PERTH (miningweekly.com) – Takeover target Santos has broken the one-million-tonne liquefied natural gas (LNG) sales volume barrier during the three months to September.
The company reported on Friday that LNG sales volumes had more than doubled in 2015, with further growth expected in the fourth quarter of the year, after the Gladstone LNG (GLNG) project shipped its first cargo last week.
Sales volumes for the third quarter reached 16.2-million barrels of oil equivalent, while production was 14.5-million barrels of oil equivalent.
“The delivery of GLNG is one of the most significant milestones in our company’s history. It marks Santos’s transition from a domestic gas company to an important Asian LNG player,” said MD and CEO David Knox.
He pointed out that the cargo ship carrying the first GLNG product would arrive in South Korea in the coming days.
In broader terms, Knox said on Friday that the company was continuing to successfully drive its cost reduction programme.
“We said we would produce more for less and this quarter’s figures are a strong reflection of that. Year-to-date production is up 10%, while capital expenditure (capex) is down 55% and unit production costs are down 15%.”
Capex in the year to date only tipped A$1.3-billion, compared with the A$2.9-billion spent in the previous corresponding period.
However, sales revenue for the year to date was down by 18%, as the average realised oil price fell from the A$121.77/bl recorded in the same period of 2014, to A$74.96/bl.
For the quarter, sales revenue reached A$808-million, while the figure tipped A$2.4-billion for the year-to-date.
Meanwhile, Santos on Friday narrowed its 2015 production guidance to between 57-million and 59-million barrels of oil equivalent, compared with the previous estimate of between 57-million and 64-million barrels of oil equivalent.
The company said the key influences on the production had been lower-than-expected domestic gas nominations from the GLNG project, combined with unscheduled maintenance at both the Mutineer-Exeter/Fletcher Finucane, and the Chim Sao floating production storage and offloading facility during the second quarter, and the month of August respectively.
These factors have been partially offset by strong performance from the Papua New Guinea LNG project, where the plant consistently operated above nameplate capacity.
Santos also lowered its capex guidance for the full 2015 by a further 10% to A$1.8-billion.