Santos 4Q Production Rises, Flags More Costs for Barossa Gas Project

By Mike Cherney

SYDNEY--Oil and gas company Santos said fourth-quarter production rose slightly on-quarter in what was a strong finish to 2023, but flagged that its Barossa gas project would require additional investment before production begins.

Santos said production in the three months to December was 23.4 million barrels of oil equivalent, slightly higher than the prior quarter. Full-year production is at the top end of guidance, the company said. Sales revenue in the quarter was US$1.5 billion.

"The fourth quarter brought free cash flow for the full year to US$2.1 billion, an outstanding achievement in what has been a challenging year," Chief Executive Kevin Gallagher said. "It positions us well to deliver shareholder returns, backfill and sustain our existing business, complete our major projects, Barossa and Pikka, progress our decarbonization plans and grow our Santos Energy Solutions business."

The company said the Barossa gas project is now 66.4% complete and that drilling had recommenced following the approval of a revised environment plan. It said one third of the Barossa gas export pipeline had been installed to date, noting that an injunction was recently lifted following a legal challenge.

Santos said the Barossa project would require another US$200 million to US$300 million in capital expenditure, with total capital expenditure expected to be US$4.5 billion to US4.6 billion. First gas is expected in the third quarter of 2025.

"Given the challenges of the past two years, we have updated our cost and schedule guidance for the project," Gallagher said. "The team has done a great job in keeping Barossa close to the original schedule and managing the costs of delay."

Regarding a potential merger with Woodside, Santos said the parties had agreed to exchange information to assess the benefits, but that Santos continues to consider alternative options. It said there is no certainty any transaction will occur.

It added that 2024 production guidance is 84 million to 90 million barrels of oil equivalent, while sales volumes guidance is 87 million to 93 million. Guidance for 2023 is unchanged. The company's 2023 results will be released on Feb. 21.

Write to Mike Cherney at mike.cherney@wsj.com

(END) Dow Jones Newswires

January 24, 2024 18:57 ET (23:57 GMT)

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