Santos has notched up a 25 per cent increase in its first half revenue and maintained its targets following the start of production at the PNG LNG project.
Santos has notched up a 25 per cent increase in revenue as the massive PNG LNG project starts production ahead of schedule.
But the energy giant is still sticking to its annual targets while quarterly production has met analysts’ expectations.
Santos recorded $1.887 billion in sales revenue for the first half of 2014, up from $1.51 billion a year ago.
Chief executive David Knox said the PNG LNG project would be a major driver of the company’s performance in the second half.
“Delivery of the PNG LNG project is an important milestone for Santos in our journey to becoming a major LNG supplier to Asia,” he said.
“This project will significantly lift Santos LNG production once the project reaches full output and we are already seeing the contribution it is making.”
Revenue was up 22 per cent to $974 million for the second quarter, compared to the same period in 2013.
Santos also expects to post a $70 million impairment charge in its 2014 half-year accounts related to its decision to withdraw from South Sumatra coal seam gas project in Indonesia.
Analysts said the strong production result offset slightly weaker-than-expected revenue.
Production lifted three per cent to 12.8 million barrels of oil equivalent (mmboe) during the June quarter, compared to the same period in 2013, while sales volumes were up five per cent to 15.1 mmboe.
The company has maintained its full year guidance for production of between 51 and 57 mmboe.
Santos owns 13.5 per cent of PNG LNG, while US-based oil and gas giant operator Exxon Mobil owns 33 per cent and Oil Search owns 29 per cent.
The company added that higher production from Darwin LNG and start-up at PNG LNG, offset lower production from the Carnarvon Basin due to lower customer nominations.
Quarterly crude oil production of 2.1 million barrels was 16 per cent lower than the previous quarter due to outages at Fletcher Finucane and Chim Sáo which was partially offset by higher Cooper Basin production.
Macquarie analyst Adrian Wood said revenue was a touch weaker than expected following some down time across the portfolio.
“But that’s been made up on the production side by a very strong rampup of the PNG LNG project which came on stream during the quarter,” Mr Wood said.
He said production was in line with expectations but noted the company’s flagging of a $70 million impairment in Indonesia, which would weigh on earnings expectations.
Notably, there was no mention of the recent vote by the CFMEU to take action at Curtis Island as part of the GLNG project in south east Queensland, he said.
Santos shares were 6.5 cents, or 0.5 per cent, lower at $14.14 at 1225 AEST.