UPDATE 2-Santos Q4 output dips; rains, floods hurt production

Wed Jan 19, 2011 8:08pm EST

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* FY output 49.9 mmboe, near bottom of 49-52 mmboe guidance range

* Sees 2011 output at 48-52 mmboe

* Coal seam gas production unaffected by Jan floods

* Rains, floods cut 2010 output by 3 mmboe (Adds analyst comments)

By Rebekah Kebede

SYDNEY, Jan 20 (Reuters) - Energy firm Santos , which recently approved its $16-billion Gladstone liquefied natural gas (LNG) investment, said extensive rains and floods across Australia sharply cut its 2010 output and halted some coal seam gas exploration.

Santos said its full-year output was reduced by about 3 million barrels of oil equivalent (mmboe) in 2010 and its full-year output was 49.9 mmboe, near the bottom of its 49 to 52 mmboe guidance range.

In the fourth quarter alone, output fell by 6 percent from a year earlier and the company now expects 2011 output in a 48 to 52 mmboe range, below the 54.4 million mmboe produced in 2009.

But industry analysts said the report held no major surprises, with production revenue within expectations at $2.2 billion, up 2 percent on the year.

"Production revenue is in line with our forecast, production guidance for next year looks achievable," Adrian Wood, an analyst with Macquarie Research in Sydney , said.

"Our earnings forecast for 2010 is probably going up a little bit because they have lowered the operating expenses and the royalty-related expenses, so there is a small upgrade there," Wood said.

Heavy flooding in Queensland state, which partially submerged Brisbane, Australia's third-biggest city, in January, did not impact coal seam gas production but field construction and drilling activity were suspended, Santos said.

Santos shares were down 1.5 percent at A$13.370 by 0105 GMT.

Santos gave a final go ahead for Gladstone LNG earlier this month and expects exports from the 7.8 million tonne per annum (mtpa) project to start from 2015.

The project would bring Australia one step closer to becoming the second-largest LNG producer by 2020 as producers try to meet growing demand from Asian giants such as China and India.

Gladstone is a joint venture between Santos (30 percent), Malaysia's Petronas (27.5 percent), France's Total (27.5 percent), and Korea Gas Corp (KOGAS) (15 percent). (Reporting by Balazs Koranyi in SYDNEY and Rebekah Kebede in PERTH; Editing by Ed Davies)

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