Santos Profits Plunge, CEO Steps Down
Australian oil and gas major Santos has announced that, after seven years in the role, Managing Director and CEO, David Knox, will step down.
The company’s board has decided to conduct a full strategic review of the company’s assets and opportunities, after announcing a half-year net profit of A$37 million ($26.7 million) after tax, 82 percent lower than the previous first half.
The results reflect significantly lower oil prices and higher exploration expenses, said the company on announcing the result.
Strong operational performance, particularly from PNG LNG and Darwin LNG, saw Santos record production growth of 13 percent compared to last year. However, the lower realized oil prices resulted in sales revenue declining by 15 percent.
Knox said that the company had responded both effectively and quickly to the lower oil price environment, delivering significant reductions in costs across the business and improving its productivity.
“Capital expenditure for the first half was 55 percent below 2014 levels, and we cut the production costs per barrel by 11 percent to A$13.70 ($9.90) per barrel of oil equivalent.
“We have been and continue to take appropriate steps to reduce costs further. We are also working closely with our suppliers and contractors towards that end. I am pleased to say we are on track to deliver our 2015 target of A$180 million ($130 million) in gross supply chain savings.”
The 2015 exploration program was weighted to the first half and resulted in exploration and evaluation expense of A$194 million ($140 million) . The campaign of drilling in PNG and Malaysia produced the successful Bestari-1 oil discovery offshore Malaysia but did not result in other commercial finds.
Santos also reported that it had brought gas into its LNG Train 1 at GLNG in Australia, demonstrating the significant progress made on the project during the first half. Other GLNG milestones achieved include bringing all major upstream processing facilities on line, completing commissioning of all LNG facility power generation and other utilities, unloading of the propane and ethylene refrigerant into storage and commissioning all six LNG Train 1 refrigeration compressors.
Knox confirmed that the GLNG project remained on track to deliver first LNG around the end of the third quarter.
Santos Chairman, Peter Coates, will assume the role of Executive Chairman and lead the strategic review with the assistance of Deutsche Bank and Lazard as advisers.