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Australia

Santos' profit soars following $3b WA gas acquisition

Oil and gas giant Santos has seen a surge in its half-year profit following the acquisition of Western Australian gas company Quadrant Energy.

Santos, which is the nation's second largest oil and gas producer, on Thursday told investors its underlying profit had increased 89 per cent to $US411 million ($606 million) for the six months ended June 30, on the back of a 17.5 per cent rise in sales to $US1.97 billion as production and sales volumes increased.

Santos is Australia's second largest oil and gas producer.

Santos is Australia's second largest oil and gas producer.Credit:Brendan Esposito

Chief executive Kevin Gallagher said the results reflected the strength of the company's operating model and the successful integration of Quadrant, which Santos bought last year for $US2.15 billion.

Net profit jumped to $US388 million from $US104 million in the prior year, thanks also to lower asset writedowns.

The announcement comes just weeks after Quadrant proved up the WA offshore Dorado well, which is being labelled as one of the most promising prospective oil discoveries in Australia in years.

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Mr Gallagher said efficient and low-cost operations in the Cooper Basin fields in South Australia contributed to stronger first-half production volumes, and the "highest number of wells drilled in 12 years".

"All of this growth activity is consistent with reaching our goal of more than 100 million barrels of oil equivalent production by 2025," he said.

“This growth is enabled by our strong balance sheet and balanced asset portfolio, which provides sustainable free cash flow through the oil price cycle."

Shares in Santos rose on Thursday morning following the release of its results, trading 2.9 per cent higher at $7.06 as of 11:22am AEST.

Santos declared an interim dividend of 6¢ a share, up from 3.5¢ last year.

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