In a statement to the ASX on Friday afternoon, Santos said it was well placed to ride out the low oil prices, despite the lowered rating.
Santos executive chairman Peter Coates repeated his earlier message, issued during today’s release of its fourth-quarterly report, that the company’s key focus was cost reduction.
Santos said the rating remained “investment grade” and there was “no material change” to its financial position.
“None of the company’s existing drawn or undrawn debt facilities contain any credit rating-related covenant triggers or review events,” it stated.
According to S&P, a BBB- rating is allocated to a company “with adequate capacity to meet financial commitments, but with more subject to adverse economic conditions”.
Credit ratings are used by investors to assist their decision about buying bonds and other new fixed-income assets.
Earlier today, Santos released its fourth-quarter report, predicting writedowns and continuous reviews as oil prices crash below the $30 mark.
Coates said the company’s fourth-quarter results echoed its response to the challenging oil price environment.
Santos posted a full-year capital expenditure of $1.66 billion which was below guidance and 54 per cent lower than the previous year.
Its full-year production costs per barrel were 10 per cent lower.
In a statement to the ASX on Friday morning, Coates said Santos would continue to review its operational and development plans with a focus on preserving cash.
“Santos is well placed to withstand an extended period of low oil prices, with $4.8 billion in cash and committed undrawn debt facilities, and no material debt maturities until 2019,” Coates said.
“We are continuing to focus on reducing our capital expenditure and will build upon the significant improvements that we have made to our operating efficiency.
“PNG LNG and Darwin LNG operated at record rates during the fourth quarter, while GLNG has ramped up as expected following first LNG in late-September.”
In its report, Santos posted a fourth-quarter production of 14.9 mmboe (million barrels of oil equivalents), which was in line with the corresponding quarter and brought full-year production to 57.7 mmboe, the highest annual production since 2007 and a 7 per cent increase on the previous year which was within the company’s guidance range of 57-59 mmboe.
Santos reported sales revenue of $828 million which was 24 per cent below the corresponding quarter, with the average realised oil price down 33 per cent to $A61, or $US$44 per barrel.
Its Queensland operations GLNG train 1 produced 544,000 tonnes of LNG during the fourth quarter and achieved daily LNG production rates more than 10 per cent above nameplate capacity.
Since shipping began last year, GLNG has sent 11 LNG cargoes.
Details of the writedowns are expected to be announced by Santos at a full-year report and investor briefing on February 19.
The announcement of more cost reductions ends 12 rough months for the producer.
As the year began the company announced it was freezing the salaries of its senior executives, triggered by the $934 million full-year net loss after posting a $516 million net profit a year before.
Overshadowing the drastic measures was a $1.6 billion writedown, some 565 positions cut and recruitment also frozen.
After seven years at the helm, chief executive officer David Knox announced he was stepping down and was to be replaced by Clough boss Kevin Gallagher who is expected to take up his new post soon.
In October, the producer announced another 200 jobs would go, this time from its Adelaide business, to save the company about $100 million at its Cooper Basin operations over three years.
A month later Santos launched a bid to raise $2.5 billion capital to slash debt.
About 86 per cent of shares offered were taken up by eligible shareholders, raising about $1.17 billion and a further $585 million when opened up to retail investors.
Santos shares began the year around $6.66 in January and climbed to a 2015 high of $7.69 in May.
Following today’s announcement, Santos shares were up 9.8 per cent and trading at $2.81 at 11.30am.
Bloomberg listed oil trading slightly up at $US29.78 a barrel at 11.30am.
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