PERTH (miningweekly.com) – Oil and gas major Santos has recorded a net loss of more than $1-billion for 2016, on the back of a $1.1-billion impairment charge on its Gladstone liquefied natural gas (GLGN) asset and lower oil prices.

Excluding impairments and other significant items, the company reported an underlying profit of $63-million, compared with the $49-million reported for 2015.

“In 2016, 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 cost, all while maintaining safety and delivering record production and sales volumes,” said MD and CEO Kevin Gallagher on Friday.

“As a result, our turnaround strategy is starting to deliver. In 2016, Santos was free cash flow positive at $36.50/bl and generated $370-million in free cash flow over the last eight months of the year. This is pleasing progress, but there is still more to be done.”

Production volumes for the full year were up by 7%, to 61.6-million barrels of oil equivalent, with sales volumes up 31% to 84.1-million barrels of oil equivalent, resulting in a 6% increase in revenue to $2.6-billion for the full year.

The record production came on the back of the start-up of the GLNG Train 1 in September 2015 and Train 2 in May 2016, as well as strong production from the Papua New Guinea (PNG) LNG operation.

“Our aim is to transform Santos into a low-cost, reliable and high-performance business that delivers sustainable shareholder value,” Gallagher said.

“At the heart of our strategy is a portfolio simplification and focused growth across five core, long life natural gas assets; Cooper Basin, GLNG, PNG, Northern Australia and Western Australia gas. Each asset has significant upside potential.”

Gallagher pointed out that Santos will continue to focus on exploration, development, production and the sale of natural gas, which he said had a significant role to play in securing Australia and Asia’s energy future.

“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.”

For 2017, Santos is targeting production and sales volumes of between 55-million and 60-million tonnes and between 73-million and 80-million tonnes respectively.