No wonder Santos was changing its payout policy and handing out a $US250 million buyback to shareholders this week – the company’s March quarter production and sales report on Thursday revealed record revenue of $US1.9 billion for the first quarter of its 2022 financial year.
With oil and gas prices still high, thanks to Vlad Putin’s invasion of Ukraine, Santos’ quarterly sales revenue jumped 25% from the December quarter of 2021 and a staggering 99% from the first quarter of 2021 of $US964 million.
Santos also said it posted record quarterly production of 26 million barrels of oil equivalent (mmboe), compared with 24.8 mmboe a year earlier, boosted by the contribution from Oil Search.
The strong production figures and the higher oil and gas prices delivered record quarterly free cash flow of $US865 million, an increase of 186% from the corresponding period of 2021.
What also boosted revenue and cash flow was a full six months boost from the Oil Search assets that were taken over in December, 2021.
“By designing our portfolio to provide strong cash flows throughout the commodity price cycle, our disciplined, low-cost operating model has positioned us to take full advantage of the increase in commodity prices,” Santos boss Kevin Gallagher said in Thursday’s statement.
“Today’s results demonstrate that our business has the size, scale and cash flows to enable Santos to deliver stronger shareholder returns.”
He added that Santos will be disciplined in the way it manages its next phase of growth.
“The Barossa project is 33 per cent complete and making excellent progress, while the Moomba carbon capture and storage project will deliver a step-change in our emissions profile when it comes online in 2024.”
“Our goal is to deliver superior shareholder returns while being a global leader in the transition providing cleaner energy and clean fuels that are affordable and reliable,” Mr Gallagher said.
Given all the cash flooding the company’s accounts and the prospect of more to come (and no doubt eyeing politicians in Australia and PNG with revenue grabs in their eyes) Santos Wednesday announced a $US250 million ($A338 million) share buyback, starting in May, as part of a new capital management framework which includes a more generous dividend payout system.
The buyback got the headlines, the new dividend policy which is linked to an anchor price of $US65 a barrel for Brent crude oil – the global marker, means the company’s shareholders can look forward to some fat payouts for most of 2022 on top of the buyback.
Santos shares rose 1.7% to $8.37.
