Santos swings to profit in H1, cuts debt

Australian LNG operator and stakeholder, Santos swung to a first-half underlying profit boosted by higher liquefied natural gas prices.

The operator of the GLNG project on Curtis Island reported underlying profit of $156 million for the six months to June, up from a loss of $5 million a year ago.

The average realised oil price was up 28% to $54.79 per barrel while the average LNG price was 26% higher at $7.21/mmbtu in the period under review

At the bottom line, Santos logged a net loss of $506 million, impacted by a new impairment charge of $690 million it flagged last week primarily against its stake in the GLNG.

Santos, which has been struggling to cut a debt burden built up in recent years, has reduced debt by $600 million to $2.9 billion since the start of the year.

However, the Australian company decided not to revive its dividend despite cutting net debt.

The company said it would continue to review each dividend decision in light of the focus on debt reduction.

“Our focus on more efficient, lower cost operations has delivered significant improvements in earnings and cash flow. Santos’ core asset portfolio of five long-life natural gas assets now provides stable base production for the next decade,” Chief Executive Kevin Gallagher said.

Santos upgraded its 2017 sales volume guidance to 77 to 82 million barrels of oil equivalent, following strong volumes from the core assets in the first half and higher forecast domestic sales volumes.

“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 PNG and Barossa offshore Northern Australia,” Gallagher added.