October 17, 2018 / 10:38 PM / a month ago

UPDATE 1-Australia's Santos hits debt target ahead of plan, Q3 revenue surges

(Adds details of oil prices, 2018 guidance, background)

Oct 18 (Reuters) - Santos Ltd, Australia’s No. 2 independent gas producer, on Thursday achieved its debt target over a year ahead of plan, tightened its 2018 production guidance upward and reported a 22.7 percent jump in third-quarter revenue from a year earlier.

Production was unchanged at 15 million barrels of oil equivalent (MMboe) from the corresponding quarter last year, the company said.

Buoyed by higher oil and LNG prices, quarterly revenue came in at $973 million, beating an estimate of $925 million by RBC Capital Markets.

Santos also cut net debt to $2 billion from $2.4 billion in the last quarter. Deep cost cuts and a rebound in oil and gas prices have helped Santos escape a massive debt overhang.

The company said its average realized oil price in the third quarter surged 52.2 percent to $81.09 per barrel over the year ago quarter, offsetting flat production to pump up quarterly revenue.

Shares of the company have surged 29.4 percent this year, buttressed by rising oil prices, which helped it reject a $10.8 billion takeover offer from private equity-backed Harbour Energy and then agree to a $2 billion-plus takeover of privately held Quadrant Energy.

Santos raised the lower end of its 2018 production forecast to 56-58 mmboe from 55-58 mmboe. It’s new sales volume guidance is 74-76 mmboe from the previous 72-76 mmboe.

The production forecast had been trimmed earlier this year from 55-60 mmboe after an earthquake in Papua New Guinea halted production at the Exxon Mobil-run PNG LNG project, in which Santos holds a minority stake. (Reporting by Devika Syamnath in Bengaluru Editing by James Dalgleish and Grant McCool)

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