Santos (ASX:STO) saw a 7% drop in its oil and natural gas production in the first quarter of its 2024 financial year after its operations were disrupted by heavy rain and planned maintenance.
Santos told the ASX on Thursday that production of 21.8 million barrels of oil equivalent (MBOE) in the three months to March was down from 23.4 million MBOE in the final three months of 2023 and 8% lower at 23.2 million MBOE than the first quarter of last year.
This led to a 6% slide in sales revenue to $US1.398 billion from the December quarter. More importantly, revenue for the first quarter was 14% down from the $1.6 billion-plus in the same quarter of 2023.
Santos said its free cash flow from operations was $US692 million in the quarter, leaving its gearing below 20% when operating leases were excluded.
“It positions us well to fund shareholder returns, backfill and sustain our existing business, complete our major projects, and grow our Santos Energy Solutions business,” said CEO Kevin Gallagher in the ASX statement.
Those major projects include the Barossa natural gas field off the north of Darwin, which is underway again after being held up by a long legal challenge.
In September 2022, a judge rejected a regulator’s approval of Santos’s environmental plan to drill for natural gas there after an indigenous leader on the remote islands argued Santos didn’t properly consult his clan on its impact.
Santos’s revised environmental plan was finally accepted by the regulator in December, and drilling is back underway at the project, which is now almost 71% complete.
Santos said its Pikka oil development in Alaska is 47% complete and on track for first production in 2026.
“Barossa and Pikka are world-class projects that will be transformative for Santos and set the company up with long-term, stable cash flows for the next 10-15 years at least,” Gallagher said.
Santos said its LNG fetched an average price of US12.68 per million British thermal units in its fiscal first quarter, slightly higher than the final three months of 2023 but down on the same period of 2023.
In fact, LNG revenues were down more than 16% at $US901 million from $US1.069 billion a year ago.
And crude oil revenues tumbled to $US133 million from $US181 million in March 2023 quarter.
Santos said on Thursday it still expects to produce between 84 million and 90 million barrels of oil equivalent this year, down from 91.7 million BOE in 2023. It has also forecast sales volumes of 87 million-93 million MBOE, compared with 96.4 million MBOE last year.