The Santos Ltd (ASX: STO) share price is down around 2% after releasing its June 2019 quarter report.
Santos is one of Australia’s largest oil and gas companies. Founded in the 1950’s, Santos owns and operates one of Australia’s largest portfolios of oil and gas fields, connected by extensive pipelines and complementary facilities.
Santos June 2019 Quarter Result
Santos revealed that for the first half of 2019 it produced 37 MMboe (Million Barrels of Oil Equivalent), which was a record for Santos and was 32% above the corresponding period.
There has been higher quarterly and year to date production in both the Cooper Basin and GLNG. A record 102 wells were drilled in GLNG during the quarter (with a 100% success rate) and 25 wells drilled in the Cooper Basin (80 success rate) including the fastest ever Cooper total well execution of 4.3 days.
The resources business also reported that sales volumes were 45.2 MMboe were up 19% and that sales revenue was $2 billion in the first half – up 18%.
In the second quarter the company generated free cash flow of $300 million, bringing the total free cash flow for the first half to over $600 million. This reduced net debt by $0.3 billion to $3.1 billion (excluding new Leases accounting).
Management said that the Dorado-2 appraisal success has confirmed a larger than anticipated major oil and gas resource in the Bedout Basin, offshore Western Australia.
Santos said it expects to book a “significant” resource upgrade above its currently booked 2C resource for Dorado.
The PNG LNG expansion has been advanced by the signing of a binding letter of intent to acquire a 14.3% interest in PRL 3.
The Barossa project has entered into exclusive negotiations with Darwin LNG Joint Venture for the supply of backfill gas to Darwin LNG.
Is Santos A Buy?
The oil company has seen some highs and lows over the past few years. Rejecting the takeover seems to have been the right choice, but I’m always going to be sceptical of owning resource shares when the commodity price can be so cyclical.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.