Santos Reports Record Quarterly Production

Santos reported its highest ever quarterly production of 16.6 million barrels of oil equivalent (mmboe), placing the Company on track to achieve its annual production guidance of a record 60 to 61 mmboe for the full year.

The record production for the three months to 30 September 2006 was 11% higher than the third quarter of 2005 and took production to 45.3 mmboe for the first nine months of 2006 compared with 41.2 mmboe in the previous corresponding period.

Sales revenue of $759.5 million for the third quarter was in line with the third quarter of 2005 and up 10% on the immediately preceding quarter.

The 2006 third quarter result takes Santos' revenue to $2.07 billion for the first nine months of the year up 16% on the previous corresponding period and already 84% of the record full year revenue of $2.46 billion in 2005.

The average realized gas price for the third quarter was $3.66 per gigajoule (GJ). The average realized oil price was A$96.71 (US$73.18) per barrel.

"This solid third quarter result builds on Santos' record 2005 performance and reflects the Company's continued growth focus and diversification program of recent years," Santos' Managing Director, Mr John Ellice-Flint, said today.

"Significantly, the record quarterly production takes Santos' total production for the first three quarters of 2006 to 45.3 mmboe and has the Company on track to achieve its production guidance of a record 60 to 61 mmboe for the full year," he said.

Mr Ellice-Flint said the record third quarter production was driven by a number of new projects that had come on stream for Santos during 2006.

"Major contributors were the John Brookes gas project in the offshore Carnarvon Basin, Western Australia, the Casino gas project in Victoria's offshore Otway Basin and the Bayu-Undan LNG project in offshore northern Australia," he said.

"First production was also achieved from the Maleo gas project, offshore Indonesia, late in the quarter, giving Santos its first offshore operated project outside Australia.

"In addition, the initial results from our Cooper Oil project are very pleasing. The drilling success rate of 80% from the first 66 wells is above expectations and augurs well for a positive impact on future oil production," he said.

Other developments during the third quarter include:

  • The ongoing flow of mud from the Banjar Panji-1 well incident in East Java, Indonesia, in which Santos has an 18% non-operated interest. Santos continues to work with the operator and government agencies in relation to the relief and remedial efforts;
  • The discovery of gas at Evans Shoal South, offshore northern Australia;
  • The successful delineation well at Gnu-1, offshore Western Australia, which confirmed a significant gas resource in the Reindeer/Caribou field;
  • The signing of a long term contract to supply gas from the John Brookes field, offshore Western Australia, to Wesfarmers for use in domestic LNG production;
  • An oil discovery offshore Vietnam where testing has confirmed multiple gas and oil reservoirs in the southern fault block of the Dua structure;
  • A farm-in by Korean National Oil Corporation (KNOC) and Samsung Corporation into Santos' Jaguar/Cougar project in Texas State Waters, Gulf of Mexico;
  • Successful commissioning of the Mutineer-12 and Exeter-8 development wells which significantly increased production from the Mutineer-Exeter oil development during the quarter;
  • Entering into agreements for the conditional acquisition of Delhi Petroleum which were subsequently terminated by the current owners due to the emergence of a higher competing offer. As a result a break fee was payable to Santos.

Subsequent to the end of the quarter, Santos announced a $1.26 per share all cash takeover offer (by its wholly owned subsidiary Santos CSG Pty Ltd (Santos CSG)) for Queensland Gas Company Limited (QGC) valuing the coal seam gas company at $606 million. Santos CSG's Bidder's Statement was mailed to QGC shareholders on 24 October 2006.

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