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Santos forecasts 32% production boost in 2019

Business

Adelaide-based oil and gas company Santos expects 2019 production to rise by up to 32 per cent, boosted by its acquisition of Quadrant assets last year.

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It acquired Quadrant for more than $2 billion last year, boosting production and giving it a stake in a promising oil find off Western Australia.

The company expects to churn out 71 million to 78 million barrels of oil equivalent (mmboe) in 2019, Santos said in a statement.

Financial services firm UBS estimates 2019 production to be 73.7 mmboe.

Santos posted annual production of 58.9 mmboe, beating its production guidance of 56 mmboe to 58 mmboe and in line with a Macquarie estimate.

The Quadrant buyout, coupled with higher realised prices for its oil and gas, propelled Santos’ fourth quarter revenue 22 per cent higher – to a record $1.04 billion.

Santos said production for the quarter that ended December 31 jumped to 15.9 mmboe, from 15 mmboe a year ago.

Firm LNG prices, sharp cost cuts and asset sales enabled Santos to achieve its debt target more than a year ahead of plan in October 2018.

By slashing debt, Santos set itself up to stave off takeover offers, revive its dividend and hunt for assets to expand its portfolio.

However, the acquisition of Quadrant, which was funded through a combination of company’s cash and new debt pushed Santos’ debt as at December 31 to $3.6 billion.

Santos shares were trading at $5.96 before open of trade this morning, up from $5.20 the same time last year, but down from October’s three and a half year high of $7.48.

– AAP

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