Santos chairman Peter Coates calls for culture change
Returning Santos chairman Peter Coates says the Adelaide oil and gas producer’s culture needs to change to make it more agile.
Returning Santos chairman Peter Coates says the Adelaide oil and gas producer’s culture needs to change to make it leaner and more agile and he has not ruled out more job cuts on top of 700 already made.
He said the company was not against selling its flagship Moomba gas plant in central Australia, which it built in the 1960s, as part of its plan to be better able to survive periods of low oil prices.
Mr Coates yesterday returned to the head of the board after previous chairman Ken Borda stepped down after just two years, saying he wanted to lighten his directorship load.
The new chairman said cultural change was needed at Santos, which has been hammered harder in the recent oil price downturn than most because of its high debt, fast-disappearing construction risk at the Gladstone LNG plant and the risk it might need to raise equity.
“We want to be more agile, leaner, able to react much more quickly to circumstances and make decisions more quickly right through the chain,” Mr Coates, a former executive director at mining and trading giant Glencore, told reporters after the company’s annual general meeting in Adelaide yesterday.
He would not rule out more job cuts.
“We need to do whatever is necessary to ensure this company can operate effectively in any oil price environment,” Mr Coates said.
At the meeting, chief executive David Knox repeated a February figure that about 500 jobs had been cut at Santos since a cost and capital spending cutting program started in response to lower oil prices.
It is understood that another 200 have gone since then and that this round of cuts is effectively finished.
Mr Knox said the company’s Moomba gas plant was not sacred as the company looked at asset sales.
He would not rule out selling the plant — as opposed to the gas fields that feed it — to an infrastructure company.
“We will consider anything that drives performance, competitiveness and our ability to invest in the Cooper Basin and make sure that it is a robust and healthy asset,” he said.
Citi analyst Dale Koenders yesterday included the Moomba plant in a list of infrastructure assets that Santos could sell to avoid having to raise equity, estimating it had $300m of value to Santos.
“We think infrastructure divestments are attractive given premium pricing on infrastructure assets when oil price capitulation has devalued exploration and production assets,” Mr Koenders said.
But he said the Moomba plant might not get the best price because they had longer asset lives than the reserves around them, meaning it was not the most likely asset sale for the company.
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