Santos shares slide amid falling oil and gas prices

What did the quarter one 2023 report show?

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Key points

  • Santos shares are down 1.26% today, however, the energy sector is down overall 
  • Santos reported a 13% drop in revenue in the first quarter of 2023 
  • Declining sales volumes and lower oil and gas prices contributed to this fall 

Santos Ltd (ASX: STO) shares are in the red today. The oil and gas producer released its first quarter report to the market today.

Santos shares are sliding 1.26% to $7.03. For perspective, the S&P/ASX 200 Energy Index (ASX: XEJ) is down 1.25% today. Woodside Energy Group Ltd (ASX: WDS) shares are falling 1.39%.

The Brent Crude Oil price is down 0.29%, while natural gas is 1.08% in the red, according to Bloomberg Energy.

So what did Santos report to the market today?

What did Santos report?

Santos' first quarter 2023 results include:

  • Sales revenue slid 13% compared to Q4 22 to US$1.631 billion
  • Production slid 13% compared to the last quarter to 22.2 million barrels of oil equivalent (mmboe)
  • Sales volume fell 12% to 23.8 mmboe
  • Capital expenditure dropped 16% to 564 million
  • Free cash flow of US$720 million during the quarter
  • Full-year 2023 production guidance of 86 to 96 mmboe production maintained

What else happened?

Santos' revenue equates to about $2.4 billion Australian dollars. First-quarter sales revenue fell on the previous quarter due to sliding domestic gas and LNG sales volumes and a falling LNG and oil price.

The average realised price of LNG fell from US$16.92 per mmBtu in the fourth quarter of 2022 to US$14.46 per mmBtu in the first quarter of 2023.

Meanwhile, the average realised crude oil price dropped from US$94.71 a barrel in the previous quarter to US$87.59 a barrel in the first quarter of 2023.

Sales volumes were also less than the last quarter due to sliding domestic gas sales from Western Australia. This was partly counteracted by more crude oil and condensate volumes.

Production in the first quarter fell amid lower domestic gas volumes in Western Australia. However, this was offset by higher volumes from the Bayu-Undan field.

Management commentary

Commenting on the results, Santos managing director and CEO Kevin Gallagher said the company delivered another solid quarter of production and cash flow generation.

Despite the uncertain external environment Santos continues to perform strongly against the backdrop of regulatory and economic uncertainty.

The disciplined operating model we have in place positions us to deliver on our strategy to backfill and sustain our infrastructure, decarbonise and develop future clean fuels.

What else?

Santos highlighted the company's Barossa project in the Northern Territory is 56% finished. The drilling activities remain on hold amid environmental plan resubmission and approval.

Drilling activities could potentially recommence "before the end of the year".

Meanwhile, drilling activities at the Pikka Phase 1 oil project in Alaska are due to commence in the second quarter of 2023.

The Moomba carbon capture and storage project is 60% finished and the first injection is forecast for early 2024.

Santos share price snapshot

The Santos share price has slid 15% in the last year.

Santos has a market cap of around $23.2 billion based on the latest share price

Motley Fool contributor Monica O'Shea has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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