Santos Ltd (ASX: STO) shares are a focus on the Australian share market today after the oil and gas company upgraded its long-term production forecasts.

About Santos

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.

Woodside Petroleum Ltd (ASX: WPL) and Oil Search Limited (ASX: OSH) are also involved in the production of oil and gas.

Production Upgrade

Addressing the company’s Investor Day gathering in Sydney, Santos CEO Kevin Gallagher revealed a new 2025 production target of 120 million barrels of oil equivalent (mmboe). That’s twice as high as the production levels achieved in 2018.

“Our strategy has been to establish a disciplined low-cost operating model that delivers strong cash flows through the oil price cycle,” Gallagher said.

“Our 2019 forecast free cash flow breakeven oil price is now ~US$29 per barrel.”

Recently, Santos announced it would acquire interests in projects in Northern Australia and Timor-Leste from Texas-based ConocoPhillips. Though the final change of control relies on regulatory approval and third-party consents, it’s expected to complete in the first quarter of 2020.

Gallagher said these additional interests leverage Santos’ ‘Transform-Build-Grow’ strategy and will help it achieve this new target.

“We are now positioned for disciplined growth leveraging existing infrastructure in all five of our core assets, which we believe will deliver 120 mmboe by 2025.”

In the near-term Santos expects to achieve between 74 and 76 mmboe of production in 2019 and spend $1.45 billion in sustaining and growth development opportunities in 2020.

Over the past year, shares of Santos Ltd have pushed higher 38% higher. For comparison, the broader S&P/ASX 200 (INDEXASX: XJO) has risen 20%.

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