April 18, 2018 / 11:52 PM / a month ago

Australia's Santos cuts 2018 production forecast slightly, first quarter production dips

(Reuters) - Oil and gas producer Santos Ltd on Thursday cuts its full-year production guidance slightly and reported a near 7 percent dip in first quarter output after its Papua New Guinea liquified natural gas production was hit by a quake in February.

FILE PHOTO: A sign for Santos Ltd, Australia's No. 2 independent gas producer, is displayed on the front of the company's office building in the rural township of Gunnedah, located in north-western New South Wales in Australia, March 9, 2018. REUTERS/David Gray

Santos, the target of a $10.4 billion takeover offer by U.S. based investor Harbour Energy, said production for the quarter ended March 31 eased to 13.8 million barrels of oil equivalent (mmboe) from 14.8 mmboe a year ago.

“The temporary PNG LNG shutdown, combined with planned maintenance at our facilities in Moomba and in Queensland, reduced first quarter production,” the company said.

The company narrowed its production forecast range for 2018 to 55-58 mmboe from 55-60 mmboe expected earlier, taking into account the outage from its LNG operation in Papua New Guinea (PNG).

In February, a 7.5 magnitude quake rocked Papua New Guinea’s energy-rich interior, causing landslides and killing 100 people, and forcing PNG LNG project operator ExxonMobil Corp to shut down operations. Production resumed last week, about two weeks ahead of schedule.

Santos is a foundation partner and holds a 13.5 percent interest in PNG LNG.

Revenue for the quarter, however, rose 16.1 percent to $794 million from $684 million a year ago, thanks to higher commodity prices, the company said in its quarterly earnings report. Oil prices currently stand at around $73.48 per barrel.

On the Harbour proposal, Santos directors reiterated that shareholder should ‘take no action’, adding that Harbour had commenced due diligence process on the company.

Reporting By Susan Mathew in Bengaluru; Editing by Michael Perry

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