Santos Ltd., who has been ruling under pressure since the collapse in oil prices announced 2015 net loss of AU$2.7 billion, impacted significantly by impairments of $2.8 billion after tax.
The impairment charges are primarily a reflection of low oil prices and relate predominantly to the company’s Cooper basin gas producing assets, Gladstone LNG (GLNG) assets and Gunnedah basin assets.
Underlying net profit after tax was $50 million, 91% lower than the previous year. Full year production, however, reached 57.7 MMboe, and it was the firm’s highest annual production since 2007. This was primarily due to production from PNG LNG, cargoes shipped from Darwin LNG and the startup of GLNG in the third quarter.
“The actions the company took in 2015 to strengthen its balance sheet and lower its cost base have put Santos in a stronger position to manage through a period of low oil prices,” said chairman, Peter Coates.
“The company raised $3.5 billion, reduced capital expenditure by 54% below 2014 levels and lowered production costs per barrel by 10%. With $4.8 billion in cash and committed undrawn debt facilities and no material drawn debt maturities until 2019, Santos is well placed to deal with the short-term challenges,” he explained.
Santos has four business units namely Eastern Australia, Western Australia and Northern Territory, Asia Pacific and GLNG. In 2015, while its Eastern Australia business unit earned $421 million, 39% lower than 2014, its Western Australia division earned $424 million, 33% lower than the year prior.
In Asia Pacific, the group’s income reached $827 million, 11% higher than 2014 primarily due to a full year of production from PNG LNG, which shipped 101 LNG cargoes. Revenue from GLNG was $8 million, 180% higher than 2014 due to the commencement of LNG sales during the fourth quarter.
Going forward, Santos will maintain its 2016 production guidance at 57-63 MMboe, but reduce capital expenditure to $1.1 billion.
Image: Santos GLNG
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