Santos unveils ambitious growth target at investor day
SANTOS plans to nearly double natural gas production to more than 100 million barrels of oil equivalent by 2025.
SANTOS plans to nearly double natural gas production to more than 100 million barrels of oil equivalent by 2025.
Outlining the Adelaide-based company’s growth strategy, chief executive Kevin Gallagher said the $2.15 billion acquisition of privately held Quadrant Energy would help reduce the company’s breakeven oil price and gave it a leading position in the significant Dorado oil find.
In August, Santos said it expected 2018 production of 55-58 million barrels of oil equivalent on growing output from its Cooper Basin assets, and maintained its sales volume guidance of 72-76 .
Australia’s number two gas company also posted a surge in half-year profit and revived its dividend.
The Quadrant takeover gives Santos a business that is the leading supplier of gas into the Western Australian market.
Santos shares were 4c lower at $7.29 in afternoon trade.
Mr Gallagher said that since the beginning of 2016, Santos’ strategy has delivered:
A diversified portfolio of five long-life natural gas assets generating free cash flow at less than $US40 per barrel oil price.
Australia’s lowest-cost onshore operations.
A strong balance sheet to support growth.
The reinstatement of shareholder dividends.
The sale of non-core assets.
“Our strategy has been to establish a disciplined low-cost operating model that delivers strong cash flows through the oil price cycle,” Mr Gallagher said.
“Subject to regulatory approvals, the recently announced acquisition of Quadrant Energy will further reduce our breakeven oil price and deliver operatorship of a high quality portfolio of low-cost, long-life conventional Western Australian natural gas assets.
“It would also give us a leading position in the highly prospective Bedout Basin, including the recent significant oil discovery at Dorado.
“We are now positioned for disciplined growth leveraging existing infrastructure in all five of our assets in the portfolio and are targeting production of more than 100 mmboe by 2025.”