Oil and gas explorer Santos (ASX:STO has reported a 155% increase in June-half profit to $504 million, as a result of asset sales and lower expenses.
The bottom line was boosted by a $246 million gain from the sale of assets including a 15% stake in a GLNG project.
But underlying profit also increased 12%, even as production and sales volumes declined, in a result attributed to lower production costs and exploration expenses.
Sales revenue likewise defied the production decline to grow 1% to $1.1 billion. While higher commodity prices contributed to this gain, the effects were muted by the stronger Australian dollar.
Santos CEO David Knox said the company's 1H operations had been impacted by adverse weather in central and Western Australia, but said the company had made progress towards important long-term projects.
“Our new LNG projects are on track for first production from PNG LNG in 2014 and GLNG in 2015,” he said. “These projects deliver the strategic vision to transform Santos into a significant producer of LNG.”
In July, Santos announced plans to buy a 100% stake in Eastern Star Gas, then on-sell a 20% interest in the company's permits in a project to TRUenergy for $284 million.
Knox said subject to approvals, Santos hopes to complete this transaction in late-October.
Santos has maintained its guidance of production of between 47 and 50 Mmboe (million barrels of oil equivalent) for the whole of 2011.
STO shares slumped 5.22% on Friday to $11.070.