Highlights:
- Santos’ sales revenue for first half of the financial year 2022 is up 85%.
- The company also recorded a free cash flow of US$1.7 billion, up 199%.
- However, production during the second quarter was slightly lower than the first quarter because of major planned shutdowns.
- During the early trading hours, Santos shares were trading lower on ASX.
Australian gas producer, Santos Ltd (ASX:STO), on Thursday, shared its second quarter (2Q) report on the ASX. Santos said it has delivered record sales revenue, production and free cash flow during the first half of the financial year 2022 (FY22), despite major shutdowns in the 2Q.
Despite sharing a solid set of numbers during the second quarter of FY22, Santos shares were trading 1.353% lower at AU$7.2890 per share at 11:30 AM AEST. Meanwhile, the benchmark index, ASX 200 Energy was down 2.44% to 10,064.40 at 12:04 PM AEST.
ASX 200 is 3.70 points down at 6,755.50 at 12:04 PM AEST.
Key highlights from the second quarter report
- The energy pioneer has delivered record sales revenue of US$3.8 billion and free cash flow of US$1.7 billion during the first half of FY22. Reportedly, strong production and higher commodity prices drove the free cash flow.
- Production of 25.5 million barrels of oil equivalent (mmboe) in the second quarter was 2% less than the previous quarter due to major planned shutdowns and expected natural field decline at Bayu-Undan.
- The sales volume in the quarter was lower than the previous quarter because of the same reason stated above.
- The sales revenue was in line with the previous quarter as higher gas, oil and LNG prices offset the lower sales volume.
- The company recorded a free cash flow of US$843 million in the second quarter.
- At the end of June, the gearing was reduced to 22.5%, primarily because of strong free cash flows.
- At the end of the quarter, the company completed US$174 million of on-market share buyback.
How are Santos’ projects progressing?
- According to today’s release, the Barossa project of Santos is progressing as per the schedule and budget and is 40% complete.
- Pikka Phase 1 project, located in Alaska, is also progressing as per the company’s plan. It has secured all major regulatory and environmental approvals. The FEED work has advanced considerably to achieve FID-ready status.
- Moomba CCS project is progressing well; 18% of the project is completed.
- Bayu-Undan CCS project is also advancing well.
- Direct air capture technologies trial at the Copper Basin are expected to be conducted in the second half of 2023.
- In addition to this, the company said it is on track to carry out merger integration synergies.
Guidance
Santos has updated the guidance for the financial year 2022. Reportedly, the production guidance has been narrowed down to 102-107 mmboe, earlier 100 – 110 mmboe. The sales volume guidance has been upgraded to 110-116 mmboe. The capital expenditure for the major projects has been reduced to around 1100 – 1200 million. The expected capital expenditure for the major contingent projects has been upgraded to up to $350 million.
Kevin Gallagher, CEO, Santos, said the company is ‘well placed to take advantage of growing Asian demand for LNG, which is forecast to double by 2050.’