Australia’s Santos posts jump in profit

Australian independent LNG producer Santos reported a 50 percent rise in its underlying profit in the first half of the year on the back of higher oil and gas prices.

Santos said on Tuesday its underlying profit increased to $317 million for the six months ended June 30, up from $212 million in the same period last year.

Also, net profit after tax surged to $354 million when compared to a loss of $289 million last year.

The reported net profit after tax includes net gains on asset sales and it mainly rose due to impairments included in the previous half-year result, Santos said.

Moreover, Santos reported record production of 47.3 mmboe and record sales volumes of 53.8 mmboe, and free cash flow of $572 million.

“The results reflect higher oil prices compared to the corresponding period due to recovery in demand but were offset by lower average LNG prices due to lagged oil-linked pricing in long-term LNG offtake contracts,” the firm said.

The firm’s board has resolved to pay an interim dividend of 5.5 cents per share fully-franked, 162 percent higher than the previous interim dividend.

Papua New Guinea-focused Oil Search has earlier this month agreed to a new merger proposal by Santos, in a deal that would create an LNG player worth about $16 billion.

Following approval of the scheme, Oil Search shareholders would own about 38.5 percent of the merged group and Santos shareholders would own 61.5 percent.

“The merged company would have strong cash generation from a diverse range of assets which provides a strong platform for sustainable growth and continued shareholder returns,” Santos chief executive Kevin Gallagher, said.

Gallagher said the two firms continue to progress on due diligence. “I look forward to the signing of a binding merger implementation deed in the coming weeks,” he said.

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