Photo by: Bloomberg
PERTH (miningweekly.com) – Oil and gas major Santos has more than doubled its 2018 underlying profit after tax, while free cash flows reached a record $1-billion.
Underlying profit for the 12 months to December was up by 129% on the previous financial year, from $318-million to $727-million, while net profit after tax reached $630-million, compared with a net loss after tax of $360-million in 2017.
The 2017 results were impacted by net impairment charges of some $689-million against some of the company’s assets.
The 2018 profit is the first time that Santos has been in the black in five years.
Meanwhile, product sales in the full 2018 financial year were up 18% to $3.6-billion compared with the $3.1-billion reported in 2017, while earnings before interest, taxes, depreciation and amortisation (Ebitda) were up by 51%, from $1.4-billion to $2.16-billion.
MD and CEO Kevin Gallagher said that the financial results demonstrated the delivery of Santos’ strategy to drive sustainable shareholder value by establishing a low-cost, high-performance operating model that generated strong cash flows through the oil price cycle.
“Santos has delivered strong financial results for 2018, with Ebitda after tax up 51% to a record $2.2-billion and free cash flow up 63% to a record of more than $1-billion. Underlying profit after tax more than doubled to a record $727-million. Santos is now on a firm path to grow production and reserves,” Gallagher said.
He added that the recent acquisition of Quadrant Energy would provide Santos with a significant boost to its production in 2019, with the company targeting between 71-million and 78-million barrels of oil equivalent.
“The acquisition, combined with organic reserves additions, contributes to strong reserves growth in 2018 with 2P reserves increasing by 20% to over one-billion barrels of oil equivalent. Contingent resources increased to 1.8-billion barrels.”
Gallagher said that consistent application of the company’s disciplined operating model also continued to deliver cost reductions and efficiencies, with underlying production costs down by 6% in the financial year to $7.62/bl of oil equivalent, and further reductions in well costs, confirming Santos to be Australia’s lowest cost onshore operator.