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
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