GLNG Q3 LNG Output at 1.3mn mt

Santos operated Gladstone LNG produced 1.3mn mt of LNG in the third quarter of 2016 and shipped 21 cargoes, taking the total to 60 LNG cargoes since start up in September 2015, the Australian company said October 21.

Third quarter sales volumes were up 31% to 21.3mn boe.  Santos LNG sales volumes more than doubled to 755,500 metric tons, reflecting the ramp up of GLNG and strong performance at PNG LNG, the company said. Third quarter production was up 7% to 15.5mn boe. Revenue rose to $650mn from $585mn a year ago.

Santos’ year to date capital expenditure was down 53% to $438mn while 2016 guidance has been reduced to $700 million. At the same time, 2016 production guidance has been narrowed to 60 to 62mn boe and production cost guidance cut to $9-9.50/boe.

GLNG project (Credit: GLNG)

“We are taking the right steps to ensure Santos becomes a strong and sustainable business, and that mindset guides our decision making as we continue to reduce costs and maintain a strong capital discipline. Furthermore, our decision to commence oil price hedging reflects our desire to reduce the effect of commodity price volatility,” managing director and CEO Kevin Gallagher said.

Initial transactions under the hedging policy have been undertaken and to date the company has hedged 7.3mn barrels of oil in calendar year 2017 using a zero-cost three-way collar structure, it said.

Low energy prices continue to have severe impact on financials of major Australian oil and gas producers. According to various agencies, the supply glut in the natural gas market is expected to linger on for some time longer, which could keep world gas price low going forward as well. However, focus on efficiency improvement emerges as a bright underlying theme. With oil prices now $50/b after hitting a low of $27/b in January, producers hope that some stability may finally be returning to the market. 

Shardul Sharma