Santos cost-cutting bears fruit as sales revenue lifts in first quarter
Struggling oil and gas company Santos has put a halt to its revenue slide, as sales rises offset weaker oil prices.
Santos’s rampant cost-cutting is starting to bear fruit, with the struggling oil and gas company putting a halt to its revenue slide during the first quarter of the year.
Santos (STO) today said its sales revenue over the three months to March hit $835 million, a 1 per cent increase over the same time last year and compared to the December quarter.
The solid revenue figures were supported by a huge increase in sales volumes, which rose 40 per cent year-on-year, offsetting weaker oil prices, which were down 28 per cent compared to the start of 2015 and 16 per cent lower than during the December quarter.
Santos chief executive Kevin Gallagher said the results were evidence of the company’s commitment to drive down costs and improve efficiencies across the business.
“We are focused on developing a business that is self-sustaining in a low oil price environment and well positioned to take full advantage of rising commodity prices in the future,” he said.
“We will continue to look for opportunities to lift productivity and reduce costs to drive long-term value for shareholders.”
Since hitting a 10-year low under $30 a barrel earlier this year, global oil prices have rallied around 50 per cent to the mid-$US45 level.
Of Australia’s big energy companies, Santos has been hardest hit by the oil price collapse due to the $9 billion of debt it took on to cover its stakes in the Gladstone LNG and Papua New Guinea LNG developments.
Santos today held firm on its production guidance of between 57 and 63 million barrels of oil equivalent over 2016, and reaffirmed its targeted capital spend of around $1.1 billion.