Operating performance remained strong
S a l e s r e v e n u e i n 2 0 0 6 w a s a r e c o r d $ 2 , 7 6 9 m i l l i o n , a n i n c r e a s e o f 1 2 % o n t h e p r e v i o u s r e c o r d a c h i e v e d i n 2 0 0 5
Santos’ record revenue reflected higher production from new projects commissioned during the year, including the Casino gas project, the Darwin LNG project and the Maleo gas project, together with a full year of production from the John Brookes gas project which was brought online in the latter part of 2005.
HIGHER PRODUCT PRICES
Favourable movements in commodity prices also contributed to the increased revenue, with a 21% increase in oil price of A$89.35 compared with A$73.83 in 2005, and a 4% increase in gas price to $3.78 per GJ from $3.62 previously.
LOW UNIT COSTS OF PRODUCTION
Unit production costs of $6.41 per boe were 3% lower than 2005, reflecting increased production from fields with low operating cost, notably the John Brookes field in Western Australia.
OPERATING PROFIT HIGHER
UNDERLYING NET PROFIT HIGHER
One-off charges in 2006 reduced the reported net profit by $40 million, compared with an uplift of $123 million in 2005.
Combined with higher depletion, depreciation and amortisation expense, reflecting an increase in future development and restoration costs, reported net profit after tax (NPAT) of $643 million was 16% lower than 2005.
After adjusting for significant items, underlying NPAT was $683 million, 7% higher than 2005.
CASH FLOW AND BALANCE SHEET ROBUST
Operating cash flow increased by 6% to $1,550 million, a record for the Company.
Net debt of $1,450 million at year end was $149 million lower than 2005, as sufficient operating cash flow was generated after funding exploration, development, net acquisitions and dividends.
As a result of higher prices and lower costs, the netback or cash margin sold increased by 12% to $33.10 per boe.
Earnings before interest, tax, depreciation, amortisation (EBITDA) increased by 17% to a record $2.14 billion.
Net assets increased by $392 million to $3,356 million, resulting in gearing (net debt to net debt plus equity) of 30.2%, which is lower than the Company’s preferred maximum of around 40%.
8 Santos Annual Report 2006
OPERATING CASH FLOW $ million
13% compound annual growth rate
Over the past 13 years, Santos has achieved an average compound annual growth rate for operating cash flow of 13%.This cash has been reinvested to build a business that continues to deliver on its strategic targets.