The result comes despite a record production year for South Australia’s largest company and is a massive nosedive from the $868 million profit it announced for 2019.

However, Santos shareholders will still receive a final dividend of about 6.4 cents ($US 5 cents) per share fully-franked, in-line with the previous year’s final dividend.

The dividend is on the back of the company’s strong free cash flow of $953 million (US$740 million) and brings full-year dividends to 9.15 cents (US7.1 cents) per share, representing 20 per cent of free cash flow.

The company has also repaid $4 million in JobKeeper wage subsidies to the Australian government after realising its COVID-19 pandemic situation was not as dire as first expected.

Santos announced an underlying profit of $369 million but that became a net reported loss due to impairments announced by the company earlier in the week.

Before tax impairment charges of  $971 million ($US756 million) as a result of lower oil price assumptions were announced by Santos on Monday.

It also reported an impairment of goodwill of $125 million ($US98 million) as a result of its Reindeer reserves revision in Western Australia.

Santos Managing Director and Chief Executive Officer Kevin Gallagher said today’s results demonstrated the resilience of its cash-generative base business in a lower oil price environment and strong operational performance across a diversified asset portfolio.

“The improvements in our base business in recent years were perfectly illustrated in 2020 with an average realised oil price of US$47 per barrel generating more than three times the free cash flow as generated in 2016 at a similar average oil price,” he said.

“2020 saw us ride through the bottom of the cycle while still generating free cash flow under a sustainable and disciplined operating model.

“As prices and demand recover, our projects are much better placed than those of our competitor countries. Living by our disciplined approach to cost and capital allocation, and remaining cash flow positive through 2020 means we are well-positioned for further efficiency gains and growth initiatives in 2021.”

Santos received $4 million in JobKeeper payments from the Australian government up to September 2020.

“By November 2020, it was clear that the impact of COVID-19 on Santos would be less than expected, so Santos repaid this amount in full to the government during December 2020,” Gallagher said.

The Santos result is consistent with the results of fellow SA oil and gas companies Beach Energy and Cooper Energy, which both reported big falls in profits earlier in the week, largely due to weak oil and gas prices.

The market has responded to the Santos announcement with cautious optimism, resulting in a four-cent increase in its share price to $7.08 in the first hour of trade this morning.

Meanwhile, South Australian mining company Oz Minerals has reported a 30 per cent increase in its net profit after tax to $213 million.

The copper and gold miner, which operates sites at Prominent Hill and Carrapateena in the north of SA, will pay shareholders a fully-franked dividend of 17 cents per share, bringing the total dividend per share to 25 cents for 2020.

“2020 saw the OZ Minerals team rise to the challenges and deliver a strong operating and financial performance, continue to grow the company, create value for our stakeholders and advance our adaptive, innovative and collaborative culture,” OZ Minerals Managing Director and Chief Executive Officer Andrew Cole said in a statement to the ASX.

Oz Minerals shares were up 15 cents in early trade this morning to $21.78.

The company’s share price has risen dramatically in the past 12 months, more than doubling from about $10 this time last year.