Santos (ASX:STO) share price wobbles despite record quarterly sales revenue

The Santos Ltd (ASX: STO) share price is currently edging lower after a rollercoaster day so far, down 0.27% to $7.26 per share. It jumped as high as $7.32 at open then slumped to $7.21 before regaining some ground.

Below we take a look at the S&P/ASX 200 Index (ASX: XJO) energy company's quarterly update for the period ending 30 September.

What were Santos' Q3 highlights?

The Santos share price is edging lower despite the company reporting record quarterly sales revenue of US$1.14 billion, a 6% increase from Q2 figures.

Santos' quarterly free cash flow also reached a new record, increasing by 33% from the previous quarter to US$359 million.

The company credited the record results to the lift in commodity prices during the reporting period along with its own "strong base business performance".

As at the end of September, Santos had brought down its net debt, including leases, to US$3.1 billion and gearing dropped to 29.7%. At current commodity prices, Santos said it expects gearing to be less than 28% by the end of the year.

In the biggest news for the company during Q3, Santos and Oil Search Ltd (ASX: OSH) entered into a definitive agreement in September to merge the two companies in an all-scrip transaction.

Commenting on the merger, Santos CEO Kevin Gallagher said:

The proposed merger with Oil Search is on track for completion by year-end, subject to customary conditions including Oil Search shareholder approval. I'm very happy with how the merger is progressing, and particularly acknowledge the positive comments from PNG Prime Minister Hon. James Marape, at what is an incredibly important time for energy markets and energy companies around the world.

Size and scale have never been more important as we look to fund the energy transition to net-zero emissions, and the merger is expected to create one of the top-20 companies in our sector globally and a top-20 ASX-listed company.

The updated 2021 guidance doesn't appear to have done much for the Santos share price. The company is maintaining production guidance, but boosting it to the upper end of its earlier forecast range. Production cost guidance, meanwhile, was reduced to the lower end of the earlier forecast.

Santos share price snapshot

The Santos share price has outperformed over the past 12 months, up 40% compared to a gain of 20% posted by the ASX 200 during that same time.

Over the past month, Santos shares are up 17%.