Santos Ltd., Adelaide, made a series of announcements at the company’s annual investor day seminar.
Santos had farmed in for 20% interest in each of five exploration licenses in Papua New Guinea between Hides and P’nyang natural gas fields, said Kevin Gallagher, managing director and chief executive officer. The permits—PPLs 395, 464, 487, 507, and 545—lie along the prospective trend between the two discoveries. The farm-ins are subject to approval from the Papua New Guinea government.
In Australia, Gallagher pointed to the successful appraisal drilling program that confirmed the multitrillion-cubic feet Barossa gas field in the Arafura Sea as the lead candidate for back-fill supply to the existing Bayu-Undan-fed Darwin LNG project. He added that front-end engineering and development for the Barossa-Caldita project is scheduled to begin during next year’s second quarter.
Santos also has executed agreements with the ConocoPhillips-led Australia Pacific LNG (APLNG) group for the evacuation of Santos’ share of gas from Combabula field in eastern Queensland, which will free up more Cooper basin gas for the domestic market in southeastern Australia.
Santos also has elevated its Narrabri coal seam gas asset in northern New South Wales into the company’s core asset portfolio.
Gallagher said Santos has made improvements in its business since introducing its “transform-build-grow” strategy at the beginning of 2016. Since that time the forecast free cash flow breakeven for 2017 now sits at $32/bbl, which is down from the previous $47/bbl.
There also has been a 22% reduction in upstream unit production costs, as well as a 42% and a 72% reduction in Cooper basin and Gladstone LNG average well costs, respectively. In addition, Gallagher was able to report a 40% reduction in net debt to $2.8 billion.
Looking ahead, Gallagher said higher production from core assets is likely to be offset by natural field decline in noncore assets, but that production guidance for 2018 is in the range 55-60 million boe. Sales for 2018 are expected to range 72-78 million boe.
