Oil price surge helps Santos double annual profit

MELBOURNE, Feb 23 AAP - Santos Ltd has more than doubled its annual profit and the oil and gas producer says the outlook is good for another bumper year in 2006. The Adelaide-based company today posted a $762.1 million net profit for calendar 2005, an increase of 115 per cent.

Chief executive John Ellice-Flint said the massive jump in profit had been driven both by increased production and by rising oil and gas prices. "The profit is split about 50/50 due to volume and commodity price," he said.

Santos' average realised price for oil climbed 42 per cent to $73.83 ($US54.76) per barrel and gas rose 10 per cent to $3.62 per gigajoule, with Mr Ellice-Flint saying prices looked set to remain strong in 2006.

Production for the year rose 19 per cent to 56 million barrels of oil equivalent (mmboe) and Santos expects this to grow to between 60 and 61 mmboe in 2006 and between 62 and 63 mmboe in 2007.

The company has ramped up exploration and development activity in recent years and is no longer accused of relying too heavily on its mature assets in the Cooper basin in South Australia. Where eight years ago only 23 per cent of its production came from outside of the Cooper Basin, this figure has now risen to 60 per cent.

The exploration program will step up another notch in 2006 with 25 wildcat exploration wells to be drilled at a cost of about $225 million and 310 wells to be drilled in total. The work is paying off with Santos' reserves at the end of the year reaching 414 mmboe, up from 348 mmboe at the end of 2004.

The market has been anxious for more details on the Jeruk oil find in Indonesia and Mr Ellice-Flint said three to four appraisal wells would be drilled there this year. The company said additional information would be released in the middle of the year and its target was to start early production in 2007.

Mr Ellice-Flint also said the company was still in discussions about its potential involvement in the $4 billion Papua New Guinea gas pipeline project. Santos declared a final dividend of 20 cents per share, taking the full year dividend to 38 cents, up from 33 cents in 2004. Santos shares fell 30 cents to $11.80.

Source:
AAP