Woodside production takes a hit

STRONGER sales from the Gladstone LNG project has boosted Santos’ expectations for its full year sales and production results.

Santos said higher liquefied natural gas prices contributed to an improved quarterly performance for the company. It’s partowned GLNG project achieved total sales growth of 12 per cent to $US769 million in three months to June, which Royal Bank of Canada analyst Ben Wilson said was above his forecast of $US692 million.

Improved sales revenue and volumes were primarily due to higher LNG prices and the timing of deliveries, Santos said in its quarterly report. Santos now expects to produce between 57 and 60 million barrels of oil equivalent (mmboe) in 2017, an improvement on its previous guidance of 55 to 60 mmboe.

Full year sales are expected to be between 75 and 80 mmboe, up from its previous target of range of 73 to 80 mmboe. Santos shares soared 25¢ or 8.3 per cent to $3.27 on the improved outlook. Santos has also lowered its forecasts for upstream production costs, to between $US8 and $US8.25 per barrel of oil equivalent (boe), down from its previous forecast of between $US8 and $US8.50.

Mr Wilson said GLNG’s reduction in costs and debt underpinned the forecast. OIL and gas giant Woodside Petroleum’s second quarter production dropped 6.6 per cent due to outages at some of its facilities and a lower share of pipeline gas from the North West Shelf.

The company produced 20.7 million barrels of oil equivalent (mmboe) in the three months to June 30, down from 22.2 mmboe a year earlier. Sales revenue rose 5.1 per cent to $US867 million in the quarter, as higher realised prices offset a 4 per cent decline in sales volume.

Royal Bank of Canada analyst Ben Wilson, said Woodside’s production modestly missed expectations, and the fall was spread among a number of the company’s assets.

Woodside said there was a temporary outage at its Karratha gas plant, and a scheduled four-day turnaround at its Pluto liquefied natural gas project in Western Australia.

The company said it had progressed plans to expand Pluto, with a trial run completed during the quarter.

CEO Peter Coleman said Woodside also achieved a major milestone after joint venture partners at the North West Shelf project agreed to process third party gas from the Karratha gas plant. Its shares closed up 20¢ at $29.93.