Santos has reported a six per cent decline in quarterly revenue as weak oil prices offset rising production at its giant Gladstone LNG project in Queensland.
The oil and gas producer said sales revenue in the three months to June fell to $US1.19 billion ($A1.59 billion), from $US1.26 billion a year earlier.
It blamed the decline on continuing weakness in oil and gas prices, saying it realised an average oil price of $US49.21 during the period, down almost a quarter from $US64.58 in the same period last year.
Quarterly sales volume jumped 25 per cent to 19.6 million barrels of oil equivalent (mmboe), and production rose eight per cent to 15.5 mmboe as it operated an expanded LNG terminal.
Santos shipped its first cargo from the $18.5 billion Gladstone LNG project in October 2015, and started production from the second LNG train in May 2016.
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Like other energy producers, Santos has been racing to slash costs amid a collapse in global oil prices, which slumped to a 13-year low earlier in 2016. It said production costs in the first half of 2016 were down 15 per cent from a year earlier to $US8.80 per barrel.
"There is a lot of work ahead of us but today's results show we are heading in the right direction," chief executive Kevin Gallagher said.
Santos reaffirmed its full year production and sales guidance, expecting to produce between 57 to 63 mmboe in 2016, and sales between 76 and 83 mmboe.
Santos shares dropped seven cents, or 1.4 per cent, to $4.83.
