Half-year loss for Santos driven by lower oil, LNG prices

Lower demand for energy during the coronavirus pandemic has caused oil and LNG prices to nosedive, resulting in bad news for producer Santos.

Santos has posted a half-year net loss on the back of falling oil and LNG prices. Picture: Supplied

The plunge in oil and LNG prices caused by the coronavirus pandemic has driven an earnings dive for Santos, which says it continues to be pressured by lower energy market demand.

The company booked a half-year net loss of $US289 million ($A403 million) compared with a net profit of $US388 million ($A541 million) for the previous corresponding period.

While production was up 4 per cent to record levels, sales revenue was down 16 per cent as the average realised price for oil fell 34 per cent and 14 per cent for LNG.

Santos has responded by slashing its forecast spending and deferred projects, including making a final investment decision on its Barossa gas project off the Northern Territory coast, which will be tied into the existing Bayu Undan to Darwin Pipeline and is on hold “until business conditions improve”.

The company took a $US756 million ($A1.05 billion) pre-tax impairment hit, mainly relating to the Gladstone LNG project in Queensland.

“The impairment charge is due to revised oil price assumptions resulting from the effects of the COVID-19 pandemic on energy market demand fundamentals,” Santos said.

“The COVID-19 crisis continues to put demand pressure on industries across the globe, and Santos is not immune.”

The company, which received $US1 million in JobKeeper payments in the first half, has maintained its full-year sales volume and production guidance.

Santos decided to pay an interim dividend of 2.1 US cents (2.93 Australian cents) per share, down from 6 US cents (8.37 Australian cents) per share for the first half of 2019.