Santos Reports Record Second Quarter

Record second quarter sales revenue reported by Santos Limited has driven the Australian oil and gas group's first half revenue above $1 billion for the first time.

Total sales revenue for the three months to 30 June 2005 was a record $553 million a 19% increase on $466 million in the first quarter and up 66% on $334 million in the second quarter of 2004.

The second quarter result has taken Santos' revenue to $1.02 billion for the opening six months of the current calendar year up 73% on the previous corresponding period, eclipsing the Company's previous highest first half revenue of $751 million achieved in 2001.

The higher revenue reflected increased production and sales volumes, combined with continuing higher oil and gas prices.

Total production for the second quarter of 13.8 million barrels of oil equivalent (mmboe) was 10% above the strong first quarter result and 19% above the previous corresponding period.

Sales volumes were up to 15.1 mmboe from 13.6 mmboe in the first quarter, taking sales volumes for the opening half of 2005 to 28.7 mmboe from 22.0 mmboe in the previous corresponding period.

The average realised gas price for the quarter increased by 11% to $3.61 per gigajoule (GJ) from $3.25 per GJ in the same period of 2004, and the average realized oil price of A$70.20 (US$54.06) per barrel was 18% higher than A$59.70 (US$43.97) in the first quarter.

"The latest quarter has continued a buoyant start to 2005 for Santos and its expanding group operations," Santos' Managing Director, Mr. John Ellice-Flint, said today.

"As well as our increased production, the Company's higher sales volumes have been achieved in a period of stronger prices for most products," he said.

Mr. Ellice-Flint said the improved production was largely due to the successful early start-up of production from the Mutineer-Exeter development, in the Carnarvon Basin offshore Western Australia.

"The 24% stronger first half production of 26.3 mmboe has us on track to achieve our previously stated guidance of approximately 54 mmboe for the full year compared with 47 mmboe in 2004," he said.

Santos has also previously forecast a further 10% increase in production for the 2006 calendar year.

Other significant developments during the second quarter included:

  • $200 million Casino gas development awarded production license by Victorian Government. Project on target to commence production in the first quarter of 2006;
  • Positive development drilling results on the Casino field;
  • Development go-ahead for the first Santos operated Indonesian development the Oyong oil and gas field;
  • The signing of the gas sales agreement for the entire gas reserves from the Maleo field in Indonesia, which is expected to generate revenue of more than A$700 million over the life of the field;
  • Securing a 10-year contract to supply gas to the $340 million Braemar Power Project in Queensland;
  • Drilling of successful development wells on the John Brookes gas field, offshore WA; and
  • Application submitted by the Kipper joint venture for a production license over the field, offshore eastern Victoria, to commence production in 2009.

Since June 30, 2005, Santos has announced its intention to acquire US listed Tipperary Corporation Inc and Tipperary Oil and Gas Australia Pty Ltd, including an approximate 75% working interest in the Fairview coal seam methane field in central Queensland. This transaction, valued at approximately US$466 million (A$612 million), remains subject to Tipperary Corporation shareholder approval, which is expected early in the fourth quarter of 2005.

The Company also earlier this month announced a further expansion of its oil and gas exploration in the Sorell Basin, offshore Tasmania, and outlined plans to sell its interest in the undeveloped Golden Beach gas field, offshore Victoria.


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