Australia's Santos underlying profit up by a third

SYDNEY Thu Feb 21, 2013 5:25pm EST

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SYDNEY Feb 22 (Reuters) - Australian oil and gas producer Santos reported a 34 percent rise in annual profit after lifting gas production and said its major LNG development projects remained on track.

Santos, the country's No. 2 energy firm, posted an underlying profit of A$606 million ($621 million) for 2012, up from A$453 million in 2011 and compared with consensus analysts' forecast of about A$600 million.

Santos maintained its 2013 production target at 53-57 million barrels of oil equivalent.

Like other gas producers, Santos has been grappling with cost increases on development projects, with the strong Australian dollar a major factor. Rival Origin Energy on Thursday announced a 7 percent hike in costs at its Australia Pacific LNG project.

Santos said its $18.5 billion Gladstone coal seam gas to LNG (GLNG) project in Queensland, which is almost half complete, was still on track to start producing LNG in 2015.

GLNG has had to purchase additional gas reserves from producers in the area, a move that some industry analysts have interpreted as a sign Santos has not been as successful as it had hoped in proving up gas reserves for its flagship development.

Santos said the Exxon Mobil-led $19 billion Papua New Guinea LNG project was also on track to come online in 2014.

Santos' Moomba-191 in South Australia's Cooper Basin became the country's first commercially producing shale gas well last year, and was producing at 2.5 million standard cubic feet per day at the end of the year. Four new exploration wells were planned for 2013, Santos said.

Larger rival Woodside Petroleum beat analyst expectations with a record full-year net profit on Wednesday after its Pluto liquefied natural gas (LNG) plant boosted production. ($1 = 0.9754 Australian dollars) (Reporting by Rebekah Kebede and Lincoln Feast; Editing by John Mair)

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