Santos, operator of the GLNG project, said it expects to recognise a non-cash impairment charge of approximately $1.6 billion after tax in its 2014 full-year accounts.
The impairment charge reflects the lower oil price environment and is a non-cash accounting adjustment that relates to the historical book value of the company’s assets. Impairment outcomes are subject to finalisation of the full-year accounts, which will be released on 20 February, the company said in a statement.
In undertaking the impairment analysis, Santos has used future oil price estimates which assume short-term market prices for four years, reverting to a long-term price of US$90 real from 2019. The future A$/US$ exchange rate is assumed to be 0.80 in all years.
Santos also stated that there is no impairment of GLNG, which is on track for first LNG in the second half of 2015, within budget.
The non-cash impairment charges are not expected to impact Santos’ investment grade credit rating or debt facilities, according to the company.
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Image: Santos GLNG