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Australia's Santos posts profit on cost cuts

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Reuters are reporting that Santos swung to a first-half underlying profit on 24 August, helped by strong oil and gas prices and lower production costs, but held off on reinstating a dividend as it focuses on paying down debt.

Santos reported underlying profit of US$156 million for the six months to June, its biggest since the first half of 2014, up from a loss of US$5 million a year ago.

At the bottom line, the company reported a net loss of US$506 million, hurt by a new impairment charge of US$690 million it flagged last week mostly on its Gladstone LNG project.

Santos decided not to revive its dividend despite cutting net debt in the first half to US$2.9 billion from US$3.5 billion at the end of 2016, and said it would continue to focus on reducing debt further.

Santos has been racing to boost gas sales into the local market this year to fend off potential curbs on its LNG exports.

Australia has put in place new rules to restrict exports of LNG to ease rising energy prices for local manufacturers, at a time when the country is on track to become the world's largest LNG exporter by 2019.

Gladstone LNG, in which Santos has a 30% interest, is the most vulnerable to the export restrictions as the rules target any east coast LNG project that is taking gas from the domestic market to help meet its export contracts.

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