Australian LNG player Santos reported a drop in its sales revenue in the second quarter of this year due to lower LNG volumes and prices.
The independent LNG producer said on Thursday that its April-June sales revenue of $1.33 billion dropped 18 percent when compared to the prior quarter.
Compared to $1.87 billion in the second quarter last year, sales revenue fell about 29 percent.
Santos reported a record sales revenue of $7.8 billion in 2022 on the back of high LNG prices and increased PNG LNG position after the merger with Oil Search.
The company said its Q2 sales revenue was lower than the prior quarter primarily due to lower LNG sales volumes, and lower commodity prices for all products.
Sales volumes of 23.3 mmboe were 2 percent lower then the prior quarter.
Santos attributed this to lower LNG volumes primarily due to seasonal shaping at GLNG ensuring more domestic volumes were available to customers during colder periods and lower crude oil and condensate volumes due to the timing of liftings, offset by higher domestic gas sales in Western Australia.
Second quarter production of 22.8 mmboe was higher than the prior quarter primarily due to increased domestic gas volumes in Western Australia, but it dropped from 25.5 mmboe last year.
53 LNG cargoes
The Australian LNG player said its average realized LNG price of $11.96 per MMBtu in the second quarter dropped when compared to 14.46 per MMBtu in the prior quarter and 14.66 per MMBtu in the same quarter last year.
According to Santos, the average realized LNG price was lower than the prior quarter, reflecting the link of sales contracts to a lower lagged Japan Customs-cleared Crude (JCC) price and lower average JKM spot prices.
Three-month lagged JCC averaged $87/bbl in the second quarter of 2023 compared to $100/bbl in the first quarter.
Moreover, Santos’ LNG projects shipped 53 cargoes in the second quarter, of which eight were sold on a JKM-linked basis, three from Darwin LNG and five from PNG LNG.
Santos managing director and CEO, Kevin Gallagher, said that “our underlying business remains strong and has continued to perform well in a volatile oil price environment.”
“Free cash flow of more than $1.1 billion in the first half positions the company well to deliver shareholder returns, backfill and sustain our existing business while also investing in our decarbonization projects,” he said.