Strong free cash flow generation and significant progress on major projects
Strong realised prices support robust free cash flow
- Free cash flow from operations for the half-year expected to be ~US$1.06 billion, US$380 million for the second quarter.
- Sales revenue of US$1.3 billion in the second quarter, consistent with the comparative prior year period.
- Production increased by 2 per cent quarter on quarter, with second quarter production of 22.2 mmboe.
- Gearing at 19.9 per cent, excluding operating leases (23.5 per cent when included).
- GLNG supporting domestic gas supply through seasonal shaping of projects LNG commitments with 18 PJ of sales gas planned to supply the domestic market across quarters two and three this year.
- Drilling and completion of both Angore wells completed during the quarter, project team commencing tie-in. High compression reliability at Gobe and Kutubu fields is providing additional backfill to the PNG LNG facility.
- WA production volumes increased by 6 per cent compared to the first quarter, following recovery from weather events and planned maintenance in the first quarter.
- Executed a binding long-term LNG Supply and Purchase agreement (SPA) with Hokkaido Gas to provide portfolio LNG of ~0.4 million tonnes per annum for 10 years from 2027.
Significant development milestones achieved
- The Barossa Gas Project is 77 per cent complete. The Gas Export Pipeline pipelay has been completed. The third well of the six well drill program was spudded in May. All 16 modules have been installed onto the FPSO. Construction activities for the Darwin Pipeline Duplication have commenced.
- The Pikka Project is 56.2 per cent complete. All facility piles are now installed, over 98 per cent of the vertical supports are in place, and 40 miles of pipeline has been completed to date. The drilling program is progressing to plan, with the tenth well currently being drilled. Nine wells have been drilled, including two disposal wells. Six development wells have been stimulated and four have been flowed back, with results comparing favourably with pre-drill expectations.
Moomba CCS project mechanical completion achieved
- The Moomba phase one Carbon Capture and Storage (CCS) Project is 92 per cent complete. The project achieved mechanical completion on 6 July 2024. The project is in final commissioning phase with well tie-ins currently in progress.
- Initial study completed on CCS pipelines for Moomba CCS phase two.
Western Australia delivering safe and efficient decommissioning program
- Commenced an eleven well Plug and Abandon (P&A) campaign on the Mutineer Exeter, Fletcher and Finucane asset and awarded contract for the safe removal of subsea assets
- Harriet joint venture has had a successful P&A campaign with nine out of thirteen wells now complete. Campbell offshore platform removal was completed safely and without incident in June.
Santos Managing Director and Chief Executive Officer Kevin Gallagher said the business performance reflects a focus on operational excellence and project execution, delivering another strong quarter of production and cash flow.
“First half cash flow of almost US$1.1 billion positions us well to fund shareholder returns, backfill and sustain our existing business, and grow our Santos Energy Solutions business,” Mr Gallagher said.
“Our major projects continue to deliver to plan. I am very pleased that both the Barossa pipelaying activities and the installation of the modules onto the FPSO in Singapore are now complete and other activities are on track for offshore commissioning to commence in the first quarter of 2025. The Pikka project has had a strong first winter season with the team delivering significant progress on the North Slope, with some pleasing well results.
“Our Moomba CCS Project is now mechanically complete and is on track to ramp-up injection of Cooper Basin Gas Plant CO2 throughout the second half of 2024. Work continues on phase two activities with a focus on opportunities for Santos to provide carbon management services to customers and third parties, particularly in hard-to-abate sectors. This is an exciting time for Santos as we are set to deliver on the first of three CCS projects in our portfolio.
“We can now see line of sight to our major projects progressively coming online, putting us in a strong position to deliver sustainable, competitive shareholder returns over the long term.
“Our focus for 2024 is on continuing to drive the disciplined low-cost operating model across the business and the execution of the Moomba phase one CCS project, Barossa Gas Project, and Pikka Project, whilst maintaining a strong balance sheet,” Mr Gallagher said.
