Independent oil and gas producer Santos Ltd (ASX: STO) has today launched the front-end engineering and design (FEED) phase for its Dorado project, located off the coast of Western Australia.
At the time of writing, the Santos share price is 1.24% in the red, currently trading at $7.16 per share.
What did Santos say?
Dorado is an integrated oil and gas project located in the Bedout Sub-basin, which is planned for 2 exploration and production phases. Santos has an 80% stake in the project and is also an operator, sharing the interest with Carnarvon Petroleum
Phase 1 of the project includes the production of oil and condensate through a floating production, storage and offloading facility (FPSO) and has an estimated cost of ~$2 billion.
Following a competitive phase amongst top-tier contractors, the tenders for the FPSO design are currently being finalised and are expected to be assigned over the next few months.
In today's statement, Santos chief executive office Kevin Gallagher said:
Entering FEED for the Dorado project is a significant milestone and has the project on schedule for a final investment decision around mid-2022.
Dorado is on track to be the first development in the Bedout Sub-basin, with its high-quality
reservoirs and shallow-water setting, making it a very cost-competitive project globally.
The company is also seeking interest from market participants in non-operated equity interests in Dorado and other potential WA oil assets.
In the same release, Gallagher also commented on the potential of the project:
Potential nearby tie-in opportunities, starting with the Pavo and Apus prospects to be drilled early next year, could be easily tied-back into the Dorado infrastructure and materially increase the value of the project, due to the very low cost of development.
Santos share price snapshot
The Santos share price is down 1.24% intraday following the release, and is also in the red 3.5% over the previous 5 days at the time of writing.
Santos shares have climbed more than 11% year-to-date with a major jump from $6.77–$7.73 from 31 May–4 June, before pulling back to today's level.
At a current share price of $7.16, Santos has a market capitalisation of $15 billion, and trades at a price-to-earnings ratio (P/E) of 12.84.
