Oil price boom lifts Santos to record
Booming oil and LNG prices and strong production saw Santos deliver record quarterly revenue of $US1.9bn.
Booming energy markets and production resulted in Santos achieving record revenue of $US1.9bn in the first quarter of 2022 with LNG prices more than doubling from a year earlier, setting shareholders up to cash in with higher dividends.
Quarterly sales revenue of $US1.9bn was up by a quarter on the prior three-month period and 99 per cent higher than a year earlier as commodity prices soared amid Russia’s invasion of Ukraine.
Higher shareholder returns are expected at its first-half results in August with Santos stating “the balance sheet is well positioned to fund disciplined growth and higher shareholder returns”.
Santos chief executive Kevin Gallagher announced on Wednesday the company would launch a $US250m ($338m) share buyback in May, with high oil prices set to boost investor returns after the company rebooted its capital management model.
Production rose 14 per cent to 26 million barrels of oil equivalent, from 22.9mboe in the fourth quarter of 2021, while sales volumes lifted 8 per cent to 28.1mboe over the same period, in line with expectations.
A further record was notched up with $US865m in free cashflow over the quarter, up 186 per cent from the last quarter of 2021.
A target of $US90m-$US115m in cost savings from its $21bn merger with Oil Search is also on track, with $US54m in synergies achieved in the first three months.
Santos’s timeline for sanctioning the Dorado oil project in Western Australia slipped slightly to the second half of the year from mid-2022 following the big Pavo discovery made in March, while the company retained its overall 2022 guidance.
Santos’s LNG projects shipped 60 LNG cargoes with seven spot cargoes from Darwin LNG and PNG LNG sold at Japan Korea Marker crude-linked prices and six contracted GLNG cargoes also sold at the lucrative benchmark. LNG prices jumped to $US13.77 per million British thermal units, from $US6.12 mbtu a year earlier.
North Asian LNG market prices have soared beyond $US30 mbtu amid global concerns over energy security.
Sanctions and restrictions on Russia, the world’s fourth-largest LNG producer and supplier of 40 per cent of Europe’s gas, have created a race to find alternate volumes among buyers.
Brent oil is trading above $US107 a barrel and has soared by 50 per cent so far this year, boosting the coffers of major Australian oil and gas producers including Santos and Woodside Petroleum.
Santos shares rose 1.7 per cent, or 14c, on Thursday to $8.37.