Santos (ASX:STO) drops 13pc in first-quarter revenue, remains positive

• Australia’s second-largest independent gas producer, Santos (STO), has reported a 13 per cent drop in first-quarter revenue due to the slump in oil and gas prices
• Santos reported revenue for the March quarter fell to US$883 million from US$1.02 billion a year ago
• The oil giant is confident its Cooper basin can weather the COVID-19 pandemic
• The company also reported its first-quarter production of 17.9 million barrels of oil equivalent was four per cent lower than the prior quarter
• Santos is up 7.39 per cent on the market this afternoon, trading for $4.29 per share

Australia’s second-largest independent gas producer, Santos (STO), has reported a 13 per cent drop in first-quarter revenue due to the slump in oil and gas prices.

Santos reported revenue for the March quarter fell to US$883 million from US$1.02 billion a year ago.

The oil giant is confident its Cooper basin can weather the COVID-19 pandemic.

Santos says it has a sufficient amount of cash and debt headroom, with over US$3 billion in liquidity.

The first-quarter production of 17.9 million barrels of oil equivalent (mmboe), was four per cent lower than the prior quarter. The company says this was due to the unplanned domestic gas customer outage in Western Australia and the impact of Cyclone Claudia.

Average sales prices for its liquefied natural gas was US$8.88 per metric million British thermal unit (mmBtu), compared with US$10.79 per mmBtu last year.

Managing Director and CEO Kevin Gallagher said decisive action is being taken to ensure Santos is well-positioned in a lower oil price environment.

“Production levels from our current assets are relatively steady for the next four or five years without any new growth projects and all our major capital projects are yet to take final investment decisions, providing flexibility in commitment timing,” he said.

“Our oil assets performed well with strong realised prices in the quarter, while our onshore assets performed particularly strongly including the highest quarterly Cooper Basin gas production in nine years and GLNG operating above guidance at 6.4 mtpa,” he added.

For the rest of the year, Santos said around 70 per cent of its forecast production volumes are either fixed-price domestic gas contracts or oil hedged at an average floor price of US$39 per barrel.

Kevin said the COVID-19 crisis continues to put demand pressure on industries across the globe and Santos is not immune.

“I remain confident our disciplined, low-cost operating model is built to see Santos through these challenging periods and today’s results are a strong base for us to build on as we fight current low oil prices and COVID-19,” Kevin explained.

“Santos is well-positioned to leverage the opportunities when prices and demand recover, which they will,” he added.

Santos is up 7.39 per cent on the market this afternoon, trading for $4.29 per share at 1:42 pm AEST.