By David Winning


SYDNEY--Santos said its oil and natural gas production fell by 7% in its latest quarter, after its operations were disrupted by bad weather and planned maintenance.

Santos reported production of 21.8 million barrels of oil equivalent in the three months through March, down from 23.4 million BOE in the final three months of 2023. Sales volumes were 8% lower at 23.2 million BOE, contributing to a 6% drop in sales revenue to US$1.4 billion.

Still, Santos said its free cash flow from operations totaled US$692 million in the quarter and its gearing was 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 Chief Executive Kevin Gallagher.

Those major projects include the Barossa natural-gas field off Australia's northern coast, which is advancing again after being held up by a legal challenge.

In September 2022, a judge threw out 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 accepted by the regulator in December, and drilling has restarted 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 liquefied natural gas fetched an average price of US$12.68 per million British thermal units in its fiscal first quarter, slightly higher than the final three months of 2023. However, its domestic gas price fell to US$5.95 per gigajoule, from US$6.02/GJ in the previous quarter.

Shares in Santos have recovered from a recent low in February that was reached not long after takeover talks with Woodside Energy collapsed. The energy industry has tailwinds of tensions in the Middle East, a major oil production hub, and a recovering global economy.

Santos reiterated on Thursday that it 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 BOE, compared with 96.4 million BOE a year ago.


Write to David Winning at david.winning@wsj.com


(END) Dow Jones Newswires

04-17-24 1943ET