Santos warns of impairments
PERTH (miningweekly.com) – Oil and gas major Santos has warned of a $700-million to $800-million non-cash impairment charge for the 2020 interim results.
The impairment charge was related to revised oil price assumptions resulting from the effects of the Covid-19 pandemic, the company said.
“Since 2016, Santos has implemented a disciplined operating model that is focused on generating free cash flow through the oil price cycle,” said MD and CEO Kevin Gallagher.
“In response to Covid-19 and the lower oil price environment, Santos announced in March financial measures, including reduction in capital and operating expenditure, and a target 2020 free cash flow breakeven oil price of $25/bl.
“Our disciplined operating model combined with the proactive measures taken to reduce expenditure saw Santos generate more than $430-million in free cash flow in the first half of 2020, despite significantly lower oil prices,” Gallagher said.
Santos will recognize a non-cash impairment of some $640-million to $700-million at its Gladstone liquefied natural gas project, and a further $60-million to $100-million for its exploration assets.
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