Santos Sees Production Surge on Quadrant Acquisition

(File photo: Quadrant)
(File photo: Quadrant)

Santos Ltd, Australia's No. 2 independent gas producer, on Thursday said it expects 2019 production to rise by up to 32 percent boosted by the acquisition of Quadrant assets.

The company expects to churn out 71 million to 78 million barrels of oil equivalent (mmboe) in 2019, Santos said in a statement.

UBS estimates 2019 production to be 73.7 mmboe.

The company posted annual production of 58.9 mmboe, beating its production guidance of 56 mmboe to 58 mmboe and in line with a Macquarie estimate.

The Quadrant buyout coupled with higher realized prices for its oil and gas propelled Santos' fourth quarter revenue 22 percent higher to a record $1.04 billion.

The Adelaide-based firm said production for the quarter ended Dec. 31 jumped to 15.9 mmboe from 15 mmboe a year ago.

Firm LNG prices, coupled with sharp cost cuts and asset sales enabled Santos to achieve its debt target over a year ahead of plan in October 2018.

By slashing debt, Santos set itself up to stave off takeover offers, revive its dividend and hunt for assets to expand its portfolio. It acquired Quadrant for more than $2 billion last year, boosting production and giving it a stake in a promising oil find off Western Australia.

However, the acquisition of Quadrant, which was funded through a combination of company's cash and new debt pushed Santos' debt as at Dec. 31, 2018 to $3.6 billion.

(Reporting by Aditya Soni in Bengaluru Editing by Tom Brown)

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