Australian independent Santos will take an impairment charge of $328mn resulting from lower reserves at its Spar and Halyard gas fields and other late-life assets, although it posted record reserves overall.
Santos expects an impairment of about $147mn resulting from a reduction at its Spar-Halyard reserves offshore Western Australia (WA), and approximately $181mn related to other late-life producing and exploration assets, it said on 14 February.
But its total proven and probable (2P) reserves were at a record 1.745bn bl of oil equivalent (boe) at the end of 2022, with the firm also securing regulatory approval for its offshore Dorado oil and gas project in WA.
Reserves were up by 171mn boe before production in 2022. The firm's annual 2P reserves replacement was at 166pc, while its three-year replacement was 366pc.
The final investment decision on the Pikka phase 1 project in Alaska in 2022 commercialised 165mn boe of 2C contingent resources to 2P reserves. This was more than offset by increases in Alaskan contingent resources outside the Pikka phase 1 area, as a result of new well data — including the Mitquq and Stirrup discovery wells — seismic reprocessing and integrated reservoir studies.
Santos' 2P reserves at South Australia's Cooper basin and Queensland rose by 9mn boe and 10mn boe, respectively, before production. Reserves were also added in Papua New Guinea before production, primarily in the operated gas fields. These reserve additions were partially offset by a 26mn boe fall in 2P reserves at WA, primarily because of earlier-than-expected water ingress at the Spar-Halyard fields.
Santos reported 841PJ (22.5bn m³) of 2P gas reserves in WA at the end of 2022, which covered existing contracts. It also posted 1,400PJ of 2C contingent gas resources at WA at the end of 2022, and 437mn boe of total 2C contingent resources including liquids.
Dorado field approval
Santos has also received approval from Australia's offshore security regulator the National Offshore Petroleum Safety and Environmental Management Authority (Nopsema) for its Dorado project in the Carnavon basin offshore WA.
Dorado's first phase will involve liquids development with gas re-injection, with a potential second phase to recover and pipe the gas to the WA domestic and LNG markets. Santos obtained a production licence for the project in April 2022.
The Dorado development is "further enhanced by the recent discovery at the adjacent Pavo field", Santos' managing director and chief executive officer Kevin Gallagher said. "Our focus now is to finalise the concept for an integrated liquids and gas development and obtain the remaining approvals required to support a final investment decision," Gallagher added.
The Dorado and Pavo fields are estimated to contain 2C contingent resources of 189mn bl of liquids and 401PJ of gas, with Santos having a share of 147mn bl and 320PJ respectively.
Santos has an 80pc stake in Dorado and a 70pc interest in Pavo, and is the operator of both fields. Fellow independent Carnarvon Energy holds the remaining interests.
