Santos lifts production and continues to cut debt

SANTOS Ltd has raised its output guidance for the year as it steps up drilling and continued to make progress reducing costs and its debt burden.
The Australian oil-and-gas producer said it now expected to produce between 57 million and 60 million barrels of oil equivalent in 2017, against an earlier guidance of 55 million-60 million and despite a 5.1 per cent drop in production in the first half of the year.
Santos also forecasts that sales volumes for the year would be between 75 million and 80 million barrels, narrowing earlier guidance for sales of 73 million-80 million.
Santos, which has been fighting to cut a debt burden built up in recent years investing in new energy projects including the GLNG gas-export project in eastern Queensland state, said it had reduced debt by US$600 million (K1.9 billion) to US$2.9 billion (K9 billion) since the start of the year.
Production costs had also been reduced to US$8 (K24.88) – US$8.25 (K25.65) a barrel, from US$8.45 (K26.28) last year, and it said it now forecast its cash flow break-even mark for the year had fallen to US$33 (K102.63) a barrel of oil from US$47 (K146.18) at the start of 2016.
“These are strong outcomes that highlight Santos’s ongoing transformation into a low-cost, reliable and high performance business,” managing director and chief executive Kevin Gallagher said.
The company has targeted a US$1.5 billion (K4.66 billion) reduction in net debt by the end of 2019, through improved operating cash flows and from the sale of infrastructure and non-core assets.
It has tied its future to the GLNG operation that counts Total SA (TOT) among its partners, the ExxonMobil Corp.-led (XOM) PNG LNG operation in Papua New Guinea and projects in northern Australia, Western Australia, and the Cooper Basin straddling South Australia and Queensland states. – Fox Business