Santos Says Production Operations Begin at Barossa Natural Gas Field

By David Winning

SYDNEY--Santos said production operations at the Barossa natural-gas field offshore Australia have begun, while offering a bullish assessment of the performance of wells drilled there.

Santos, which is the operator of the Barossa project, said it has pumped natural gas to the BW Opal floating production, storage and offloading vessel for the first time.

The company said on Monday that all six wells drilled in the Barossa gas field have intersected excellent reservoir quality.

"Testing has been completed on five of the six wells, demonstrating outstanding flow capacity that exceeds pre-drill estimates, with expected average potential well deliverability of around 300 million standard cubic feet per day," Santos said in a regulatory filing.

Santos owns the Barossa field with minority partners South Korea's PRISM Energy Australia and Japan's JERA Australia.

Santos said it will now recognize a lease liability of US$665 million and a right-of-use asset value of US$1.4 billion as a result of the BW Opal FPSU reaching the final milestone at Barossa. It expects the impact of the operating lease liability will increase gearing by 2.4 percentage points.

Write to David Winning at david.winning@wsj.com