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Santos Limited (ASX:STO) today flagged the completion of Bayu Undan infill program three months ahead of schedule and at much lower than expected cost. The news sent the Santos shares to take a leap of 8.696% or $0.480 to last trade at $6.00 on 3 December 2018.
The company announced the return of first gas from the drilling of final and third well at Bayu Undan gas condensate field, located in the Timor Sea. The successful completion of companyâs infill program at Bayu-Undan underscores the increase in Santosâ offshore well capacity and its potential to deliver higher liquids production. Â
Kevin Gallagher of Santos, Managing Director and Chief Executive Officer stated the drilling campaign at Bayu-Undan has returned strong subsurface results and has marked the completion of entire project around 40% below the planned budget. He added it outlines the advancement of final well three months ahead of schedule.
The drilling work at Bayu commenced after the company undertook the final investment decision in January 2017. As a part of long-term development plan, the infill program aimed at the drilling of two wells and one subsea well connecting with existing offshore infrastructure. Noble Tom Prosser rig reportedly utilized for the drilling of wells, moreover Santos has contracted the rigs to be used in the 2019 drilling program including the appraisal of the recent Dorado oil discovery offshore Western Australia.
Santos holds 11.5% interest in Bayu Undan joint venture and the Darwin LNG plant in the Northern Territory, both operated by ConocoPhillips Australia. Moreover, the operator ConocoPhillips holds 56.94% interest in the project which is within the Joint Petroleum Development Area, circa 500 km north-west of Darwin. Through the 500 km subsea pipeline, the gas is sent from the Bayu-Undan field to the plant at Wickham Point which is then converted into LNG and shipped to Japan, Tokyo Gas and a joint venture between Tokyo Electric and Chubu Electric (JERA).
Moreover, the final investment decision for Barossa joint venture is scheduled for late 2019. The company reported that Barossa gas field project, 25% owned by Santos is currently in front end engineering and design. It is a leading candidate to backfill Darwin LNG when Bayu Undan production ceases.
In todayâs trading session, Santos shares last traded at a Price to Earning ratio of 33.840 x with market capitalization of $11.5 million as at 3 December 2018. The stock has undergone a positive performance change of 8.66% in 12 months but in the past three months Santosâ stock price has slipped by 18.46%.
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