Santos posts 13% drop in Q1 revenue

Santos has posted a 13 per cent drop in first-quarter revenue due to lower realised prices for oil and gas but says it has sufficient liquidity and debt headroom to weather the recent crude price crash.

Australia’s second-largest independent gas producer says revenue for the quarter ended March 31 fell to $US883 million ($A1.4 billion) from $US1.02 billion a year ago.

The figure is lower than brokerage RBC Capital Markets’ forecast of $US912 million.

Average sales prices for its liquefied natural gas amounted to $US8.88 per metric million British thermal unit (mmBtu), compared with $US10.79 per mmBtu a year earlier.

Demand destruction due to the coronavirus pandemic and a Saudi-Russia price war in March have upended energy markets this year, with crude prices sinking below $US30 a barrel.

Australian LNG companies, which sell most of the commodity through long-term oil-liked contracts, have delayed investments in major growth projects to cope with the collapse in crude prices.

Last month, Santos cut its full-year capital spending by $US550 million and deferred an investment decision on its $US4.7 billion Barossa gas project off northern Australia, in which it recently sold a stake to Japan’s JERA.

“The current environment is a time for discipline. We have a strong liquidity position with over $3 billion available and we have sufficient headroom in our debt covenants for a number of years at current oil prices,” chief executive Kevin Gallagher said on Thursday.

Santos produced 17.9 million barrels of oil equivalent (mmboe) during the period, down from 18.4 mmboe last year.

The ASX-listed firm raised its annual output forecast to between 81 mmboe and 89 mmboe as it expects to complete the acquisition of ConocoPhillips’ northern Australia business by the end of the first half of 2020. 

Santos shares were up 24 cents, or 6.02 per cent, to $4.23 at 1015 AEST.

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