Santos Loses Revenue Due to Lower Oil Price

Submitted by Jim Thesiger on 21 January, 2010 - 16:41

Santos Limited (STO), an Australia based company that concentrates on exploration, production, marketing and transportation of oil and gas has posted a sharp drop for its yearly revenue for the year 2009 due to the low oil price which fell at the middle of the year and continued throughout the rest of the year while the company maintained an unchanged volume of production. Santos saw a 7 percent fall to its revenue for the three month period which ended in December in comparison with the corresponding period of 2008. Revenue for the full year was slumped by 21 percent during 2009 in comparison with a year earlier. It is to be mentioned that Santos generated as much as 54.4 million barrel of oil equivalent in the year 2009 which is in line with the company’s guidance of 53 to 56 million BOE. The revenue and output results were in line with the market expectations, despite the company being able to come up with some good news regarding its expenditure of production for the year 2009 by pushing the figures lower than what was anticipated earlier.

The company determined its output guidance as 51 million-54 million BOE for the year 2010 and also maintained an unchanged guidance for the capital expenditure ($2.8 billion). According to Santos, its joint venture with Malaysia based Petroliam Nasional at Gladstone is right on the track which will make it possible to come up with a final decision within mid 2010. Due to positive impacts of the foreign exchange and realized cost efficiencies at the fourth quarter, the company managed to reduce its production cost for 2009.

The tax expenses related to royalty is also likely to be lower than the earlier guidance which Santos termed as a result of the lower oil price during the fourth Quarter which dropped more than what was expected.