April 23, 2020 / 12:02 AM / a month ago

UPDATE 1-Santos posts drop in revenue, but says well positioned to weather oil crash

(Adds first-quarter metrics, comments on lower oil prices)

April 23 (Reuters) - Australia’s Santos Ltd posted a 13% drop in first-quarter revenue on Thursday due to lower realised prices for oil and gas, but said it had sufficient liquidity and debt headroom to weather the recent crude price crash.

The country’s second-largest independent gas producer said revenue for the quarter ended March 31 fell to $883 million from $1.02 billion a year ago. The figure was lower than brokerage RBC Capital Markets’ forecast of $912 million.

Average sales prices for its liquefied natural gas (LNG) amounted to $8.88 per metric million British thermal unit (mmBtu), compared to $10.79 per mmBtu a year earlier.

Demand destruction due to the coronavirus pandemic and a Saudi-Russia price war in March have upended energy markets this year, with crude prices sinking below $30 a barrel.

Australian LNG companies, which sell most of the commodity through long-term oil-liked contracts, have delayed investments in major growth projects to cope with the collapse in crude prices.

Last month, Santos cut its full-year capital spending by $550 million and deferred an investment decision on its $4.7 billion Barossa gas project off northern Australia, in which it recently sold a stake to Japan’s JERA.

“The current environment is 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 Officer Kevin Gallagher said.

Santos produced 17.9 million barrels of oil equivalent (mmboe) during the period, down from 18.4 mmboe last year.

The Adelaide-based firm raised its annual output forecast to between 81 mmboe and 89 mmboe, as it expects to complete the acquisition of ConocoPhillips’ northern Australia business by the end of the first half of 2020. (Reporting by Shriya Ramakrishnan in Bengaluru; Editing by Maju Samuel)

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