Santos lifted its 2025 production target further to 120mn barrels of oil equivalent, more than double 2018’s output. The new target, up from 100mn boe set in 2018, represents a cumulative annual growth rate in production of over 8% to 2025.
Speaking at the company’s Investor Day in Sydney, Santos CEO Kevin Gallagher said the successful execution of Santos’ Transform-Build-Grow strategy since 2016 has the company positioned for disciplined growth and sustainable shareholder returns.
“Our strategy has been to establish a disciplined low-cost operating model that delivers strong cash flows through the oil price cycle,” he said, adding that company’s 2019 forecast free cash flow breakeven oil price is now about US$29/barrel.
“The recently announced acquisition of ConocoPhillips’ interests in northern Australia and Timor-Leste will further reduce our breakeven oil price and deliver operating interests in long-life, low-cost conventional natural gas assets and strategic LNG infrastructure,” Gallagher said. “We are now positioned for disciplined growth leveraging existing infrastructure in all five of our core assets, which we believe will deliver 120mn boe by 2025.”
Santos said its growth portfolio includes Barossa LNG – targeting FID around the end of Q1 2020; Dorado liquids – targeting Feed-entry Q2 2020; PNG LNG expansion – targeting Feed-entry in 2020; GLNG ramp-up to about 6.2mn mt/yr sales from 2020; and Cooper Basin production growth.
Gallagher said Santos was well-positioned to fund growth out of operating cash flow and debt while maintaining gearing levels within the company’s target range through the major growth phase, with rapid de-gearing expected thereafter.
“Natural gas is forecast to supply a quarter of the world’s total energy demand by 2040. Through our Energy Solutions business, we are investing in projects to lower emissions and assessing the significant potential for carbon capture and storage in the Cooper Basin,” Gallagher said.