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Santos halves full-year loss and cuts debt

Business

South Australian-based oil and gas producer Santos has halved its full-year loss and cut net debt as it continues to restructure and cut costs.

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The company said its loss narrowed by 46.4 per cent to $US1.04 billion ($A1.36 billion) and its net debt was cut by 26 per cent to $US3.5 billion in the 12 months to December 31.

Santos has been under pressure from investors to restructure and cut debt amid a prolonged slump in oil prices that has now abated.

Chief executive Kevin Gallagher said the new strategy was paying off despite a US$1.1 billion first-half impairment on its GLNG liquefied natural gas plant taken in August and lower oil prices compared to the prior year.

“The Santos leadership team took tough and decisive action to stabilise the business and build the foundations for future growth. We restructured the business, removed substantial costs, all while maintaining safety and delivering record production and sales volumes,” he said in a statement.

“As a result our turnaround strategy is starting to deliver.”

Santos’ underlying profit jumped 29 per cent to US$63 million in 2016, when impairments and other significant items are taken away.

Gallagher said Santos would continue to focus on portfolio simplification and growth across five core assets – Cooper Basin, GLNG, PNG, Northern Australia, and Western Australia Gas – this year.

“In 2017, we will further refine our operating model to drive costs down, improve cash flow and reduce debt. We now have the strategy, assets, people and growth options to deliver on our future success and provide sustainable shareholder value,” Gallagher said.

Santos said production and sales volume guidance for this year remained unchanged at 55-60 million barrels of oil equivalent (mmboe) and 73-80 mmboe, respectively.

Santos’ turnaround

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