Santos reported updated production forecasts following progress at two major development projects during the first half of the year. The Barossa LNG facility in Australia reached 97% of its planned production capacity, with liquefied natural gas cargoes being loaded approximately every eight days. In Alaska, the Pikka oil project’s initial wells were producing around 23,000 barrels per day, with the company targeting plateau production near 80,000 barrels per day in the third quarter and anticipating first sales in August.
Second-quarter production increased 3% from the previous quarter to 23.1 million barrels of oil equivalent, bringing first-half cumulative output to 45.6 million barrels of oil equivalent. Based on these results, Santos narrowed its full-year production guidance to a range of 99-105 million barrels of oil equivalent. The company projected second-half production would be approximately 20% to 30% higher than first-half levels as both major projects moved toward full operational capacity.
Financial results reflected the advancement of both projects. Second-quarter sales revenue rose 6% from the prior quarter to $1.35 billion. Free cash flow from operations during the first half reached approximately $378 million but was reduced by one-time costs associated with commissioning activities, timing of LNG shipment receipts, and temporary supply imbalances in Papua New Guinea. Management anticipated these headwinds would reverse during the second half, generating improved cash generation.
Santos also benefited from higher liquefied natural gas pricing, having realized $11.21 per million British thermal units during the quarter. With most LNG contracts indexed to the Japan Crude Cocktail benchmark on a three-month lag, the company expected further price improvements in the third quarter following second-quarter crude price movements.
Beyond the two major ramp-ups, Santos approved additional investments in Papua New Guinea, including the Agogo Production Facility tie-in project targeting production in the second quarter of 2028 with expected returns exceeding 50%, and an oil infill drilling program anticipated to deliver returns above 30%. The company indicated Papua LNG remained positioned for a final investment decision in the fourth quarter following receipt of key regulatory permits.
Article Attribution | Read More at Article Source
Article summary produced by Claude AI