Revenue has dropped another 19% at Santos as oil prices fade

Aerial view of Santos GLNG’s LNG plant under construction at Curtis Island, Gladstone

Revenue at Santos dropped below expectations, down 19% to $786 million in the June quarter as falling oil prices continue to eat into the energy giant’s business.

Some analysts had been expecting more than $800 million in sales.

The slide couldn’t be halted by a rise in production and an increase in sales. Second quarter production of 14.3 million barrels of oil was 12% higher. Sales volumes increased 4%.

Sales revenue of $786 million compares to $974 million in the same three months in 2014. The latest result follows a 24% drop in sales to $825 million for the March quarter.

CEO David Knox says he’s pleased with production growth and progress on taking costs out of the business.

“Santos is taking positive steps to strengthen the company’s operating position in the lower oil price environment,” he said in a quarterly report to the market.

Capital expenditure is 53% below 2014 levels and production costs for the first half are tracking below guidance at $14 a barrel.

The average oil price for the quarter was $83 a barrel, 15% higher than the previous quarter but 32% lower than the corresponding quarter.

However, total gas, ethane and LNG sales revenue increased 15% to $409 million for the quarter due to higher volumes and higher domestic gas prices.

In February Santos took a $1.564 billion write down on its assets on the back of lower oil prices.

Santos shares are down 1.3% to $7.62.

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