Santos forecasts stable production, lower sales
Adelaide headquartered energy firm Santos has forecast production to be largely stable in 2018, but has tipped sales to be lower than its 2017 volumes.
Santos managing director and CEO Kevin Gallagher. Photo: AAP/Paul Miller
It expects to produce between 55 and 60 million barrels of oil equivalent (mmboe) in 2018, similar to the 2017 guidance of 58 to 60 million barrels.
All the five core assets are expected to deliver higher production in 2018, after allowing for major planned plant shutdowns at PNG LNG, Darwin LNG and Moomba, the company said in an investor day presentation on Thursday.
However, higher production from the core assets is expected to be offset by natural field decline in the non-core assets, it said.
Chief executive Kevin Gallagher said the company’s strategy to focus on five core, long-life natural gas assets had positioned it to provide stable production for the next decade.
“We have removed substantial cost, arrested the production decline in the Cooper, GLNG is ramping-up and PNG LNG is operating at record rates,” he said.
Santos in October narrowed its full-year production and sales guidance for 2017 after improved output from major assets in its fiscal third quarter.
These include the Gladstone liquefied natural gas terminal in Queensland, the Cooper Basin and Western Australian gas divisions, the Darwin LNG project and associated production blocks and Papua New Guinea projects.
The company says it will increase drilling activity in both the Cooper Basin and at the Gladstone LNG plant in 2018 as it looks to boost gas supply for the domestic market.
It also plans to spend more at its assets in PNG and the Barossa project in Northern Australia.
Capital expenditure in 2018 is expected to be in the range of $US825 million and $US875 million, a significant increase over the $US700-750 million range expected for 2017.
Despite the increase, the company expects to maintain its free cash flow break-even point within the $US35-40 a barrel range, slightly higher compared to $US32 a barrel estimate for 2017.
Sales volumes in 2018 are likely to be slightly lower at 72 to 78 mmboe, mainly due to lower third-party volumes and natural field decline from non-core assets, Santos said.
Shipments in 2017 are expected to be between 79 and 82 mmboe.
Santos also aims to reduce net debt to $US2 billion by the end of 2019, from $US2.8 billion now.
– AAP
