Santos posts record revenues

21st October 2021 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

Santos posts record revenues

Photo by: Bloomberg

PERTH ( – Oil and gas major Santos has reported record sales revenue and free cash flows for the three months to September.

Production during the three months under review was down 3% on the previous quarter, to 21.9-million barrels of oil equivalent, while sales volumes declined by 8% on the June quarter to 24.4-million barrels of oil equivalent.

Third quarter sales volumes were lower than the prior quarter primarily owing to the timing of liquids liftings in Western Australia and lower Cooper basin third-party oil volumes, combined with a lower average working interest in Bayu-Undan/Darwin liquified natural gas (LNG) owing to the 25% sell-down to SK E&S completed at the end April 2021.

Sales volumes guidance is maintained at 100-million barrels to 105-million barrels of oil equivalent for the full year.

However, sales revenue for the period increased by 6%, to A$1.14-billion, up from the A$10.7-billion in the June quarter.

Santos MD and CEO Kevin Gallagher said sales revenues and free cash flow were records for Santos as the business benefited from higher commodity prices, including Japan-Korea Marker (JKM) pricing for 12 LNG cargoes sold during the quarter.

“Our disciplined, low-cost operating model continues to drive strong performance with $931-million of free cash flow generated in the first nine months of 2021. At current commodity prices, Santos should generate close to $1.3-billion in free cash flow for the full year.

“Consistent with our strategy, our next phase of growth will be disciplined and phased. We are making good progress on the Barossa project, awarded the major front end engineering design contracts for Dorado and commenced the process to register the Moomba carbon capture and storage (CCS) project with the Clean Energy Regulator. Once registration is complete, we will be in a position to take a final investment decision to proceed with Moomba CCS,” Gallagher said.

He noted that the proposed merger with fellow listed Oil Search was on track for completion by year-end, subject to customary conditions including Oil Search shareholder approval.

The two companies in August struck a merger agreement to create a A$21-billion oil and gas giant, under which Oil Search shareholders will receive 0.6275 new Santos shares for each Oil Search share held via a scheme of arrangement.

The proposal implies a transaction price of A$4.29 per Oil Search share, based on the closing price of Santos and Oil Search shares on July 19.

The merged entity will have a diversified portfolio of high quality, long-life, low-cost assets across Australia, Timor-Leste, Papua New Guinea (PNG) and North America with significant growth optionality

“I’m very happy with how the merger is progressing, and particularly acknowledge the positive comments from PNG Prime Minister Hon. James Marape, at what is an incredibly important time for energy markets and energy companies around the world,” Gallagher said on Thursday.

“Size and scale have never been more important as we look to fund the energy transition to net-zero emissions, and the merger is expected to create one of the top-20 companies in our sector globally and a top-20 ASX-listed company.”