Balance sheet strengthened
- Net debt reduced to US$2.7 billion at the end of the year, down from US$3.5 billion at the end of 2016.
- Euro Hybrid redeemed and replaced with more efficient long-term debt funding.
- US$600 million of 2019 ECA supported loan facility prepaid.
- Upstream unit production costs down 5% to US$8.07/boe and toward the lower end of guidance.
- Drilling efficiencies resulting in materially lower onshore well costs.
- Capital expenditure US$682 million, below guidance.
- Free cash flow breakeven down 12% to US$32/bbl1, from US$36.50/bbl in 2016.
Strong annual sales and production
- Sales volumes of 83.4 million boe, above the upper end of guidance.
- Production of 59.5 million boe, toward the upper end of guidance.
- Record annual LNG sales volumes of 3.1 million t, driving LNG sales revenues up 33% to US$1.2 billion.
- Total sales revenue up 20% to US$3.1 billion.
Santos Managing Director and Chief Executive Officer Kevin Gallagher said: “In 2017, our turnaround strategy to deliver a low-cost, reliable and high performance business progressed ahead of expectations. Santos is now a stronger, more resilient company with the capacity to execute and bring on-line growth opportunities across its core long-life natural gas assets.
“In 2017, we reduced net debt by 23% to US$2.7 billion, lowered our free cash flow breakeven oil price by 12% to US$32/bbl and delivered Australia’s lowest-cost onshore operations.”
Strong operating performance across the core assets resulted in sales volumes of 83.4 million boe exceeding the top end of guidance and production of 59.5 million boe being toward the top end of guidance.
LNG sales volumes were up 10% to a record 3.1 million t following continued strong performance from PNG LNG and the ramp-up of GLNG. LNG sales revenues were up 33% to a record US$1.2 billion.
“Santos’ new operating model has set a disciplined framework to drive shareholder value as we seek to further reduce costs, build production and maximise operating cash flow,” Mr Gallagher said.
“In 2018, we will increasingly focus on the Build and Grow phases of our strategy as we progress growth opportunities in Northern Australia, PNG and Narrabri, and ramp-up drilling in the Cooper Basin and GLNG.”
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/25012018/santos-4q17-activities-report/