Santos Ltd Ongoing cost control focus and positive guidance
Ongoing cost control focus and positive guidance: Santos Ltd (ASX: STO) stock rallied over 8.2% on July 20th, 2017 after the group’s strong second quarter performance. Santos controlled their net debt position by US$600 million to US$2.9 billion as compared to 2016 year end and expects a free cash flow breakeven for 2017 which currently reached US$33 per barrel from US$47 per barrel at the beginning of 2016. Further, it has been focusing to control costs while building a strong asset portfolio which could generate a major free cash flow despite the volatile oil price environment. The group’s second quarter production fell 1% to 14.7 mmboe against the last quarter but this was in line with estimates. Sales volumes enhanced 16% to 21.5 mmboe as compared to first quarter of 2017 while sales revenues rose 12% to US$769 million driven by better LNG prices and the timing of liftings. As a result Santos enhanced the production and sales volume for 2017 to 57-60 mmboe and 75-80 mmboe respectively. Meanwhile, Santos also enhanced their drilling activity in Cooper Basin as well as across its GLNG acreage and accordingly expects further wells to improve their gas production in the coming years.
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