Santos will decide on a dividend next month after a quarter in which the Cooper Basin starred

SANTOS cut net debt by 4 per cent since the start of the second quarter, helped by higher oil prices and may revive dividends in August.

SANTOS cut net debt by 4 per cent since the start of the second quarter, helped by higher oil prices and may revive dividends in August.

The Adelaide company also said quarterly oil prodcution from the Cooper basin in South Australia’s Far North was the highest in four years and Cooper gas production was up 8 per ent and oil production up 17 per cent compared to the prior quarter

Overall, second quarter production fell 3.4 per cent from a year ago to 14.2 million barrels of oil equivalent (mmboe), said Santos, which which in May rejected a $10.8 billion takeover by US-based investor Harbour Energy.

Santos said its board would consider a dividend declaration in August, which would be the first declaration since early 2016, reflecting a policy adopted late last month to target a payout of between 10 per cent and 30 per cent of annual free cash flow as ordinary dividends.

“Given the cyclical nature of the industry, the board will also consider additional returns to shareholders above the ordinary dividend when business conditions permit,” the company said on Thursday.

Santos said its average realised oil price in the second quarter rose 48 per cent to $US78.60 per barrel over the same period a year earlier, helping quarterly revenue rise 15.2 per cent despite lower production. The company in April narrowed its 2018 production forecast range to 55-58 mmboe from 55-60 mmboe after an earthquake in Papua New Guinea in February caused an outage at the Exxon Mobil-run PNG LNG operation in which it holds a minority stake.

Santos shares have risen more than 9 per cent this year, supported by a rise in Brent crude prices, and yesterdy closed 1.7 per cent higher at $6.06. The Harbour bid was for $7 per share. At the end of June Santos had cash and cash equivalents of US$1.5 billion and total debt of US$3.9 billion, resulting in net debt of US$2.4 billion.

Chief executive Kevin Gallagher said: “Our onshore development team continues to drive excellent results, including the fastest ever gas well drilled in the Cooper. This level of performance gives us confidence we can commercialise more of the vast discovered resource that remains undeveloped within the producing fields of the Cooper Basin, as well as the expanding prospective resource base across the Cooper.”

-with Reuters