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Santos boosts dividend as production, profits rise

Business

Adelaide-based Santos has reported an 89 per cent increase in underlying profit and declared an interim dividend of 6.0 US cents per share.

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Releasing its half-year report this morning, the company reported underlying profit of $US411 million, up 89 per cent on the previous year, and net profit of $US388 million, up 273.1 per cent.

Production volume also increased by 32 per cent, from 29 million barrels of oil equivalent (mmboe) to 37 mmboe in 2019.

Shares were up 2.62 per cent from Wednesday’s close to $7.04 after the start of trade this morning.

The dividend, 6.0 US cents per share fully franked, is 71 per cent higher than the previous interim dividend of 3.5 US cents.

“Today’s announcement of half-year results demonstrates the strength of our cash-generative operating model and the successful integration of the Quadrant acquisition,” said Santos managing director and CEO Kevin Gallagher in a statement to the Australian Stock Exchange.

“Today’s results also demonstrate the successful integration of our Western Australian business following the acquisition of Quadrant.”

Santos acquired Quadrant Energy last year in a $US2.15 billion deal, and in turn received an 80 per cent stake in the promising Dorado oil find.

Australia’s No.2 independent gas producer today increased its forecast on savings from the acquisition to between $US50 million and $US60 million ($A74 million and $A88 million) a year, from $US30 million to $US50 million.

The Quadrant assets, along with the gas-rich Cooper Basin that stretches from South Australia’s northeast into the southwest of Queensland, is the largest source of gas for Santos, which also operates in Papua New Guinea.

“In the Cooper Basin, our focus on low-cost, efficient operations contributed to stronger first-half production and the highest number of wells drilled in 12 years,” said Gallagher.

“The Cooper Basin is now positioned to grow production and reserves.”

Santos also lowered its capital spending forecast for the year from about $US1.1 billion to between $US950 million and $US1.05 billion.

The company’s underlying profit of $US411 million for the half-year beat Citi estimates of $US377 million.

The underlying profit figure excludes acquisitions.

Santos yesterday announced it had entered into a new lease on its Adelaide offices on Flinders Street in the CBD, until the year 2032.

– with AAP

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