Santos Q3 2023 report raises important questions

The Australasian Centre for Corporate Responsibility​ (ACCR) is commenting on the release today of Santos Ltd’s third quarter report, for the period ending September 30 2023.

Commenting on the results, Brynn O’Brien, Executive Director at the Australasian Centre for Corporate Responsibility said:

“Despite the drilling environment plan for the Barossa Gas Project being set aside by a decision of the Federal Court over a year ago and still not reissued, Santos is still suggesting that the project could be delivered on time and within cost guidance.

“Investors will be questioning Santos on how it can lose a year in the drilling schedule and still be on track. And what gives Santos confidence that drilling will recommence this year, despite the drilling rig reportedly being needed for a separate contractual obligation?

“According to recent reports, the drill rig has cost AUD$350 million to remain idle for the past year and appears to have a contractual obligation to start drilling a separate project imminently.

“Santos’ progress with its Moomba CCS project also raises a number of questions. At FID Santos reported that the project would sequester CO2 for less than $24 per tCO2. The project capital cost has since increased by 33%, but Santos is still targeting the same unit cost. Greater disclosure from Santos on how this is possible would be very welcome.”

Background

According to a recently released IEEFA report from September 2023, the drilling rig for Barossa is only contracted to Santos until October 2023, before being transferred to another company, thought to be Shell for drilling at the Crux field in the northern Browse Basin. IEEFA said “this adds to the uncertainty on whether Santos will have a rig to drill the Barossa field should it receive the regulatory approval to do so.”