Oil and gas company Santos is making solid progress on its growth projects as it sticks to full year production targets despite a weak first quarter.
Santos said its three major growth projects remain on track but shutdowns caused a two per cent fall in March quarter production.
Chief executive David Knox said Santos remained focused on major project delivery in 2013.
“The progress on our Fletcher Finucane project has been pleasing,” Mr Knox said.
First oil is expected ahead of schedule by mid 2013.
Santos’ liquefied natural gas joint venture in Papua New Guinea is also 80 per cent complete and on track for first LNG in 2014.
Its GLNG project, which is part of several coal seam gas-to-LNG projects in Queensland, is also half complete and on track for first LNG in 2015.
Santos produced 12.1 million barrels of oil equivalent (mmboe) in the March quarter, down two per cent on the same time a year ago, but sales revenue fell five per cent to $713 million due to third party trade.
Despite the falls, Santos maintained its production guidance for 2013 at 53-57 mmboe.
Shares in the company were 23 cents, or two per cent, higher at $11.61 at 1432 AEST.
Santos added that gas production during the quarter was steady, with higher Otway Basin production offset by lower production from the Cooper Basin due to planned shutdowns.
The company posted a record average gas price of $5.43 a gigajoule, driven by demand on Australia’s east coast and Asia.
Macquarie analyst Adrian Wood said Santos had done a poor job of communicating maintenance plans to the market, but the company’s full year guidance was in line with Macquarie’s forecasts.
“We would agree with that,” Mr Wood said.
“The focus will be on the development projects and the news is actually pretty good.”
It looked like the Fletcher Finucane project would be delivered early while the Gladstone LNG project was half complete.
He noted that well drilling in Queensland had increased significantly in the quarter.
Revenue was weaker than the production result because third party volumes were lower.
“They won’t have a massive impact on earnings,” he said.
However, Fat Prophets resources analyst David Lennox said the result looked a bit “tired”.
“It looks like it’s at the end of its construction cycle,” Mr Lennox said.
“You couldn’t say it was disappointing but the quarter was not inspiring.”
The company’s share price was related to a recovery in the sector on the local market.
