First half production rose by 24%, from 21.2 million barrels of oil equivalent to 26.3 million boe, driven largely by the Mutineer-Exeter oil field off Western Australia coming onstream ahead of schedule.

Santos has increased its forecast full year production to 55 million boe compared to 47 million boe in 2004. A further production increase of at least 10% has been forecast for the 2006 calendar year.

The John Brookes field, which will supply gas to Western Australia’s new power station at Kwinana, will begin production in the next few weeks, and the Tipperary coalbed methane acquisition will underpin Santos’ core position as a major supplier of gas to eastern Australia, managing director John Ellice-Flint said.

In addition the company had almost doubled its spending on exploration, which was at $71 million, up from $37m in the previous corresponding period.

The company's Australian oil and domestic gas businesses provided Santos with strong and predictable cashflows, together with incremental growth opportunities, and would continue to do so for many years to come, according to Ellice-Flint.

"The growth in operating cashflow bodes well for our ability to invest in growth projects whilst continuing to reward shareholders via dividend payments," he said.

The company said the 2005 first half result was favourably impacted by the partial reversal of impairment write-downs booked on transition to the Australian equivalent of International Financial Reporting Standards, which is not considered part of the underlying profit.

It said the profit was achieved on first half sales revenue of $1.02 billion, a 72.6% cent increase on the first half of 2004.

The company declared a fully franked interim dividend of 18 cents per ordinary share, a 20% increase on the 2004 interim dividend.