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Australia’s Santos cautious on Alaska, Australia oil projects

Australia’s Santos Ltd flagged on Wednesday it may not make final go-ahead decisions on its oil projects in Alaska and Australia by mid-year, even after delivering a record annual underlying profit on the back of surging oil and gas prices.

Santos had previously said it expected to make a final investment decision (FID) on its Pikka project in Alaska in the first half of 2022 and on its Dorado project off Western Australia by mid-2022, but on Tuesday said the two projects would be “FID-ready” by mid-year.

The caution on its growth projects came despite Chief Executive Kevin Gallagher saying the world needs more oil and gas, following a year in which energy security issues came into the spotlight.

“It is vitally important that investment in new supply occurs and in a sustainable way,” Gallagher said in a statement.

Santos shares fell 3% in early trade, against a 0.9% drop in the Australian energy index.

It delivered an annual dividend of 14 cents a share, beating forecasts for a full-year divided of 12 cents, according to Refinitiv IBES estimates.

“We will now seek to further optimise the portfolio, reduce gearing and conduct a review of our capital management framework including returns to shareholders,” Gallagher said.

The company said it aims to snare between $2 billion and $3 billion from asset sales in 2022.

However on Wednesday, it took some of the shine off that, saying its share of Bayu-Undan production would be about 10 million barrels of oil equivalent (mmboe) less than in 2021, mainly due to the sale of 25% of its stake in the field and lower output as the field nears the end of its life.

Santos, which became a global top-20 oil and gas firm after its $6.2 billion takeover of Oil Search last year, forecast 2022 production between 100 and 110 mmboe up from 92.1 mmboe in 2021.
Source: Reuters (Reporting by Sonali Paul; Additional reporting by Harish Sridharan and Riya Sharma in Bengaluru; Editing by Shinjini Ganguli and Aditya Soni)

 

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