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$690m impairment warning from Santos

15th August 2017

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Oil and gas major Santos has warned of a $690-million noncash impairment charge for the half-year ended June.

The company on Tuesday told shareholders that the impairment resulted from changes to the carrying value of its assets, brought on by changing oil prices, exchange rates, discount rates, as well as production and cost fluctuations.

The ASX-listed company said that as a result of the changes in assumptions, which included a lowering of its Brent oil price forecast, Santos now expected to recognise an impairment of around $870-million on its Gladstone liquefied natural gas (GLNG) asset, on the back of the lower oil prices.

The lower US dollar oil price assumption also impacted on the Cooper basin assets; however, Santos said that this had been more than offset by a continuation of the cost efficiencies and performance improvements achieved during 2016, allowing increased drilling activity and production.

This has resulted in an expected positive net write-back to the Cooper basin carrying value of about $330-million after tax.

Meanwhile, Santos expected to take an impairment charge against its noncore assets in Indonesia of around $150-million after tax on the back of the lower oil prices.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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