Santos’ earnings take hit on Gladstone LNG project

Santos Ltd., Adelaide, has taken a $1.5-billion write-down on the value of its Gladstone LNG (GLNG) project that sources gas from coal seam gas fields in the Surat-Bowen basins to supply an LNG plant on Curtis Island near Gladstone.

The company said the hit followed a review of key production assets and the decision to make the impairment charge was attributed to lower oil prices, a slower-than-anticipated ramp-up in coal seam gas production from its fields, and higher gas purchase prices from other companies on Australia’s east coast.

The impairment charge on the $18.5-billion GLNG project is on top of the $565 million pretax write-down on the project last February.

Santos Chairman Peter Coates said the impairment charge was “clearly disappointing, but it is a consequence of the challenging environment which we now face.”

He said, “We have decided to adjust our long-term operating assumptions for GLNG to reflect the reality of the current oil-price environment.”

Santos said the noncash charge will result in an aftertax impact of $1.05 billion on the company’s half-year profits, but it will not affect the debt facilities.

Production began at GLNG in September 2015 from Train 1. Train 2 came on stream this past May.

Santos is operator of the project with 30%. Other stakeholders are Petronas of Malaysia, Total SA of France, and Kogas from South Korea.

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now

Whitepapers

Making DDoS Mitigation Part of Your Incident Response Plan: Critical Steps and Best Practices

Like a new virulent strain of flu, the impact of a distributed denial of service (DDoS) attack is...

The Multi-Tax Challenge of Managing Excise Tax and Sales Tax

To be able to accurately calculate multiple tax types, companies must be prepared to continually ...

Operational Analytics in the Power Industry

Cloud computing, smart grids, and other technologies are changing transmission and distribution. ...

Maximizing Operational Excellence

In a recent survey conducted by PennEnergy Research, 70% of surveyed energy industry professional...