Production for the three month period was 11.6 million barrels of oil equivalent (mmboe) compared with 13.8mmboe in the previous corresponding period. Sales volumes were also down from 13.8mmboe to 12.0mmboe.
Lower volumes were partially offset by an increased average oil price for the quarter of A$50.65 per barrel resulting in sales revenue of $334.1 million compared with $347.4 million in the June 2003 quarter.
“The lower second quarter production was due mainly to the impact of the Moomba plant incident and declining field performance from fields in Western Australia and Victoria,” said Santos’ managing director, John Ellice-Flint.
“The Moomba plant reinstatement continues to progress well. Recovery of losses in the second quarter is included in the company’s insurance claim, which is currently in progress.
“There have also been production challenges in two of our non-operated fields offshore Western Australia,” he said.
While gas production from the East Spar gas field was higher than in the June 2003 quarter, the field has experienced earlier than expected water breakthrough. The production shortfall will ultimately be offset with the development of the John Brookes gas field, but production during the second half of 2004 will be lower than previously forecast.
The Stag oil field has experienced unanticipated well downtime resulting in poorer field performance. A remedial program is now being developed although full year production from Stag is expected to be lower than previously forecast.
Partly offsetting these negative effects, the acquisition of Novus Petroleum assets is expected to add around 0.8mmboe to 2004 production, depending upon the precise date of the completion of the deal.
“Taking these factors into account, together with the recent divestment of onshore Otway assets, the current outlook for 2004 production is 45–46 mmboe,” said Ellice-Flint.
Total development spending for the quarter was a record $175 million as the company moved quickly to bring new projects online, such as Mutineer-Exeter and John Brookes, to increase future production.
Of the company’s major projects the Bayu-Undan liquids project is three months ahead of schedule; the Mutineer-Exeter oil field development has passed the 55% completion point within budget and the John Brookes gas field project for which new contracts, plus additional volumes to meet East Spar obligations, have been considered sufficient to accelerate development.
The June quarter also saw the addition of further possible growth opportunities through acquisition and new ventures such as the recent Egypt and Novus deals. The company divested some non-core assets with the sale of some onshore Otway interests and the farm down of interests to ConocoPhillips in an offshore Darwin block.
