Santos’ strong results overshadowed by impairments

Santos posted a 2014 underlying net profit of $533 million, up 6 percent on the previous year.

After the previously advised non-cash after-tax impairments of $1,563 million, the financial result for the year was a net loss of $935 million, the company informed in a statement.

Managing Director and Chief Executive Officer David Knox said that despite the reported loss, Santos made significant progress in 2014.

“Our results today reflect the many achievements of the company in 2014, highlighted by the start-up of PNG LNG ahead of schedule and the commencement of commissioning the GLNG project,” Knox said.

Santos also delivered its highest production in five years rising 6% to 54.1 mmboe, and record sales revenue of $4 billion, which was an increase of 12%. The company also posted strong operating cash flow of $1,843 million, a rise of 13%.

“The underlying performance of our business remains strong and we look forward to further production growth in 2015 with the start-up of GLNG in the second half of this year, within the US$18.5 billion budget,” added Knox.  “The bottom line result nevertheless reflects the impact of the unexpectedly sharp down-turn in oil prices towards the end of the second half in particular which saw us recognise significant non-cash asset impairments announced earlier this month.”

Santos Capital expenditure in 2015 is forecast at $2 billion, 44% lower than 2014, and the company expects to reduce production costs per barrel by 10%.

Santos retains a robust funding position with approximately $2.9 billion in cash and undrawn debt facilities available at the end of 2014.

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Image: Santos