Fourth Quarter Report
For period ending 31 December 2021
ASX: STO | PNGX: STO | ADR: SSLZY
20 January 2022
only | Record annual production, record sales revenue and record free cash flow | |
• Strong base business performance delivered record annual production of 92.1 million barrels of oil | ||
equivalent (mmboe), inclusive of 1.7 mmboe from the Oil Search assets from 11 December 2021 | ||
• Stronger commodity prices and higher sales volumes delivered record quarterly sales revenue of | ||
US$1.5 billion, up 34 per cent, and record annual sales revenue of US$4.7 billion, up 39 per cent | ||
• Free cash flow is expected to be around US$1.5 billion in 2021, more than double the level in 2020 | ||
• | GLNG delivered a record 6.4 million tonnes of LNG sales in 2021 | |
• Bayu-Undan delivered higher gross gas and liquids production in 2021, which enabled Darwin LNG to | ||
produce 3.2 million tonnes of LNG, almost all of which was sold at JKM spot prices | ||
• Santos' portfolio average realised LNG price increased by 32 per cent in the quarter to US$13.64/mmBtu | ||
use | Disciplined and phased growth | |
• Barossa 20 per cent complete and progressing on schedule and budget | ||
• FID on the Moomba carbon capture and storage project taken in November 2021, with first injection | ||
expected in 2024 | ||
• | Dorado Phase 1 and Pikka Phase 1 projects targeting FID in mid-2022 and first half 2022, respectively | |
Merger with Oil Search completed |
- On 10 December 2021, Santos announced the merger with Oil Search had become effective following approvals by Oil Search shareholders and the National Court of Papua New Guinea
- The merger created a company with strong and diversified cash flows, providing a platform to deliver shareholder returns and successfully navigate the transition to a lower carbon future
- Data in this report includes the Oil Search assets from 11 December 2021, unless otherwise stated
personalSantos Managing Director and Chief Executive Officer Kevin Gallagher said Santos delivered record annual production and sales revenue in 2021, as strong base business performance positioned the company to benefit from higher commodity prices.
Free cash flow of around US$1.5 billion for the year was also a record and more than double the level in 2020.
"Our disciplined, low-cost operating model continues to drive strong performance across the business and has positioned us to take full advantage of the increase in commodity prices. The completion of the Oil Search merger delivers us the size and scale to deliver even stronger outcomes in 2022 and beyond," Mr Gallagher said.
"I was particularly pleased that we were able to complete the merger before the end of 2021 and in just 130 days from
the announcement of our intent to merge with Oil Search, and this sets us up for what is going to be a very busy 2022.
"Consistent with our strategy, our next stage of growth will be disciplined and phased. The Barossa project is 20 per cent complete and making excellent progress, while I was delighted to announce the final investment decision on the ForMoomba carbon capture and storage project in November. The Dorado Phase 1 and Pikka Phase 1 projects are
progressing towards FID this year.
"Our merger with Oil Search delivers increased scale and capacity to drive a disciplined, low-cost operating model and unrivalled growth opportunities over the next decade - with a vision of becoming a global leader in the energy transition."
