Santos will keep its Gladstone LNG terminal in Queensland, Papua New Guinea, Cooper Basin, Northern Australia and Western Australia Gas, and bunch its remaining assets into a standalone business for a divestment that will help reduce net debt by $US1.5 billion by the end of 2019.
Santos also revised its 2016 production costs to below $US9 per barrel of oil equivalent (boe), from the previous guidance range of between $US9 to $US9.50 per boe. It expects sales volumes to be at the top end of the 81 million to 83 million boe guidance range.
Speaking at the company’s investor day in Sydney, Santos CEO Kevin Gallagher said Santos’s new strategy would be “underpinned by disciplined capital management”
He said substantial progress had been made in 2016 on the Santos turnaround.
“We have reduced the free cash flow breakeven oil price to US$39 per barrel, down from US$47 per barrel at the start of the year,” Gallagher said.
“Capital expenditure and upstream unit production costs have been reduced by 53% and 17% respectively, headcount has been reduced by more than 500 positions, and the business has been free cash flow positive for each of the last seven months.”
Santos also announced it had appointed Bruce Clement as vice president to run the “new standalone low-cost business comprising all non-core assets”.
Clement, to be based in Sydney, was previously chief executive officer of AWE Limited and would bring a “low-cost mindset to the management of these assets”.
– with AAP
