July 22, 2020 / 11:41 PM / 21 days ago

UPDATE 1-Australia's Santos posts drop in Q2 revenue, sees steady output in near-term

(Adds second-quarter metrics, comments on expectations of steady output in near term, background on impairment)

July 23 (Reuters) - Australia’s Santos Ltd reported an 18% drop in second-quarter revenue on Thursday due to lower realised prices for its oil and gas, but said production from its core assets was expected to remain steady in the near term.

The country’s second-largest independent gas producer said sales revenue fell to $785 million in the June quarter from $959 million a year earlier, missing a consensus forecast from RBC and UBS of $850 million.

Average realised prices for its LNG during the three-month period slid to $8.27 per metric million British thermal unit (mmBtu), from $9.09 per mmBtu a year earlier.

Energy players have been hit this year by a global gas glut and sluggish demand, with the coronavirus pandemic bringing economic activity to a virtual halt.

On Monday, Santos warned of an up to $560 million impairment, mostly on its Queensland-based Gladstone Liquefied Natural Gas (LNG) project, owing to an over 10% reduction in the company’s long-term oil price assumption.

Santos however reported a record production of 20.6 million barrels of oil equivalent (mmboe) during the period, up from 18.6 mmboe last year, helped by higher output across its Western Australia assets.

“Production levels from our core assets are expected to remain relatively steady for the next five or six years, allowing us to continue to progress our major capital projects,” Chief Executive Officer Kevin Gallagher said in a statement.

The Adelaide-based firm narrowly trimmed its annual production forecast to between 83 mmboe and 88 mmboe, from its earlier range of 81 mmboe and 89 mmboe. (Reporting by Shriya Ramakrishnan and Anushka Trivedi in Bengaluru; Editing by Anil D’Silva and Stephen Coates)

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