Booming oil and gas production in the Cooper Basin is helping South Australian companies survive through record low oil prices caused by the COVID-19 crisis.
Santos has reported its strongest quarter of gas production in the Cooper Basin in nine years while Beach Energy told the ASX this week it had achieved a 15 per cent oil production increase in the basin’s Western Flank.
In a statement to the Australian Securities Exchange on Thursday, 23 April, Santos reported a $209 million fall in sales revenue for the March quarter.
Australia’s second-largest independent gas producer’s first quarter production of 17.9 million barrels of oil equivalent (mmboe) was four per cent lower than the prior quarter, primarily due to an unplanned domestic gas customer outage in Western Australia and the impact of Cyclone Claudia.
This was partially offset by Cooper Basin gas production, which was 23 per cent above the corresponding quarter and the highest quarterly gas production since 2011. Production was driven by strong flow rates from new gas wells combined with lower equipment downtime.
Total Santos Cooper Basin production was at an annualised rate of 17.6 mmboe Santos-share in the first quarter, achieving the 2025 production growth target range ahead of expectations.
The Adelaide-based company’s revenue fell to $1.4 billion ($US 883 million) for the quarter ending March 31, down 13 per cent on the $1.61 billion ($US1.02 billion) it generated in the March quarter last year.
The Cooper Basin covers an area of about 127,000sq km in northeast South Australia and southwest Queensland and is home to Australia’s largest onshore oil and gas field development.
Beach Energy’s total sales revenue for the three months ending March 31 was $431 million, 7 per cent lower than the previous March quarter as the 13 per cent decline in average realised price more than offset a 7 per cent increase in sales volumes to 6.94 mmboe.
Its total Cooper Basin production reached 2.68 mmboe, up 10 per cent on the December quarter and 42 per cent higher than the same period last year.
Beach Managing Director and Chief Executive Officer, Matt Kay said the strong operational result was a perfect example of the strength and resilience of Beach’s workforce and asset portfolio.
“In a quarter in which global events have required us to reconfigure the way we go about our day-to-day operations, the entire Beach team has remained focussed on the job and delivered a good result,” Mr Kay said.
“Our robust asset portfolio and operational capabilities combined with our extremely strong balance sheet, means Beach is well positioned to navigate the turbulent times being experienced across the globe.
Last month, Santos cut its full-year capital spending by $US550 million and deferred an investment decision on its $US4.7 billion Barossa gas project off northern Australia, in which it recently sold a stake to Japan’s JERA.
It also announced a target free cash flow breakeven oil price of US$25 per barrel.
Santos Managing Director and Chief Executive Officer Kevin Gallagher said about 70 per cent of the company’s forecast production volumes were either fixed-price domestic gas contracts or oil hedged at an average floor price of US$39 per barrel.
He said the current environment was a time for discipline.
“We have a strong liquidity position with over $3 billion available and we have sufficient headroom in our debt covenants for a number of years at current oil prices,” chief executive Kevin Gallagher said in a statement to the ASX this morning.
“The COVID-19 crisis continues to put demand pressure on industries across the globe and we are not immune.
“I remain confident our disciplined, low-cost operating model is built to see Santos through these challenging periods and today’s results are a strong base for us to build on as we fight current low oil prices and COVID-19. Santos is well positioned to leverage the opportunities when prices and demand recover, which they will.”