STO Santos Limited

   By Robb M. Stewart 
 

MELBOURNE, Australia--Santos Ltd. (STO.AU) recorded record quarterly production and cash flow, keeping it on track to hit its output target for the year.

The Australian energy company produced 18.4 million barrels of oil equivalent in the first quarter, up 16% from the prior three months and 33% higher from a year earlier thanks in part to the acquisition of oil and gas assets in Western Australia.

The jump in output offset a softer oil price for the period, helping drive sales revenue up 28% year-over-year to US$1.02 billion.

Santos maintained targets set in late January for production to rise to between 77 million and 78 million barrels this year and sales volumes to hit 88 million to 98 million.

The company said it generated free cash flow in the quarter of US$327 million, and US$1.1 billion in gross debt was repaid, reducing net debt to US$3.4 billion the end of March.

Santos last year laid out ambitious plans to nearly double production to more than 100 million barrels a year by 2025, leveraging existing oil and gas assets in Australia and Papua New Guinea. In late November, it completed the US$1.93 billion acquisition of Quadrant Energy, giving it ownership of a portfolio of conventional natural gas assets in Western Australia and diversifying its revenue base to include long-term gas-supply contracts at a time of volatile oil prices.

After Kevin Gallagher took over as chief executive in early 2016, the company sold a string of assets to help lower debt and focus on the joint-owned GLNG gas-export plant in eastern Australia, the Darwin LNG gas-export venture in Australia's north, the Exxon Mobil Corp. (XOM)-led PNG LNG operation, and assets including in the Cooper Basin straddling South Australia and Queensland states. In August, the company resumed half-yearly dividends roughly two years after freezing payouts.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

April 16, 2019 20:28 ET (00:28 GMT)

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