REPORTING SEASON: Santos Limited (STO)

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Figure 1: Santos Limited 12 month chart

 

Santos Limited (STO) Higher dividend and a new Browse discovery excites investors

·         Energy provider Santos Limited (STO) posted a 3% lift in underlying profit for the first half of 2014 compared to the corresponding period in 2013. The successful start-up of STO’s Papua New Guinean Liquefied natural gas (PNG LNG) project ahead of schedule in April 2014 aided in lifting Santos’ first half production and sales. The growth for the PNG LNG project helped to offset lower production from the Carnarvon Basin due to lower gas customer deals.

·         Net cash flow improved but STO did post a $67Million non-cash impairment charge in 1H related to the South Sumatran (Indonesia) coals seam gas assets (CSG) project and paid out higher 3rd party costs over the year. These costs hit STO’s bottom line with a drop in Net profit of 24% to $206Million

·         Sales volumes were 5% higher at 28.9Million metric barrels of oil equivalent (mmboe), sales revenue grew by 25%, due to the start-up of PNG LNG, higher A$ oil prices and higher volumes of third party product sales. The average realised oil price was $125.09 a barrel, 11% higher than in 1H13.

·         The GLNG project (of which Santos holds a 30% interest) is over 85% complete and on track for first LNG in 2015. Santos left its FY14 production guidance unchanged at between 52 to 57 mmboe, representing up to 12% growth (Y/Y) and is driven by new projects.

·         Santos today announced a significant gas-condensate discovery at its Lasseter exploration well located in the Browse Basin offshore Western Australia, with positive signs from initial drilling., in which Santos holds at 30% interest

·         Santos increased its 1H dividend payment from $0.15 to $0.20 over the year up 33%, paid on 30 Sept 2014

 

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Juliana Roadley, Market Analyst,