Comparative performance
Santos share | Unit | Q4 2021 | Q3 2021 | Change | 2021 | 2020 | Change |
Production | mmboe | 22.9 | 21.9 | 5% | 92.1 | 89.0 | 4% |
Sales volume | mmboe | 26.0 | 24.4 | 7% | 104.2 | 107.1 | -3% |
Sales revenue | $million | 1,532 | 1,142 | 34% | 4,714 | 3,387 | 39% |
Capital expenditure1 | $million | 494 | 359 | 38% | 1,387 | 858 | 62% |
1 Capital expenditure including restoration expenditure but excluding capitalised interest.
Media enquiries | Investor enquiries | Santos Limited ABN 80 007 550 923 |
Claire Hammond | Andrew Nairn | GPO Box 2455, Adelaide SA 5001 |
+61 (0) 401 591 488 | +61 8 8116 5314 / +61 (0) 437 166 497 | T +61 8 8116 5000 F +61 8 8116 5131 |
james.murphy@santos.com | andrew.nairn@santos.com | www.santos.com |
Sales volumes (Santos share including Oil Search from 11 December 2021)
Product | Unit | Q4 2021 | Q3 2021 | Q4 2020 | 2021 | 2020 | ||||||
LNG | 000 t | 1,107.9 | 1,055.2 | 1,382.2 | 4,555.6 | 4,278.8 | ||||||
Domestic sales gas & ethane | PJ | 62.5 | 65.1 | 76.5 | 257.7 | 275.1 | ||||||
Crude oil | 000 bbls | 2,781.5 | 1,771.2 | 2,818.2 | 9,037.1 | 11,120.6 | ||||||
Condensate | 000 bbls | 1,651.6 | 1,244.0 | 1,451.3 | 6,090.7 | 6,329.1 | ||||||
LPG | 000 t | 50.5 | 29.0 | 73.9 | 211.6 | 235.7 | ||||||
Sales | ||||||||||||
only | Own product | mmboe | 21.3 | 18.7 | 25.6 | 83.3 | 87.6 | |||||
use | ||||||||||||
Third-party | mmboe | 4.7 | 5.7 | 5.5 | 20.9 | 19.5 | ||||||
Total sales volume | mmboe | 26.0 | 24.4 | 31.1 | 104.2 | 107.1 | ||||||
Fourth quarter sales volumes were higher than the prior quarter primarily due to inclusion of the Oil Search assets from 11 December 2021 (1.5 mmboe) combined with timing of crude oil liftings, partially offset by lower Cooper Basin third- party oil volumes.
Sales revenues (Santos share including Oil Search from 11 December 2021)
personal | |||||||||||||
Average realised prices (including Oil Search from 11 December 2021) | |||||||||||||
Product | Unit | Q4 2021 | Q3 2021 | Q4 2020 | 2021 | 2020 | |||||||
LNG price | US$/mmBtu | 10.36 | 5.34 | 6.39 | |||||||||
13.64 | 9.25 | ||||||||||||
Domestic gas price | US$/GJ | 5.19 | 4.98 | 3.97 | 4.86 | 3.88 | |||||||
For | |||||||||||||
East coast domestic | US$/GJ | 6.31 | 5.50 | 4.15 | 5.62 | 4.51 | |||||||
West coast domestic | US$/GJ | 4.61 | 4.72 | 3.67 | 4.48 | 3.33 | |||||||
US$/bbl | 86.32 | 76.64 | 46.76 | 76.11 | 47.70 | ||||||||
Crude oil price | |||||||||||||
Condensate price | US$/bbl | 80.91 | 72.17 | 45.82 | 70.08 | 40.50 | |||||||
LPG price | US$/t | 831.20 | 625.93 | 443.37 | 626.53 | 401.52 |
Product | Unit | Q4 2021 | Q3 2021 | Q4 2020 | 2021 | 2020 |
LNG | $million | 791 | 574 | 388 | 2,213 | 1,437 |
Domestic sales gas & ethane | $million | 324 | 324 | 303 | 1,252 | 1,068 |
Crude oil | $million | 240 | 136 | 132 | 688 | 531 |
Condensate | $million | 135 | 90 | 66 | 428 | 256 |
LPG | $million | 42 | 18 | 33 | 133 | 95 |
Sales | ||||||
Own product | $million | 1,293 | 875 | 721 | 3,779 | 2,634 |
Third-party | $million | 239 | 267 | 201 | 935 | 753 |
Total sales revenue | $million | 1,532 | 1,142 | 922 | 4,714 | 3,387 |
Third-party purchase costs | $million | 152 | 179 | 151 | 655 | 612 |
Fourth quarter sales revenues were a record and higher than the prior quarter reflecting inclusion of the Oil Search assets from 11 December 2021 (US$101 million) and improved commodity prices for all products.
The average realised LNG price was higher than the prior quarter reflecting the linkage of sales contracts to an improving lagged Japan Customs-cleared Crude (JCC) price and higher JKM spot prices. Three-month lagged JCC averaged US$73/bbl in the fourth quarter compared to US$67/bbl in the third quarter. Santos' LNG projects shipped 68 cargoes in the fourth quarter, of which 12 cargoes (Darwin LNG 11, PNG LNG 1) were sold at JKM spot prices.
