Santos has delivered some record results in a strong swing back to full year profit

SANTOS has had a nearly billion dollar turnaround in its fortunes, posting a set of record numbers.

Managing director and chief executive of Santos Kevin Gallagher.

SANTOS has had a nearly billion dollar turnaround in its fortunes, posting a set of record numbers.

The Adelaide energy company boosted full year net profit to $US630 million, up from a $US360 million loss the previous year.

The underlying profit of $US727 million was a record as was free cash flow of $US1.006 billion.

The company declared a dividend of US6.2c per share, fully franked, up from zero last year.

Managing director Kevin Gallagher said the company’s low-cost operating model continued to deliver results.

“Santos has delivered strong financial results for 2018 with EBITDAX up 51 per cent to a record US$2.2 billion and free cash flow up 63 per cent to a record of more than US$1 billion.

“Underlying profit after tax more than doubled to a record US$727 million. Santos is now on a firm path to grow production and reserves.”

Mr Gallagher said the recent completion of the acquisition of Quadrant Energy would provide a significant boost in Santos’ production in 2019, with the company targeting production of

between 71 and 78 million barrels of oil equivalent (mmboe).

“The acquisition, combined with organic reserves additions, contributed to strong reserves

growth in 2018 with 2P reserves increasing by 20 per cent to over one billion barrels of oil equivalent. Contingent resources increased to 1.8 billion barrels.

“Consistent application of our disciplined operating model continued to deliver cost reductions

and efficiencies, with underlying production costs down 6 per cent to $US7.62/boe and further

reductions in well costs, confirming Santos as Australia’s lowest cost onshore operator.’’

The company reported an 8 per cent increase in production in the Cooper basin in far North South Australia, “including our highest daily oil production rates since 2009. Drilling

activity increased 40 per cent over the course of the year to 85 wells and a fourth drilling rig was added’’.

Drilling continued apace in Queensland also.

“At GLNG, our low-cost, efficient operations continue to support a development plan to unlock more gas over time. In 2018, we drilled a record 305 wells, 77 per cent higher than 2017. During the year the 480-well Roma East field development was sanctioned with 121 wells drilled by year end and the Scotia CF1 field project delivered one year ahead of schedule and 16 per cent under budget.

“The 148-well Arcadia Phase 1 development was also sanctioned during the year with

the first wells due online in the first quarter of 2019.

“In Northern Australia, Darwin LNG remains an important and strategic infrastructure project for the future development of onshore and offshore resources. Plant performance in 2018 was

again strong with LNG production higher than 2017.

“The Barossa project is being progressed as the lead candidate to backfill Darwin LNG with a

final investment decision targeted by late 2019 or early 2020.

“In PNG, plant upgrades resulted in a record daily production rate equivalent to 9.2 mtpa being achieved in the second half of the year.

“PNG LNG expansion opportunities continue to be progressed with provisional results from the Muruk-2 appraisal well indicating the objective Toro reservoir is likely hydrocarbon bearing

“In September, we completed the sale of our non-core Asian assets. The sale was consistent

with our strategy to realise value from late-life non-core assets.”

Santos shares were 0.5c lower at $6.93.