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Australia's Santos says oil production hit 4-year high

The company's underlying profit for the first half of the year was double what it was during the same period in 2017.

By Daniel J. Graeber
Australia's Santos says oil production hit 4-year high
Australian energy company Santos declares four-year high in production and a big boost in underlying profits. Photo courtesy of Santos Energy

Aug. 23 (UPI) -- Following its move to acquire Quadrant Energy, Australia's Santos said oil production hit a four-year high while production costs dropped 13 percent.

Santos announced Wednesday it targeted Quadrant in a $2.15 billion acquisition, setting it up to be one of the strongest producers in Australia. Santos, alongside French supermajor Total and Australian energy company Melbana, already has a role in the Beehive prospect off the coast of Australia, one of the largest untapped basins in the country.

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Santos on Thursday released its half-year results, showing all major indices in positive territory. Underlying profit of $217 million was double what it was last year and production was setting records for the company.

"Oil production has reached the highest in four years and unit production costs per barrel were down 13 percent, highlighting excellent performance from our onshore development and operations teams," Managing Director and CEO Kevin Gallagher said in a statement.

Santos said its standalone reserves last year were 848 million barrels of oil equivalent. Including what Quadrant had, the potential for Santos improves by 25 percent. For production, Santos would improve by 31 percent when adding the 2017 assets from Quadrant.

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The move on Quadrant came two days after the declaration of one of the largest oil discoveries in Australia in decades. At its first well, dubbed Dorado, Quadrant and Carnavon Petroleum announced they uncovered at last 171 million barrels of oil.

Carnarvon, which holds a minority stake in the basin, said it has a good relationship with Santos and welcomed it as an incoming joint venture partners at the Dorado discovery.

Elsewhere, Santos noted its strength was in natural gas, but output there was curtailed by early-year earthquakes in Papua New Guinea.

"Our Western Australia gas business continues to deliver strong results, with higher customer demand driving production up 12 percent in the first half," Gallagher said.

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