Santos logs $357 million net loss, sets sight on Barossa LNG FID

Australian independent producer Santos reported a $357 million net loss for 2020, hit by impairments and lower oil price assumptions, but the firm still plans to decide on its Barossa LNG project this year.

Excluding one-time charges, the firm said its underlying profit dropped 60 percent to $287 million.

On the other side, production increased 18 percent to 89 mmboe while sales volume rose 13 percent to 107 mmboe.

Santos chief Kevin Gallagher said the firm delivered record annual production and sales volumes in 2020, and “strong” free cash flow of $740 million despite significantly lower commodity prices.

“These results again demonstrate the resilience of our cash-generative base business in a lower oil price environment and strong operational performance across our diversified asset portfolio,” he said.

“The improvements in our base business in recent years were perfectly illustrated in 2020 with an average realised oil price of $47 per barrel generating more than three times the free cash flow as generated in 2016 at a similar average oil price,” Gallagher said.

Barossa LNG FID in first half

Santos said in December it signed a long-term supply deal with a unit of Japan’s Mitsubishi Corporation to supply LNG from its Barossa project.

The firm is developing the Barossa gas field offshore northern Australia to secure feed gas for the Darwin LNG plant.

“The Barossa LNG project remains on-track for a final investment decision in the first half of 2021,” Gallagher said.

Mitsubishi would buy 1.5 million tonnes per annum of Santos equity LNG but the company also executed agreements to transport and process Barossa gas through the Darwin LNG facilities.

“All required consents and approvals are now in place for our sell-down of 25% interests in Bayu-Undan and Darwin LNG to SK E&S, which is now binding and subject only to FID. We also continue to progress the binding sale and purchase agreement with JERA for the sale of a 12.5% interest in Barossa,” Gallagher said.

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