CANBERA (dpa-AFX) - Santos Ltd. (STOSF.PK, SSLTY.PK, STO.AX) and its joint venture partner Beach Energy have taken a final investment decision to proceed with the Moomba Central Optimization (MCO) project in the Cooper Basin, South Australia. Santos will invest $357 million (net Santos) in the project, which is planned to be delivered over three years. The company has fully budgeted this capital expenditure and will remain within its $45-50/bbl all-in free cash flow breakeven target, the Oil and gas producer said in a statement.
The MCO project will replace seven ageing gas-driven compressor stations with a single electric-driven compressor station. This upgrade will debottleneck upstream infrastructure and unlock future production growth from the Cooper Basin Central Fields. At the Moomba Gas Plant, new inlet compression and additional power generation capacity will be installed to receive gas and power the upstream satellite.
The project is expected to deliver strong economics, with key metrics meeting or exceeding Santos' hurdle rates. It targets more than $600 million in capex and opex savings (net Santos) over the life of the Central Fields, a reduction in unit production costs of up to $3 per boe, and an estimated internal rate of return (IRR) of greater than 15 per cent.
The Central Fields contain more than half of the remaining 2P reserves in the Cooper Basin and are characterized by higher productivity wells. The MCO project is designed to unlock the full productivity of these fields, with an IRR greater than 25 per cent expected from full-field development enabled by the project.
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