Signed mid-term sales agreement with PetroChina: Santos Ltd.’s (ASX: STO) stock rose 1.65% on July 20, 2018 to A$6.16 (3:30 PM AEST) after the company signed a mid-term LNG sale and purchase agreement (SPA) with PetroChina International (Hong Kong) Corporation Limited (PCI), for the supply of approximately 0.45 million tonnes of liquefied natural gas (LNG) per annum (mtpa), commencing in July 2018. The mid-term SPA is for supply over a three-year period. This SPA will take the total contracted volumes from the Project to 7.0 mtpa, and 6.6 million tonnes of PNG LNG’s annual output is already committed under long-term contracts to JERA, Osaka Gas, Sinopec and CPC. Further, ExxonMobil, on behalf of the PNG LNG Project participants (STO has a 13.5% interest in PNG LNG), is negotiating with a number of other parties to get mid-term LNG supply agreements for spot sales. These agreements are expected to end in the near-term and increase the sales under new mid-term agreements to 1.3 mtpa. On the other hand, STO for the first half has reported 16% growth in the sales revenue to US$1.7 billion due to stronger commodity prices and higher oil sales. The company for the second quarter has achieved the production of 14.2 million barrels of oil equivalent (mmboe), which is higher than the prior quarter due to strong production from the Cooper Basin and Western Australia gas, combined with the restart in PNG LNG production after the major earthquake activity in February. Offsetting these factors was a planned one-month maintenance shutdown of Bayu Undan/Darwin LNG during the second quarter. However, the second quarter production fell 3.4 percent from a year ago. Additionally, STO has announced a new dividend policy, according to which the company plans to pay ordinary dividends that are sustainable through the oil price cycle and will target a range of 10% to 30% payout of free cash flow per annum. Meanwhile, STO stock has risen 1.17% in three months as on July 19, 2018.
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