Australian LNG operator and stakeholder, Santos, reported a significant growth in underlying profit for the year 2017 due to a strong operating performance.
The company reported an underlying profit of $336 million, representing a 433 percent increase over $63 million reported in 2016. However, the net impairment of $689 million booked in the first half of the year against the Gladstone LNG and AAL assets, saw the company record a net loss of $360 million for the year.
Speaking of the results, Santos managing director and CEO Kevin Gallagher said the company removed substantial costs, generated significant free cash flow and reduced net debts in addition to the increase in underlying profit.
Operating cash flow was up 49 percent to $1.2 billion and free cash flow up 200 percent to $618 million, the results showed with Gallagher adding that this reduced the net debt to $2.7 billion at the end of last year.
“Strong operating performance across the core assets resulted in sales volumes above the upper end of guidance and production toward the top end of guidance,” he said.
The sales volumes reached 83.4 million barrels of oil equivalent during the year while production was at 59.5 mmboe.
Liquefied natural gas (LNG) sales volumes rose 10 percent during the year reaching a record high of 3.1 million tons as PNG LNG continued to perform above nameplate capacity and the GLNG project ramped up.
LNG sales revenues were up 33 percent compared to the previous year reaching $1.2 billion. Santos’ sales revenue totaled $3.1 billion 20 percent up on the previous year’s results due to higher oil and LNG prices, that were 25 and 21 percent higher, respectively.
Santos said it will remain focused on reducing the costs and debt during 2018 and expects a free cash flow breakeven at $36/bbl oil price.