Santos Ltd., Australia’s third- largest oil and gas producer, said 2010 profit rose 15 percent on higher prices for the commodities.
Net income increased to A$500 million from A$434 million in the prior year, the Adelaide-based company said in a statement today. Analysts expected profit of A$535 million, according to a median of eight estimates compiled by Bloomberg.
Sales gained 2 percent to A$2.2 billion, while production declined 8 percent to 49.9 million barrels of oil equivalent. Santos said it expects 2011 production of between 48 million and 52 million barrels as wet weather continues to affect operations in the Cooper Basin in central Australia.
Santos and its partners Total SA, Petroliam Nasional Bhd. and Korea Gas Corp. are developing a $16 billion liquefied natural gas project at Gladstone. The venture is one of four on the Queensland coast planning to liquefy gas extracted from coal deposits for export to Asian customers.
The Spar and Reindeer ventures in Western Australia, the Chim Sao oilfield in Vietnam and the Wortel gasfield in Indonesia are due to start production this year.
“Santos is on track to deliver incremental production from four new projects in 2011,” Chief Executive Officer David Knox said in the statement.
Spending on LNG
Capital expenditure this year is expected to rise 58 percent to A$3 billion, with two-thirds of that allocated to LNG projects, Santos said. Production costs are forecast to rise to between A$550 million and A$590 million from A$537 million last year.
Underlying profit, after stripping out certain items, climbed 46 percent to A$376 million, beating the A$359 million median in the Bloomberg analyst survey. The average price Santos received for its oil rose 11 percent to A$87.35 a barrel, while the average gas price climbed 5 percent to A$4.31 a gigajoule.
The oil and gas producer declared a final dividend of 15 Australian cents, compared with 20 cents a year earlier. Santos said in December that it will reduce dividend payments to help fund its “transformational” portfolio of projects, including Gladstone and the Exxon Mobil Corp.-led LNG venture in Papua New Guinea, where it is a partner.
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