PERTH (miningweekly.com) – Oil and gas major Santos has reported a 3% increase in net profit to $271-million for the six months to June, despite lower production volumes.

CEO David Knox on Friday said the higher profit reflected record sales revenue for the half-year, driven by higher crude oil sales volumes and gas prices, as well as impairment reversals and lower production costs.

He noted, however, that this was partially offset by lower interest income.

“In the first half of this year, Santos delivered first oil from the Fletcher Finucane project, ahead of schedule and under budget; a facility that will drive stronger production for the company in the second half.”

He noted that the Santos Asia business also continued to make good progress, with the Dua project, in Vietnam, and the Peluang project, in Indonesia, progressing well to deliver first oil and first gas respectively, in the first half of 2014.

“We also continue to make strong progress on our two major growth projects, Papua New Guinea (PNG) liquefied natural gas (LNG) and Gladstone LNG (GLNG), both of which remain on schedule and whose capital cost estimates remain unchanged.”

Knox said the LNG projects were poised to deliver significant shareholder value, and Santos was planning a review of its capital management options as the PNG LNG project approached production.

The PNG LNG project is 90% complete. It is expected to top a gross capital investment of $19-billion and will include a 6.6-million-ton-a-year gas liquefication plant.

The GLNG project, in turn, is some 60% complete and on track for first production in 2015. The $16-billion GLNG project, which is 30% held by Santos, will deliver some 7.8-million tons a year of gas.

Meanwhile, Santos on Friday reported that production volumes for the six months under review were down 4% on that produced in the first half of 2012, to 24.5-million barrels of oil equivalent, mainly owing to a higher level of planned maintenance activity in the Cooper basin.

Santos’ total natural gas production was down 3% to 105 petajoules, primarily owing to lower production in the Cooper basin and Indonesia.

Crude oil production was down 2% to 4.4-million barrels, owing to lower production from the Mutineer-Exeter, Stag and Cooper basin operations. This was partially offset by higher production from Chim Sao, in Vietnam, and first oil from Fletcher Finucane, in Western Australia.