Santos revenue slides on weaker oil production

Santos has seen its profits and revenue fall in the first six months of 2023, driven by a decline in oil production.

Aug 23, 2023, updated Aug 23, 2023

The Adelaide-based company says its first half results for the period ending 30 June were “robust”, despite a 13 per cent decrease in oil production.

Net profit was down 32 per cent to $1.2 billion, while revenue took a 21 per cent tumble to $4.6 billion.

The company believes its cash flow of $1.7 billion reflects “the strength of the disciplined operating model which is designed to ensure the business remains resilient through the oil price cycle”.

Santos’ first half results follow a windfall profit for the company in 2022, off the back of increased energy demand and rising prices.

Oil sales were lower due to the temporary shutdown of the John Brookes facility off the coast of Western Australia which has since reopened, as well as reduced capacity from two offshore gas fields due to water breakthrough.

Santos also says there was a decrease in Cooper Basin third-party oil sales volumes in the half, but that sales volume guidance is in the range of 90-100 million barrels of oil for the remainder of 2023.

Production meanwhile was down to 45 million barrels of oil due to lower domestic gas production in WA, lower volumes from ageing infrastructure and lower production in Papua New Guinea due to “natural field decline”. The company maintains guidance for oil production in the range of 89-93 million barrels of oil for the full year.

Managing director and CEO Kevin Gallagher said the Flinders Street-headquartered oil producer – South Australia’s top company per InDaily’s 2022 SA Business Index – delivered strong results “despite an ever-changing macro environment”.

“We remain focused on executing our strategy to backfill and sustain our existing infrastructure, decarbonise and develop our Santos Energy Solutions division,” Gallagher said, referring to the company’s clean fuel development arm.

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“Our goal is to strike the right balance between disciplined and phased major project spend, returns to shareholders, and invest in new energy solutions to meet customer demand.”

He said the Energy Solutions division was expanding, “and continues to work on building new revenue sources through decarbonisation projects”.

“The Moomba carbon capture storage project will be one of the biggest and lowest cost in the world and is on track for first injection of CO2 next year,” Gallagher said.

“Our critical fuels play a key role in the energy security of Australia and Asia.

“Gas enables a cleaner energy future, offering firming for renewable energy and an affordable, reliable alternative to higher-emitting fuels.”

Earnings before interest, tax, depreciation and amortisation was down 23 per cent to $3.27 billion, and the company declared an interim dividend of 8.7 US cents per share.

Shares in Santos are down 1.2 per cent to $7.71 per share at 11.23am AEST.

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