the Cooper Basin and GLNG,” he said.