Santos misses quarterly revenue view, lowers annual output estimate

Shares of Australia's second-largest independent oil and gas producer pared earlier gains and fell as much as **2%** to **A$7.69** by **0444 GMT**, while the broader benchmark **.AXJO** was up **0.6%**. However, with Barossa commissioning nearly complete, analysts at Citi were more positive about the future. > "Given investor concerns around potential commissioning and ramp-up challenges at Barossa, we believe the market is likely to focus on the improving operational performance and de-risking towards nameplate capacity," the Citi analysts said. Santos reported second-quarter sales revenue of **$1.35 billion**, compared with **$1.29 billion** a year earlier, missing Visible Alpha's consensus estimate of **$1.57 billion**. One-off Barossa and Pikka commissioning costs weighed on the company's operating cash flow, which was **$378 million** for the first half. The two facilities together recorded a combined free cash flow from operations loss of about **$151 million**. Cash flow was further affected by cargo movements timed near the half-year reporting date, and by delayed revenue from about **1.3 million boe** of Papua New Guinea production. Santos expects higher realised LNG pricing combined with expected production uplift to drive free cash flow in the second half of the year. In the second quarter, Santos realised an average crude oil price of **$120.33 per barrel**, nearly **70%** up from a year earlier. Second-quarter production was **23.1 million boe**, higher than last year's **22.2 million boe** but missing Visible Alpha's estimate of **24.3 million boe**. Santos commenced continuous production at its **Pikka Phase 1** project in Alaska last month, while the **Barossa gas field** and related liquefied natural gas facility in Australia's Northern Territory are now producing at **97% of planned rates** after delays. Santos said production has resumed at all its Western Australia oil and gas assets after Tropical Cyclone Narelle disrupted production at sites on the country's west coast and the Cooper Basin earlier this year. Santos missed market estimates for second-quarter revenue on Thursday due to lower output at its Barossa facility, and lowered its annual production forecast to reflect what it called commissioning-related disruptions at the site. Annual production is now expected between **99 million barrels of oil equivalent (boe)** and **105 million boe**, Santos said in a statement. That is nearly 4% below the midpoint of the previous forecast of between **101 million** and **111 million boe**, according to Reuters calculations. > "Our initial production guidance had a large band of uncertainty ... However, with Barossa's ramp-up nearing completion and Pikka's first wells online, we have narrowed our production guidance," Chief Executive **Kevin Gallagher** said in the statement.

Santos misses quarterly revenue view, lowers annual output estimate

Shares fall after the update

Revenue, cash flow and pricing

Barossa and Pikka ramp-up details

Quarterly revenue and production miss estimates

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