Investors in Santos (ASX: STO) should be feeling pleased today. The oil and gas producer announced record sales revenues for the first half of the 2013 financial year driven by higher prices crude oil and gas.
Sales revenue was up 1% to $1.51 billion for the period, a positive result given that production of oil and gas was down by 4%. Why is that good news for investors? Because Santos is counting down the weeks until it receives significant lifts in production from two huge LNG projects it has stakes in and higher prices will bring a higher return from those projects.
Santos has a 30% stake in Queensland's GLNG project set for first production in 2015, and a 13.5% stake in PNG LNG, set to come online in 2014. The projects are 60% and 90% complete, respectively, and are expected to deliver significant shareholder value according to Santos CEO David Knox.
The lower half year production was attributed to planned maintenance undertaken on operations in the Cooper Basin. This will come as no surprise to investors after the company warned of lower production in its second quarter update last month.
There were no changes made to previous full-year production guidance of between 52 and 55 million barrels of oil equivalent (mmobe).
Net profit after tax (NPAT) for the first half was up 3% to $271 million, while the company wrote down $25 million in impairments, resulting in underlying profit after tax of $251 million.
Santos has been one of the strongest performers among big energy companies in the last year. Shares in Santos have increased 23.5% compared to Woodside Petroleum's (ASX: WPL) 11.6% and Origin Energy's (AS: ORG) -5%.
Foolish takeaway
The measured results released by Santos will leave focus on 2014 and 2015 as projects come online. This makes Santos a good company to hold for the long term. Current investors will want to consider taking up the company's dividend reinvestment plan, which offers a 2.5% discount to the issue price.
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Motley Fool contributor Regan Pearson does not own shares in any companies mentioned in this article.