Santos (ASX:STO) Commences Production at Halyard-2 Well, Boosting Gas and Condensate Reserves

Highlights 

• Santos (ASX:STO) begins production at the Halyard-2 infill well located off the coast of Western Australia. 
• The project is expected to supply 65 million standard cubic feet of gas daily to Varanus Island facilities. 
• This production is estimated to convert approximately nine million barrels of oil equivalent into 2P probable reserves. 

Santos Commences Production at Halyard-2 Well 

Santos Limited (ASX:STO) has achieved a significant milestone with the commencement of production from its Halyard-2 infill well, situated off the coast of Western Australia. This development represents a key addition to the company’s portfolio and strengthens its position in the energy market. 

The Halyard-2 well is strategically located to connect to existing infrastructure on Varanus Island, an offshore processing hub. The project is designed to deliver an estimated 65 million standard cubic feet (MMscf) of gas per day to Varanus Island facilities. This supply will facilitate increased capacity for gas and condensate production, reinforcing Santos’ role in meeting domestic and international energy demands. 

Impact on Gas and Condensate Reserves 

One of the most notable aspects of this development is its potential to significantly boost Santos' 2P (proved and probable) reserves. The Halyard-2 well is expected to convert around nine million barrels of oil equivalent (boe) into these reserves. This increase underscores the efficiency and economic viability of the Halyard-2 project, as it transitions from production to long-term value generation. 

Gas produced from the Halyard-2 well will feed directly into processing and export facilities, ensuring a steady flow of supply. The inclusion of condensate, a valuable hydrocarbon byproduct, further enhances the financial returns from this operation. Santos’ integrated approach to leveraging existing infrastructure on Varanus Island has contributed to minimizing project costs while optimizing output. 

Strategic Significance of the Halyard-2 Well 

The successful commencement of Halyard-2 reflects Santos' ongoing commitment to bolstering its production capabilities. Western Australia plays a critical role in the company’s exploration and production strategy, with a strong focus on gas as a transitional energy source. The addition of Halyard-2 aligns with the company’s broader objectives of increasing supply reliability and supporting energy security in the region. 

Varanus Island, a key hub in Santos' operational framework, is well-equipped to handle the additional production volumes. Its proximity to domestic and export markets makes it a strategic asset in capitalizing on growing demand for natural gas and condensate. Furthermore, the integration of the Halyard-2 well with existing infrastructure reduces lead times and enhances the overall cost-effectiveness of the project. 

Broader Market Implications 

The commencement of production at Halyard-2 contributes positively to the energy sector in Western Australia. It reinforces the region’s position as a critical supplier of natural gas, supporting both domestic energy requirements and exports to Asia-Pacific markets. Gas remains a pivotal component in bridging the transition to cleaner energy sources, and developments such as Halyard-2 underscore its role in providing reliable and efficient energy solutions. 

Additionally, the increase in 2P reserves signals long-term potential for Santos to continue delivering value to its stakeholders. With the energy market undergoing rapid transformation, securing reliable reserves is vital for maintaining competitiveness and ensuring sustainable growth. 

Conclusion 

The Halyard-2 infill well marks another significant achievement for Santos (ASX:STO) in its pursuit of operational excellence and resource optimization. By leveraging existing infrastructure and achieving notable increases in gas and condensate production, the project strengthens Santos' position in the energy market. As the Halyard-2 well transitions to full production, its impact on reserves and output highlights Santos’ capability to execute projects that deliver long-term value while supporting the energy needs of Western Australia and beyond.