Santos reaffirms domestic supply, improves forecasts
Santos has set new gas production records, driven by its PNG LNG operations running above capacity and the ramping up of its Queensland GLNG plant, and reaffirmed its commitment to ensure domestic gas supply.
“As an Australian company, we understand the importance of reliable and affordable energy for Australian businesses and households, and are committed to playing our role in supplying the domestic market,” Santos chief executive Kevin Gallagher said on Thursday.
The company said it would provide more than 125 petajoules of gas into the east coast gas market in the coming years.
The company’s positive momentum has been driven by its PNG LNG operations running above capacity, at 8.6 million tonnes of LNG per annum for the quarter – the highest rate since it began – and its Queensland GLNG ramping up operations to hit new production highs as it looks to fill the regional output gap left by fellow Gladstone gas operation QCLNG’s recent temporary maintenance shutdown.
Santos lifted its forecast guidance range on sales volumes from 77-82 MMboe to 79-82 MMboe, also adding another million barrels of oil into its production guidance, to sit between 58 and 60 MMboe.
The positive results helped push down Santos’ breakeven price from $US47 per barrel to $US33 per barrel.
Santos also slashed its debt levels by 20 per cent, cutting it down by $US700 million to $US2.8 billion from $US3.5 billion at the end of last year.
However, Santos is less optimistic about future pricing, reducing its oil hedging prices for Brent short call and Brent long put from $US62.85 to $US60.30 and $US50 to $US48.48 per barrel, respectively.
The market reacted positively to Santos’ results, its shares up 1.2 per cent to close at $4.28.
Although Santos’ results have buoyed its position, Woodside’s quarterly results released on Thursday showed a company hamstrung by gas plant delays.
While Woodside has announced first production at its West Australian Wheatstone LNG operations – which will add 13 million barrels of oil equivalent (MMboe) annually once its two LNG trains and gas plants are operational – it came too late to make a significant impact for the quarter.
The delayed start up of Wheatstone has seen the oil and gas company narrow its 2017 production guidance to 84-86 MMboe, as it records its worst production quarter this year.
However, the poor results were offset by strong production at Pluto LNG, which set a record 3 per cent higher than the previous record last year, producing 1,059,735 tonnes of LNG.
The market punished Woodside, with shares falling 1.8 per cent to close at $29.25 on Thursday.
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