The Santos Ltd (ASX: STO) share price closed 1.2 per cent higher today at $4.28 after the oil and gas producer modestly upgraded its sales and production guidance for FY 2018.
It now expects to sell 79 million to 82 million barrels of oil equivalent over the full financial year "primarily due to higher production from the Cooper Basin, Queensland, PNG and WA Gas assets".
Net debt also reduced to US$2.8 billion from US$3.5 billion at the start of the year as the company has little choice other than to prioritise free cash flow for debt reduction given the perilous state of its balance sheet.
Santos is also continuing efforts to restructure its debt in order to reduce the punishing interest payments it currently has to make on the debt.
For the six-month period ending June 30 2017 it made an adjusted profit of US$156 million thanks to higher oil and gas prices. For investors it remains a high risk play thanks to its debt load, although if energy prices do take off over the 12 months ahead the share price is almost certain to follow.
