Santos forecasts FY14 production lift

Oil and gas group expects growth from its Papua New Guinea LNG start-up.

Santos (STO) expects to increase production in 2014 due to its liquefied natural gas start-up in Papua New Guinea.

In a statement to the Australian Securities Exchange, Santos said it expects 2014 production to be 52-57 million barrels of oil equivalent.

The group flagged an increase from 2013 production, which it now expects to be approximately 51 million barrels of oil equivalent.

The figure has fallen from Santos' October update, when it expected 2013 full-year production to be at the low end of previously stated guidance of 52 to 55 million barrels of oil equivalent.

Santos said its PNG LNG project is more than 90% complete and is on track for first LNG in the second half of 2014.

Its GLNG project is 72 per cent complete and on track for first LNG in 2015, with drilling ahead of plan and an unchanged capital cost estimate, Santos said.

Santos said its east coast gas market is in transition ahead of LNG demand and it sees fewer spot market opportunities in Western Australia.

The group said it is committed to increasing returns to shareholders and it intends to review capital management options as PNG LNG production approaches.

Capital expenditure is expected to peak in 2013, with guidance unchanged at $4 billion, falling to $3.5 billion the following year.