Santos’ Barossa gas on track, pumps $1.3b back to investors
Resources giant Santos will pump $1.3 billion into investors’ pockets after reporting its troubled Barossa gas project in the Timor Sea is nearly two-thirds complete and its Moomba carbon capture and storage project is on track for its first injection of carbon midway through this year.
Adelaide-based Santos said oil and gas production, revenues and underlying profits fell sharply over the full-year to December as energy markets finally rebalanced following a two-year period in which global supply was squeezed by the war in Ukraine, driving prices and profits for fossil fuel producers to historic highs.
Santos’ underlying profit slumped more than $US1 billion on the previous year to $US1.423 billion ($2.172 billion), but that didn’t deter the oil and gas major from setting an unfranked half-year dividend of US17.5¢ per share, giving investors a record total cash return for the full year of $US852 million ($1.3 billion).
Chief executive Kevin Gallagher said the cash return to investors was the result of Santos’ high-performance culture, disciplined low-cost operating model and strong focus on safety, but overall the company saw a decline in revenue and production.
The average price per barrel of oil last year, at $US87.6, was well blow 2022’s $US110.1, and million-barrels-of-oil-equivalent per day production fell to 91.7, down on the previous year but on par with production during 2021.
“These results reflect lower oil and LNG [liquid natural gas] prices, and lower production compared to the corresponding period,” Gallagher said.
Santos ran into difficulty last year when it was forced to re-consult traditional owners after key approvals for its troubled Barossa field were revoked.
The company reported on Wednesday that the project is now 67 per cent complete with first gas expected in the third quarter of 2025. Half the pipeline from the gasfield to Darwin LNG is laid, with the first well complete and the second well is under way, it said.
The fossil fuel producer, which was in merger talks with rival Woodside before they were shelved earlier this month, claims its Moomba Carbon Capture and Storage (CCS) will be one of the lowest-cost in the world. The viability of CCS as a technology is still unproven.
Rival Chevron, which is pumping waste carbon into old wells at its Gorgon gas export project, managed to inject underground just 34 per cent of the five million tonnes of carbon dioxide it captured in the 12 months to June last year.
Fossil fuel companies see CCS as a viable means to dispose of CO₂ from their gas fields, but they face the difficulty of using offshore reservoirs deep under the ocean.
The Albanese government passed legislation in November that will enable Santos to move CO₂ from the Barossa project it is constructing north of Darwin to a near-empty gas field in Timor-Leste waters where it can store it in perpetuity. CCS is crucial to the viability of Santos’ $5.6 billion Barossa field.
The company said its guidance forecast for 2024 remains unchanged.
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Source: Thanks smh.com