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Santos tops 2016 full-year guidance

Business

Adelaide-based oil and gas producer Santos has topped its guidance for 2016 with a 7 per cent rise in production and a 31 per cent jump in sales, boosted by the ramp-up of its Gladstone liquefied natural gas (GLNG) plant in Queensland.

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Santos produced 61.6 million barrels of oil equivalent (mboe) in 2016, ahead of a revised full-year guidance of 60 to 62 mboe, while sales rose to 84.1 mboe, ahead of the 81 to 83 mboe target.

The rise in volumes helped lift full-year sales revenue 6 per cent to $US2.59 billion ($A3.43 billion), despite lower average oil and gas prices compared to the previous year.

The energy giant last month launched a surprise $1.5 billion share sale to help speed up its debt reduction efforts. It also outlined a change in strategy earlier in December, with plans to spin off second-tier assets into a separate business.

Today, Santos said it had reduced net debt to $US3.5 billion by the end of December, from $US4.7 billion at the start of the year.

The company’s full-year performance was boosted by strong December quarter.

For the fourth quarter, production rose one per cent to 15 mboe, but sales volumes climbed 27 per cent to 21.9 mboe.

Revenue for the quarter also jumped 26 per cent to $US753 million ($A996 million), thanks to higher volumes and prices.

Santos reaffirmed its 2017 guidance, with production expected to be in the range of 55 to 60 mboe, while sales volume is forecast to be between 73 to 80 mboe.

In its fourth-quarter activity report, managing director and CEO Kevin Gallagher said the company entered 2017 with “a clear strategy and a solid platform off which we can build and grow”.

“Our business turnaround will continue as we reshape and focus our organisation to support five core, life-long natural gas assets: Cooper Basin, GLNG, PNG, Northern Australia and WA Gas.

“This singular focus will allow Santos to become a leaner, lower-cost and high-performing business with significant upside opportunities across our portfolio.”

– AAP

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