Santos Ltd to develop Kakatua oil field

Santos Ltd to develop Kakatua oil field

ADELAIDE (Reuters): Oil and gas producer Santos Ltd said yesterday approval had been granted to develop the Kakatua North oil field in ZOCA 91-12 by the Australia-Indonesia Joint Authority for the Timor Gap Zone of Cooperation.

Santos said in a statement the field, about 500 km north-west of Darwin, was located about 12 km west of the Elang oil field in 94 metres of water and had gross proven and probable reserves of 12.2 million barrels of oil.

It was discovered in February 1997, encountering a 70 meter oil column, it said.

Participants in the ZOCA 91-12 joint venture are operator BHP Petroleum (42.417 percent), Santos (21.426 percent), Inpex Sahul (21.209 percent) and the Petroz Group (14.948 percent).

Santos said the Kakatua North oil field would be developed in conjunction with the Elang/Kakatua oil field development, with a tie-in cost of about A$42 million gross (A$9 million Santos group share).

First production was targeted for December 1998, six months after Elang/Kakatua first oil, it said.

"The Kakatua North development will extend the period of the initial production plateau of 32,500 barrels of oil per day from Elang/Kakatua," Santos said.

"Kakatua North production is expected to extend the economic life of the complex to around five years and add significant value to the total development," it said.

Santos said development of the Kakatua North field involved subsea completion of the existing Kakatua North 1A wellbore, with the well connected via an independent 12 km subsea flowline to the Elang/Kakatua development.

The Hingkip-1 volatile oil discovery in ZOCA 91-12 was subject to development consideration in association with the neighboring Bayu-Undan gas/condensate field, it said.

Santos shares were 8.3 cents lower at A$6.69 at 1.05 p.m. (0205 GMT).

Meanwhile Standard and Poor's Corp said on Thursday it has assigned its A-minus long-term rating to Santos Finance Ltd's A$500 million medium term note program guaranteed by Santos Ltd.

S&P said the rating reflected Santos' position as a midsize international oil and gas company, with a good cost position and long-term gas contracts, offsetting the cyclical natures of its oil operations.

"Santos is concentrating on expanding its gas business through the development of new marketing opportunities for its Cooper/Eromanga basin reserves and its liquids and gas business through exploration and development of its permits in offshore Western Australia, Papua New Guinea and Indonesia," S&P said.

"The rating outlook is stable, reflecting management's commitment to maintaining the company's balance sheet and financial profile over the medium term," S&P said.

"Operating cash flow should substantially exceed capital spending requirements, enabling Santos to lower its gearing to within target levels," it said.