Santos’ profit surges on high prices

Australia’s Santos has reported record earnings in the first half of 2022, boosted by high oil and LNG prices.

The independent LNG producer said on Wednesday its underlying profit reached $1.27 billion, up 300 percent year-on-year, while statutory net profit after tax rose 230 percent to $1.16 billion.

Last month, Santos reported a record sales revenue and cashflow in the first half of this year.

Santos attributed the rise in its profit to significantly higher oil and LNG prices compared to the corresponding period due to stronger global energy demand combined with a higher interest in PNG LNG following the Oil Search merger.

The Australian LNG player said its average realized LNG price of $14.19 per MMBtu in the first half increased 111 percent when compared to $6.74 per MMBtu in the same period last year

Santos also said average crude oil price rose 67 percent to $116.28 per barrel.

The company intends to return $605 million to shareholders (equivalent to 18 cents per share) under the company’s capital management framework.

PNG LNG talks

Santos is also in “advanced discussions” with shortlisted counterparties for the sale of a five percent interest in the PNG LNG project.

“Throughout this process, there has been strong interest from reputable counterparties with expected proceeds in-line with market consensus valuation,” it said.

Santos aims to retain a 37.5 percent stake in PNG LNG. ExxonMobil has a 33.2 percent operating interest in PNG LNG.

CEO Kevin Gallagher said Santos delivered record production, free cash flow and underlying earnings in the first half 2022 as the company benefited from “strong customer demand for our products and higher commodity prices.”

“Demand for our products has remained strong in both Australia and internationally, due to increased demand and shortages of supply from producing nations due global underinvestment in new supply,” Gallagher said.

“We are seeing these issues play out in the significant shift in global energy policy towards energy security as a key priority,” he said.

Pikka FID

Santos, as operator of the Pikka Unit joint venture, also announced that a final investment decision (FID) had been taken to proceed with the $2.6 billion gross ($1.3 billion Santos-share) Pikka Phase 1 oil project located on the North Slope of Alaska.

Pikka Phase 1 is expected to produce 80,000 barrels a day of oil gross with first oil anticipated in 2026.

Santos has a 51 percent interest in the Pikka Unit, while Repsol holds the remaining interest.

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