Santos upgrades 2020 production guidance

Business

SANTOS Ltd has upgraded its 2020 production guidance to 87 and 89 million barrels of oil equivalent (mmboe) and lowered its production cost guidance to US$8.00 (K28)-$8.50 (K29.80)/boe (barrels of oil equivalent).
It said the upgrade in production guidance, from 83-88 mmboe, was due to strong operating performance across its base businesses and represents 15-18 per cent production growth for the year and more than 50 per cent growth since 2015. Its PNG LNG asset alone produced 30 per cent above nameplate capacity without additional significant capital.
It is on track to deliver the production cost reductions announced in March in response to the Covid pandemic, which sees 2020 guidance lowered to US$8.00 to US$8.50/boe.
Capital expenditure is still expected to be approximately US$900 million (K3.15b), consistent with the 38 per cent reduction for the year announced in March.
Integration of the ConocoPhillips acquisition completed in May was proceeding well, with guidance on acquisition synergies upgraded from US$90 million (K315m) to US$105 (K368mil) million per annum.
Managing director and chief executive officer Kevin Gallagher said the consistent and successful execution of Santos’ transform-build-grow strategy had the company positioned for disciplined growth and sustainable shareholder returns.
“Our strategy has been to establish a disciplined low-cost operating model that delivers strong free cash flows through the oil price cycle,” he said.
“Our 2020 forecast free cash flow breakeven oil price is less than US$25 (K87.70) per barrel before hedging and around US$20 (K70) per barrel after hedging.
“Our base business is strong with production levels expected to remain relatively steady for the next decade and providing significant free cash flow.”