Santos Managing Director and Chief Executive Officer Kevin Gallagher said: “Santos’ first quarter results highlight the benefits of a diversified portfolio of natural gas assets underpinned by a disciplined operating model focused on cash generation.”
“In the first quarter of 2018, we generated $246 million in free cash flow, reduced net debt by 8% to $2.5 billion and maintained our 2018 forecast free cash flow breakeven at ~US$36/bbl, despite the significant increase in drilling activity in Queensland and the Cooper Basin, and the temporary shutdown in PNG following major earthquake activity.”
“This clearly demonstrated the resilience of our diversified portfolio of core assets and we are now beginning to enjoy the sustained benefits of our low cost, high efficiency operating model, with strong free cash flow generation further strengthening our balance sheet and setting us up for future growth.”
“As a result of our strong cash flows that enabled net debt to be reduced by a further 8% to $2.5 billion over the quarter, Santos is now set up to reap the benefits of higher oil prices and continue to build value for our shareholders. If current oil price levels continue throughout 2018 then we will achieve our end-2019 net debt target sometime in the second half of 2018, more than a year ahead of plan.”
“In late February, we were deeply saddened by the loss of life and personal injury suffered by communities in Papua New Guinea as a result of the severe earthquake in the region. Our PNG LNG expertise and resources were deployed to assist the humanitarian relief effort and Santos donated US$200,000 to help provide urgently needed food, water and medical supplies to more than 30,000 people isolated in remote villages.”
“PNG LNG has now safely resumed LNG production, ahead of ExxonMobil’s eight-week estimate, with LNG exports expected to resume shortly. Santos carries appropriate property damage and business interruption insurance for its assets.”
“I would like to thank ExxonMobil, our joint venture partners and the PNG Government for all their efforts in safely resuming production. Santos looks forward to continuing to work with our local communities in PNG who still have a long road to recovery following the loss of life, homes and crops caused by the earthquake,” Mr Gallagher said.
The temporary PNG LNG shutdown, combined with planned maintenance at our facilities in Moomba and in Queensland, reduced first quarter production by 1.2 mmboe to 13.8 mmboe. Excluding these shutdowns, production would have been in line with the prior quarter.
On 3 April 2018, Santos announced it had received an unsolicited, non-binding and indicative proposal from Harbour Energy to acquire 100 percent of Santos shares by way of a scheme of arrangement.
“We will engage with Harbour Energy on its proposal to determine whether an offer for the company that is capable of recommendation by the Board for consideration by shareholders, can be developed,” Mr Gallagher said.
“Regardless of the outcome of engagement with Harbour, our strong free cash flows, sustainable low cost base, stable production out to at least 2025 and the resilience of our diverse natural gas asset portfolio mean Santos is very well positioned to drive value for our shareholders going forward. When combined with the continued progress of our key growth projects in Northern Australia and PNG and our strong opportunity set built around existing infrastructure and our core natural gas assets, Santos is in a great position to increase its value over the medium and longer term.”
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