The oil price boom of the past three years has made the managements of every oil company look good.
Woodside, Roc Oil, Oil Search, Tap Oil, AWE and even BHP Billiton have all prospered as the rising level of demand from Asia and India, America’s profligate ways and instability in the Middle East, Venezuela and Nigeria, plus the rundown nature of the US refining industry, have helped underpin the biggest boom the industry has seen since the first oil shock back in 1973.
Gas, crude and chemical have boomed and motorists and consumers of all types have paid: and the producers and producer companies have got rich.
Oil prices have more than trebled in the eight years and the share price of the country’s underachiever, Santos, has performed roughly the same: rising from just under $4 to around just over $13 yesterday and a recent all time high of just over $16.
The company finally though seems to have settled its future path on LNG projects in Queensland using coal seam methane gas, and a share of the huge PNG project of Exxon and Oil Search. It has fluffed efforts to grow in the Cooper Basin by buying the Delhi assets: it was topped by Beach Petroleum, and its efforts to takeover Queensland Gas Co were rebuffed.
And the 15% shareholding cap maintained by the South Australian Government will end this year, putting Santos on the same footing as Oil Search and others in the industry.
Earnings have risen with the higher prices, although the stronger Australian dollar, the costs of repairing technical problems and breakdowns in the Cooper Basin, plus some unsuccessful exploration efforts, not to mention the big mudflow in Indonesia, have taken some of the gloss off the recent returns for the company under CEO John Ellice Flint who yesterday revealed he was stepping down.
The news surprised the market: the shares kicked higher, peaking at $13.38 before they eased to finish up 7c at $13.10.
Mr Ellice-Flint will continue with the company until June 30, this year in a consulting capacity.
Santos said that Executive Vice President, David Knox, who joined only in September last year, had been appointed Acting Chief Executive Officer until the end of an international search for a successor to Mr Ellice-Flint.
Santos chairman Stephen Gerlach said Mr Knox’s extensive industry experience and existing senior role within Santos meant he was very well placed to step into the acting CEO position.
"The Board has total confidence that David has the necessary skills and experience to lead the Company while we undertake a comprehensive selection process for John’s successor," he said in a statement to the ASX
"We expect that Mr Knox will be a strong candidate for that role."
Santos seemed to be going out of its way to highlight Mr Knox’s extensive global experience in the petroleum industry.
It said that during a 25 year career, he has held senior positions with BP in Australia, the United Kingdom and in Pakistan. He worked previously for ARCO and Shell in the United States, the Netherlands, the United Kingdom and Norway.
Mr Knox joined Santos in September 2007 as executive vice president, growth businesses, responsible for growth in Santos emerging new businesses including LNG, Geoscience and New Ventures, Indonesia and other strategic projects.
"Mr Ellice-Flint said Santos had an excellent portfolio of quality assets with depth.
"I am very pleased with the transformation that we have put in place and I feel that it is the right time to move on to other opportunities," he said in the statement.
At least Santos didn’t say he was resigning to ‘spend more time with the family’ or ‘pursue other interests’, all of which are code phrases for being pushed out the door.
