Santos Reports Q1 Production Growth

Santos on Tuesday announced a 5% increase in first quarter production to 14.5 million barrels of oil equivalent, reflecting the start-up of a number of new projects during the past year.

This record first quarter production was achieved due to new production from the Bayu-Undan LNG, Maleo gas and Casino gas projects, although this was partially offset by the impact of cyclones on Western Australian oil production during the quarter.

Sales revenue of $580.9 million was 7% lower than the previous corresponding period due to lower realized liquids prices driven by lower oil prices and the strengthening A$/US$ exchange rate.

Average realized gas prices increased by over 4% year on year to $3.83 per gigajoule (GJ).

Commenting on the first quarter result, Santos' Managing Director, John Ellice-Flint said, "This is a strong result for Santos, with production up on last year notwithstanding the impact of cyclones during the period."

"Significant progress was also made during the quarter with the completion of a new export pipeline and installation of additional compression at the Fairview field, which will see coal seam gas production ramp up further during the second quarter. Since October 2005, Santos has doubled Fairview production from 27 terajoules per day (TJ/d) to 55 TJ/d and our target is to lift production towards 70 TJ/d during the second quarter," he said.

"Continued promising results for the Cooper Basin Oil Project, with a drilling success rate of 88% during the quarter augers well for increasing oil production over the remainder of 2007.

"A new discovery well, Itchy-1, was brought online during the quarter, free flowing at rates of approximately 1,000 bopd. The well is now being set up for higher flow with the installation of artificial lift through an electric submersible pump," said Ellice-Flint.

Other significant activities during and subsequent to the March 2007 quarter included:

  • Ongoing monitoring of the Sidoarjo mudflow incident in the Brantas PSC in Indonesia (Santos non-operating 18% interest). A net provision of A$67 million (after recognition of insurance proceeds) was recorded as at 31 December 2006. Further announcements in relation to Santos' share of potential costs relating to this incident will be made as definitive information becomes available and has been evaluated.
  • The award of two offshore deep water exploration blocks in the Bay of Bengal, India.
  • The signing of a three-year, $90 million gas supply contract from the John Brookes gas field offshore Western Australia.
  • The commencement of Front End Engineering Design (FEED) studies for the Henry gas field, offshore Otway Basin, and the Kipper gas field, offshore Gippsland Basin, both in Victoria.
  • The signing of a PNG LNG cost sharing agreement with ExxonMobil and Oil Search.

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