snto - Santos

Review of Performance
Financial Performance
Record sales volumes were achieved in 1998. This growth largely offset
the impact of the lower oil price, with the result being a marginal fall in
sales revenue.
The volume of product sold in 1998 increased by 9.2%
to a record 45.1 million boe.
Gas sales were 183.6 PJ, an increase of 7.1%,
reflecting increased sales in Queensland, South
Australia and Western Australia.
Sales of crude oil increased by 15.6% as a result of
the new oil fields which came onto production during
the year. There were also increases in sales of LPG
and condensate.
Average prices received for sales gas remained
stable. However, the prices received for crude oil fell
by 35.2% in US dollar terms and 23.6% in Australian
dollar terms. Prices received for ethane, condensate
and LPG also fell.
As a result, notwithstanding the strong growth
in sales volume, sales revenue fell by 1.2% to
$769.4 million.
Operating Expenses
Average operating costs per boe produced fell to $4.49,
the lowest in four years. However, total operating
costs increased by 9.2% due to increased production.
Royalties paid decreased due to lower oil prices.
The depreciation and depletion expense increased by
9.0% to $225.9 million. Average depreciation and
depletion per boe produced fell from $5.04 to $4.95.
There was a writedown in exploration expenditure
of $4.9 million (nil in 1997) in respect of interests
in the Browse Basin, Bula/Seram in Indonesia and
New Zealand.
Earnings Before Interest Expense and Tax
(EBIT)
Earnings before interest expense and tax fell by 11.1%
to $334.6 million. Interest on higher borrowings
associated with the funding of the Company’s
development program increased the net interest
expense by $13.1 million to $67.3 million.
Operating profit before income tax fell by 17.1% to
$267.3 million. Income tax on operating profit fell by
$25.1 million to $91.0 million, primarily due to the fall
in operating profit before tax.
In 1998, gas sales commenced for supply to the Mica Creek Power Station
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