Santos Ltd l Fourth Quarter Report l 20 January 2022 | Page 2 of 13 |
Production by asset (Santos share including Oil Search from 11 December 2021)
only | ||||||||||
Asset | Unit | Q4 2021 | Q3 2021 | Q4 2020 | 2021 | 2020 | ||||
Western Australia | mmboe | 8.5 | 8.6 | 8.9 | 33.7 | 31.1 | ||||
Cooper Basin | mmboe | 3.6 | 3.8 | 4.0 | 15.3 | 16.8 | ||||
Queensland & NSW | mmboe | 3.5 | 3.5 | 3.4 | 13.7 | 13.4 | ||||
PNG | mmboe | 4.9 | 3.2 | 3.3 | 14.2 | 13.2 | ||||
Northern Australia & Timor-Leste | mmboe | 2.4 | 2.8 | 5.8 | 15.2 | 14.5 | ||||
Total production | mmboe | 22.9 | 21.9 | 25.4 | 92.1 | 89.0 | ||||
use | ||||||||||
Production by product (Santos share including Oil Search from 11 December 2021) | ||||||||||
Product | Unit | Q4 2021 | Q3 2021 | Q4 2020 | 2021 | 2020 | ||||
Sales gas to LNG plant | PJ | 56.8 | 50.7 | 62.1 | 231.0 | 198.0 | ||||
Domestic sales gas & ethane | PJ | 56.5 | 59.3 | 68.2 | 233.2 | 249.6 | ||||
Crude oil | 000 bbls | 1,938.5 | 1,531.1 | 1,136.2 | 5,876.8 | 5,093.3 | ||||
personal | Condensate | 000 bbls | 1,175.1 | 1,150.0 | 1,505.6 | 5,069.1 | 5,460.6 | |||
LPG | 000 t | 45.4 | 48.1 | 61.3 | 202.8 | 220.9 | ||||
Total production | mmboe | 22.9 | 21.9 | 25.4 | 92.1 | 89.0 | ||||
Fourth quarter production was higher than the prior quarter primarily due to inclusion of the Oil Search assets from 11 December 2021 (1.7 mmboe), partially offset by lower Cooper Basin volumes, a lower net entitlement under the Bayu- Undan Production Sharing Contract due to higher realised commodity prices and lower domestic gas volumes in Western Australia due to planned maintenance.
A data worksheet containing unaudited quarterly sales, revenue, production and capital expenditure tables in Excel f rmat is available on Santos' website.
2021 Guidance
2021 Guidance item
Production
Sales volumes
Capital expenditure - base
Capital expenditure - major growth
Upstream production costs
ForDepreciation, depletion and amortisation
Guidance on 2021 financial outcomes above is preliminary and subject to finalisation of the company's accounting and audit processes, and Board review. As such, actual results for the year ended 31 December 2021 may differ from the guidance given in this update.
Santos will announce its results for the year ended 31 December 2021 on 16 February 2022. The full-year report (incorporating Appendix 4E) and associated investor briefing presentation will be available on Santos' website at www.santos.com. A live webcast briefing, including analyst/investor questions, will be available on Santos' website from 11:30am AEDT on 16 February 2022.
2022 Guidance
Guidance for 2022 will be provided with the full-year results on 16 February 2022.
Santos Ltd l Fourth Quarter Report l 20 January 2022 | Page 3 of 13 |
Western Australia
only | Santos share | Unit | Q4 2021 | Q3 2021 | Q4 2020 | 2021 | 2020 | |||||
Sales volume | ||||||||||||
Sales gas | PJ | 40.5 | 42.4 | 48.3 | 168.7 | 158.8 | ||||||
Condensate | 000 bbls | 380.2 | 302.3 | 368.0 | 1,312.1 | 1,393.8 | ||||||
Crude oil | 000 bbls | 1,328.3 | 522.8 | 807.0 | 3,016.1 | 2,523.4 | ||||||
Total sales volume | mmboe | 8.6 | 8.1 | 9.4 | 33.2 | 31.1 | ||||||
Total sales revenue | $million | 337 | 262 | 233 | 1,099 | 723 | ||||||
Production | ||||||||||||
Sales gas | PJ | 40.0 | 42.4 | 46.7 | 168.1 | 159.0 | ||||||
use | 000 bbls | 299.2 | 321.8 | 381.5 | 1,342.3 | 1,452.3 | ||||||
Condensate | ||||||||||||
Crude oil | 000 bbls | 1,265.1 | 1,005.2 | 497.5 | 3,510.0 | 2,448.6 | ||||||
Total production | mmboe | 8.5 | 8.6 | 8.9 | 33.7 | 31.1 | ||||||
Capital expenditure | $million | 80 | 102 | 82 | 316 | 171 |
Domestic gas production and sales were slightly lower than the previous quarter due to a planned maintenance shutdown at Varanus Island.
Tie-in and start-up activities for the two remaining dual lateral wells in the Van Gogh Phase 2 infill program were personalsuccessfully completed, ahead of schedule and under budget. WA oil production and sales were higher in the fourth
quarter due to incremental production from the wells.
