Santo Mining Corp (OTCMKTS:SANP) reduced its debt by around $1 billion as its revenues continued to spike after elevation in the oil prices. The company’s share prices also increased recently after a positive response from the investors to the fourth-quarter activities statement from Santos.
According to trade analysts, the cut down on debt may not be enough to renew interest in the takeover bid. The company released its fourth-quarter results recently which indicated that the takeover bid of $11 billion by Harbour Energy for the last year seems to be losing steam. The total revenue of the company elevated by 20 percent on a year-on-year basis and reached $US3.1 billion for 2017.
The rise is preceded by the increase in the average oil prices year on year. The production of the oil reached 59.5 million barrels of oil but was low by 3 percent from the production rate of 61.6 million barrels in 2016. The fall in the oil production was owing to lower crude oil output levels. In the past few years, debt reduction has been one of the most crucial aspects of Santos.
Santos Will Have Greater Margin With More Drillings
According to Kevin Gallagher, chief executive of Santos, the company reduced the debt by around 23 percent to $2.7 billion which reduced its free cash flow breakeven price to $US32 per barrel and Santos could deliver the lowest-cost onshore operations of Australia. While talking to Fairfax Media, it was a 32 percent reduction from the previous breakeven price of $US47 a barrel in 2016.
Gallagher further added that this reduction will allow the company to drill more wells and with the rise in the oil process, the company will get a greater margin. He said that Santos is right on the track to hit its net debt target of $US2billion by the end of next year and if the prices continue to remain the way they are now, Santos may even hit its debt target much earlier.