Australian Santos’ Underlying Profit Surges 433% on Year
Leading Australian oil and gas producer Santos saw its underlying profit surge 433% year on year to A$336mn ($264mn) in 2017, up from A$63mn the year before, the company said February 21.
Santos CEO Kevin Gallagher said the company removed substantial costs, generated significant free cash flow and reduced net debt.
“Strong operating performance across the core assets resulted in sales volumes above the upper end of guidance and production toward the top end of guidance,” he said.
The company’s five core, long-life gas and LNG assets 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 interests in Papua New Guinea which includes the PNG LNG project.
Its total sales volumes in 2017 were 83.4mn boe, which was above guidance of 79mn boe-82mn boe, and this year it is expecting the total to come in the range of 72mn boe-78mn boe.
The 2017 full-year result includes the previously announced net impairment charge of A$689mn after tax taken in the first half against GLNG (A$867mn) and the Ande Ande Lumut oil project assets offshore Indonesia (A$149mn), partially offset by a positive net write-back to the Cooper Basin of A$336mn, it said.
“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,” Gallagher said.
“In 2018, we will increasingly focus on growth as we progress significant opportunities like Barossa backfill of Darwin LNG, appraisal drilling in PNG, seek new market opportunities around our WA gas assets, and ramp-up activity in the Cooper Basin and GLNG,” he said.
The company also said it has delivered on its commitment to the federal government to meet domestic gas demand, while also honouring its long-term LNG contractual obligations.
“Over the course of the year we signed agreements to facilitate the delivery of more than 140 PJ of gas into the east coast domestic market,” Gallagher said.
He said that in 2018, the company is on track to supply about 70 PJ into the region, which is 11% of the expected demand as stated by the country’s competition watchdog, the ACCC.
“In Eastern Queensland we signed transport agreements to unlock significant gas reserves that sit outside the GLNG project. This allows Santos to meet contractual obligations to supply gas to GLNG while freeing up Cooper Basin gas for domestic east coast markets,” Gallagher added.