The Santos Ltd (ASX: STO) share price has dipped into the red in early trading this morning.
Today's slump comes after the company announced first oil from its Van Gogh Phase 2 infill development off the coast of Western Australia.
Let's take a look at what the oil and gas producer said in its release.
Record production rate at Van Gogh
The news from Santos regarded the first of three new production wells at Van Gogh. The well had produced oil "at the highest initial rate from an individual well in field history".
The first well produced a peak rate of 23,000 barrels of oil per day after completion and tie-in. Santos explains this is "well ahead of expectations for a single well".
The progress comes as the drilling of the "second, horizontal, dural lateral production well" is now in situ. This comes 16 months after the final investment decision.
Speaking on the announcement, Santos chief executive Kevin Gallagher said:
We have seen an excellent reservoir outcome from this first well with a larger oil column than expected and a total horizontal section of 5,430 metres, which is 490 metres more than originally planned.
Gallagher added:
The Van Gogh crude oil is also a highly sought-after product, and the premium to Brent that we get allows further value to be realised beyond the current oil price.
Santos holds a 52.5% equity interest at the project, which it operates. Inpex Corp owns the remainder.
Investors responded to the announcement, pushing the Santos share price down 1.37% to $6.48 apiece when the market opened, before making up some ground. Santos shares are currently trading at $6.53 apiece at the time of writing.
Santos share price snapshot
The Santos share price has posted a year to date return of 4.15%. This extends the previous 12-month return of 17%.
These returns have lagged the S&P/ASX 200 Index (ASX: XJO)'s return of ~23% over the last year.
Santos has a market capitalisation of $13.6 billion at the time of writing.
