Santos Reports Improvements in Production

Santos reported that production continued to improve in the latest September quarter, following the full recommissioning of the Moomba plant during the period and new production from Bayu-Undan.

Production has increased strongly with third quarter production up by 12%, and revenue up 26% compared with the second quarter to 30 June 2004.

Revenue rose by 9% when compared with the September 2003 quarter, while production declined by 11% as forecast. Production optimization, acquisitions and new projects continued to slow the rate of decline.

Revenue for the latest quarter was Santos' highest quarterly revenue since 2001. The higher average oil price for the quarter more than offset the impact of lower sales volumes and resulted in the Company's sales revenue increasing to $420.3 million compared with $386.4 million in the September 2003 quarter.

The average oil price for the quarter increased to A$57.36 per barrel up 34% over the third quarter of 2003.

Recent performance in quarterly production and sales is depicted in the chart at the end of this release.

"Lower third quarter production in 2004 was due mainly to reduced Cooper Basin gas and liquids production as a result of the Moomba incident and lower firm contracted demand," said Santos' Managing Director, Mr. John Ellice-Flint.

"Pleasingly, crude oil production from the Cooper increased against the second quarter and also against the third quarter last year. This is the highest quarterly production in four years," he said.

"The Moomba plant was fully recommissioned during the third quarter. Losses during the quarter will be included in the Company's insurance claim, which is currently in progress."

Mr. Ellice-Flint said Santos' production outlook for 2004 remained unchanged at 45 to 46 million barrels of oil equivalent (mmboe) despite higher production losses than first anticipated from the Moomba incident.

"The rapid development of new projects continues to be a priority and we have maintained a high level of spending with third quarter development expenditure of $158.5 million," he said.

Significant progress on key growth projects was achieved during the third quarter, including:

  • The Bayu-Undan LNG project (Darwin) the pipeline project which connects the field to the onshore LNG plant is 63% complete, while the LNG plant is 59% complete and on schedule for early 2006 start up.
  • The Mutineer-Exeter oil field development (offshore WA) the well completion and sub-sea connection phases commenced during the quarter, to bring the four successful horizontal development wells, three of which have been drilled since the August interim results. The project is now more than 75% complete.
  • The Casino gas field development (offshore Victoria) has progressed to formal sanction with the signing of an expanded gas sales agreement with TXU. Increased volumes available under the contract have enabled additional exploration drilling which is now in progress.
  • The John Brookes gas field project (offshore WA) is moving towards first production in mid 2005. An additional gas sales agreement with EDL has been signed supplementing volumes under the Newcrest contract.

  • This quarter marked the start of an active exploration period for Santos with several potentially high impact exploration wells spudded. More are planned for the fourth quarter. Exploration results to date include the successful Torres 1A well in the United States, which was recently brought onto production. In the opening weeks of October, the Jeruk 2 well, which was drilling in the third quarter, was tested with an encouraging flow of 7,488 barrels of 33 API oil per day through a 1/2 inch choke at a flowing pressure of 2,762 psi.

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