PERTH (miningweekly.com) – Oil and gas major Santos has reported a slight decline in production during the three months to March, following the temporary shutdown of the John Brookes platform, in Western Australia, in late 2022 and reduced capacity from its Reindeer field owing to increased water production.

Santos on Thursday reported that production volumes for the first quarter to March declined to 22.2-million barrels of oil equivalent, down from the 25.6-million barrels of oil equivalent produced in the fourth quarter of 2022, while sales volumes declined from 26.9-million barrels to 23.8-million barrels.

Sales revenue for the period declined from $1.8-billion to $1.6-billion.

Santos MD and CEO Kevin Gallagher said Santos delivered another solid quarter of production and cash flow generation with its diversified portfolio demonstrating the strength of a disciplined operating model.

Free cash flow of around $720-million positions the company well to maintain a strong balance sheet, deliver higher shareholder returns and invest in cash-generative critical fuels projects and decarbonisation.

“Our Santos Energy Solutions business continues to work on building new revenue sources through decarbonisation projects. The Moomba carbon capture and storage (CCS) project, which will be one of the biggest in the world, is 60% complete and on track for first injection of carbon dioxide next year. We have also established a partnership with Osaka Gas to investigate the feasibility of carbon neutral synthetic e-methane from green hydrogen in the Cooper basin,” Gallagher said.

“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.”

The Barossa drilling operations remain suspended with the drill rig on standby off the coast of Darwin as Santos works to secure the requisite approvals to recommence work, the company said on Thursday.

Assuming regulatory approval for the environmental permit is obtained, there is potential for drilling activities to restart before the end of the year. In addition, Santos is implementing the requirements of a General Direction from the regulator to further investigate potential First Nations underwater cultural heritage along the pipeline route.

Assuming that drilling re-commences before end 2023 and that the gas export pipeline is installed in 2023, the Barossa project remains on target to commence production in the first half of 2025 and within current cost guidance.

Santos has maintained the company’s production outlook for 2023, targeting between 89-million and 96-million barrels of oil equivalent, and sales volumes of between 90-million and 100-million barrels.