STO Santos Limited

   By Robb M. Stewart 
 

MELBOURNE, Australia--The strengthening in oil prices and a jump in gas-export volumes helped lift Santos Ltd.'s (STO.AU) revenue in the final quarter of last year.

The Australian oil-and-gas producer notched up record sales volumes over 2016, spurring a recovery in annual revenue, as a liquefied natural gas operation on the country's east coast continued to ramp-up output and a LNG venture in Papua New Guinea in which it has a minority stake maintained strong production.

Sales revenue in the final quarter of last year rose 26% on a year earlier to US$753 million, as sales volumes climbed 27% to 21.9 million barrels of oil equivalent. Production for the quarter was 1% higher on-year at 15 million barrels.

For the year, volumes rose 31% to 84.1 million barrels, slightly better than the company's earlier guidance, and sales revenue was 6% higher at US$2.59 billion after dropping 20% the year before, the Adelaide-based company said Friday.

Production for 2016 rose 7% to 61.6 million barrels, toward the top end of guidance given in October.

Santos, which has been fighting to cut a debt burden built up in recent years investing in new energy projects including the GLNG gas-export project in eastern Queensland state, said it managed to slash capital expenditure for 2016 by 51% to US$625 million. A string of asset sales and a surprise 1.04 billion Australian dollar (US$786.4 million) equity raising late last year helped it to cut net debt by about a 26% to US$3.5 billion at the end of December.

Santos has targeted a US$1.5 billion reduction in net debt to less than US$3 billion by the end of 2019 through improved operating cash flows and from the sale of infrastructure and noncore assets. It has tied its future to the GLNG operation in eastern Queensland state that counts Total SA (TOT) among its partners, the Exxon Mobil Corp.-led (XOM) PNG LNG operation in Papua New Guinea and projects in northern Australia, Western Australia, and the Cooper Basin straddling South Australia and Queensland states.

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

(END) Dow Jones Newswires

January 19, 2017 18:07 ET (23:07 GMT)

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