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Australia's Santos wants to cut more costs amid oil slump

Published 22/01/2016, 09:49 am
© Reuters.  Australia's Santos wants to cut more costs amid oil slump
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MELBOURNE, Jan 22 (Reuters) - Australia's Santos Ltd STO.AX , with its shares at 23-year lows, is looking for more ways to reduce costs to help weather the slump in oil prices after cutting capital spending more than expected in 2015, the company said on Friday.

Last November, the oil and gas producer conducted an A$3 billion share sale to pay down debt after rejecting a A$7.1 billion takeover offer, but it has since seen its share price sliced in half.

In its effort to preserve cash, Santos said it cut capital spending by 54 percent in 2015 to A$1.66 billion ($1.16 billion), beating its target of $1.8 billion, while it cut its production costs by 10 percent, as planned.

"We are continuing to focus on reducing our capital expenditure and will build upon the significant improvements that we have made to our operating efficiency," Executive Chairman Peter Coates said in the company's quarterly report.

Santos increased production in 2015 by 7 percent to 57.7 million barrels of oil equivalent (mmboe), within its target range, following the start of exports from the Gladstone liquefied natural gas (GLNG) project.

Annual sales revenue slid 20 percent to A$3.2 billion, coming in slightly below analysts' forecasts at A$3.3 billion, according to Thomson Reuters I/B/E/S.

The company gave no forecasts for 2016, with a new chief executive, Kevin Gallagher, due to take the reins in February. ($1 = 1.4288 Australian dollars)

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