Investors Get To Share In The Spoils Of Santos' Sale Year
The Age
Friday August 22, 2008
SANTOS is flush with cash from record operating cash flow and first proceeds from the sale of a 40% stake in its Gladstone export gas project.
So much so that it has increased the interim dividend on an (underlying) June-half profit that was up 30% to $289million, announced a $300million off-market share buyback and added an ambitious $800million foray into gas-fired power generation in western Victoria to its portfolio of potential future growth options.The market reacted warmly to the share buyback and the longer-term potential of the push into power generation as a way to accelerate monetisation of gas resources, with Santos shares closing 98, or 5.7%, higher at $18.18.The interim dividend has been increased from 20 to a fully franked 22 a share. It will be paid on September 20 after books close on September 2. The ex dividend date is August 27.Record oil prices more than offset the impact on June-half earnings of lower production and the higher dollar. Santos' received oil price was $US113.08 a barrel - an increase of 66% on the previous corresponding period. Because of the stronger dollar, the average realised price in local dollar terms was a less spectacular increase of 44% to $A120.51 a barrel.Total production for the first half was 27.6 million barrels of oil equivalent, down by 8.3% on the first half of 2007. The group is sticking to previous forecasts that production for the full (December year) will be 54-56 million barrels of oil equivalent.Not much in the way of production growth is expected until first deliveries are made from the group's Gladstone project and the 17.7%-owned Papua New Guinea export gas project. Both are due to come on stream in 2014.Managing director David Knox said the proposed Shaw River power station in western Victoria reflected the group's view that natural gas would play an increasingly important role in reducing Australia's carbon footprint. Santos has yet to decide if it will sole finance/operate the project, or bring in power specialists.The reporter owns Santos shares.
© 2008 The Age
