AUSTRALIAN operator Santos has trumpeted the rewards the PNG LNG project will bring about to the company and its shareholders as construction of the development nears completion.
In the company’s 2013 full-year financials released to the market in February, Santos chairman Ken Borda said consistent execution of the company’s strategy had positioned it for a step change in earnings and cash flow as its transformational LNG projects were delivered.
“As the PNG LNG and GLNG projects commence production, Santos and its shareholders are poised to reap the rewards,” he said.
“Our operating cash flow will more than double over the next two years as the PNG LNG and GLNG projects come on-line.
“We are focussed on rewarding shareholders as we strike a balance between higher dividends, debt repayment and ongoing investment for growth.”
As production and earnings grow, Santos expressed plans to increase the dividend per share to a sustainable level then steadily increase or maintain its dividend each year.
The company reported a net profit after tax of A$516 million, in line with last year while sales revenue was up 12 per cent to a record A$3.6 billion.
2013 saw Santos make strong progress towards completion of its major growth projects.
“PNG LNG construction is nearing completion, with the first LNG delivery now expected in the third quarter of this year,” Santos managing director and chief executive David Knox said.
Santos, which has a 13.5% stake in PNG LNG, said the project was 95% complete with first LNG delivery now expected in the third quarter of this year. The company had previously forecast a more ambiguous deadline of first production for some time in the second-half of 2014.
“Construction of the project is now nearing completion, with the focus shifting to commissioning key facilities and equipment,” the company said.
“Drilling of four of the eight production wells is complete and commissioning of the upstream gas conditioning plant is underway.”
Concurrently, construction of the onshore pipeline is well progressed and the offshore pipeline is complete. Commissioning is also ramping-up at the LNG plant with gas circulating in train 1 and the refrigeration compressors being test run.
PNG LNG, to be operated by ExxonMobil, will have gross LNG production capacity of 6.9 million tonnes per annum. The project’s capital costs remain unchanged at US$19 billion.