Santos Crashes to $1.1bn H1 Loss
Santos’s $1 billion writedown on its GLNG project has resulted in first half net loss of $1.1 billion.
During the course of 2016 there has been a slower ramp up of GLNG equity gas production and an increase in the price of third party gas. This has caused Santos to adjust its upstream gas supply and third party gas pricing assumptions for GLNG.
Excluding impairments and other one-off items, the company recorded an underlying net loss of $5 million. The net debt has reduced to $4.5 billion and free cash flow breakeven oil price has dropped to $43.50 per barrel verses $47 per barrel, the company said on Friday.
“Our goal is to be free cash flow breakeven at between $35 to $40 per barrel on a portfolio basis,” said Managing Director and Chief Executive Officer Kevin Gallagher. “We have made good progress in the first half towards this goal and are forecasting a free cash flow breakeven oil price of $43.50 per barrel for 2016, down from US$47 per barrel.”
Sales revenue decreased by 6% to $1.2 billion. The average realised oil price fell 29% to $42.79 per barrel while the average LNG price was 42% lower at $5.70/mmbtu.
First half production was up 10% to a record 31.1 mmboe, primarily due to the start-up of GLNG train 1 in September 2015 and train 2 in May 2016. GLNG shipped 32 cargoes in the first half, taking the total to 39 cargoes since start-up in September 2015.
Production guidance for 2016 is maintained at 57-63 mmboe.
Unit upstream production costs dropped 15% to $8.80 per boe primarily due to cost savings in operated and non-operated assets. Upstream production cost guidance has been reduced to $9-10/boe.