Santos Q1 output down 4 pct, holds year guidance

Australian oil and gas producer Santos Ltd (STO.AX) posted a 4 percent fall in first-quarter production, but maintained its full-year production and cost guidance.

Total production in the three months to March 31 was 13.2 million barrels of oil equivalent (boe), compared with 13.7 million boe in the same period a year ago, Santos said in a statement on Thursday.

The fall in output was due to the sale of its 40 percent stake in of the proposed Gladstone liquefied natural gas (LNG project to Malaysia’s Petronas [PETR.UL] and natural field decline, Santos said.

Total sales revenue in the quarter fell 15 percent from a year ago to A$570 million ($402 million), as a tumble in international crude oil prices was partly offset by a weaker Australian dollar, Santos said.

Santos said it maintained all guidance for 2009, including a production range of between 53-56 million boe.

Shares in Santos, which has been the subject of takeover speculation after the South Australia state government lifted shareholder restrictions, rose 2.1 percent to A$16.22 by 0100 GMT, outperforming a 1 percent gain on the broader S&P/ASX 200 Energy index .AXEJ.

The company recently realigned its business to focus on the liquefied natural gas (LNG) sector and said its proposed coal seam gas-fuelled LNG project in Australia’s northeastern state of Queensland was progressing on schedule.

The venture remains in talks with a range of potential customers for the sale of LNG and expects to reach a final investment decision on the 3.5 million tonnes a year project by the first half of 2010 and first LNG cargoes in 2014.

The A$900 million Reindeer gas project in western Australia was, operated by partner Apache Energy (APA.N), is scheduled to see first production in the second half of 2011, Santos said.

Construction of Reindeer was originally deferred in December amid economic uncertainties but the venture later revived the project in March after they inked a $585 million gas supply deal with China state-backed CITIC Pacific Ltd (0267.HK).

On the production front, Santos said its key Mutineer-Exeter oil field off western Australia would be shut down in the second quarter for up to two months for repairs. ($1=1.419 Australian Dollar)