Santos has lifted its 2025 production target further to 120 million barrels of oil equivalent (mmboe), more than double 2018’s output.
The new target, up from 100 mmboe set in 2018, represents a cumulative annual growth rate in production of over 8% to 2025.
Speaking at the company’s Investor Day in Sydney, Santos Managing Director and Chief Executive Officer Kevin Gallagher said the successful execution of Santos’ Transform-Build-Grow strategy since 2016 has the company positioned for disciplined growth and sustainable shareholder returns.
“Our strategy has been to establish a disciplined low-cost operating model that delivers strong cash flows through the oil price cycle. Our 2019 forecast free cash flow breakeven oil price is now ~US$29 per barrel,” Mr Gallagher said.
“The recently announced acquisition of ConocoPhillips’ interests in northern Australia and Timor-Leste1 will further reduce our breakeven oil price and deliver operating interests in long-life, low-cost conventional natural gas assets and strategic LNG infrastructure.”
“We are now positioned for disciplined growth leveraging existing infrastructure in all five of our core assets, which we believe will deliver 120 mmboe by 2025.”
This disciplined growth portfolio includes:
- Barossa LNG – targeting FID around the end of Q1 2020
- Dorado liquids – targeting FEED-entry Q2 2020
- PNG LNG expansion – targeting FEED-entry in 2020
- GLNG ramp-up to ~6.2 mtpa sales from 2020
- Cooper Basin production growth.
Mr Gallagher said Santos was well positioned to fund growth out of operating cash flow and debt while maintaining gearing levels within the company’s target range through the major growth phase, with rapid de-gearing expected thereafter.
“Natural gas is forecast to supply a quarter of the world’s total energy demand by 2040. Through our Energy Solutions business, we are investing in projects to lower emissions and assessing the significant potential for carbon capture and storage in the Cooper Basin,” Mr Gallagher said.