The Santos Ltd (ASX: STO) share price has dropped lower this morning following the release of the energy producer's second quarter and first half update.
At the time of writing the Santos share price is down 1.5% to $6.93.
What happened in the first half?
During the first half of FY 2019 Santos achieved production of 37 mmboe. This was a record for the company and 32% higher than the prior corresponding period.
Over the six months the company recorded sales volumes of 45.2 mmboe, which was up 19% on the first half of FY 2018.
Santos achieved an average realised oil price of $72.11 a barrel during the half, down 4% on the prior correspond period. This ultimately led to the company posting an 18% lift in sales revenue to $2 billion for the half.
And despite the company recording a sizeable increase in its capital expenditures, it still generated over $600 million of free cash flow. This means Santos has delivered positive free cash flow for thirteen consecutive quarters.
Santos' managing director and chief executive officer, Kevin Gallagher, appeared to be very pleased with the first half performance.
He said: "Our disciplined operating model and approach to capital allocation has delivered a strong first half result and the successful integration of our Western Australian business has exceeded expectations."
Pleasingly for shareholders, Mr Gallagher expects an even stronger performance in the second half.
He explained: "Second quarter production was however impacted by planned maintenance in the Cooper Basin and PNG LNG. With this maintenance activity now mostly behind us, we currently expect stronger production in the second half."
Mr Gallagher also revealed that the company has revised its guidance for the full year. It now expects production of 73-77 mmboe and sales volume of 90-97 mmboe. This compares to its previous guidance of 71-78 mmboe and 88-98 mmboe, respectively.
Whilst that revision is a touch mixed, one positive is that it has lowered its unit production cost guidance down to between $7.25 and $7.75/boe. Previously management had forecast production costs of $7.50 to $8.00/boe.
Elsewhere in the industry, the Woodside Petroleum Limited (ASX: WPL) share price has fallen 2.5% following the release of its latest update and the Beach Energy Ltd (ASX: BPT) share price is down 1.5% after oil prices tumbled lower overnight following a rise in U.S. oil inventories.
