Santos has bolstered its 2020 production guidance following strong operating performance across the company and a 50 per cent increase in output over the past five years.
The upgraded 2020 production will see the company increase its guidance to 87-89 million barrels of oil equivalent (mmboe) and lower its production cost guidance to $8-8.50 barrel of oil equivalent (boe).
As a result of the 15-18 per cent production growth this year, Santos managing director and chief executive officer Kevin Gallagher said the consistent execution of its transform-build-grow strategy had the company positioned for disciplined growth.
“Our strategy has been to establish a disciplined low-cost operating model that delivers strong free cash flows through the oil price cycle. Our 2020 forecast free cash flow breakeven oil price is less than $US25 ($34) per barrel before hedging and around $US20 per barrel after hedging,” Gallagher said.
“Our base business is strong with production levels expected to remain relatively steady for the next decade and providing significant free cash flow. This cash flow combined with a strong balance sheet and control over the timing of our major projects, means we are well positioned for disciplined growth.”
Santos has also confirmed that it has received tolling agreements to transport and process Barossa gas through Darwin LNG, edging the company closer towards a final investment decision (FID) on the project.
Last month, the company advised that it was on track to make a final FID on the Barossa LNG project offshore northern Australia by the end of the year.
Santos, in a September quarter update, reported that the Barossa project was well progressed on value engineering that is targeting reduced project capital and operating costs.
The Barossa JV, which includes JERA and SK E&S, is also finalising the processing agreement for gas from the project, with Santos in advanced discussions for an LNG offtake.