Santos announces net loss in 1H16

Santos has announced a 1H16 net loss of US$1.1 billion. The company said that this result was significantly impacted by a heavy impairment charge against its Gladstone LNG (GLNG) project, as well as lower oil prices.

Excluding impairments and other one-off items, the company recorded an underlying net loss of US$5 million after tax for 1H16.

Santos’ Managing Director and Chief Executive Officer, Kevin Gallagher, said: “When I joined the company in February, I said the first priority was to assess the company’s assets and deliver the appropriate organisational structure to ensure that Santos is sustainable in a low oil price environment […] Our goal is to be free cash flow breakeven at between US$35 to US$40 per barrel on a portfolio basis […] We have made good progress in the first half towards this goal and are forecasting a free cash flow breakeven oil price of US$43.50 per barrel for 2016, down from US$47 per barrel.

“The establishment of the new operating model for Santos will lift productivity and drive long-term value for shareholders in a low oil price environment. Our asset-focused model is supported by strong technical capabilities in exploration, development, production and commercial […] The appointment of the new Executive team (Excom) was a key step in establishing the new operating model […] Our progress is also evidenced by record production and significant cost reductions achieved in the first half: unit upstream production costs were down by 15% to US$8.80/boe and capital expenditure down by 58% to US$283 million."

Mr Gallagher added that the company’s near-term goals are to embed the new operating model, drive down costs and apply available cash flow to reduce debt.

Edited from press release by Callum O'Reilly

Read the article online at: https://www.lngindustry.com/liquefaction/22082016/santos-announces-net-loss-in-1h16-2935/