By David Winning
SYDNEY--Santos Ltd. said its annual net profit rose by 7% as stronger production from its oil and gas fields more than offset a weaker realized oil price and a step-up in capital expenditure.
Santos reported a net profit of US$674 million for the 12 months through December, up from US$630 million a year earlier. Directors of the company declared a final dividend of 5.0 U.S. cents a share, bringing its full-year payout to 11 cents, up 13% on 2018.
Over the year, sales revenue climbed 10% to US$4.03 billion on the back of a 28% rise in production to 75.5 million barrels of oil equivalent. That was more than enough to offset the impact of a 4% annual drop in the average realized oil price to US$71.99 per barrel.
Santos achieved free cash flow of US$1.1 billion, which it said was a record for any year.
"The year was highlighted by record onshore drilling performance, lower unit costs, successful integration of the Quadrant acquisition and significant progress on our diversified portfolio of growth projects," Chief Executive Kevin Gallagher said.
In December, Santos lifted medium-term forecasts for its production as it prepares to integrate roughly US$1.4 billion in assets it has agreed to buy from ConocoPhillips (COP). Those assets include the U.S. company's operations in northern Australia and East Timor, including a controlling stake in the Darwin LNG gas-export project in which Santos already is a partner.
"The acquisition is expected to complete around the end of the first quarter of 2020, subject to third-party consents and regulatory approvals," Mr. Gallagher said.
Completion of the transaction will enable Santos to make a final investment decision on the Barossa project, which will provide gas for the active Darwin LNG project. It expects to make that decision in the second quarter of 2020.
"We are also targeting a front-end engineering and design-entry decision on the exciting Dorado liquids project in the second quarter," Mr. Gallagher said.
Santos said in December that it now expects production to jump to 120 million barrels of oil equivalent by 2025. It had previously targeted a lift in output to 100 million barrels over that period.
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