Santos reports lower Q1 revenue due to production drop, lower prices
Australian oil and gas company Santos on April 18 reported a 14.3% year/year decline in revenue during the January-March quarter (Q1) due to lower production volumes and weaker LNG prices.
The company's Q1 revenue was $1.39bn, down from $1.63bn recorded in the same period last year. Production also dipped slightly, reaching 21.8mn barrels of oil equivalent (boe) compared to 22.2mn boe in Q1 2023. This decline is primarily due to planned maintenance activities and adverse weather conditions impacting domestic gas, ethane, and crude oil production in Western Australia and the Cooper Basin.
LNG production also faced a setback compared to the previous quarter due to annual preventative maintenance, according to Santos.
The average realised LNG price during Q1 2024 was $12.86/mmBtu, down from $14.46/mmBtu a year earlier. Domestic gas prices followed a similar trend, averaging $5.95/gigajoules in Q1 2024 compared to $6.59/gigajoules in the corresponding quarter of 2023.
Santos also highlighted progress on its major projects. The Barossa gas project has reached 70.6% completion, with the gas export pipeline expected to be completed within the coming week. Additionally, thirteen out of sixteen modules have been installed on the floating production, storage and offloading (FPSO) vessel. The FPSO remains on track to sail from Singapore to the field in the first quarter of 2025. The company also reported that the Darwin LNG life extension project is currently 39% complete.
The Barossa gas project represents a significant offshore gas and condensate initiative aimed at providing a fresh source of gas to the existing 3.7mn tonnes/year Darwin LNG facility in the Northern Territory. With a $3.6bn investment programme initiated following the project's final investment decision in March 2021, the first gas from the Barossa project is scheduled for 2025.
“I am very pleased that Barossa pipelaying activities are now almost complete and all other Barossa activities are progressing well with first gas expected in the third quarter 2025," said Santos CEO Kevin Gallagher.
Despite previous legal challenges and litigations related to the project's drilling and pipeline plans, a recent Australian court decision has allowed Santos to proceed with the pipeline project, removing a major hurdle and paving the way for the long-anticipated gas project.