Santos Trims 2025 Output Target as BW Opal FPSO Faces Technical Issues
Australia's Santos narrowed its annual output forecast for a second time this year on Thursday after a technical issue delayed the ramp-up of its key Barossa oil and gas project and inclement weather hampered recovery at its Cooper Basin project.
The country's no. 2 independent oil and gas producer now expects to produce 89 to 91 million barrels of oil equivalent (mmboe) in fiscal 2025, compared with 90 to 95 mmboe previously forecast. The mid-point of the forecast fell short of the Visible Alpha consensus of 91.4 mmboe.
The Barossa project is co-owned by Santos along with South Korean energy company SK E&S and Japan's JERA, and is expected to cost $4.5 billion to $4.6 billion to develop, according to a 2024 company guidance.
It remains on track to ship its first liquefied natural gas (LNG) cargo in the December quarter.
"Software issues affecting the safety systems onboard the BW Opal FPSO resulted in an unplanned shutdown of around two weeks during September, impacting the ramp-up of the Barossa project," Managing Director and CEO Kevin Gallagher said in a statement.
Santos had narrowed its full-year production forecast in the previous quarter to reflect flood-related operational disruptions at Cooper Basin.
Recovery effects at Cooper Basin have run into the fourth quarter, the firm said, adding that 155 wells were still offline due to flood water levels receding more slowly than expected.
Gallagher had said the impact would not be material in the "big picture" after flooding submerged more than 200 wells in Cooper Basin in May, with the production recovery expected to pick up in the second half of the year.
Santos, which had received an $18.7 billion bid from a consortium led by Abu Dhabi National Oil Company in June, reported an 11% fall in sales revenue to $1.13 billion for its third quarter ended September 30, missing the Visible Alpha estimate of $1.18 billion.
The Adelaide-based company also narrowed its annual sales volume forecast to 93 to 95 mmboe from 92 to 99 mmboe previously expected. The mid-point of the range also fell short of the Visible Alpha consensus of 96 mmboe.
Shares of Santos ended 0.8% higher at A$6.38, in line with the benchmark S&P/ ASX 200 index's .AXJO gain, after rising as much as 1.7% earlier in the session.
(Reuters - Reporting by Shivangi Lahiri and Sherin Sunny in Bengaluru; Editing by Shreya Biswas and Subhranshu Sahu)