Santos lifts oil production guidance and reduces costs for 2017

Santos lifts oil production guidance and reduces costs for 2017

Australian energy giant Santos reported an improved production guidance for 2017 combined with reduced costs for the year for its Q2 activities.

The oil and LNG producer confirmed that it had upped its production forecast to 57-60 million barrels of oil equivalent (mmboe) for the year, against an earlier prediction of 55-60mmboe, despite a 5.1% drop in production in the first half of 2017.

Santos also forecast a reduction in production costs per barrel of oil equivalent to US$8-8.25 from $8.45 in 2016.

The company, which had built up a debt burden in recent years from major investments in new energy projects, revealed it had paid off $600 million in debt to bring the total to 2.9 billion.

“These are strong outcomes that highlight Santos’ ongoing transformation into a low-cost, reliable and high performance business with a robust asset portfolio that can generate significant free cash flow in a lower oil price environment,” said managing director and CEO Kevin Gallagher.

Santos’ forecast free cash flow breakeven for 2017 has come down to $33 per barrel of oil from $47 per barrel at the start of 2016.

Gallagher added the company had increased drilling in Australia’s Cooper Basin and across the GNLG acreage in Queensland and additional wells were expected to help boost production over the coming years.

“As a long-standing supplier of gas to Australian customers in both the East and West coast, we understand the importance of well-functioning domestic market,” Gallagher said.

“It is also pleasing to see our exploration and appraisal activity growing as part of our disciplined operating model, with successful outcomes in the Cooper Basin, as well as Muruk in PNG and Barossa offshore Northern Australia.”