Santos set for revenue boost as Exxon Mobil gas project nears

SYDNEY Wed Jan 22, 2014 7:35pm EST

SYDNEY Jan 23 (Reuters) - Australia's Santos Ltd expects a sharp boost in production and cash flow in the second half of 2014 as liquefied natural gas begins flowing from the Papua New Guinea gas project it has a stake in.

Santos, Australia's second-biggest oil and gas producer, on Thursday posted record sales revenue of A$1.1 billion for the fourth quarter of 2013 - driven by its highest oil production in six years.

Strong oil prices and higher third-party sales volumes, also played a role in boosting sales, the company said.

Santos has a 13.5 percent interest in the $19 billion PNG liquefied natural gas (LNG) project, which it said was over 90 percent complete. The project is operated by Exxon Mobil .

Santos is also developing the Gladstone LNG project in Queensland state, one of seven under construction in Australia to meet demand for gas in Asia.

That project is on track to start in 2015, it said.

"In the second half of 2014 the first of these projects, PNG LNG, is on track to commence LNG shipments to Asia, delivering a significant boost in production and cashflow for the company," Chief Executive Officer David Knox said.

For calendar 2013, Santos said it produced 51 million barrels of oil equivalent (mmboe), down 2 percent from 2012, and in line with guidance issued in December. This was a revision from an October forecast that it would produce at the low end of a 52 million to 55 mmboe range.