Page 11 - AsianOil Week 29 2020

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Santos’ Q2 production

climbs, revenue dips

PERFORMANCE AUSTRALIAN independent Santos posted a Santos managing director and CEO Kevin
15% quarter-on-quarter jump in its April-June Gallagher said the first half had delivered free
oil and gas production. Second-quarter produc- cash flow (FCF) of $431mn, despite significantly
tion set a new company record of 20.6mn barrels lower oil prices.
of oil equivalent (boe), the developer said in its “Our disciplined, low-cost operating model
July 23 activities report for the period. continues to drive strong performance across
Santos attributed the improved performance our diversified asset portfolio, and completion
to higher domestic natural gas production in of the ConocoPhillips acquisition in late-May
Western Australia, continued strong onshore further boosted our production and cash flows.”
production and a higher equity interest in the He added that the company was aiming to
Bayu-Undan gas field following completion of deliver a FCF breakeven oil price of $25 per
the ConocoPhillips acquisition. barrel for 2020 and that by “maintaining our
The company’s revenue, however, dropped sustaining activities”, production from the com-
11% q/q to $785mn on the back of lower liquids pany’s core assets was anticipated to remain rela-
prices. Santos noted that the higher revenue tively steady for the next five to six years.
from domestic gas sales and liquefied natural gas “As COVID-19 and the lower oil price con-
(LNG) exports had helped to offset some of the tinue to challenge us, we have remained resilient
liquids price drag. and kept production going, meaning our reve-
While half-year production climbed 4% to nues have continued to flow,” Gallagher said.
a record 38.5mn boe, revenue slipped 16% on The company’s results statement came after it
the year to $1.7bn. Santos again struck a positive announced on July 21 that it expected to recognise
note, saying its “diversified portfolio of fixed- a pre-tax, non-cash impairment charge of $700-
price domestic gas revenues” had cushioned the 800mn – $490-560mn after tax – in its half-year
impact of lower oil prices. financial results set to be released on August 20.
The developer added that around 60% of its Santos said the charge was the result of
production for the rest of this year was either revised oil price assumptions stemming from the
fixed-price domestic gas contracts or oil hedged effects of the coronavirus COVID-19 pandemic
at an average floor price of $38 per barrel. on energy demand.™

Oil Search’s revenue

plunges 26% in Q2

PERFORMANCE SYDNEY-LISTED Oil Search saw its sec- from $9.08 per mmBtu ($276.6 per 1,000 cubic
ond-quarter revenue plunge 26% quarter on metres) to $7.34 per mmBtu ($203.02 per 1,000
quarter owing to the oil price crash in March. cubic metres), owing to a two-to-three month
Revenue for the April-June period amounted lag between oil prices flowing through to LNG
to $266.2mn, down from the $359.4mn in the contract prices.
first quarter, the company said on July 21. The
result dragged the company’s first-half income to
$625.6mn from $777mn a year earlier.
Weaker international oil and gas prices out-
weighed production gains in the first half, with
output climbing by 4% to 14.66mn barrels of oil
equivalent from 14.13mn boe in the same period
of 2019.
Oil Search said the average realised price for
oil and gas condensate tumbled by 53% to $23.05
per barrel in the April-June period from $49 per
barrel in the first quarter. Average realised lique-
fied natural gas (LNG) and gas prices fell by 19%

Week 29 23•July•2020 www. NEWSBASE .com P11