Santos oil and gas production record eases price pain
Record first half production from oil and gas producer Santos has eased the pain of a 29 per cent slide in realised prices.
Santos produced 31.1 million barrels of oil equivalent (mmboe) in the first half of the year, up 10 per cent on the previous first-half result.
Over the same period, the average price realised slid 29 per cent to $US43 a barrel.
The increase in production was largely driven by shipments out of the new GLNG plant in Gladstone.
The GLNG plant produced 1 million tonnes of LNG in the first half, which will be further boosted by the the plant’s second train which commenced operation in late May.
Production in the second quarter was marginally down on the first, reflecting routine maintenance at the PNG LNG joint venture.
A highlight for the company was cutting upstream production costs by 15 per cent, while capital expenditure fell by 58 per cent in the first half as the massive GLNG project moved to completion.
Santos chief executive Kevin Gallagher said productivity and cost-cutting initiatives were starting to deliver tangible results.
“There is a lot of work ahead of us but today’s results show we are heading in the right direction,” Mr Gallagher said.
Santos has struggled in recent years, caught in the pincer of tumbling oil prices and mounting debt associated with its big bet on Queensland coal seam gas.
Earlier this year it announced a full year loss of $2.7 billion on the back of write downs in the value of its stake in the GLNG plant as well as other key gas producing assets in the Cooper Basin and Gunnedah.
Its share price is down around 20 per cent over the past year, but has doubled since the nadir in January as the oil price recovered.
Santos opened down 0.9 per cent at $4.89, with the energy sector falling in line with lower oil prices overnight.