Australian gas producer and GLNG operator Santos said on Tuesday it will book non-cash impairments of up to $560 million after tax due to the effects of the Covid-19 coronavirus pandemic.
Santos expects to record non-cash charge in the range of $490-560 million after tax in its half-year results next month.
These include impairments of its GLNG project of $640-700 million before tax and exploration assets primarily in the Cooper and Amadeus Basins of $60-100 million before tax.
The Australian company says that the impairments will have no impact on its reserves.
With this move, Santos has joined many other energy players writing down assets due to the oil and gas price downturn caused by the pandemic.
The company has revised its oil price outlook and expects brent prices this year of $45 a barrel, rising gradually over the next four years to $62.50 per barrel in 2024.
This means the company reduced its long-term price assumption by over 10 percent while also forecasting a slower recovery in the short to medium term.
Santos said it expects the impairment charge to increase its gearing by about 1.5 per cent adding that its debt covenants “have sufficient headroom and are not under threat at current oil prices for a number of years.”