Santos Share Price Shoots Up 4.53% after quarterly sales

The share price of oil and gas producer Santos Limited [ASX:STO] jumped 4.78% today, adding $0.28 to trade at $6.24 per share.

Santos operates in the exploration, development, production, transportation and marketing of natural gas, producing for Australian, Indonesian and other Asian markets. The company also develops oil and liquids businesses in Australia, Indonesia and Vietnam.

Record quarterly sales saw Santos share price climb

In its quarterly activities report released this morning, Santos announced a record quarterly sales revenue, including a record LNG sales profit.

According to the report, sales revenue for Q4 2018 came in at $1.043 billion, up 7% from the previous quarter.

LNG sales account for just under half of total sales revenue, pulling in $449 million, up 11%.

Santos’s acquisition of Quadrant Energy in November undoubtedly helped to lift these figures, as Santos reports an increase in total production of 6% during Q4.

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Both Santos Managing Director and Chief Executive Officer Kevin Gallagher commented on the record quarter:

Our cash generative asset portfolio set new records for quarterly and annual sales revenues, notwithstanding the divestment of our non-core Asian assets during the year, while our low cost and disciplined operating model enabled more investment in exploration and appraisal to improve ongoing organic resource and reserve replacement.’

Excluding the acquisition of Quadrant Energy, Santos realised sales volume of 77.2 million barrels exceeding their guidance of 74-76 million barrels, while the production of 57.1 million barrels stayed within guidance of 56-58 million barrels.

What’s next for Santos?

With the acquisition of Quadrant Energy now complete, Santos expects to realise $30–$50 million in synergies per annum through the integration from Quadrant’s assets.

Quadrant’s former CEO Brett Darley will now lead Santos’s Australian offshore business. Mr. Darley has more than 25 years’ experience in the upstream oil and gas industry, both in Australia and overseas.

According to their announcement, Santos’ focus for 2019 will centre on their growth portfolio, including the PNG LNG expansion and the Barossa backfill to Darwin LNG, as well as appraisal of new oil discoveries.

Mr. Gallagher said, ‘Santos is positioned for growth across each of our five core assets and we are targeting production of more than 100 mmboe (million barrels) by 2025, almost double 2018’s level.’

The company has given guidance for 2019 sales to be in the range of 88–98 million barrels and production of 71–78 million barrels.

More to come.


Ryan Clarkson-Ledward,

For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

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