Santos delivered record production, sales revenue and free cash flow in the first quarter, demonstrating a strong performance of business and strategic benefits of its diverse portfolio.
Santos Managing Director and Chief Executive Officer, Kevin Gallagher said the strong production combined with higher commodity prices delivered record quarterly free cash flow of US$865 million, an increase of 186 per cent from the corresponding period last year.
“By designing our portfolio to provide strong cash flows throughout the commodity price cycle, our disciplined, low-cost operating model has positioned us to take full advantage of the increase in commodity prices,” Mr Gallagher said.
He said the results demonstrate that its business has the size, scale and cash flows to enable Santos to deliver stronger shareholder returns.
“Consistent with our strategy, our next stage of growth will be disciplined and phased appropriately. The Barossa project is 33 per cent complete and making excellent progress, while the Moomba carbon capture and storage project will deliver a step-change in our emissions profile when it comes online in 2024.
“Our goal is to deliver superior shareholder returns while being a global leader in the transition providing cleaner energy and clean fuels that are affordable and reliable.”
First quarter sales volumes were higher than the prior quarter primarily due to completion of the Oil Search merger in December 2021, partially offset by lower domestic gas volumes in Western Australia and expected natural field decline at Bayu-Undan.
The average realised LNG price was higher than the prior quarter reflecting the linkage of sales contracts to an improving lagged Japan Customs-cleared Crude (JCC) price and higher JKM (Japan Korea Marker) spot prices.
Santos’ LNG projects shipped 60 cargoes in the first quarter, of which seven spot cargoes (Darwin LNG 4, PNG LNG 3) and six contracted GLNG cargoes were sold at JKM prices.
Santos’ interest in PNG LNG increased to 42.5 per cent in December 2021 following completion of the Oil Search merger.
Strong production at PNG LNG was maintained during the first quarter with the plant operating at an annualised rate of 8.8 mtpa. The project shipped 28 cargoes in the quarter, of which three were sold at JKM spot prices.
According to a recent report from Santos, the coiled tubing campaign in the Moran field was completed with Moran 15ST2 returning to production at expected rates after being offline for more than a year.
The Papua LNG project continued to progress technical and commercial, regulatory, social and environmental activities, with pre-FEED (Front End Engineering Design) activities progressing well in support of a FEED-entry decision targeted later in 2022.
The P’nyang Gas Agreement was successfully executed between the PRL3 joint venture partners and the Government of PNG on 22 February. This agreement provides a framework for the future development of the P’nyang project.