The first quarter production was 13 million barrels of oil equivalent (boe), which was slightly ahead of first quarter 2001. Mr Gerlach added the company expected its US acquisition of Esenjay Exploration would add another 500,000 boe of production during the year.
He told shareholders the company's financial results for the year will depend heavily on oil prices. For every $US1 change in the oil price, Santos' after tax earnings vary by about $A23 million, Mr Gerlach said. The average oil price received during the first quarter was $US20.75 compared with $US25.23 per barrel in 2001.
Mr Gerlach said Santos was looking for more opportunities to expand its exposure in the US, particularly in the gas market, where the prices were twice those obtained in Australia. It would also hope to capitalise on four Santos-operated offshore oil discoveries.
As for PNG, Mr Gerlach told the meeting Santos is negotiating its re-entry to the PNG-North Queensland gas pipeline project with ExxonMobil. He said he supported the project provided the economics was realistic and believed over the past six months the viability of the project had improved considerably.
Santos is also stepping up its renewed push to have the 15% shareholding limit on it removed and will hold talks with the South Australia Government within the fortnight.
The takeover cap was introduced in the heady days of the eighties when failed entrepreneur Mr Alan Bond was stalking Santos. Santos managing director, Mr John Ellice-Flint said the limit was entirely inappropriate. "We hope the new Government will change its mind," he said.
