This compares with net profit of $85 million in the first half of 2004 when earnings were impacted by the loss of production caused by the Moomba incident.
The 2005 first half result is favourably impacted by the partial reversal of impairment write-downs booked on transition to the Australian equivalent of International Financial Reporting Standards (A-IFRS), which is not considered part of the underlying profit.
The profit was achieved on opening half sales revenue that topped the $1 billion level for the first time, representing a 73% increase on the first half of 2004.
Cash flow from the Company's operating activities was up over 190% to $565 million.
First half production rose 24% from 21.2 mmboe to 26.3 mmboe and included the benefit of the Company's Mutineer-Exeter oil field off Western Australian coming on stream ahead of schedule.
Santos has increased its forecast full year production to 55 mmboe compared with 47 mmboe in 2004.
A further production increase of at least 10% is forecast for the 2006 calendar year.
Directors increase interim dividend to 18 cents
Santos' Chairman, Mr. Stephen Gerlach, said the increase in interim dividend reflects the Board's continued confidence in Santos' growth outlook and follows a rise in last year's total annual dividend from 30 cents to a fully franked 33 cents per share.
"Santos is delivering" -- Managing Director
"The record first half result demonstrates the ways in which Santos' strategy is building earnings momentum, whilst at the same time progressing options for future value creation," the Company's Managing Director, Mr. John Ellice-Flint, said today.
"The higher profit and interim dividend reflect our growing production profile and the increased proportion of liquids versus gas in our production mix," Mr. Ellice-Flint said.
"The drivers behind this improvement in liquids mix are new projects such as Mutineer-Exeter, Bayu-Undan and an expanded Cooper Basin oil exploitation program."
"Our sales revenues and increased margins reflect the strong oil price and a 10% increase in the average gas price across our portfolio."
Unprecedented number of new projects
Three new projects -- Bayu-Undan liquids, Minerva and Mutineer-Exeter -- have added to the Company's production profile in the past year.
Five new offshore projects will commence production over the next 18 months, including John Brookes, Casino, Oyong, Maleo and the LNG phase of Bayu-Undan.
These projects are in addition to development activities in the Company's existing onshore assets where the focus remains on drilling, completing and connecting wells to extend and grow production.
Significantly for Santos, its key growth projects are in most cases performing above expectations, including:
Santos' exploration program delivered a 22% wildcat success rate in the first half with two discoveries from nine wildcat wells -- Hiu Aman in the deep water Kutei Basin and Hurricane in the offshore Carnarvon.
The remainder of our 2005 exploration drilling program includes 19 wildcat exploration wells across a range of areas in Australia and internationally.
The first of these, Henry 1 is a commercial discovery.
"The growth in operating cash flow bodes well for our ability to invest in growth projects, whilst continuing to reward shareholders via dividend payments," he said.
Mr. Ellice-Flint said Santos had a large number of options to continue to satisfy eastern seaboard gas markets due to the Company's infrastructure and supply position.
"We have already demonstrated our ability to create value through innovative contracting for the Casino gas field, and with gas swaps through several states and joint ventures," he said.
"In addition, our unique gas storage capabilities in Moomba and south western Queensland provide us with flexibility and security of supply advantages, the value of which are increasingly being recognised by the market."
"Integrating the Fairview operation into Santos' existing business and further monetising the large uncommitted reserves will be the key priorities for Santos once the acquisition is completed later this year," he said.
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