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Australian energy giant Santos has suffered an 18 per cent drop in quarterly sales revenue to $US1.3 billion ($1.9 billion) as approvals for offshore work on its linchpin Barossa gas project remain stalled.
Santos chief executive Kevin Gallagher said the business had performed well in a volatile oil price environment that resulted in prices for gas exports dropping 17 per cent in three months while gas sold to the eastern states fetched 6 per cent less.
Santos chief Kevin Gallagher said the business had held up well in a volatile oil price environment.Credit: Ben Searcy
Lower prices were partially offset by a 3 per cent rise in production, primarily to the WA domestic market after the new Spartan well came online.
Santos’ sales on the east coast fetched an average of $7.97 a gigajoule, lower than the March quarter but 20 per cent more than a year ago. In Western Australia where substantial quantities of gas are reserved for the domestic market, Santos received an average of $4.87 over the quarter.
The troubled $US3.6 billion Barossa gas export project north of Darwin is now 66 per cent complete.
Drilling has been stalled for almost a year after the Federal Court ruled that Tiwi Islanders had not been properly consulted, rendering the environmental approval invalid.
In January, the offshore environment regulator ordered Santos to halt installation of the gas pipeline to Darwin, just as it was about to start, due to concerns there may be Indigenous heritage along the route.
Santos offered no timeline for when the two critical activities might restart in its June quarter results issued on Thursday. It said if commencement was assumed by the end of the year the project could say on budget and start production in the first half of 2025 as planned.
Santos took control of a larger stake in Barossa and the Darwin LNG plant after buying out US oil giant ConocoPhillips in 2020 for $US1.26 billion and a $US200 million payment contingent on the Barossa project proceeding.
The Adelaide-based company handed over the contingent payment in the June quarter after ConocoPhillips went to arbitration. This came after it received nothing when Barossa was sanctioned more than two years ago.
Maximum production guidance for 2023 has been trimmed from 96 million to 93 million barrels of oil equivalent. Other guidance is unchanged.
Santos’ falling revenue and its principal project stalled by approvals for offshore work mirrored the report of its larger rival Woodside on Wednesday which posted a 29 per cent plunge in revenue while the $17.7 billion Scarborough project has yet to get any offshore work approved.
The Santos share price was almost unchanged at $7.615 a share in early trading on Thursday.
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