Australia’s Santos logs record quarterly revenue

Australia’s Santos reported a record sales revenue in the third quarter, boosted by higher LNG prices.

The independent LNG producer said its quarterly sales revenue rose 6 percent to $1.14 billion on improved commodity prices.

Santos said it produced 21.9 million barrels of oil equivalent (mmboe) during the July-September period, down 3 percent when compared to the prior quarter but also from 25.1 mmboe in the same quarter last year.

Moreover, the average realized LNG price of $10.36 per MMBtu increased when compared to $7.52 per MMBtu in the prior quarter. It rose more than two times from $4.27 per MMBtu the firm logged in the third quarter last year.

Santos said the higher average realized LNG price reflects the linkage of sales contracts to an improving lagged Japan Customs-cleared Crude (JCC) price and higher JKM spot prices.

The firm also reported a record quarterly free cash flow of $359 million, up 33 percent.

Chief executive Kevin Gallagher said Santos had delivered “another strong quarter” as the business benefited from higher commodity prices, including JKM pricing for 12 LNG cargoes sold during the quarter. Santos’ LNG projects shipped in total 69 cargoes in the third quarter.

“Our disciplined, low-cost operating model continues to drive strong performance with $931 million of free cash flow generated in the first nine months of 2021. At current commodity prices, Santos should generate close to $1.3 billion in free cash flow for the full year,” he said.

Papua New Guinea-focused Oil Search and Santos have recently entered into a definitive merger deal that would create an LNG player worth about A$21 billion ($15.5 billion).

“The proposed merger with Oil Search is on track for completion by year-end, subject to customary conditions including Oil Search shareholder approval,” Gallagher said.

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