PERTH (miningweekly.com) – Oil and gas major Santos has reported a 16% increase in sales revenue for the first half of 2018, compared with the previous corresponding period, on the back of stronger commodity prices and higher oil sales.

Santos on Thursday reported that production during the first half of the year declined by 5% on the previous corresponding period, to 28-million barrels of oil equivalent, with 14.2-million barrels of oil equivalent produced in the second quarter ended June.

Sales volume for the interim period was also down by 5% on the same period in 2017, to 38-million barrels of oil equivalent, with 19.1-million barrels sold in the second quarter.

However, sales revenue for the half year increased to $1.6-billion, compared with the $1.4-billion achieved in the first half of 2017, with $886-million of revenue generated in the three months to June.

“Santos’ strategy has been to establish a low cost operating model that is designed to deliver strong cash flows through the oil price cycle,” said MD and CEO Kevin Gallagher.

“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.”

Gallagher said that in the Cooper basin, Santos delivered production growth owing to strong performance from recently connected wells, including the highest quarterly oil production in four years, and the highest daily oil rate in a decade.

“We also had exploration success with the Wildcat gas exploration wells, Mountain Goat and Hobgoblin.”

In Western Australia, higher customer demand and the start of two new sales contracts saw production increase by 10% on the previous quarter.

Gallagher noted that production at the liquefied natural gas (LNG) facility in Papua New Guinea (PNG) was safely restarted within two months of the February earthquake, and full rates were achieved by the end of April.

“The PNG LNG shutdown, combined with planned maintenance at our facilities in Moomba and Bayu Undan/Darwin LNG, reduced first half production by about two-million barrels of oil equivalent. Excluding these shutdowns, we would have delivered production growth from our core assets in the first half.”

Santos has maintained its sales volumes, production and cost guidance for the full year, with between 72-million and 76-million barrels of oil equivalent expected to be sold in the full year.

Between 55-million and 58-million barrels of oil equivalent will be produced in the full year.