MELBOURNE, Australia--Santos Ltd. (STO.AU) reported a narrower first-half loss despite further impairment charges as it benefited from stronger prices and the steady lift in output from its big gas-export venture on Australia's east coast.
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The oil-and-gas company's net loss was US$506 million in the six months through June from a loss of US$1.10 billion in first half of last year, while revenue climbed 24% to US$1.5 billion from US$1.21 billion as prices for its products jumped year-over-year and liquefied natural gas volumes ramped up.
The company earlier in the month flagged an about US$690 million impairment charge, primarily against its stake in the GLNG liquefied natural gas venture in Queensland state stemming from lowered oil-price assumptions. The hit was softened somewhat by positive US$330 million writeback of the carrying value of Santos's assets in Australia's Cooper Basin on the back of cost cutting and efficiency improvements.
Impairments have fueled losses each of the last three years for Santos, including a US$1.05 billion loss for 2016 due largely to an earlier charge against the GLNG project.
Stripping out impairments, asset sales and other one-time items, the company said it swung to a first-half profit of US$156 million from a year-earlier loss of US$5 million.
Santos, which has been fighting to cut a debt burden built up in recent years investing in new energy projects, has reduced debt by US$600 million to US$2.9 billion since the start of the year.
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"We have removed substantial costs, generated significant free cash flow and reduced net debt," Managing Director and Chief Executive Officer Kevin Gallagher said.
The company was now focused on lower-cost operations to drive earnings, and material reductions in drilling costs in the Cooper Basin and the GLNG venture were unlocking more gas supply, he said.
The company has targeted a US$1.5 billion reduction in net debt by the end of 2019 through improved operating cash flows and from the sale of infrastructure and non core assets. It has tied its future to the GLNG operation that counts Total SA (TOT) among its partners, the Exxon Mobil Corp.-led (XOM) PNG LNG operation in Papua New Guinea and projects in northern Australia, Western Australia, and the Cooper Basin straddling South Australia and Queensland states.
Santos has forecast production of between 57 million and 60 million barrels of oil equivalent in 2017, despite a 5.1% drop in output in the first half.
Write to Robb M. Stewart at email@example.com
(END) Dow Jones Newswires
August 23, 2017 19:46 ET (23:46 GMT)