The third-largest oil and gas producer in Australia, Santos said losses for the first half of the year were $1.1 billion, against income of $30 million year-on-year.
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The result compares to a $US30 profit in the previous corresponding period, while revenue dropped six per cent to $US1.19 billion, despite a 32 per cent jump in sales volume.
However, Santos Chief Executive Kevin Gallagher said the company may run its Gladstone liquefied natural gas plant (LNG) below its 7.8 million tonnes a year capacity, but said there was no plan to mothball one of its two production units, reports Reuters.
Santos leads an $18.5 billion project created to convert coal seam natural gas to liquefied natural gas for exports to the global market.
Santos is the operator and holds a 30 per cent stake in GLNG, with Malaysia’s Petronas, France’s Total and South Korean KOGAS the other investors.
‘Our goal is to be free cash flow breakeven at between US$35 to US$40 per barrel on a portfolio basis.
“At the moment, the best thing we can do for the business is to continue to take costs out”.
The company is in the midst of a corporate shake up with transition “well under way” by the end of the second quarter. It is ultimately targeting a break even between level of $US35 to $US40 a barrel.
Net debt fell by $US200 million to $US4.5 billion, mostly thanks to the sale of the Kipper project offshore Victoria.
Santos still expects to produce 57 million to 63 million barrels of oil equivalent in 2016, and has slightly lowered its guidance for production costs to $US9-$US10 per barrel.
Santos’s revised dividend policy makes a payout as a ratio of underlying earnings and the company said that, consistent with that framework, the board had resolved not to pay a dividend in the first half.
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Santos rallied on the result, up 2.5 per cent to $5.06 per share on opening.
