Leading oil and gas producer Santos has posted a $935 million full year net loss following a massive writedown on its assets in light of the sharp slide in global oil prices.
Last week Australia’s second largest oil and gas producer was hit with a $1.6 billion impairment charge relating to its oil producing assets in the Cooper Basin and exploration licences near Gunnedah, in New South Wales, which resulted in a $1.4 billion reversal on last year’s $516 million profit.
Chief Executive David Knox said the losses were spread out across all of the company’s operations, but mostly stemmed from its SA and Queensland businesses, where the bulk of the company’s workforce is concentrated.
The massive loss saw Santos sack 520 staff and freeze the salary of its Senior Executives, with more layoffs still to come.
Chief executive David Knox told Adelaide Now that the job shedding program still had months to run, but did not give a specific number on the company’s redundancy targets.
“We are bringing our workforce down so it matches the strategy we’re executing right now which is to bring our capex (capital expenditure) down to lower our operating costs. This is in response to the conditions we’re facing right now,” he said.
“It’s obviously not something that we wish to do, but we need to do it in order to ensure that we are a fit, strong, lean company and we’re taking the necessary action. Going forward this process is going to continue. We’re in the middle of the process and it will continue on for the next few months as we bring the organisation to the right size to match our capital and operational spend.’’
Mr Knox said that despite the loss, Santos made significant progress in 2014, delivering its highest production in five years and a 12% increase in sales revenue to a record $4 billion. He said the commissioning of the Gladstone LNG project in Queensland along with the start-up of the PNG LNG were partially offsetting lower oil prices.
“The underlying performance of our business remains strong and we look forward to further production growth in 2015 with the start-up of GLNG in the second half of this year, within the $US18.5 billion budget,” Mr Knox said.
“The bottom line result nevertheless reflects the impact of the unexpectedly sharp downturn in oil prices towards the end of the second half in particular which saw us recognise significant non-cash asset impairments announced earlier this month.”
Santos employs 1,586 people in South Australia plus 2,574 contractors. It employs another 3,585 staff and contractors across Australia and Asia.