Oil and gas major Santos Ltd (ASX: STO) has reported its full year financial results today which on an underlying basis were reasonable, however after non-cash impairments the bottom-line loss was $935 million.
Here are the key figures:
- Production was up 6% to 54.1 million barrels of oil equivalent (mmboe)
- Revenues jumped a pleasing 12% to a record $4 billion
- Operating cash flow was up a solid 13% to $1.8 billion
- Underlying net profit after tax came in at $533 million
- A final dividend in line with the prior year was maintained at 15 cents per share (cps), which brings the total dividend for the year to 35 cps
And key facts:
- Management highlighted the group's strong liquidity position and minimal debt maturities until 2017 to try and quell some investors' concerns regarding the strength of the balance sheet. At year end, net debt stood at $7.5 billion.
- The increase in revenues was primarily thanks to the PNG LNG project which has successfully ramped-up into full production. So far the project has shipped 55 cargoes. Oil Search Limited (ASX: OSH) which is a partner in PNG LNG is also a major beneficiary of the ramp-up.
- GLNG is more than 90% complete and management stated that the project remains on track for first LNG in the second half of 2015 and importantly, within budget.
2015 outlook:
Like its peers Woodside Petroleum Limited (ASX: WPL) and Beach Energy Ltd (ASX: BPT), Santos' management is responding to the significantly lower oil price environment. As a result, Santos is forecasting a 44% decline in capital expenditure in 2015, with costs to be tightly managed. Meanwhile, production is forecast to increase to between 57 and 64 mmboe.
For investors considering whether now is the time to add Santos to their portfolio it comes down to your expectations for the oil price over both the near term and the longer term.
