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UPDATE: Santos reduces 2015 capital spend

LNG Industry,

Following the announcement that Standard & Poor has revised its credit rating for Santos, the company has reduced its projected 2015 capital expenditure to AUS$2.0 billion, from the previous guidance of AUS$2.7 billion.

Santos Managing Director and CEO, David Knox, reaffirmed the strength of Santos’ financial position notwithstanding the substantial fall in the oil price and the company’s share price in recent weeks.

Knox commented: “We remain on track to realise the cash flow benefits in 2015 and 2016 from our growth investments in recent years.

LNG production

“The PNG LNG project is producing at full capacity. The GLNG project is 90% complete and remains on track for first LNG in the second half of 2015. First commissioning gas is expected to be introduced to the LNG plant before the end of 2014. Offtake agreements are in place with large, well-capitalised buyers.”

Santos has approximately AUS$2 billion in cash and undrawn debt facilities available, as at 30 November 2014.


Growth and sustaining capital expenditure in 2015 are now forecast at AUS$1.4 billion and AUS$600 million respectively. Asset divestments remain under consideration as part of Santos’ ongoing portfolio management, provided fair long-term value is realised.

Production guidance for 2015 is maintained at 57 - 64 million barrels of oil equivalent (boe).

Knox concluded: “To be clear, the underlying performance of our business remains strong with production continuing to grow in the second half of this year. The company has no present need or intention to raise equity.”

‘Reducing costs’

“The current volatile oil price means that Santos is focused on driving operational efficiency, reducing costs, prudently managing capital and making sure our balance sheet remains strong – without making short term reactive decisions that could damage the long term interests of the company or the interests of shareholders.

“We remain committed to restoring value for our shareholders.”

Adapted from press release by Katie Woodward

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