Santos plummets to $1.1 bln loss on GLNG impairment

Adelaide-based LNG player Santos on Friday reported a US$1.1 billion loss in the first half of 2016 due to a previously revealed impairment charge of $1.05 billion after tax for the GLNG project and lower oil prices.

Excluding the impairment, the company posted an underlying $5 million loss compared to a $25 million profit for the corresponding period in 2015.

The company’s first-half production has hit a record 31.1 mmboe, primarily due to the start-up of the Gladstone LNG liquefactions trains 1 and 2.

The company said in its report that the $18.5 billion GLNG project in which it has a 30 percent stake produced 1,958,000 tons of LNG in the first half and shipped 32 cargoes, taking the total to 39 cargoes since start-up in September 2015.

In a separate statement, Santos revealed the 50th cargo has been loaded aboard the 138,370 SK Splendor and dispatched to South Korea.

The sales revenue dropped 6 percent to $1.2 billion despite a 32 percent rise in sales volumes, due to lower oil and oil-linked LNG prices, Santos said.

The average realised oil price fell 29 percent to $42.79 per barrel with the average LNG price sliding 42 percent to $5.70 per mmBtu.

Managing director and CEO Kevin Gallagher noted that the company has made progress on ensuring its sustainability in low oil price environment.

Santos’ net debt has been reduced to $4.5 billion as well as the free cash flow breakeven price which is set to $43.50 per barrel for 2016, down from $47 per barrel.


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