Successful Drilling in Australia

The Australian oil and gas group Santos increases its exploration efforts by a third this year after a highly successful drilling programme in the first half. The Adelaide-based company would lift its planned number of exploration wells for 2002 from 17 to 23, at a total cost of US$75.2m, after five of the six wells it drilled in the six months to June proved successful. A higher-than-expected increase in charges for reserve depletion as well as lower oil prices helped depress interim net profits by 35 per cent to A$163m, at the bottom end of analysts' forecasts. The depletion charge was $141m, up 36 per cent. But the company said it expected second-half profits to be stronger than in the first six months and to find twice as much oil and gas as it did last year. Profits in the first half had been hit by the sharp drop in oil prices since last year with the average realised per barrel A$40.40, down from A$51.10 in the first half of 2001, he added. But the group said it was on track to cut costs by A$50m by the end of next year, with savings of A$39m already achieved. ©

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