Today, Santos Ltd, an ASX energy stock, is defying broader market declines on the ASX 200 as its share price climbs. Yesterday, Santos' shares closed at $8.01. By Thursday morning trading, the stock has risen to $8.06 per share, marking a 0.6% increase. In contrast, the ASX 200 index is down 0.2% during the same period. This uptick in Santos' share price follows the release of its quarterly update covering the three months ending on 30 June.
Highlights from Santos' Quarterly Update
Santos (ASX: STO) reported quarterly sales revenue of US$1.3 billion, consistent with the previous corresponding period. Production for the quarter reached 22.2 million barrels of oil equivalent (mmboe), reflecting a 2% increase from the previous quarter.
The company reported gearing levels at 19.9%, excluding operating leases, and 23.5% when including them. Free cash flow from operations totaled US$380 million for the quarter, with expectations to reach approximately US$1.06 billion for the half-year period.
CEO Kevin Gallagher attributed the positive momentum in the Santos share price to strong financial performance, stating, "First half cash flow of almost US$1.1 billion positions us well to fund shareholder returns, support our current operations, and expand our Santos Energy Solutions business."
Strategic Developments
During the quarter, Santos secured a long-term LNG supply and purchase agreement with Hokkaido Gas, committing to supply 400,000 tonnes of LNG annually for a decade starting in 2027.
Key projects also progressed well, with the Barossa Gas Project 77.5% complete, the Pikka Project 56.2% complete, and the Moomba phase one Carbon Capture and Storage (CCS) Project 92% complete.
Gallagher highlighted progress on these projects, noting, "Our major projects are on track for offshore commissioning in early 2025, positioning us to deliver sustainable returns to our shareholders over the long term."
Looking ahead, Santos forecasts production between 84 mmboe to 88 mmboe and sales volumes of 87 mmboe to 93 mmboe for 2024. Capital expenditure is expected to total around $2.85 billion for the year, with unit production costs ranging from $7.45 to $7.95 per barrel of oil equivalent (boe).
"Our focus for 2024 remains on maintaining disciplined operations and advancing key projects like the Moomba CCS, Barossa Gas, and Pikka Project, while ensuring a robust financial position," Gallagher emphasized.
Santos will release its full half-year results on 21 August. Over the past 12 months, Santos' share price has appreciated by 7%, and the company currently offers an unfranked dividend yield of 3.5%.