The Santos Ltd (ASX: STO) share price is virtually unmoved in early trading today, despite the oil and gas producer flagging a monster US$1.5 billion write down of its Gladstone LNG asset.

Santos saw its share down just 1 cent to $4.72 in early trading, as the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) also remains flat.

In an announcement to the ASX today, Santos says it expects to recognise an impairment charge against the carrying value of GLNG of circa US$1.5 billion before tax (US$1,050 million after tax) in its half year 2016 accounts – which will be released to the market on August 19. Santos holds a 30% interest in GLNG.

As Santos chairman Peter Coates puts it, “The expected impairment charge for GLNG is clearly disappointing but it is a consequence of the challenging environment which we now face. We have decided to adjust our long-term operating assumptions for GLNG to reflect the reality of the current oil price environment.

CEO Kevin Gallagher added, “Low oil and gas prices continue to challenge our upstream business and the entire oil and gas industry.” It’s clearly a major problem for Santos’s oil and gas peers including

It’s clearly a major problem for Santos’s oil and gas peers including Woodside Petroleum Limited (ASX: WPL), Origin Energy Ltd (ASX: ORG) and BHP Billiton Limited (ASX: BHP).

In November 2015, Santos said it was aiming to be cash flow positive in 2016 with oil prices at around US$50 a barrel and the Australian dollar at US 70 cents. Unfortunately for the oil and gas producer, Brent oil prices are currently at US$47.13 a barrel according to Bloomberg, and the exchange rate is currently 76.43 US cents. The difference is ~13% lower in Australian dollar terms, suggesting Santos continues to be loss-making at current prices.

Santos had impairments of $3.9 billion before tax ($2,761 million) last financial year (FY15) mostly related to oil and gas assets in the Cooper Basin and GLNG. After that writedown, Santos still had $17 billion in oil and gas assets on its books and a book value of $10 billion (and prior to today’s writedown).

That compares to the current market capitalisation of $8.4 billion, suggesting the oil company is trading at roughly around book value.

Foolish takeaway

It appears Santos may be done with the writedowns for now, but it looks likely to continue losing money for some time to come – and unlikely to be cashflow positive next year – unless oil prices soar or the Aussie dollar crashes. Investors might want to keep clear.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.