Oil and gas producer Santos has revealed the damage the higher Australian dollar is doing to export income for the company, the resource sector and for the country.
The company yesterday said while it is on track to meet its production guidance for calendar 2009, after reporting a 5% lift in third quarter output, the jump in the value of the dollar cut sales by nearly one quarter.
In fact it was a 24% slide in the three months to September.
And even though oil prices reached above $US81 a barrel midweek, the Aussie dollar trimmed that gain by rising past 93 US cents.
The surging value of the Aussie dollar has taken a big bite out of the company’s financial returns.
Santos said third quarter sales fell to $A557 million in the quarter from $A730 million in the same quarter of 2008.
Production rose 5% to 13.9 million barrels of oil equivalent from 13.2 million boe in the September quarter of last year. It was also up 4% from the June quarter of this year..
Santos said it sold its oil for an average of $A82.52 a barrel in the quarter, down from $A146.42 a year earlier.
The oil price surged peaked in July 2008 at around $US147 a barrel.
Santos said it still expects to meet its 2009 production target of 53 million to 56 million barrels of oil equivalent.
Santos CEO, David Knox said in the statement that the company had delivered a solid production performance in the September quarter, leaving it on track to meet its guidance to produce between 53 mmboe and 56 mmboe for the full year.
"Our liquefied natural gas (LNG) portfolio continues to develop with the addition of our fourth project, Bonaparte LNG, during the quarter," he said.
He said both the Papua New Guinea LNG and Queensland-based Gladstone LNG projects were progressing well and were on track for final investment decisions by the end of 2009 and the first half of 2010, respectively.
"Looking forward, we remain focused on performance from the base business, delivering significant growth through our LNG projects and focused opportunities in Asia," Mr Knox said.
"We continue to believe natural gas has a strong role to play in addressing the twin challenges of carbon emissions and energy security in Australia and in Asia."
Santos shares closed at $15.66.
And shareholders in Newcrest Mining will be jointing those in Santos in watching the value of the Aussie dollar more closely.
There was good news and bad for them in yesterday’s September quarter production report.
Quarter on quarter prices were down, and production was off a touch, year on year the production was down more than 20%, but the Gold price was around 17%, or $A168 an ounce higher than in the same quarter of 2008.
Copper prices were down year on year as well, while production was lineball with September a year ago, but was down on the June quarter of this year.
Newcrest, which is Australia’s largest gold mining company, reported first-quarter output down 22% from a year ago after production declined at its Cadia Valley project in NSW.
The company said gold production from its mines in Australia and Indonesia was 377,084 ounces in the three months ended September 30, down from 485,978 ounces a year earlier.
Copper output was 21,289 tonnes, from 21,550 tonnes a year ago.
Gross cash costs were $A450 an ounce of gold and the company got an average gold price of $A1,143 an ounce in the quarter, the report said.
The average gold price a year ago was $A975 an ounce, but $A1223 an ounce in the June quarter.
Copper prices averaged $A3.02 a pound in the September quarter, up from $A2.66 in the June quarter, but well down from the $A3.93 a pound of a year ago.
Newcrest said lower grades at its 82.5% owned Gosowong project in Indonesia and slower commissioning at its 50% owned Hidden Valley operation in Papua New Guinea were the main causes of the output fall.
"The faster than planned commissioning of the Gosowong expansion required the processing of lower grade stockpiles to maintain higher mill throughput rates whilst additional underground mining locations were brought online," Newcrest said on Thursday in a statement.
"At Hidden Valley heavy rain and plant commissioning issues, including a mill gearbox failure, reduced planned production levels by approximately 15,000 ounces."
Newcrest said its flagship Telfer mine in Western Australia and the Cadia Valley mine in western New South Wales were producing at rates in line with its plan to increase output levels as the 2009-10 financial year progresses.
Newcrest shares ended weaker at $35.48.
The Ten Network has reported a 32% drop in TV pre-tax profits for the year to August 31, after TV ad sales fell 9.9%.
The company, which is now Australian-owned after the debt- stricken Canadian parent sold out in late September, said TV earnings before interest, tax and depreciation totalled $142.1 million down sharply from the $209 million earned in the 2008 financial year.
No final dividend will be paid, although the company said the board was currently reviewing its dividend policy. A 2c a share interim was paid.
For the group as whole (including the EyeCorp outside advertising business which lifted pre tax earnings to $10 million). revenue was $902.5 million (down 10%), with earnings before interest, depreciation and amortisation (EBITDA) of $151.0 million, down almost 30%.
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