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Santos Ltd (ASX: STO) shares are on the rise today, bucking the broader market trend. Despite the S&P/ASX 200 Index (ASX:XJO) slipping 0.2% this morning, Santos shares have edged up by 0.6%, trading at AU$8.06, up from yesterday's closing price of AU$8.01.
Quarterly Update Drives Positive Sentiment
The uptick in Santos' share price follows the company's release of its quarterly update for the three months ending June 30. Investors are reacting positively to the solid performance metrics reported by the company.
Key Highlights from Santos' Quarterly Report
- Steady Revenue and Increased Production
- Santos reported quarterly sales revenue of US$1.3 billion, consistent with the revenue from the same quarter last year.
- Production increased by 2% quarter-on-quarter, reaching 22.2 million barrels of oil equivalent (mmboe).
- Financial Metrics
- Gearing was reported at 19.9% excluding operating leases, and 23.5% including them.
- Free cash flow from operations was US$380 million, with an expectation of half-year free cash flow to reach approximately US$1.06 billion.
CEO Kevin Gallagher's Comments
CEO Kevin Gallagher highlighted the company's strong cash flow position, stating, "First half cash flow of almost US$1.1 billion positions us well to fund shareholder returns, backfill and sustain our existing business, and grow our Santos Energy Solutions business."
Strategic Agreements and Major Projects
Santos has also secured a significant long-term LNG supply and purchase agreement with Hokkaido Gas. Starting in 2027, this agreement will provide 400,000 tonnes of LNG per year for ten years.
On the project front, the Barossa Gas Project is 77.5% complete, the Pikka Project is 56.2% complete, and the Moomba phase one Carbon Capture and Storage (CCS) Project is 92% complete. Gallagher expressed satisfaction with the progress, particularly noting the completion of key activities for the Barossa and Pikka projects.
Outlook and Future Plans
Looking ahead, Santos forecasts 2024 production to be between 80 mmboe and 84 mmboe, with sales volumes ranging from 87 mmboe to 93 mmboe. Total capital expenditure for the year, including major projects and decommissioning, is projected to be around $2.85 billion. Unit production costs are expected to be between $7.45 and $7.95 per barrel of oil equivalent (boe).
Upcoming Earnings Report
Investors are keenly awaiting Santos' full half-year results, which are scheduled to be reported on August 21. With the recent share price movements factored in, Santos shares have risen 7% over the past 12 months, offering a 3.5% unfranked dividend yield.