Australian LNG player, Santos has maintained its production and sales volumes guidance on the upper end of the 58-60 mmboe and 79-82 mmboe guidance ranges, respectively.
All other guidance for 2017 is maintained, including capital expenditure of US$700-750 million, the company said in its investor day presentation on Thursday.
Speaking of the company’s transformation phase, Santos managing director and CEO Kevin Gallagher said it has exceeded expectations.
Santos’ forecast free cash flow breakeven for 2017 now sits at $32/bbl, dropping from $47/bbl Gallagher said, adding that the company has achieved a 40 percent reduction in net debt that now sits at $2.8 billion.
“We have simplified the business to focus on five core, long-life natural gas assets: Cooper Basin, Queensland (including GLNG), PNG, Northern Australia and Western Australia Gas,” Gallagher said.
2018 Guidance
In 2018, Santos will increase drilling activity in both the Cooper Basin and GLNG to grow production and increase gas supply for the domestic market. The company also plans to invest in the Angore surface facilities and tie-in to Hides, Muruk appraisal and exploration drilling in PNG, and FEED on the Barossa project in Northern Australia.
Capital expenditure in 2018 is expected to be in the range of $825-875 million. Notwithstanding the increase in capex compared to 2017, the company expects to maintain a free cash flow breakeven in 2018 within the US$35-40/bbl target range.
All five core assets are expected to deliver higher production in 2018, including allowing for major planned plant shutdowns at PNG LNG, Darwin LNG and Moomba. Higher production from the core assets is expected to be offset by natural field decline in the non-core assets. Production guidance for 2018 is 55-60 mmboe.
Excluding the major plant shutdowns, upstream unit production costs are expected to be broadly in-line with 2017 levels. Including the major shutdowns, guidance for 2018 is US$8.20-8.80/boe.
Sales volumes in 2018 are expected to be in the range of 72-78 mmboe, primarily due to lower forecast third-party gas sales volumes and lower non-core asset volumes.