Santos narrows losses in interim period
PERTH (miningweekly.com) – Australian oil and gas major Santos has narrowed its net loss for the six months ended June from the $1.1-billion loss reported in the first half of 2016 to a loss of $506-million in the first half of 2017.
The net loss includes an impairment charge of $689-million, which 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.
Meanwhile, underlying profit was reported at $156-million for the six months under review, compared with an underlying loss of $5-million for the previous corresponding period.
Revenue for the period under review was also up by 24% on the previous corresponding period, to $1.4-billion, despite a 2% decline in sales volumes, with some 40.1-million barrels of oil equivalent sold.
Santos MD and CEO Kevin Gallagher told shareholders on Thursday that the company’s half-year results delivered strong progress on its turnaround strategy.
“We have removed substantial costs, generated significant free cash flow and reduced net debt.
“Our forecast free cash flow breakeven for 2017 sits at $33/barrel and we generated $302-million in free cash flow in the first half. This is pleasing progress towards our goal of transforming Santos into a low-cost, reliable and high-performance business with a strong portfolio that can generate significant free cash flow from a low oil price environment.”
Gallagher said that the company’s focus on more efficient, lower cost operations has delivered significant improvements in earnings and cash flow, while the company’s core asset portfolio of five long-life natural gas assets provided a stable base production for the next decade.
Following strong volumes from the core assets in the first half of 2017, Santos has upgraded the full year sales volume guidance to between 77-million and 82-million barrels of oil equivalent, with production expected to reach between 57-million and 60-million barrels of oil equivalent.
“We are also focused on future growth, with exploration and appraisal activity growing as part of our disciplined operating model and delivering successful outcomes in the Cooper basin, as well as Muruk in Papua New Guinea, and Barossa, offshore Northern Australia.”
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