Despite experiencing production hiccups due to an earthquake and on-site maintenance, Santos saw a 16-percent increase in sales revenue for the first half of 2018.
Santos’ (ASX:STO) sales revenue increased 16 percent in 2018’s first half, hitting US$1.7 billion, a jump the company has attributed to stronger commodities prices and higher oil sales.
In its Q2 report, Santos highlights production growth at its Cooper Basin and Western Australia assets, with Cooper’s gas and oil production rising 8 and 17 percent, respectively, from the previous quarter.
Meanwhile, Western Australia gas production was up 10 percent from the previous quarter due to higher demand and the launch of two new sales contracts.
Santos’ second-quarter production came to 14.2 million barrels of oil equivalent (MMBOE), with the year-to-date amount hitting 28 MMBOE. The company’s Q2 output came in higher than it did in Q1, but its year-to-date output is lower than it was during the same period in 2017.
“Santos’ strategy has been to establish a low cost operating model that is designed to deliver strong cash flows through the oil price cycle,” Managing Director and CEO Kevin Gallagher said in the report.
“Our second quarter results demonstrate the strength of our diversified portfolio of core assets underpinned by a disciplined operating model and significantly stronger balance sheet,” he added.
Gallagher also pointed to the firm’s ability to achieve strong production results after a major earthquake in February that shut down liquefied natural gas (LNG) production in Papua New Guinea (PNG).
“The PNG LNG shutdown, combined with planned maintenance at our facilities in Moomba and Bayu Undan/Darwin LNG, reduced first half production by about 2 mmboe. Excluding these shutdowns, we would have delivered production growth from our core assets in the first half,” Gallagher said.
He continued, “[w]e remain on track to achieve our net debt reduction target in the second half of 2018, more than a year ahead of schedule, and we now have a significantly stronger balance sheet and cash flows to support our growth strategy.”
In the activities report, Santos details a balance sheet with cash and cash equivalents of US$1.5 billion and total debt of US$3.9 billion, with net debt at a total of US$2.4 billion.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.