The Varanus Island Compression and Spartan projects continued to make good progress in support of developing additional reserves back to Varanus Island. The Varanus Island Compression Project started up during the quarter. Pre- works activities commenced on the John Brookes Platform to tie-back Spartan and prepare for the first offshore campaign planned for early 2022.
The Dorado development has continued to progress with the planned FEED work for the FPSO and Wellhead Platform. The Stage 1 Offshore Project Proposal (OPP) phase has closed and the Stage 2 OPP submitted to NOPSEMA. The initial phase of development will involve gas reinjection to maximise liquids recovery ahead of a second phase of gas export from the field. This future phase of gas export offers backfill supply to Santos' existing domestic gas infrastructure in Western Australia. The project is targeting a final investment decision around mid-2022.
The Noble Tom Prosser rig is currently drilling the Dancer prospect, located seven kilometres from the Reindeer field. This will be followed by drilling the Pavo and Apus prospects in the Bedout Basin, located 35 to 40 kilometres east of the Dorado field.
For
Santos Ltd l Fourth Quarter Report l 20 January 2022 | Page 4 of 13 |
Cooper Basin
only | Santos share | Unit | Q4 2021 | Q3 2021 | Q4 2020 | 2021 | 2020 | |
Sales volume | ||||||||
Sales gas and ethane1 | PJ | 15.5 | 17.0 | 17.1 | 67.5 | 72.4 | ||
Condensate1 | 000 bbls | 402.3 | 393.1 | 397.8 | 1,787.0 | 1,914.0 | ||
LPG1 | 000 t | 39.8 | 16.7 | 45.8 | 138.7 | 166.9 | ||
Crude oil | ||||||||
Own product | 000 bbls | 1,035.0 | 400.8 | 529.5 | 2,557.0 | 3,267.2 | ||
Third-party | 000 bbls | 222.1 | 846.7 | 1,479.7 | 3,264.9 | 5,320.6 | ||
Total | 000 bbls | 1,257.1 | 1,247.5 | 2,009.2 | 5,821.9 | 8,587.8 | ||
Total sales volume | mmboe | 4.6 | 4.6 | 5.7 | 20.2 | 24.2 | ||
Total sales revenue | $million | 253 | 206 | 199 | 925 | 847 | ||
Production | ||||||||
Sales gas and ethane | PJ | 14.8 | 16.4 | 16.2 | 63.8 | 68.5 | ||
Condensate | 000 bbls | 237.8 | 233.1 | 268.6 | 1,011.2 | 1,149.8 | ||
useLPG | 000 t | 33.5 | 33.8 | 36.7 | 138.0 | 150.3 | ||
Crude oil | 000 bbls | 545.8 | 524.7 | 637.5 | 2,235.9 | 2,637.0 | ||
personal | Total production | mmboe | 3.6 | 3.8 | 4.0 | 15.3 | 16.8 | |
Capital expenditure | $million | 108 | 80 | 87 | 329 | 313 |
1 Sales volumes include own product and third-party volumes.
Cooper Basin production was slightly lower than the previous quarter due to natural field decline and higher gas downtime as a result of planned upstream events and unplanned train outages in the Moomba Plant. Oil production was stronger than the previous quarter due to new oil wells in Limestone Creek area and improvement in downhole well l sses.
Nineteen wells were drilled (14 gas wells and 5 oil wells), and 14 wells connected (9 gas wells and 5 oil wells) across the Cooper Basin in the fourth quarter.
The horizontal well program continued with the drilling of three oil and two gas horizontal wells. The horizontal oil wells were drilled in the McKinlay, Hobbes and Frostilicus fields. Of the two gas horizontal wells, one was drilled in the Moomba South field and the other in the Beanbush field which was drilling ahead.
In November, Santos took FID on the Moomba CCS Project after the Clean Energy Regulator registered the project with the Emissions Reduction Fund, enabling the project to generate Australian Carbon Credit Units (ACCUs). The project is now in the execute phase and will have the capacity to capture and permanently store 1.7 million tonnes of CO2 per annum, with first injection expected in 2024.
The Moomba CCS project is an important enabler for the production of hydrogen. Engineering, commercial and marketing studies are progressing on the Moomba hydrogen project with the goal of positioning the project as Australia's
Forlowest cost and one of the largest commercial hydrogen opportunities.
Santos Ltd l Fourth Quarter Report l 20 January 2022 | Page 5 of 13 |
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Santos Ltd. published this content on 19 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 January 2022 21:55:17 UTC.