Santos has lowered its full-year production and sales guidance due to the shutdown caused by February’s magnitude 7.5 earthquake in Papua New Guinea.
The company’s March quarter production was 13.8 million barrels of oil equivalent, down from 15 mmboe in the preceding quarter, due to a seven week outage of the Exxon-operated PNG liquefied natural gas project.
The drop in production weighed on revenue in the first quarter, which was down eight per cent from the December quarter at $US794 million ($A1.1 billion), though 16 per cent higher than the same period a year ago.
Santos said production would have been in line with the December quarter had it not been for the shutdown in PNG and planned maintenance at facilities in Queensland and South Australia.
It expects the PNG outage to impact output and sales volumes for the full year, and revised its 2018 production guidance to 55 to 58 mmboe, down from the previous range of 55 to 60 mmboe.
Sales volume guidance was cut from a range of 72 to 78 mmboe to 72 to 76 mmboe.
“Guidance is subject to PNG LNG earthquake recovery impacts and costs still being assessed, and potential insurance recoveries,” the company said.
LNG production recommenced on April 13, ahead of the estimated time frame, with one train operating at the plant near Port Moresby.
It is expected that the second train will restart as gas production is ramped up over time.
Santos chief executive Kevin Gallagher said strong cash flows helped the company reduce debt by eight per cent to $2.5 billion over the March quarter.
“This clearly demonstrated the resilience of our diversified portfolio of core assets,” he said in a statement.
Mr Gallagher said if oil prices remain at current oil prices throughout the year, Santos will achieve its net debt target in the second half of the 2018 – more than a year ahead of plan.
Santos said its suitor, US private equity firm Harbour Energy, has commenced due diligence, and the two companies are working to determine if an offer that Santos would recommend to its shareholders can be developed.
Santos shares gained two cents to $6.00.