Santos’ profit slides. CEO to step down

Australian energy company Santos will soon have a new Chief Executive Officer. 

The company on Friday said its board agreed with Managing Director and Chief Executive Officer, David Knox that after seven years in the role Knox will step down once a successor has been appointed.

In light of the continuing pressure on the Santos share price in recent months and approaches from other parties concerning various assets and strategic opportunities, the Board has decided to conduct a full strategic review to examine all options to restore and maximise shareholder value, said Santos in its announcement.

Santos Chairman, Peter Coates, will assume the role of Executive Chairman and take executive responsibility for conducting the strategic review with the assistance of Deutsche Bank and Lazard as advisers to the Board.

Coates said: “After seven years as CEO and with the commencement of production at the Company’s GLNG project now imminent, the Board and David have agreed that it is an appropriate time to institute a succession of leadership.

“Until he steps down as CEO, David will remain in his role responsible to the Board for all of the company’s operations and projects.

“At the same time, the Board is determined to address the impact of the fall in global oil prices on the Company’s share price relative to other oil and gas companies,” Coates said.

Results

Separately, Santos today announced a half-year net profit of $37 million after tax, 82 per cent lower than the previous first half, reflecting significantly lower oil prices and a higher exploration expense.

Commenting on results David Knox said that the company had responded both effectively and quickly to the lower oil price environment, delivering significant reductions in costs across the business and improving its productivity.

“Capital expenditure for the first half was 55% below 2014 levels and we cut the production costs per barrel by 11% to A$13.70 per barrel of oil equivalent,” Knox said.

“We have been and continue to take appropriate steps to reduce costs further. We are also working closely with our suppliers and contractors towards that end. I am pleased to say we are on track to deliver our 2015 target of $180 million in gross supply chain savings.”

“Tightly managing costs will continue to be a key focus as we work through the current oil price environment.”

“We have again delivered strong operational performance including higher production and sales volumes thanks to good performance from our LNG assets and stronger Cooper Basin gas production.”

“However, the bottom line result reflects the impact of the severe decline in oil prices compared to the previous first half, along with a higher exploration expense.”