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Santos names Narrabri among its five core assets

9th November 2017

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Oil and gas major Santos has reclassified the Narrabri project, in New South Wales, as a core project in the company’s new transform-build-grow strategy.

MD and CEO Kevin Gallagher said at an investor day on Thursday that Santos had simplified the business to focus on five core, long-life natural gas assets: Cooper Basin, Queensland (including Gladstone liquefied natural gas (GLNG), Papua New Guinea (PNG), Northern Australia and Western Australia gas.

“This core portfolio is positioned to provide stable base production for the next decade and positive free cash flow in an oil price range of $35/bl to $40/bl, pre-major growth opportunities.

“We have removed substantial costs, arrested the production decline in the Cooper, GLNG is ramping-up and PNG LNG is operating at record rates.

“We have embedded a disciplined operating model and established clear guidelines for portfolio management and priorities for uses of cash,” Gallagher said.

The proposed Narrabri project could supply up to 50% of New South Wales's gas needs, and could create about 1 300 jobs during the initial construction phase, and about 200 ongoing jobs. Over its life, the project would generate about A$1.2-billion in state royalties and could deliver up to A$120-million to the Gas Community Benefit Fund. The project, on which Narrabri had already spent about $1-billion over ten years to develop, has faced sustained community opposition and has previously faced a legal challenge over the approval of a wastewater treatment facility.

“Our primary objective is to safely deliver production and reserves growth across the core assets, and discover new resources to grow the business, all within the constraints of our disciplined operating model,” Gallagher said.

Santos on Thursday said that 2017 production volumes were expected to be towards the upper end of the 58-million barrels to 60-million barrels of oil equivalent a day and that sales volumes would be at the upper end of the 79-million barrels of oil equivalent to 82-million barrels of oil equivalent guidance range.

All other guidance for 2017 is maintained, including capital expenditure (capex) of $700-million to $750-million. Capex in 2018 is expected to be in the range of $825-million to $875-million.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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