Adelaide company posted record output which was up by 28 percent
LNG Journal editor
Australian energy company Santos reported average LNG prices of over US$9 per million British thermal units in the fourth quarter and higher sales at the Gladstone export plant in Queensland, driven by stronger upstream equity gas production and a record 393 coal-seam gas wells drilled.
Santos, based in the city of Adelaide, said annual production of 75.5 million barrels of oil equivalent was a record and 28 percent above the prior year.
Santos said that during the fourth quarter it sold LNG at an average price of US$9.07 per million British thermal units compared with US$10.04 in the third quarter and $10.96 per MMBtu in the same three months a year ago.
The company also logged record annual sales revenue of over US$4 billion, an increase of 10 percent, generated from volumes of 94.5 million barrels of oil equivalent.
Gross GLNG-operated upstream sales gas production increased at the end of the quarter, supported by continued steady growth from Roma and Arcadia.
“Drilling continues in the Roma East project with 327 wells drilled and 302 wells online to date,” said Santos.
“A record number of wells were drilled and connected in 2019: 393 wells were drilled (29 percent higher than 2018) and 431 wells were connected (44 percent higher than 2018),” added Santos.
“Sixty-two development wells were drilled across Santos’ non-operated Eastern Queensland acreage in the quarter,” it stated.
CSG-to-LNG projects each require feed-gas resources from several thousand CSG wells over the lifespan of the plants.
The fourth quarter was marked by the acquisition of the ConocoPhillips business in northern Australia and Timor-Leste comprising the single-Train Darwin LNG plant as well as the Bayu-Undan, Barossa and Poseidon gas field stakes.
The purchase was valued at US$1.39 billion, plus a US$75 million contingent payment subject to a final investment decision on the Barossa project. It was fully-funded from existing cash resources and new committed debt.
Santos had an existing stake in Darwin LNG. It is also a shareholder in Papua New Guinea LNG and its expansion plan, as well as being operator of GLNG plant on Curtis Island, near Gladstone.
During the fourth quarter, PNG LNG shipped 28 cargoes, a further 22 shipments departed from GLNG and 11 were shipped by Darwin LNG.
“The year was highlighted by highest ever free cash flow of more than $1.1 billion, record onshore drilling performance, lower unit production costs and significant progress on our diversified portfolio of growth projects,” said Santos Chief Executive Kevin Gallagher.
“Santos delivered record annual production and revenues in 2019, and lower unit production costs, clearly demonstrating the effectiveness of our disciplined, cash generative operating model,” added the CEO.
“The acquisition of ConocoPhillips’ natural gas assets in northern Australia and Timor-Leste announced in October is fully aligned with our growth strategy to build on existing infrastructure positions and delivers operatorship and control of strategic LNG infrastructure at Darwin,” explained Gallagher.
The CEO said that in the Northern Territory of Australia, there were better than expected gas flow rates from the ongoing Tanumbirini-1 vertical well test.
He added that this was very encouraging and an important step in the appraisal by the company of the significant resource potential of the McArthur Basin.