Santos shares dipped yesterday after the oil and gas producer reported a bottom-line net loss for 2017 of $US360 million.
The full-year loss was due to write-downs from the first half, but profit excluding one-off items rose more than five-fold to $US336 million thanks to price gains and lower costs.
The core profit still fell short of consensus estimates of $US349 million. Sales rose 21% to $US3.172 billion. That saw the shares down 3% at $5.02.
The statutory loss was driven by a number of impairment write downs, including charges of $US689 million in the first half against the Gladstone LNG project and $US149 million against the Ande Ande Lumut (AAL) oil project, which it bought in 2016 for $US188 million, as well as $US14 million in additional write-downs across its other assets.
However, this was partially offset by the positive write-back of the Cooper Basin assets of $US336 million .
Santos CEO Kevin Gallagher was pleased with the results.
“We have removed substantial costs, reported a material increase in underlying profit, generated significant free cash flow and reduced net debt,” Mr Gallagher said.
“Santos is now a stronger, more resilient company with the capacity to execute and bring on-line growth opportunities across its core long-life natural gas assets.”
The company also revealed plans for a major LNG marketing initiative in China, the world’s fastest growing market for the gas.
Santos is linking with its largest shareholder, ENN Holding, China’s biggest gas distributor, to form an LNG trading venture that will have access to the Chinese firm’s Zhoushan import terminal, due to come into operation later this year
Chief executive Kevin Gallagher said the joint venture would capitalise on rapid growth for LNG demand in China, where imports soared 48% last year on government policies to shift industry and power plants from coal to gas to clean up air quality.
Santos maintains its existing 2018 guidance levels.
Dividend has again been omitted.
