Australia’s Santos slips as quarterly revenue slumps on tepid output

Oct 19 (Reuters) – Santos Ltd (STO.AX), Australia’s No. 2 independent gas producer, reported a 33% slump in its quarterly revenue on Thursday, dented by lower production and average-realised prices.

Oil and natural gas prices came in lower during the third quarter, compared with the previous year when they hit record highs in the wake of the Russia-Ukraine war.

Shares of Santos were down 0.5% during early trade, while the benchmark (.AXJO) dropped 1.3%.

Santos retained its target to start production in its Barossa project in the first half of 2025 and within the current cost estimate.

Drilling at the project has been suspended since September 2022 after a judge found that an environmental approval was invalid due to failures in properly consulting the traditional landowners.

“An independent expert concluded after an extensive research and interviews that there were no specific underwater cultural heritage places along the planned Barossa pipeline route,” Santos Managing Director and CEO Kevin Gallagher said.

Analysts at Citi term the findings as “positive”, but believe there may be a number of back-and-forth iterations between Santos and the regulators, beyond the one iteration that has been done to date.

The Adelaide-based company on Thursday reported revenue of $1.44 billion for the three-month period ended September, in line with Visible Alpha consensus of $1.43 billion, according to UBS, but lower than previous year’s revenue of $2.15 billion.

The company said its average-realised LNG prices were $12.02 per metric million British thermal unit (mmBtu) in the reported period from $16.76 per mmBtu in the previous quarter.

The company expects at least one more cargo from its Bayu-Undan field, after which the project will cease to function in the fourth quarter of 2023.

Production in the third quarter also came in lower year-on-year, with output falling over 10% to 23.3 million barrels of oil equivalent (mmboe).

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